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One of the biggest challenges in creating successful business models is understanding what VALUE is. The importance of value is hugely underrated. The way value is added today is different from how it was in the past and how it will be in the future.
How Business Models Evolve
Industries have changed the way they create, capture, and deliver value through time. The change is about the business model shifts and how new tech influences customer behavior. New techs affect social behavior, consumption, and how businesses need to Create, Deliver, and Capture Value.
A business model describes the logic of how an organization Creates, Delivers, and Captures Value.
Value Creation: value can be created by producing an offering (good or service) worth more to customers than its cost to deliver.
Value Delivery: customers are willing to accept and use your value because of their awareness of your company, their belief that your offering will solve a business problem, and their expectation of improved operations.
Value Capture: this is the stage at which your organization gets paid and makes a profit.
20TH vs 21ST Century Business Models
Press Industry
20th Century: [Create Value: journalists write articles and produce newspapers] [Deliver Value: paper boys go around neighborhoods delivering papers] [Capture Value: they have companies that would advertise, placing ads in these newspapers]
21st Century: [Create Value: users of platforms like GG/FB, we are the ones creating content] [Deliver Value: value delivered on SNS platforms, they are delivering the content that we create [Capture Value: through ads, like Google Ads, FB Ads, or Youtube Ads]
Grocery Store
20th Century: [Create Value: accumulating all the goods into one location/store] [Deliver Value: people come into the location and buy whatever they want] [Capture Value: in the cash register]
21st Century: [Create Value: suggesting recipes and you don’t have to go to stores] [Deliver Value: deliver all the recipes to you] [Capture Value: subscribe online to a monthly fee on their website]
Mobility Industry
20th Century: [Create Value: manufacturing cars in assembly lines] [Deliver Value: selling people new cars at dealerships] [Capture Value: through cheques or financing]
21st Century: [UBER Create Value: you choose where to go and what kind of car you need] [Deliver Value: a net of drivers that offer vehicles and driving services to take you where you want to go] [Capture Value: credit in their APP system, payment is touchless and automatic]
Hotel Industry
20th Century: [Create Value: buildings in cities and locations] [Deliver Value: offer services of short-term rental of rooms and additional services such as restaurants] [Capture Value: daily rates and extra service fees]
21st Century: [AirBnB Create Value: allows you to choose a wide variety of lodging/tourism experiences] [Deliver Value: acting as a broker] [Capture Value: receiving commissions from each booking through their website]
Bank Industry
20th Century: [Create Value: offers safe deposits and interest over investments] [Deliver Value: building branches with safes throughout the city] [Capture Value: fees and loan interests]
21st Century: [Create Value: offer low-cost and straightforward digital accounts] [Deliver Value: through an APP or credit card with a simple/intuitive interface] [Capture Value: lower interest rates and low cost of maintenance by not owning a physical location]
Entertainment Industry
20th Century: [Create Value: offering different movies at different theaters] [Deliver Value: displaying movies that customers can watch in comfortable rooms] [Capture Value: through tickets]
21st Century: [Create Value: offer a number of movies and series from different studios] [Deliver Value: through an APP that can be used in mobile devices and TVs] [Capture Value: charging monthly subscription]
Music Industry
20th Century: [Create Value: through physical stores with a big catalog of records, tapes, discs] [Deliver Value: customers choose record albums they want to listen to] [Capture Value: album sales]
21st Century: [Create Value: digital music at music stores] [Deliver Value: iPod players] [Capture Value: through its per music sales]
Travel Industry
20th Century: [Create Value: purchase trips to anywhere] [Deliver Value: by travel agents help you plan your flight] [Capture Value: through air tickets, hotel rates, and trip packages]
21st Century: [Create Value: offer tickets/packages through its aggregator and comparison tool] [Deliver Value: allowing you to design and purchase your trip package] [Capture Value: charging customers with a credit card]
Investment Industry
20th Century: [Create Value: advising on stocks to buy and sell] [Deliver Value: trading stocks with floor traders] [Capture Value: trading fee]
21st Century: [Create Value: offer multiple investment products through website/App] [Deliver Value: allowing you to invest yourself or using robots that automatically balance your investments based on market shifts] [Capture Value: charging fees]
Education Industry
20th Century: [Create Value: offer classes on campuses filled with classrooms and highly educated teachers] [Deliver Value: provide education programs with lectures in classrooms] [Capture Value: through tuition fee]
21st Century: [Create Value: multiple online courses in a platform with a massive variety of topics] [Deliver Value: online video classes that can be watched anywhere at any place] [Capture Value: value charging accessible prices per course]
Data Center Industry
20th Century: [Create Value: developing mainframe that can handle high-volume data processing] [Deliver Value: selling and installing the mainframes] [Capture Value: high-ticket sales or finance]
21st Century: [Create Value: multiple server solutions in a flexible format] [Deliver Value: using the cloud to provide servers for different apps on demand] [Capture Value: charging per usage fees without upfront costs]
Law Firms Industry
20th Century: [Create Value: offer a team of experienced and influential lawyers] [Deliver Value: creating legal documents] [Capture Value: service fees]
21st Century: [Create Value: allows you to choose a variety of legal document templates] [Deliver Value: a self-service filling process where you can create legal documents in mints] [Capture Value: charging a lower price value for the downloadable legal document]
Software Industry
20th Century: [Create Value: develop software that would do a specific set of tasks] [Deliver Value: through physical media] [Capture Value: one-time payment license fees for each software version]
21st Century: [Create Value: developing cloud-based software] [Deliver Value: through the internet in a software as a service format] [Capture Value: charging license fees in a subscription model]