From first time entrepreneurs to CEOs, and frankly, the majority of people just interested in business know that the correctly chosen business model is one of the keys to the success of the business. The second being the business’s strategy. Business Model and Business Strategy, two terms that are constantly interchanged with each other by many amateurs and experts, myself included, in the business. Knowing and differentiating the two can sometimes be misconstrued and incorrect, but knowing the difference can help in growing your start-up venture to a Fortune 500 company, or at least raising a few million in venture capital.

Business Model

According to Google’s definition search on the term business model, a business model:

describes the rationale of how an organization creates, delivers, and captures value

Many see the term, “model”, and think immediate of a scientific chemical compound model, a whiteboard of mathematical formulas, or just simply a plastic automobile that is assembled with glue. However, business models are like a stories, those which describe how the business operates. This story answers some of the basic questions, such as:

  • Who is the customer?
  • What does the customer value?
  • How do we make money in this business?
  • What is the underlying process and logic that explains how we can deliver value to customers at an appropriate cost?

Consider the story of American Express’s founder, J.C. Fargo. While on a vacation in Europe in the 1980′s, Fargo constantly ran into issues translating his letters of credit into cash. Through frustrations and imagination, Fargo realized what other travellers were [possibly] going through. Seeing as himself was the founder of a major financial institution, he could just imagine how much frustration other travellers were being put through. Because of this, soon after his trip, American Express created the traveller’s cheque, an innovative and robust business model that answered the fundamental questions and told a great story.

The traveller’s cheque business model answered the questions required, and provided customers a peace of mind and convenience for a small fee. Though Fargo created a new business model, almost all businesses use similar business models as their competitors.

Business Strategy

According to Google, the definition of the term “business strategy” is the:

strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments

As you can see by the definitions alone, both terms “business model” and “business strategy”, are very much different, but both are critical components to a business. The difference though is that the business strategy is focused on being different. Essentially, how will your business differentiate itself from your competitors.

Looking at the story of Walmart, founder Sam Walton knew that the majority of large retail stores that employed similar business models had a weakness, which was their location. Many of the large retail outlets like Walmart in the 1960′s were located in major metropolitan centers like New York City, Los Angeles and so on. This resulted in unique opportunity to bring a business that already existed into an already existing market. This opportunity was created by the geographical market of the “little one-horse towns”, cities and towns with a population between five thousand and twenty-five thousand residents, which Walton’s competitors did not exist and stayed away from. Opening its doors, Walmart aimed to provide low-costs and national brands to consumers who could now shop at home, instead of driving into the city.

Building a more successful web solution

Similar to business models and business strategies, web solutions, whether they are a small five page website for the local lawyer’s firm down the street or a large e-commerce solution for a worldwide organization, defining and implementing models and strategies for a web solution are similar to the business equivalent.

Considering the term, “business model”, and that it is essentially used to determine how the organization operates, while answering some of fundamental questions of any business, similar questions need to be answered with a web solution’s model. A few of the fundamental questions are:

  • Who is the target audience (the customer)?
  • What are the goals and objectives (value) of the user visiting or using your web solution?
  • How does this web solution make money for the organization (directly or indirectly)?
  • What is the underlying process or logic that explains how this solution delivers value to the user?

Answering these fundamental questions (and many more) are essential in executing the implementation of a successful web solution, along with maintaining and revising it as the market’s needs change. Like a business model, a model for a web solution is like a story – telling the story is critically important.

Defining and implementing your web strategy on the other hand, can be a little trickier. A web strategy is very similar to that of your business strategy – it focuses on having a competitive advantage, defining a roadmap for your web solution that includes actionable items to produce measurable results and desired results.

Importance of web models and strategies

Like the stories of Fargo, Walton and hundreds of other businesses, web models and strategies can accomplish just as powerful return(s). Many businesses who run and operate their web solution do so in a very poorly way, simply because they do not have a sufficient strategy or model, and do not hire expert consultants who can dedicate time each day, week, month, or when needed to the web solution. Alone in London, Ontario, there are at least a couple dozen examples. This is the primary result of the solution specialists that have been hired by your organization, whether they play the role of a consultant or freelancer, many successfully sell and implement ineffective solutions that purely do not meet the needs and requirements of your business.

If you believe your business is one of them, feel free to contact us today to turn your non-existent or poorly defined web strategy into a successful one.