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The culture of the business model

An article sums up an important concept for businesses

 

Knowing the meaning of vocabulary is essential for everyone, even entrepreneurs and managers. It is not only a question of general culture, but also – and particularly in this case – a matter of business culture to know what one is talking about and dealing with. When in addition to their true meaning, certain terms also acquire a sense linked to convenience or to a passing fashion, the necessity of being clear about what they mean becomes even more urgent. This is the reasoning behind “Modello di business, patrimonio strategico e creazione di valore” (Business model, strategic assets and value creation) which was recently written by Giorgio Donna (former Full Professor of Business Economics at the University of Turin and at Turin Polytechnic University).

The book has the objective of investigating the true meaning of the concept of “business model”. Donna starts precisely by stating that “just like what happened for many other labels that in recent decades have pressingly entered the business lexicon (for example quality, strategy, value creation, and so on), the term business model is similarly running the risk of becoming a trendy expression, which often happens to attract, gaining plenty of coverage and quotes, but in the long run also running the risk of turning into one of those terms with very vague, watered down contents”.

This risk is even more significant in this case if you think that, as pointed out by the author, literature agrees that the business model is “a concept of potentially great utility, but (that) continues to wallow among interpretations that are not always unequivocal and complex or unconvincing application proposals”. This is why Donna intends to clarify the terms, by analysing the concept both on a theoretical and a practical plane. The article thus begins with an investigation into the “ingredients” of a business model, and then moves on to the effects of its correct application: creating value for the company and the customer, its significance as an instrument of competitive advantage, its role as strategic business assets.In his conclusions, the author writes: “Just like what happens to people, companies are also often victims of taboos or simplistic beliefs (…). So it is often the case that a company tends to overestimate its strengths and instead underestimate its weaknesses”. According to the author the real interpretation of the business model can help in both cases.

The article by Donna is written in a comprehensible and careful language, and it can really contribute towards clarifying the matter in a sector of business management and management that has been explored but often not properly been understood.

Modello di business, patrimonio strategico e creazione di valore (Business Model, strategic assets and value creation)

Giorgio Donna

Impresa Progetto – Electronic Journal of Management, no. 2, 2018