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KSR business models convert innovation to economic value for a business.
Business models illustrate the manner in which a company makes money through
the identification of its position in the value chain. Models draw on a
multitude on business subjects including entrepreneurship, strategy, economics,
finance, operations, and marketing.
Simply put, KSR develops business models that describe how a business positions
itself within the value chain of its industry and how it intends to sustain
itself and generate revenue.
Six Components of a Business
Model
- Value Proposition - a description of the customer problem, the solution
that addresses the problem, and the value of this solution from the
customer's perspective.
- Market Segment - the audience to target, recognizing that different
market segments have different needs. Sometimes the potential of an
innovation is unlocked only when a different market segment is targeted.
- Value Chain Structure - the firm's position and activities in the
value chain and how the firm will capture part of the value that it
creates in the chain.
- Revenue Generation and Margins - how revenue is generated (sales,
leasing, subscription, support, etc.), the cost structure, and target
profit margins.
- Position in the Value Network - identification of competitors, complementors,
and any network effects that can be leveraged to deliver more value
to the customer.
- Competitive Strategy - how the company will attempt to develop a sustainable
competitive advantage and use it to improve the enterprise's competitive
position in the market.
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