1. Nine Business Model Building Blocks
By Jeff De Cagna FRS A FAS AE, chief st rategist and founder, P rin cipled In n ovation LLC
•Stak eh o l der segmen t sThe distinct and profitable stakeholder groups an organization
consciously chooses to reach and serve. In the association context, “member” is not a stakeholder
segment, but a type of relationship an association has with certain stakeholders.
•V al u e pr op o s it i o n sThe combination of products, services, experiences that create value for
specific stakeholder segments. A value proposition is not a litany of products and services, but a
simple comprehensive statement, e.g., the early value proposition for the iPod and iTunes store
was a “seamless music experience,” not a cool new MP3 player and an online store.
•Ch an n el s The methods and approaches for communicating with and reaching stakeholder
segments to build awareness of and deliver a value proposition. For associations, channels can
include websites, magazines, conferences, direct mail, chapters and so on.
•Stak eh o l der rel at i o n s h i p sThe types of relationships an organization establishes with
specific stakeholder segments. As described above, “member” is a stakeholder relationship, and
other relationships include subscriber, financial supporter, exhibitor, learner, collaborator and so
forth.
•Reven u e stream sThe actual cash an organization generates from each stakeholder segment.
• Key res o u rcesThe most important physical, financial, intellectual or human assets required
to make a business model work. Key resources are the raw materials for which an organization
occurs a cost and from which it can create new value.
• Key activit iesThe most important things an organization must do to make its business
model work. Key activities are the practices and processes an organization implements to create
new value, and for which is incurs some cost.
• Key p art ner s h i p sThe network of suppliers and partners that make the business model work.
Key partnerships are third-party contributors who provide additional resources, extend existing
resources, implement key activities or offer other support new value creation for which an
organization incurs some cost.
•Co st str uctureThe actual costs incurred to operate a business model.
Jef f De Cagn a FRSA is chief str ategi st an d f o u n der o f Principled In n o vati o n L L C,
l ocated i n Rest o n, Vir gi n i a. He can b e r eached at jef f @pri ncipl edi n n o vati o n.com.

2. Six Design P rinciples for Business Model Innov ation
By Jeff De Cagna FRS A FAS AE, chief st rategist and founder, P rin cipled In n ovation LLC
•Pu rpose and profit are in terdependent  Associations must resolve to end the fruitless and
counterproductive clash between dedication to a larger sense of purpose and the pursuit of profit. The truth is
that associations cannot thrive without both of these invaluable resources. Associating must be about the
purposeful creation of meaningful "thick value" in exchange for a reasonable level of profitability that, in turn,
generates a consistent revenue stream for reinvestment in more value creation.
QUESTION: What are t he key elemen ts of a n ew cy c le of " t hick va lue" c reation t h rou gh w hich
profitability can f low f rom pu rposefu l ac tion ?
•I n timacy d rives value c reationThe long-term success of purposefully profitable business models for
associating will depend on our ability to build real intimacy with our current and future stakeholders. Genuine
intimacy leads to a stronger sense of empathy. Associations must learn who their stakeholders are and what
moves them as people, not just where they work or what products and services they buy.
QUESTION: How can we c reate a sustained conversation that builds intimacy and empathy with
ou r cu r ren t and fu t u re s takeho lders?
•The social layer is digital Over the last decade, we have witnessed the creation of a robust public social
layer of interaction, conversation, and sharing in the form of blogs, wikis, near real-time information flows and
global social networking sites. Today’s relationships flourish in a fully digital form, a medium that makes them
always accessible, highly portable, easily shared, and thus more valuable.
QUESTION: What are t he different ty pes and fo rms of "associating" re lationships we are willin g
t o offer t o ou r c u r ren t and fu tu re stakeh olders, beyond membership?
•Net w o rks are f luidThe mobility of relationships makes it ridiculously simple for our stakeholders to
rapidly assemble their own networks, for whatever purpose, whenever and wherever they are needed. Today's
fluid networks operate at a speed much closer to the real-world pace of our stakeholders' work, and they enable
the free flow of rivers of information and content filtered and curated by network participants. In this context,
the presence of trust within networks is crucial.
QUESTION: How can we inten tional ly nu r t u r e social capital ac ross f luid net w o rks t o un l eash
serendipity and enable the phenomenon of " pu l l? ”
•Co l labo ration is the new con ten t Content creation today is a continuous and increasingly
collaborative process. But even more critical than the specific outputs of those collaborations is the residual
impact of collaboration itself. The ability to pursue significant and sustained collaboration makes it possible for
stakeholders to unite to meet their current needs, as well as tackle the deeper problems facing the industries,
professions, and fields in which they work.
QUESTION: What wil l it t ake for us t o move f rom na r r ow " member engagement " t o expansive
and sustained "stakeh older c o l labo ration "?
•Openness is the default set tingThe experience of associating is situated in a context of genuine
openness. Openness promotes inclusion and trust, and accelerates the flow of control away from institutions
and toward individuals, groups, and networks. In very practical terms, business models designed for the loss of
control may well deliver greater value while incurring lower costs. After all, among other problems, control is
expensive.
QUESTION: How d o we deliberate ly design a 2 1s t- cen tu ry experience of associating for the
l oss of con t ro l?
This overview is ext rac ted f rom t he ar tic le, “Six Design P rinciples for Business M ode l
I nn ovation ” ( 1 3 9 KB PDF down load) f rom t he Ap ril 2 0 1 1 issue of Associations Now .