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Business Model Archetypes

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The Business Model Archetypes are seven fundamental business “personalities” upon which any business model can be developed. By providing the context of all available models, it becomes easier to see how businesses relate and directions in which businesses can pivot. In this article, we’ll discuss the model and the archetypes, as well as describe use patterns where the models might benefit entrepreneurs and product strategists who use the model.

Published in: Business, Technology
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Business Model Archetypes

  1. 1. SmarterStartup.org   BUSINESS MODEL ARCHETYPES The 7 Business Personalities
  2. 2. BUSINESS MODEL ARCHETYPES What is a Business Model? A business model describes the rationale of how an organization creates, delivers, and captures value … Well-known business models can operate as "recipes" for creative managers.
  3. 3. BUSINESS MODEL ARCHETYPES Business Models Everywhere! BRICKS & CLICKS COLLECTIVE CUT OUT THE MIDDLE MAN DIRECT SALES DISTRIBUTION MODEL VALUE ADDED RESELLER FREE IN, FREE OUT FREEMIUM AUCTION / ONLINE AUCTION ALL-IN-ONE LOW-COST BARRIER LOYALTY MONOPOLISTIC MULTI-LEVEL MARKETING NETWORK EFFECTS PRO OPEN SOURCE PYRAMID SCHEME RAZOR & BLADES SERVITIZATION OF PRODUCTS SUBSCRIPTION etcetera,  etcetera  …   There  are  many  disparate  business  models  that  were  defined  in  isola8on  but  nothing  comprehensive    that  describes  the  fundamentally  unique  pa=erns  in  a  single  and  concise  framework  that  suited  our  needs.      
  4. 4. Describes 7 abstract business model archetypes (fundamental personalities) from which every business model is inherited. Two prototypes (applied examples) are given for each archetype. This represents a holistic view of the possibilities. BUSINESS MODEL ARCHETYPES Business Model Archetypes Trade Product Service Marketplace Ecosystem Subscription Brokerage prototypes: • e-commerce • lead generation prototypes: • software • content prototypes: • service platform • service agency prototypes: • ad network • dropship program prototypes: • content as a service • software as service prototypes: • products market • services market prototypes: • technology platform • media platform
  5. 5. Carl Jung Psychologist BUSINESS MODEL ARCHETYPES What is an Archetype? A philosophical idea, referring to pure forms which embody the fundamental characteristics of a thing. The concept is based on Carl Jung’s Personality Archetypes, describing fundamental personalities and roles that we draw from to develop our own unique personality.
  6. 6. PRODUCT TANGIBLE SOLUTION SERVICE CUSTOM SOLUTION TRADE CONNECT BUYERS & SELLERS The Business Model Archetypes framework takes a step back from specific business models to say there are 7 abstract archetypes (fundamental personalities) from which every business inherits. Two prototypes (examples) are given for each archetype. This represents a holistic view of the possibilities. BUSINESS MODEL ARCHETYPES Primary Archetypes
  7. 7. BUSINESS MODEL ARCHETYPES Product Archetype HALLMARKS OF A PRODUCT TRADE PRODUCT SERVICE Properties: •  Up-front Investment •  Sell for One-time Fee •  Highly Scalable Online Prototypes: •  Software Product •  Content Product Develop a tangible good and sell on a one-time fee basis (purchase or license). Requires high up-front sunk capital but is able to leverage economies of scale.
  8. 8. BUSINESS MODEL ARCHETYPES Service Archetype Intangible work for a client, monetized on a per-use basis. Low sunk costs but high float cost requirements. Professionals or technicians with expert knowledge and limited capital prefer it. TRADE SERVICE PRODUCT HALLMARKS OF A SERVICE Properties: •  Intangible Value Creation •  Low Sunk / High Float Cost Online Prototypes: •  Service Agency •  Platform as a Service
  9. 9. PRODUCT TRADE SERVICE BUSINESS MODEL ARCHETYPES Trade Archetype Connecting prospective buyers with a product they seek, making profit on the spread between sell price and cost of acquisition. Requires moderate capital and good sourcing connections. HALLMARKS OF TRADE Properties: •  Connect Buyers/Sellers •  Sourcing is key •  Profit from Arbitrage Online Prototypes: •  Ecommerce •  Lead Generation
  10. 10. Carl Jung Psychologist BUSINESS MODEL ARCHETYPES What is an Archetype? The meeting of two personalities (archetypes) is like the contact of two chemical substances; if there is any reaction, both are transformed.
  11. 11. MARKETPLACE TANGIBLE SOLUTION SUBSCRIPTION CUSTOM SOLUTION BROKERAGE CONNECT BUYERS & SELLERS Secondary Archetypes are created by combining the primary archetypes, similar to how new colors are derived by combining 2or more colors. In this way, all archetype possibilities are accounted for, starting with a model of three simple types of businesses. BUSINESS MODEL ARCHETYPES Secondary Archetypes ECOSYSTEM CONNECT BUYERS & SELLERS
  12. 12. SERVICE TRADE BUSINESS MODEL ARCHETYPES Brokerage Archetype BROKERAGE   Sourcing on behalf of a client for a retainer or per- transaction fee. The client then profits from any arbitrage spread rather than the sourcing partner. HALLMARKS OF A BROKERAGE Properties: •  Trading for Clients •  Paid by retainer not arbitrage Prototypes: •  Real Estate Broker •  Ad Network
  13. 13. TRADE PRODUCT BUSINESS MODEL ARCHETYPES Marketplace Archetype MARKETPLACE   Create a platform that facilitates trade, rather than actually trading. This is a network effects business that depends heavily on bringing together sufficient demand and supply. HALLMARKS OF A MARKETPLACE Properties: •  Network Effects •  Build Trade Platform Online Prototypes: •  Products Marketplace •  Services Marketplace
  14. 14. SERVICE PRODUCT BUSINESS MODEL ARCHETYPES Subscription Archetype SUBSCRIPTION   Building, maintaining, and supporting ongoing use of a product, rather than a one-time sell. Customers pay a monthly subscription service and benefit from continued improvements. HALLMARKS OF A SUBSCRIPTION Properties: •  Monthly Billing •  “Freemium” Pricing •  Ongoing Updates Online Prototypes: •  Software as Service •  Content as Service
  15. 15. SERVICE TRADE PRODUCT BUSINESS MODEL ARCHETYPES Ecosystem Archetype ECOSYSTEM   A mature market leader may expand as a result of success. They develop a marketplace and/or community for customers and/or service/support vendors to offer augmented solutions. HALLMARKS OF AN ECOSYSTEM Properties: •  User Community •  ISV or Dev Community •  Enhanced Product Marketplace Online Prototypes: •  Tech Platform •  Media Platform
  16. 16. BUSINESS MODEL ARCHETYPES Business Model Archetypes Trade Product Service Marketplace Ecosystem Subscription Brokerage prototypes: • e-commerce • lead generation prototypes: • software • content prototypes: • service platform • service agency prototypes: • ad network • dropship program prototypes: • content as a service • software as service prototypes: • products market • services market prototypes: • technology platform • media platform Primary archetypes Review: •  Trade, Product, Service Secondary archetypes Review: •  Product + Trade = Marketplace •  Service + Trade = Brokerage •  Product + Service = Subscription •  Product + Service + Trade = Ecosystem
  17. 17. THE SMARTER STARTUP STRATEGY FOR STARTUPS The Smarter Startup looks at why some startups succeed while others fail. By taking a more strategic approach to entrepreneurship, founders can improve their own outcomes. Written by Neal Cabage and Sonya Zhang, PhD, and published by Pearsons/NewRiders. SMARTER STARTUP The Book
  18. 18. SMARTER STARTUP Created By NEAL CABAGE Digital Product Architect •  Product manager and entrepreneur. •  Founded ProductCamp.LA and PMA.LA. •  Built and sold two startups. •  Co-author, The Smarter Startup. neal@smarterstartup.org@NealCabage
  19. 19. SMARTER STARTUP SmarterStartup.org The framework, including the part described here, are posted on the website, along with downloadable worksheets and reference material. Everything is free to use, so enjoy!. www.SmarterStartup.org

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