The document presents a model of business behavior that identifies the key elements and their relationships. The model shows that four fundamental requirements underlie the state of any business: 1) Capabilities in the form of capital, capacity, operations, processes and resources. 2) Direction determined by markets, propositions and experiences. 3) Position defined by demands, brands and customers. 4) Return on investment as measured by the valuation of customers against the initiating capital. The model is generic and abstract, showing commonalities across businesses rather than company-specific details.

1. A Behavior Model of Business
An Archestra Notebook
© 2012, 2014 Malcolm Ryder / archestra research

2. Notes
• A business and a company are two different things. A company
conducts business. The company is a structure. The conduct is a
behavior. The behavior may have a pattern.
• As in math, a “variable” is a changeable state of a part of a pattern of
interaction or influence. Varieties of the part occur within the pattern.
• Interactions and influences are not necessarily sequential. Affected by
the presence and varieties of included parts at any given time, they
are systemic. They can be more or less emphatic, more or less
recurring, and more or less preferred.
• This discussion describes business; it does not describe companies.

3. A framework identifies what
kind of elements are necessary
to consider, and why
A model associates selected types
of elements in a logical pattern
for static or dynamic interactions
w
x y
z
An architecture co-ordinates the
specifications of the elements
selected from the framework, to
meet a situational requirement
X1 X2 X3
W1
Y1 Y2 Y3
W2
Z1 Z2
Y2
©2012,2014MalcolmRyder/archestraresearch

4. Overview

5. capital
customer
valuation
capacity
value
props
demands experiences
operations
brand
process
resources
acquire assets
pick marketscreate customers
- Performance
constraints
- Success factors
- Objectives
This is a model of
a behavior called
“business”.
produce
request
©2012,2014MalcolmRyder/archestraresearch

6. - Performance
constraints
- Success factors
- Objectives
This is a model of
a behavior called
“business”.
produce
request
Success factors are independent variables.
Performance constraints are dependent variables.
Objectives are intentions.
PRODUCTION aims at relevance
REQUESTS aim at quality
Many different companies are “in” the same or similar business.
This model abstracts the commonality of business above and
beyond the company-level particulars of structure and timespan.

7. Management
Issues
Independent
variables
Dependent
Variables
Business value Business Outcome
Investment basis Capital Capacity Resources Capabilities
Organization Operations Value props Market definition Direction
Goals Experiences Brand Transactions Position
Return basis Demands Customer valuation New assets ROI
A change here… precipitates a
change here
A development
here…
preconditions a
result here
PRODUCTION
A type here is
pursued for…
a target here A type here is
desired from…
a condition hereREQUEST
Business
Environment
Strength of
the Business
Business
Impacts
State of the
Business
BUSINESS
CONDITIONS
©2012,2014MalcolmRyder/archestraresearch

8. A simple business does not have fewer
factors. But the overall behavior may be
less exposed, and/or less sensitive, to
variations in most of the factors. Said
differently, in a simple business, one or
only a few of the factors highly dominate
the behavior or its outcomes, regularly.
A complex business does not have more
factors. But the overall behavior may be
more exposed, and/or more sensitive, to
more of the different factors when any of
those vary. Said differently, more of the
factors can significantly affect outcomes,
even though few or none of the factors
necessarily dominate regularly.
Covering a wide spectrum of instances
The generic model shows basic elements in their most typical
relationships. All the elements and relationships are always
concurrent. Both the elements and the relationships vary in
strength of presence and actual detail, and they can vary both
intentionally and unintentionally. Any specific company’s
business is an example of the model. Particular examples may
differ, between companies and/or from one time to another.
The generic model does not feature
“centricity” of any of its elements or
relationships. The model features
“coherence”. A given instance of a
business may, for some reason (usually
competitiveness), feature “primacy” of
some factor and call it “centricity”.

9. Walkthrough
Some brief elaboration…

10. capital
capacity
operations
process
resources
acquire assets
- Performance
constraints
- Success factors
- Objectives
This is a model of
a behavior called
“business”.
produce
request
Assets are assigned both to
support processing and to
be processed, making
them resources
Example developments:
- Relationships
- Services
- Products

11. value
props
experiences
operations
process
resources
pick markets
- Performance
constraints
- Success factors
- Objectives
This is a model of
a behavior called
“business”.
produce
request
Processes, in effect,
generate a group of
supported targeted
participants as a market
definition
Example developments:
- Segments
- Channels
- Networks

12. demands experiences
brand pick marketscreate customers
- Performance
constraints
- Success factors
- Objectives
This is a model of
a behavior called
“business”.
produce
request
Transactions occur because a
relationship is exercised between an
available experience and a demand for
the experience. Either one can precede
the other. A customer is an instance of
the relationship.
Example developments:
- Sales
- Contracts
- Adoptions

13. capital
customer
valuation
demands
acquire assets
create customers
- Performance
constraints
- Success factors
- Objectives
This is a model of
a behavior called
“business”.
produce
request
The volume and “worth” of
customers is in effect a
new asset, returned from
(i.e. produced by) the
capacity, proposition and
brand. This new asset
compares against the cost
of the initiating capital – a
difference which might be
seen as profit-or-loss
Value = the meaning of a distinction
Worth = the impact of the value in a context

14. The summary
state of the business
Four fundamental requirements

15. capital
capacity
operations
process
resources
acquire assets
- Performance
constraints
- Success factors
- Objectives
This is a model of
a behavior called
“business”.
produce
request
CAPABILITIES…

16. value
props
experiences
operations
process
resources
pick markets
- Performance
constraints
- Success factors
- Objectives
This is a model of
a behavior called
“business”.
produce
request
capital
capacityacquire assets
DIRECTION…

17. demands experiences
brand pick marketscreate customers
- Performance
constraints
- Success factors
- Objectives
This is a model of
a behavior called
“business”.
produce
request
value
props
operations
process
resources
capital
capacityacquire assets
POSITION…

18. capital
customer
valuation
demands
acquire assets
create customers
- Performance
constraints
- Success factors
- Objectives
This is a model of
a behavior called
“business”.
produce
request
experiences
brand pick markets
value
props
operations
process
resources
capacity
ROI…
©2012,2014MalcolmRyder/archestraresearch

19. © 2014 Malcolm Ryder / archestra research
mryder@malcolmryder.com