Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43, 172-194
3 important questions on Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43, 172-194
Explain what the authors mean with this statement: The business model outlines the architecture of revenues, costs, and profits associated with delivering value. It is, in essence, a conceptual, rather than financial, model of a business, embodying the organizational and financial 'architecture'.
this structure is conceptual, not a detailed financial spreadsheet. In other words, a business model is a high-level blueprint of how the business is organized and how the money is supposed to flow — the “organizational and financial architecture” — rather than the precise numerical budgets, forecasts, or accounting figures. It shows the logic of the business, not the exact math.
Why does Teece argue that the concept of a business model has weak grounding in traditional economics?
Traditional economics assumes perfect markets where prices and full information solve all coordination problems.
Under these assumptions, firms don’t need to think about value propositions, delivery mechanisms, or how to capture value — so business models never appear in economic theory.
But in the real world, markets are imperfect and involve intangible goods, platforms, and customers who want solutions, so managers must design business models to create, deliver, and capture value.
Under these assumptions, firms don’t need to think about value propositions, delivery mechanisms, or how to capture value — so business models never appear in economic theory.
But in the real world, markets are imperfect and involve intangible goods, platforms, and customers who want solutions, so managers must design business models to create, deliver, and capture value.
What does Teece mean by “learning and adaptation” in business models?
Teece argues that a business model is essentially a management hypothesis, so the correct model is rarely obvious at the start. Firms must experiment, learn, and adjust their model over time.
Because markets, technologies, and regulations continually change, successful business models must evolve (morph) as well.
Companies that fail to update their model—even if it is currently profitable—risk serious problems when external conditions shift.
Because markets, technologies, and regulations continually change, successful business models must evolve (morph) as well.
Companies that fail to update their model—even if it is currently profitable—risk serious problems when external conditions shift.
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