e-business model analysis: a relational-structural view sunghyun juhn, ph.d., professor and dean...
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e-Business Model Analysis: A Relational-Structural View
Sunghyun Juhn, Ph.D.,
Professor and Dean
Graduate School of Information Science
Kookmin University
Korea
PACIS
June, 2001
Seoul, Korea
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Prof. S. H. Juhn, Kookmin University, Korea
The Questions:
What Are They?
Do They Have Any Generic Form?
How Do They Function?
What Value Do They Generate?
How May Firms Reap Revenues From Them?
The New Business Models in the New Economy.
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Prof. S. H. Juhn, Kookmin University, Korea
A Mindmap for Business Model Analysis:
Business
Model
Business
Model
Morphology
Enablers
Motives
Evolution
PathTaxonomy
ValueAnalysis
Levels
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Prof. S. H. Juhn, Kookmin University, Korea
Business Model Analysis Perspectives
Focal Organization vs. Network From a particular organization’s viewpoint vs. From a Collective of
Organizations’ viewpoint
Internal vs. External Internal: BM as Configured Business Processes
External: BM as Configured Business Relationships
Static vs. Dynamic Static: A State Description
Dynamic: A State Transition Description: An Evolution Path
Content vs. Morphology Content Description vs. Morphology Description
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Prof. S. H. Juhn, Kookmin University, Korea
The New Business Models: What Are They?
What are Business Models?
A Value Creating Mechanism.
Both Designed and Emergent.
What Does The New Economy Tell Us About Value Creation?
A unit of value creation is no longer firm.
Value stems as much from relationships as from transformation.
IT and Business Strategies engender and enable creative relational arrangements for value generation.
Value creators are therefore complex, variable, ingenious and relational
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Prof. S. H. Juhn, Kookmin University, Korea
The New Business Models: What Are They?
“The New Business Model is a set of Value Creating Relationships Structure, both intended and emergent, that demonstrates creative business design and productive technology use.”
A departure from the focal organization point of view
Adopts a structural-relational view
Espouses both intended and emergent perspectives of strategy
An amalgamation of both business and technology ingenuity
Generates Collective, Synergetic, Systemic Value
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Prof. S. H. Juhn, Kookmin University, Korea
The New Business Models: What Are They?
Three Analysis Realms A Structure Analysis
What are the structure of business models?
A Function Analysis
How do the models function?
A Value Analysis
What value do the models generate?
What revenues do the firms generate?
Why the above three? View Business Models as a System Phenomenon.
Hence Adopt a Systems Analysis Point of View in Analysis
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Prof. S. H. Juhn, Kookmin University, Korea
The New Business Models: What Are They?
What to look for in a system?
Structural Configuration
What it consists of?
System Components and their Inter-Relationships
Mode of Functioning
Core System Activities and how they are executed
Goods and Offerings
What the system produces and transports
System Value
The value the system creates;
What justifies the the continued existence and survival of the system;
System Quality
System Level Characteristics
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Prof. S. H. Juhn, Kookmin University, Korea
A Structure Analysis
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Prof. S. H. Juhn, Kookmin University, Korea
Structure Analysis: The Tasks
Given Business Model as a Value Creating Relationship Structure (VCRS):
1. Look for a set of generic forms for different value creating relationship structures
2. Identify their attributes
3. Draw strategic implications for firms
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Prof. S. H. Juhn, Kookmin University, Korea
Structure Analysis:
We identify 5 generic forms of value creating relationship structure (VCRS).
A Chain Structure
A Shop Structure
A Marketplace Structure
A Community Structure
An Ecosystem Structure
The VCRSs are distinguished in terms of:
The purpose of the structure and the value it purports to generate.
The types of structural arrangement it employs for value creation.
The generic forms make up a business model, either alone or in combination with other forms.
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Prof. S. H. Juhn, Kookmin University, Korea
Generic VCRS: A Chain Structure
A Chain Structure
Creates value through a chain of transformation relationships.
Transformation of resources is the goal of the structure.
Value adding results.
Acquisition, Transformation, and Distribution are the key value creating mechanism.
Chain is the structural arrangement employed for value creation
Cost and Value may spill over from one phase to the next in the chain: Inheritance property
A most typical form of VCRS
Eg: A firm’s value chain, An industry’s value system, etc
A Morphology of the Chain structure
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Prof. S. H. Juhn, Kookmin University, Korea
Generic VCRS: A Shop Structure
A Shop Structure
Creates value through chipping in and integration of resources and capabilities of individual parties to solve particular problems.
Problem Solving is the goal of the structure.
Collaboration, Coordination, and Integration are the key value creating mechanism.
Hub is the structural arrangement employed for value creation.
A Centrality may exist in the relationships structure: (eg: A below)
Value Constellation is a special case of shop where value co-production is emphasized.
A
A Morphology of the Shop structure
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Prof. S. H. Juhn, Kookmin University, Korea
Generic VCRS: A Marketplace Structure
A Marketplace Structure
Creates value through setting up marketplaces and linking together buyers and sellers
Transaction Making is the goal of the structure.
Assemblage and Intermediation is the key value creating mechanism.
Hub is the structural arrangement employed for value creation.
A
A Morphology of the Marketplace structure
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Prof. S. H. Juhn, Kookmin University, Korea
Generic VCRS: A Community Structure
A Community Structure
Creates value through setting up communities and linking together their members
Community Building is the goal of the structure.
Aggregation and Sharing is the key value creating mechanisms.
Web is the structural arrangement employed for value creation.
A Morphology of the Community structure
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Prof. S. H. Juhn, Kookmin University, Korea
Generic VCRS: An Ecosystem Structure
An Ecosystem Structure
A habitat for feeding and sustain firms.
Adaptation and Growth is the goal of the structure.
Co-evolution, Selection, Self-renewal, and Self-Organizing are the key value creating mechanisms.
Web is the structural arrangement employed for value creation.
Formed typically around a critical technology
A largest unit of VCRSs: All Inclusive
A Morphology of the Ecosystem structure
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Prof. S. H. Juhn, Kookmin University, Korea
Generic VCRSs: A Summary Profiles
Chain Shop Marketplace Community Ecosystem
Purpose Transform Problem Solving
Transaction Making
Community Building
Adaptation Growth
Form Chain Hub Hub/Web Hub/Web Web
Binding of Relations
High High Medium Low Low
Inter- dependence
Sequential Reciprocal Reciprocal Reciprocal Pooled
Pooled
Technology Long-linked
Intensive Mediating Intensive Mediating
All
Coordination Standards Supervision Mutual
Adjustment
Mutual Adjustment
Mutual Adjustment
All
Success Factors
Transform Technology
Linking
Expertise Communicat
ion
Participation Transaction
Effiency
Participation Loyalty
Value Potential
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Prof. S. H. Juhn, Kookmin University, Korea
Generic VCRSs: Strategic Implications for Firms
1. Decide Which Ship to Board
Select VCRSs for the firm to participate in:
2. Identify the Key Success Factors of the VCRS
Those factors that maximize the value creating potentials of the VCRS:
3. Determine What You Can Do In and For the VCRS
The firm’s role and position in the VCRS
Its contribution to the VCRS KSFs.
Get the KSFs right.
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Prof. S. H. Juhn, Kookmin University, Korea
A Function Analysis
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Prof. S. H. Juhn, Kookmin University, Korea
Function Analysis:
VCRSs are founded on two critical functions
1. Resource Join
2. Resource Flow
We identify a set of generic forms for resource join and resource flow in the VCRSs
Resource Join Resource Flow
Resource Exchange
Resource Pooling
Resource Conjugation
Resource Complement
A Dyadic Exchange
A Multi-Party Inter-linking
A Multi-Party Cyclic
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Prof. S. H. Juhn, Kookmin University, Korea
A Resource Join Analysis
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Prof. S. H. Juhn, Kookmin University, Korea
Function Analysis: Resource Join
4 Generic Types of Resource Join
A Resource Exchange Type
A Resource Pooling Type
A Resource Complementation Type
A Resource Conjugation Type
Resource Join
Resource Exchange
Resource Pooling
Resource Conjugation
Resource Complement
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Prof. S. H. Juhn, Kookmin University, Korea
Function Analysis: Resource Join Types
A Resource Exchange Type
A simple exchange relationship
The most basic
A primary type of join for the Marketplace VCRS
A Resource Pooling Type
Everyone chipping in resources and form a Resource Pool
Homogeneous resources
Creates value through Aggregation
May result in the Community VCRS
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Prof. S. H. Juhn, Kookmin University, Korea
Function Analysis: Resource Join Types
A Resource Complementation Type
A join of Complementary resources
Generates Synergy Effect
Most typical in the Chain VCRS
A Resource Conjugation Type
A resource join that produces Innovation
Demands Ingenuity, Imagination
Mostly in the Shop VCRS
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Prof. S. H. Juhn, Kookmin University, Korea
Function Analysis: Modes and Motives of Resource Join
Motives of Resource Join
Economy Motive
For Efficiency; Money Saving
Innovation Motive
For Producing Something New and Creative
Modes of Resource Join
Commensalistic Mode
Residing in and sharing a common habitat
Eating from the same table
Symbiotic Mode
Cooperate toward common goals and purposes
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Prof. S. H. Juhn, Kookmin University, Korea
Function Analysis: Modes and Motives of Resource Join
Resource Joins May Differ in Modes and Motive
Commensalistic
Resource
Exchange
Resource
Pooling
Change
Economics
Create
Innovation
Symbiotic
Resource
Complement
Resource
Conjugation
Mode of Join
Motive
of
Join
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Prof. S. H. Juhn, Kookmin University, Korea
Function Analysis: Resource Join Characteristics
Motives
Resource
Exchange
Resource
Pooling
Resource
Conjugation
Resource
Complement
Modes
Strategic Mindset
Resource Homogeneity
Resource VRIO
Resource Dependency
Join Effect
Value Created
VCRS
Economy Innovation Economy Innovation
Low Low Medium High
Acquire Amplify Complement Invent
TransactionAggregationComplement innovate
MarketplaceCommunity Chain Shop
Low Low Medium High
Hetero Homo Hetero Hetero
CompetitiveCompetitive Collective Collective
CommensalCommensal Symbiotic Symbiotic
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Prof. S. H. Juhn, Kookmin University, Korea
A Resource Flow analysis
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Prof. S. H. Juhn, Kookmin University, Korea
Function Analysis: Resource Flow
Resource Flow
Transfer of Goods from One Party to Another
Goods include Product, Service, Information, Capital, Attention, Reputation, Authority, Trust
Tangible and Intangible, Actual and Anticipated
We Identify 3 Topological Units of Resource Flow based upon the Resource Flow Closure Hypothesis
A Dyadic Exchange Pattern
A Multi-Party Cyclic Pattern
A Multi-Party Inter-Linking Pattern
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Prof. S. H. Juhn, Kookmin University, Korea
Function Analysis: A Resource Flow Closure Hypothesis
A Resource Flow Closure Hypothesis
A Resource Flow is Closed When the sum utility of outbound resource flow is compensated by the sum utility of inbound resource flow
A firm participates in business relationships if and only if there is a resource flow closure, i.e., for each outbound resource flow is a corresponding inbound resource flow.
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Prof. S. H. Juhn, Kookmin University, Korea
A B
B
CA
A CB*
A) A Dyadic Exchange Pattern
B) A Multi-Party Cyclic Pattern
C) A Multi-Party Inter-Linking Pattern
Function Analysis: 3 Topological Units of Resource Flow
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Prof. S. H. Juhn, Kookmin University, Korea
Function Analysis: Profiles of Resource Flow Units
A Dyadic
Exchange
A Multi-Party
Cyclic
A Multi-Party
Inter-Linking
Flow Form
Causal Driver
Principals
Effect
Exchange Inter-LinkCycle
Disintermediation InfomediationValue Redemption
Remove Margin Facilitate TransExpand Flow Cycle
A Value Dyad A NavigatorA Value Cycle
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Prof. S. H. Juhn, Kookmin University, Korea
A Value Analysis
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Prof. S. H. Juhn, Kookmin University, Korea
Value Analysis: The Question
What Value Do New Business Models Generate?
We Identify 4 Value Drivers-The Underlying Motives-
-The Form of VCRS-
-The Nature of Resource Join-
-The Nature of Resource Flow-
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Prof. S. H. Juhn, Kookmin University, Korea
A Motive Analysis
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Prof. S. H. Juhn, Kookmin University, Korea
Motive Analysis: The Question
The Questions:
What are the motives that underlie and are at work in the business model ?
How do the motives conjoin with one another to generate value?
What value do the motives collectively generate?
The value that a business model generates is the result of
a complex interplay and intertwining of various motives,
both technological and business,
which occurs at an individual level as well as at a collective level.
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Prof. S. H. Juhn, Kookmin University, Korea
Motive Analysis:The types
Technological
Motives
Business
Motives
Motives
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Prof. S. H. Juhn, Kookmin University, Korea
Technological Motives: What and Where
The Question
What is it that IT makes possible? - IT as an Enabler
What is it that IT calls for? – IT as a Driver
IT Effects
Nature of Change:
Change Economics
Create Innovation
Realms of Change:
Transformation
Linking
Transforming
Increase
Efficiency
Create
Goods
Change
Economics
Create
Innovation
Linking
Increase
Interaction
Create
New Space
Realms of Change
Nature
of
Change
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Prof. S. H. Juhn, Kookmin University, Korea
Business Motives: The Questions
How can we exploit the technology for business?
-What kinds of business to pursue with the technology?-
-What value will the business generate?-
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Prof. S. H. Juhn, Kookmin University, Korea
Business Motives:What business to pursue with the technology?
The 5 options
Business On the Internet
Business For the Internet
Business With the Internet
Business Through the Internet
Business Around the Internet
Internet
Business
on
Through With
ForAround
With
Business
For
Business
On
Business
Through
Business
Around
Business
internet as action space
e-Shop
internet as product domain
ISP
Internet as action
mechanism
e-Procurement
Internet Related
businesses
Telecom Animation
Internet as basis for
business design
Virtual Corp
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Prof. S. H. Juhn, Kookmin University, Korea
Motives and Value
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Prof. S. H. Juhn, Kookmin University, Korea
Motives Create Value:
Motives
TransformingIncrease
Efficiency
IT
Eff
ects
Ch
an
ge
Econ
om
ics
Cre
ate
Inn
ovati
on
Linking
Transforming
Linking
Increase
Interaction
Create
Goods
Create
New Space
Value at
Transforming
Value at
Linking
Value at
Goods Creation
Value at
Market Making
Value
Technological Motives and Value
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Prof. S. H. Juhn, Kookmin University, Korea
Motives Create Value:
Motives
On
Business
For
Business
With
Business
Around
Business
Value at
Market/Transaction Making
Value at
Goods Creation
Value at
Business Process Facilitating
Value at
Business Complementation
Value
Business Motives and Value
Through
Business
Value at
New Business Design
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Prof. S. H. Juhn, Kookmin University, Korea
Motives Also Conjoin for More Value:
Increase
Efficiency
Increase
Interaction
Create
Goods
Create
New Space
Technological and Business Motives
With
Business
For
Business
On
Business
Through
Business
Around
Business
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Prof. S. H. Juhn, Kookmin University, Korea
VCRS Form and Value
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Prof. S. H. Juhn, Kookmin University, Korea
VCRS Form Specifies Value:
VCRS
Form
Chain
Shop
Marketplace
Community
Value Adding
Problem Solving
Transaction Making
Community Building
Value
VCRS Form and Value
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Prof. S. H. Juhn, Kookmin University, Korea
Resource Join and Value
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Prof. S. H. Juhn, Kookmin University, Korea
Resource Join Creates Value:
Motives
Commensal
-istic
Resou
rce J
oin
Resource
Exchange
Ch
an
ge
Econ
om
ics
Cre
ate
Inn
ovati
on
Symbiotic
Commensal
-istic
Symbiotic
Resource
Complement
Resource
Pooling
Resource
Conjugation
Value at
Transacting
Value at
Complementation
Value at
Aggregation
Value at
Innovation
Value
Resource Join and Value
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Prof. S. H. Juhn, Kookmin University, Korea
Resource Flow and Value
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Prof. S. H. Juhn, Kookmin University, Korea
A B
B
CA
A CB*
Resource Flow and their Causal Driver
Disintermediation
Value Redemption Cycle
Infomediation
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Prof. S. H. Juhn, Kookmin University, Korea
A B
B
CA
A CB*
Resource Flows Engender New Business Entities
Aggregator
Community
Value Cycle
Navigator
Infomediary
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Prof. S. H. Juhn, Kookmin University, Korea
A B
B
CA
A CB*
Resource Flow Generates Value
Value at Transacting
-Remove Intermediary-
Value at Co-Living ( 共生 )
-Expand Flow Cycle-
Value at Consolidating
-Facilitate Transaction-
Resource
Flow Value
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Prof. S. H. Juhn, Kookmin University, Korea
Value Constellation
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Prof. S. H. Juhn, Kookmin University, Korea
Value Constellation: Value Drivers Summary
Value at
Market/Trans Making
Value at
Goods Creation
Value at
B. Proc Facilitating
Value at
B. Complementation
Value
Value at
New Bus Design
Value at
Transforming
Value at
Linking
Value at
Goods Creation
Value at
Market Making
Value
Value Adding
Problem Solving
Trans Making
Com Building
Value
Value at
Transacting
Value at
Complementation
Value at
Aggregation
Value at
Innovation
Value
Value at
Transacting
Value at
Co-Living
Value at
Consolidating
Value
Business
Motives
Technology
Motives
VCRS
Form
VCRS
Functions
-Resource Join-
VCRS
Function
-Resource Flow-
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Prof. S. H. Juhn, Kookmin University, Korea
Value Constellation
The Value Drivers Conjoin to Form Various
Types of Value Constellations
-The Technological Motives and the Business Motives-
-The VCRS and the Business Motives-
-The Technological Motives and the VCRSs-
-The Resource Join and the Resource Flow-
-The Resource Join, Flow, and VCRSs-
----
----
An Implication: We have an infinite set of configurations
for business model values.
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Prof. S. H. Juhn, Kookmin University, Korea
Value Constellation
Types of Value Conjoin
Generative Join
Join Between the Same Types of Value Drivers
Technology Motive Join, Business Motive Join VCRS Form Join, VCRS Function Join
eg.) VCRS Form x VCRS Form (Chain x Marketplace)
Configurative Join
Join between Complementary Value Drivers
VCRS Form x Function Join
Technology Motive x Business Motive Join
Integrative Join
Generative Join x Configurative Join
VCRS Form x VCRS Function x Technology Motives x Business Motives
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Prof. S. H. Juhn, Kookmin University, Korea
Value Constellation: An Exmaple
Value at
Transacting
Value at
Complementation
Value at
Aggregation
Value at
Innovation
Value at
Transforming
Value at
Linking
Value at
Goods Creating
Value at
Market Making
Technology Motives x VCRS Function (Resource Join)
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Prof. S. H. Juhn, Kookmin University, Korea
A Revenue Analysis
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Prof. S. H. Juhn, Kookmin University, Korea
The Question:
Where and How Can Revenue be Generated in a VCRS?
-What Are the Value Junctures Where Revenue Can be Generated?-
-Develop A Revenue Model for Firms-
Revenue Analysis calls for a change in perspective from that of a network’s to that of a focal
organization’s.
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Prof. S. H. Juhn, Kookmin University, Korea
Revenue Source: Conceptual, Instrumental Branching
General versus VCRS specific Sources
On VCRS versus For VCRS Sources
Support versus Twist Sources
Structural versus Functional Sources
Infra Support versus Method/Application Support
Execution versus Modal Change
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Prof. S. H. Juhn, Kookmin University, Korea
Revenue Source: General versus VCRS Specific SourcesGeneral
Revenue Domain
VCRS Structure: Actors and Relationships
VCRS Function: Execution and Execution Infrastructure
Revenue Generator
Provide Support for the VCRS
Make a Twist of the VCRS
VCRS specific
Identify the KSF’s of the VCRS
At Structure and Function of VCRS
Determine what you can offer for the KSF’s
Support and Twist
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Prof. S. H. Juhn, Kookmin University, Korea
Revenue Source:
Twist
Support
VCRS StructureActors and Relationships
VCRS FunctionExecution and Infrastructure
Marketization
Aggregation
(Amplify Actors)
Infra Support
Method Development
Role Reversing
Disintermediation
(Actor Displacement)
Modal Twist
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Prof. S. H. Juhn, Kookmin University, Korea
VCRS Revenue Source: A General Model
Actors InfrastructureExecutionRelationships
VCRS Form VCRS Function
Role Expansion
(Participation)
Role Enlarging
(Infomediary)
PowerAmplification
(Demand Pooling)
Relationships
Solidifying
(Concentration)
(Institutionali-
Zation)
Role Reversing
(Reverse Auction)
Role Bypassing
(Disintermediation)
Relationships
Disruption
(Marketization)
Infrastructure
Support
(Standardization)
Infrastructure
Twist
(Modal Twist)
(Decoupling of
Info and Things)
Execution
Support
(Service
Provider)
(Method
Develop)
Execution
Twist
(Method Substi.)
(Tech.
Irrelevance)
Su
pp
ort
Tw
ist
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Prof. S. H. Juhn, Kookmin University, Korea
VCRS Revenue Source: A VCRS-specific Model
Actors InfrastructureExecutionRelationships
VCRS Form VCRS Function
S T S T S T S T
KSF
1
<A Revenue Model for A VCRS>
KSF
2
KSF
--
VC
RS
KS
Fs
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Prof. S. H. Juhn, Kookmin University, Korea
Revenue Source: A Chain Structure
What are KSFs for the Chain VCRS?
Resource Acquisition
Transform
Linkage
What you can offer:
Facilitate Resource Acquisition: B2B
Develop Transformation Method and Technology
Reduce Interdependence: B2B, B2C
A Morphology of the Chain structure
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Prof. S. H. Juhn, Kookmin University, Korea
Revenue Source: A Shop Structure
What are KSF’s for the Shop VCRS?
Expertise
Coordination and Integration
What you can offer:
Solicit and assemble expertise: P2P
Facilitate coordination and integration: Play Integrator
Develop and Provide Collaborative Technology
A
A Morphology of the Shop structure
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Prof. S. H. Juhn, Kookmin University, Korea
Revenue Source: A Marketplace Structure
What are KSF’s for the Marketplace VCRS
Buyer-Seller Participation
Transaction Making
What you can offer:
Help assemble buyers and sellers: Community
Facilitate Transaction: Price Determination Mechanism
A
A Morphology of the Marketplace structure
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Prof. S. H. Juhn, Kookmin University, Korea
Revenue Source: A Community Structure
What are KSF’s for the Community VCRS?
Participation
Loyalty
What you can offer:
Induce Participation
Cultivate Loyalty
A Morphology of the Community structure
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Prof. S. H. Juhn, Kookmin University, Korea
Conclusions
Contributions
An Enriched Conceptualization of Business Models
A Contexualized View of Business
A Good Exercise in Theorizing…
Needs further research on:
A Generic Revenue Model: How revenue can be generated in a VCRS
A dynamic, evolutionary account of Business Model generation
Empirical validation of the analysis models
Draw practical implications and guidelines for business
Develop Context-driven Strategy Model for Firms
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Prof. S. H. Juhn, Kookmin University, Korea
Conclusions
Implications for Business and Firms – The Ten Commandments 1. Understand the New Economy Context for Business
2. Determine What You Can Do with Technology
3. Consider Value Creation from A Network Perspective
4. Determine Which VCRSs to Join
5. Maximize Value Potentials of the VCRS
6. Generate Revenue by Contributing to the VCRS Value Maximization
7. Design Value Redemption Cycle
8. Develop Resources Others Want – It’s a small world
9. Be Creative in Resource Join – Imagination is the only resource to run out of
10. Learn to Live with Others – You never go at it alone anymore.
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Prof. S. H. Juhn, Kookmin University, Korea
..Thank You and Good Day..