Models make complex ideas sharable

Business models encapsulate complex ideas into simple and sharable patterns.

In software design there is a concept called design patterns. Design patterns are commonly defined as “a general reusable solution to a commonly occurring problem within a given context” (Wikipedia). Software developers who apply these patterns in their appropriate circumstances benefit from proven solutions to problems others have experienced in the software space. This also gives developers a common vocabulary to explore designs for large systems without the precise details of implementation.

Business models perform the same role in the world of business. They are generally reusable, as Osterwalder’s five classifications demonstrate. The models solve a common problem in their space, namely how to make a profitable business given a context. Entrepreneurs who are aware of these models, such as the “Long Tail” model, have a common vocabulary to communicate the complex and proven ideas with one another (Osterwalder).

Business is complex to design, featuring many important avenues to consider. Osterwalder lists nine crucial areas and gives five examples of models that balance these nine areas in unique ways to create value. While there will always be room for new business models to emerge in our ever-changing markets, the majority of businesses find their success in a model already proven by others. An entrepreneur with a deep understanding of the benefits and trade-offs of various models has a toolbelt they can apply to their context without having to invent everything from scratch. The models help to highlight the risks involved in their use and can reducee the overall risk of a venture that relies on a common set of constraints.

I love design patterns. One of the first books I studied for personal use in the software industry was the seminal book on software design patterns. As I re-created the patterns in the book I learned clever solutions to many problems I’d never faced. I began to recognize these patterns in other’s software which helped me conceptualize complex systems and interact with them without having to learn all the implementation details. Osterwalder’s concept is remarkably similar to design patterns, and his examples show that business isn’t far removed from software in the opportunity to codify common patterns.

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