The dark side of business models: the risks of strategizing through business models alone

Abstract

Purpose

This paper aims at exposing the risks entrepreneurs and managers run whenever they focus on business model design alone, while disregarding other strategy analysis tools; disclosing what a business model is and is not; and proposing a checklist to frame business models within – rather than without – the process of strategic planning. The business model has recently gained popularity in the broad community of strategists, thanks to its apparent simplicity and straightforward applicability. Yet, business models have a dark side too, residing in their fuzzy relationship with strategy and little theoretical foundations.

Design/methodology/approach

This paper is based on a survey on 105 C-level managers involved in strategy formulation and business model design.

Findings

The business model is often misinterpreted by strategists, who show a tendency to employ it as a substitute – not a complement – for traditional strategy analysis frameworks; however, such approach has significant downsides, as it fails to provide a holistic view on strategy. To exploit business models’ value, strategists should use them as instruments for business idea generation, strategy execution and innovation.

Practical implications

Entrepreneurs and managers are faced with the pros and cons related to the use of business models, and are provided with action points to include the model in the overall business strategic planning.

Originality/value

By questioning the current use of business models, the paper sheds light on its actual value and role in relation to strategy.

Citation

Ghezzi, A. (2014), "The dark side of business models: the risks of strategizing through business models alone", Strategic Direction, Vol. 30 No. 6, pp. 1-4. https://doi.org/10.1108/SD-03-2014-0036