The difference between the business model, framework and architecture

The difference between the business model, framework and architecture


An interesting question from Marsha Campbell, HR Officer at National Commercial Bank Jamaica Ltd landed in my inbox the other day:

I noticed on your website you explained the difference between a model and a business plan. I would like to know what is the difference between the model, framework and architecture. Most sites that attempt to answer this question tend to be IT specific. Would you be able to shed some light?

Our business model research specialist, Huss Sadri, came up with the following answer.

A business model describes the rationale of how an organization creates, delivers, and captures value (economic, social, or other forms of value). The process of business model construction is part of business strategy and the design of organizational structures. Thus the essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit: it thus reflects management’s hypothesis about what customers want, how they want it, and how an enterprise can organize to best meet those needs, get paid for doing so, and make a profit.

Ultimately, the business model of a company is a simplified representation of its business logic. It describes what a company offers its customers, how it reaches them and relates to them, through which resources, activities and partners it achieves this and finally, how it earns money. The business model is usually distinguished from the business process model and the organization model.

A business model can be described by looking at a set of building blocks such as for example:

  1. Market Attractiveness of the Business
  2. Value proposition
  3. Revenue Distribution
  4. Sales Performance
  5. Competitive Advantage
  6. Key resources
  7. Cost structure
  8. Pitfalls & Risks
  9. Exist Model
  10. Customer Value

Business architecture is a part of an enterprise architecture related to corporate business, and the documents and diagrams that describe that architectural structure of business. Business Architecture articulates the functional structure of an enterprise in terms of its business services and business information. The key views of the enterprise within the business architecture context are:

Business frameworks Operationally, the business framework generally describes the corporate organization or management structure or may generally outline company policies or an organization might develop a framework to achieve a particular goal or An innovations framework may outline policies, procedures and management changes the company will use to achieve innovation and growth etc.

Effective leaders provide a business framework in which people and business partners can work efficiently and effectively, both individually and collectively, and succeed for mutual benefit. A framework comprises:

A good business framework creates an organizational environment in which people think and act for themselves, yet collaborate to achieve common goals and objectives.

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