What is your business model?

In our previous discussion, we explored the crucial role of mental models in fostering shared understanding among diverse stakeholders. We emphasized the importance of establishing a common language through clearly defined concepts aligned with company goals. Building on this foundation, this blog shifts its focus to another vital element: the business model.

A model is a blueprint that transforms imagination into tangible results. Without a defined model, there can be no buildings, products, activities or systems. It acts as a structured representation of a concept, embodying its accepted and dominant properties. This is a crucial tool for innovation and execution in the corporate world.

A business model serves as a simplified and abstract representation of an activity designed to create value for all stakeholders in a mutually beneficial manner. This model encompasses the activities and resource transactions among stakeholders that allow a business to function effectively and fulfill its shared goals.

The first question we must address is: What are the accepted, dominant properties of a business?

To answer this question, let’s look into the definition of these concepts according to our glossary developed by “Notion Defining Method”.

  • Business: Coordinated and aligned interaction by a group of people for the purpose of creating values in a mutually beneficial manner.

The interaction by a group of people who share common purpose is also a dominant property of a system, yet a social system.

  • Social System: A social system is an interrelated activity taken by a group of people that share common goals over a certain period of time.

Consequently, a business is a social system. They are networks of interrelated and aligned activities carried out by groups of people who share common goals. These business activities, as social systems, are dynamic; they grow, adapt, and evolve in response to internal and external changes.

The Social System Engineering Approach to Business:

The social system engineering approach views business as complex social systems that:

  • Creates commonly shared goal among stakeholders
  • Emphasizes collaboration with stakeholders
  • Seeks win-win solutions that prioritize social and environmental sustainability
  • Requires a participatory culture and open communication
  • Requires adaptability and evolution over time.

This approach challenges traditional management styles, which often focus narrowly on financial metrics, potentially at the expense of some stakeholders' interests. Instead, it advocates for a participatory culture with clear communication, aligning stakeholder interests and duties with organizational goals.

System Based Business Model:

Given that businesses are social systems, their business models must inherently include a stakeholders’ interaction/ duties and benefit component. These duties are not just about exchanges of goods or services but also involves sharing information, principles, time, knowledge and goals.

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To function effectively as a social system, businesses must adopt the GEMIA5 (Goal Enforcement Mandatory Interconnected Axioms) framework, which includes:

  • Commonly Shared Goal: Unifying all organizational activities around a commonly shared goal.
  • Flow of Quality Data: Ensuring data is documented, real-time, processed and delivered seamlessly.
  • Clearly Defined Duties: Aligning responsibilities of stakeholders’ to support the implementation of organizational goals.
  • Feedback Mechanism: Employing tools for continuous feedback to foster innovation and adaptability.
  • Quantified Metrics: Measuring the performance and outcomes of goals to assess effectiveness and efficiency.

A business as a social system requires more than just economic transactions; it necessitates a comprehensive framework that supports sustainable and collaborative practices. 

In upcoming blog posts, we will explore each of the GEMIA5 axioms in detail, demonstrating how they can be practically applied to enhance organizational effectiveness and sustainability.

Actionable Tips:

  1. Define stakeholders in your business activity
  2. Define metrics you use to measure your business success and performance

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