Replies to This Discussion

Permalink Reply by Patrick van der Pijl on April 23, 2009 at 10:02pm

Hi Rod. Great question because I hear this on the Hub also. Hubbers want to discuss this at the Knowledge Fair.

Definition
Before considering the similarities and differences we have to look closely to the definition of the business model. Do we look at the business model of the company or a single product/service? And does the business model incl. a financial model as well answering the important question: what is the return? For me the definition of the business model includes the financial data/business case.

Similarities
Both look into strategy, vision, concept, financial calculations and the concept/company itself.

Differences
The business plan is a document containing data and information we need for explaining what we would like to achieve. Mostly serving the purpose of convincing third parties such as banks and investors;
The business model is an overview graphically and financially about the new course that is meant for employees to set the right direction and to keep control of that.

I feel that more and more the business model is an easy to read and understand tool to help companies determining new roads. You only write it down in a business plan if this is really necessary.

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Permalink Reply by Alex Osterwalder on April 23, 2009 at 10:14pm

A business model describes the logic of your business - how you are going to create and monetize value. A business plan describes the business model plus how you are going to implement it and why it is going to work - team, milestones, financial projections.

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Permalink Reply by Rod on April 29, 2009 at 6:47am

Hi Patrick and Alex,
Thanks for sharing your ideas and insights.

Best,
Rod.

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Permalink Reply by Cesar Picos on April 29, 2009 at 7:48am

Hello Rod,

The business plan is a tool that describes the actions and metrics to accomplish the company´s goals including the business model.

Similarities: common concepts are included in both definitions.

Differences: Business Model describes the value cration chain (I consider also money retrievieng process as part of the value creation chain) and business plan goes beyond with the actions to take to develop the business model concept.

Regards.

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Permalink Reply by Mike Lachapelle on April 29, 2009 at 12:44pm

HI Rod

As others have indicated, I see the business model as a precursor or an integral part of the business plan. But, I also see the business model serving in another stream. In creating innovation within an existing organization, the business model can be the tool used to guide the process of innovation.

The are various ways to structure that process. Some use - describe, analyse, innovate - others use - describe, define, design, do - I am sure there are many other approaches. What they have in common is a need for a basis of description and comparison. That is where the business model comes in.

What follows in this scenario is an implementation plan and tracking and measuring plan. In my current project we ae using Strategy Maps and Balanced Score Card. If one wants to call these a form of 'business plan', I won't quibble. Personally, I see a difference in the outcomes of the two approaches.

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Permalink Reply by Fernando Saenz-Marrero on April 29, 2009 at 3:15pm

A business model is the "core content" or the "short story" of the company (actually or prospective)

A business plan is the "guideline for the action" or the "full story"

There are a lot of Bplans without a clear Bmodel

To put a Bmodel in action, better develop a Bplan

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