This presentation answers three questions: (1) What are viable definitions of the business model? (2) Is the business model relevant for start-up success? (3) What elements of the business model are very success sensitive in the start-up context? The short case study of wegreen is used to exemplify the main arguments of the presentation.

1. © HWTK 2017
Relevance of the business
model for start-up success
Prof. Dr. Christian Schultz
christian.schultz@hwtk.de

2. © HWTK 2017
1. Key questions
Questions
Relevance of the
business model
for start-up
success
§ What are viable definitions of the
business model?
§ Is the business model relevant for
start-up success?
§ What elements of the business
model are very success sensitive
in the start-up context?

3. © HWTK 2017
Different perspectives on
the business model
The Intrapreneur
à Focus: Help exploit
the latest techno-
logical developments
with the right
business models
The Senior Executive
à Focus: Establish a
new business model
in an old industry
The Entrepreneur
à Focus: Address
unsatisfied customer
needs and build new
business models
The Investor
à Focus: Invest in
companies with the
most competitive
business models
The Consultant
à Focus: Help clients
question their
business models, and
envision and
build new ones
The Designer
à Focus: Find the
right business model
to launch an
innovative product
The Conscientious
Entrepreneur
à Focus: Bring about
positive social and
economic change
through
Source: Osterwalder & Pigneur, 2004, 11.

4. © HWTK 2017
Business model
definitions (examples)
Article Definition
Timmers (1998): Business Models for
electronic markets, Electronic Markets, p. 2.
The business model is an architecture of the product, service and
information flows, including a description of the various business actors and
their roles; a description of the potential benefits for the various business
actors; a description of the sources of revenue.
Amitt & Zott (2001): Value creation in e-
business, SMJ, p. 511.
A business model depicts the content, structure and governance of
transactions designed so as to create value through the exploitation of
business opportunities.
Chesbrough & Rosenbloom (2002): The role
of the business model in capturing value from
innovation: Evidence from Xerox corporation’s
technology spin-off companies, Industrial and
Corporate Change, p. 529.
The business model is the heuristic model that connects technical
potential with the realization of economic value.
Magretta (2002): Why business models
matter, HBR, p. 87.
Business models are stories that explain how enterprises work. A good
business model answers Peter Drucker´s age old questions: Who is the
customer? And what does the customer value? It also answers the
fundamental questions every manager must ask: How do we make
money in this business? What is the underlying economic logic that
explains how we can deliver value to the customers at an appropriate cost?
George & Bock (2011): The business model is
the design of organizational structures to
enact a commercial opportunity, p. 99.
A business model is the design of organizational structures to enact a
commercial opportunity.

5. © HWTK 2017
The evolution of the
business model concept
Starting point:
Michael E. Porter’s work on the generic value
chain in 1985.
Perceived standard:
Osterwalder & Pigneur’s business model
canvas published in 2004.
Further refinements:
The sophisticated framework of Bernd Wirtz
in 2010.
For a timeline of the business model concept go to:
http://www.affarsmodeller.se/Business-Model-Timeline.gif

6. © HWTK 2017
Key
Activities
Key
Partners
Key
Ressources
Value
Creation
Offer
Value
Proposition
Customer
Relationship
Channels
Customer
Segments
Customer
Interface
Revenue
Streams
Cost
Structure Finance
Source: Osterwalder & Pigneur, 2004, 43. 6
The business model
canvas

7. © HWTK 2017
The business model
lifecycle
Entrepreneurial
Mode
Adaptive Mode Planning Mode
Time
Revenue
Introduction Growth Maturity Stagnation/
Degeneration
Adaptive Mode/
Planning Mode
Business
Model 1 Business
Model 2
Source:Wirtz,2010,215
„The fact is, no matter how bulletproof your firm’s current business model, it will be challenged by new business
models.[…] You must constantly attempt to discover new business models if your company hopes to
survive and grow.“ Source: Tucker, 2001, 23.

8. © HWTK 2017
§ Success for start-ups can be captured by looking at the pure survival of the
organization (at a very early stage) and the economic success e.g. revenue
and profit (at a later stage).
§ Success will always not solely depend of the business model but also on
management execution and contextual factors (market, country, customer
values, competition).
§ Technology by itself has no single objectice value. The economic value of
a technology remains latent until it is commercialized in some way via a
business model.
„Having a well-thought-out business model is important for several
reasons. While some models are better than others, it is
dangerous to link the performance of a firm solely to the
configuration of its business model. In most cases, performance
is a choice of a business model and how effectively a firm uses
its chosen model.“
– Barringer & Ireland, 2006, 102.
“ ”
Relevance of the
business model
8

9. © HWTK 2017
Key
Activities
Key
Partners
Key
Ressources
Value
Creation
Offer
Value
Proposition
Customer
Relationship
Channels
Customer
Segments
Customer
Interface
Revenue
Streams
Cost
Structure Finance
Source: Osterwalder, 2004, 43.
Business model canvas: Two
crucial areas for start-up success

10. © HWTK 2017
Meet Maurice Stanszus
§ Maurice holds master degrees in
sustainability and innovation management
by HTW Berlin and University of Potsdam.
§ When Maurice wrote his master thesis he
discovered a lack of viability of
sustainability measurements.
§ With more than 400 available
measurements it’s nearly impossible to
make balanced “sustainable” purchase
decision.
§ He developed the “Nachhaltigkeitsampel”
as a meta-ranking for sustainability
measurement and to help the customer
making informed buying decisions.

11. © HWTK 2017
His startup Wegreen
in 2011
§ The social ranking lists of other
organizations are used
(Greenpeace, greenbrands,
greenleaks etc.) to create a
meta-ranking.
§ In 2011 www.wegreen.de is a
search engine to classify ven-
tures in regard to their social
responsibility.

12. © HWTK 2017
Evolved business model:
Wegreen in April 2012
§ Wegreen offers new functions and services.
§ The consumer can engage in the discussion on
sustainability and sustainable products.
§ Wegreen has the vision of becoming the market
leader for sustainability information on the web.
§ Wegreen pays especially attention to the
challenge of preserving their high reputation in
the community.
New branding
New functionalities

13. © HWTK 2017
The new Wegreen
(since 2013)
§ Wegreen added strong revenue
potential to their business model by
incorporating product search on their
site.
§ Wegreen has evolved into a
sustainable product search engine
for sustainable-conscious
customers. There is a clear revenue
model now.
§ Now, Wegreen enables consumers
to act socially responsible in an
instant. Their value proposition has
clearly risen.

14. © HWTK 2017
Conclusion
1. What are viable definitions of the business model?
§ There are many definitions, which mostly depend on the perspective of the
practitioner or academic.
§ A timeline of the business model concept can be identified.
2. Is the business model relevant for start-up success?
§ The business model is of high relevance for start-up success. But it is never the
single relevant success factor.
§ Don‘t forget that business models (have to) change over the company‘s life cycle.
§ Especially the elements of capturing the value proposition and developing a clear
revenue model are of crucial importance.
3. What elements of the business model are very success sensitive in the start-up
context?
§ Value proposition remains unclear or low. For example in the case of wegreen in
2010. Tools to enhance the value proposition is the value proposition map by
Alexander Osterwalder.
§ Revenue streams are underdeveloped. Wegreen has evolved into a sustainable
product search engine… so far.

15. © HWTK 2017
Literature
Bucherer, E. et al. (2012): Towards systematic business model innovation: Lessons
from product innovation management, in: Creativity and Innovation Management,
183-192.
Barringer, B. & Ireland, D. (2006): Successfully launching new ventures, .
Osterwalder, A. & Pigneur, Y. (2004): Business model generation, Lausanne.
Porter, M. E. (1985): Competitive advantage, Free Press: New York.
Tucker, J. (2001): Driving growth through innovation, Berret Publishers: New York.
Wirtz, B. (2010): Business model management, Wiesbaden: Gabler.
Further Reading
Lean start-up initiative: www.theleanstartup.com
Book on the basics of business models by Prof. Christian Nielsen & Morten Lund
(Aalborg University, Denmark): http://bookboon.com/en/the-basics-of-business-models-ebook
Blog on Business Model Research: http://www.affarsmodeller.se/
Literature and
further reading

16. © HWTK, 2015© HWTK, 2015
© HWTK 2016
Your Future. Your Success.
Prof. Dr. Christian Schultz
Head of Distance Learning at HWTK
christian.schultz@hwtk.de