{"id":51472,"date":"2021-10-15T08:32:00","date_gmt":"2021-10-15T12:32:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=51472"},"modified":"2021-10-18T14:28:39","modified_gmt":"2021-10-18T18:28:39","slug":"open-business-model","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/open-business-model\/","title":{"rendered":"What Is the Open Business Model?"},"content":{"rendered":"\n<p>What is the open business model? How do companies with open business models create value for their customers? <\/p>\n\n\n\n<p>An open business model is where a business creates value through collaboration with external partners. There are two main ways to do that: 1) integrate their internal resources with the partner, or 2) supply their resources for a fee. <\/p>\n\n\n\n<p>We&#8217;ll break down both of these principles below.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\">What Is the Open Business Model? <\/h2>\n\n\n\n<p>Businesses with open business models create opportunities for innovation and efficiency by collaborating or co-creating with external partners. For example, NASA collaborated with TopCoder, Harvard Business School, and London Business School to build an algorithm to assist manned missions.&nbsp;<\/p>\n\n\n\n<p>According to Osterwalder and Pigneur, the authors of <em>Business Model Generation<\/em>, there are two ways to create value through collaboration\u2014businesses can either receive and integrate <a href=\"https:\/\/www.shortform.com\/blog\/external-resources\/\">external resources<\/a> to strengthen their own business models, or they can leverage their internal resources by supplying their internal resources for a fee.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><\/td><td><strong>Receive Resources<\/strong><\/td><td><strong>Supply Resources<\/strong><\/td><\/tr><tr><td><strong><a href=\"https:\/\/www.shortform.com\/blog\/customer-groups\/\">Customer Groups<\/a><\/strong><\/td><td><\/td><td>Focus on creating partnerships with organizations that require existing internal resources.<\/td><\/tr><tr><td><strong>Value Offer<\/strong><\/td><td><\/td><td>Value comes from anything that won\u2019t be used internally such as research results or intellectual property.<\/td><\/tr><tr><td><strong>Profit Sources<\/strong><\/td><td><\/td><td>Profit comes from selling off any resources that aren\u2019t required internally.<\/td><\/tr><tr><td><strong>Resources<\/strong><\/td><td>Focus on evaluating external resources and develop methods to work with external networks\u2014these capabilities will become the main resource.<\/td><td><\/td><\/tr><tr><td><strong>Critical Actions<\/strong><\/td><td>Evaluate external resources, develop and manage the infrastructure to connect these external resources with existing internal processes.<\/td><td><\/td><\/tr><tr><td><strong>Network<\/strong><\/td><td>Focus on developing partnerships with organizations that can provide value in the form of innovative products and services or research.<\/td><td><\/td><\/tr><tr><td><strong>Expenses<\/strong><\/td><td>Acquiring external resources, as well as developing the infrastructure to work with these resources, will incur the highest expenses.<\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>(Shortform note: In addition to identifying physical and intellectual resources, <a href=\"https:\/\/www.pica9.com\/blog\/boost-brand-equity-brand-partnerships\">businesses can also create value by leveraging their brand equity<\/a>. For example, <a href=\"https:\/\/knowledge.insead.edu\/strategy\/xiaomis-road-to-internet-of-things-dominance-17046\">Xiaomi grew to become the world\u2019s leading consumer internet-of-things company by forming alliances with partner firms<\/a>. Xiaomi offered these partner firms significant value in the form of physical and intellectual resources such as research, development, and manufacturing resources, as well as <strong>brand capital<\/strong>\u2014the firms benefited from access to Xiaomi\u2019s millions of existing loyal customers without having to go through the long process of building a customer base and developing trust.)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is the open business model? How do companies with open business models create value for their customers? An open business model is where a business creates value through collaboration with external partners. There are two main ways to do that: 1) integrate their internal resources with the partner, or 2) supply their resources for a fee. We&#8217;ll break down both of these principles below.<\/p>\n","protected":false},"author":7,"featured_media":8529,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,79,103],"tags":[514],"class_list":["post-51472","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-entrepreneurship","category-sales","tag-business-model-generation","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Is the Open Business Model? - Shortform Books<\/title>\n<meta name=\"description\" content=\"Open-business-model companies create value through collaboration with external partners. There are two ways to generate value this way.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/open-business-model\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Is the Open Business Model?\" \/>\n<meta property=\"og:description\" content=\"Open-business-model companies create value through collaboration with external partners. There are two ways to generate value this way.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.shortform.com\/blog\/open-business-model\/\" \/>\n<meta property=\"og:site_name\" content=\"Shortform Books\" \/>\n<meta property=\"article:published_time\" content=\"2021-10-15T12:32:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-10-18T18:28:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/s3.amazonaws.com\/wordpress.shortform.com\/blog\/wp-content\/uploads\/2020\/05\/man-at-desk-outsiders-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1920\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Darya Sinusoid\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Darya Sinusoid\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.shortform.com\/blog\/open-business-model\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/open-business-model\/\"},\"author\":{\"name\":\"Darya Sinusoid\",\"@id\":\"https:\/\/www.shortform.com\/blog\/#\/schema\/person\/0421cce75bc249b11e2517b3a91f9c46\"},\"headline\":\"What Is the Open Business Model?\",\"datePublished\":\"2021-10-15T12:32:00+00:00\",\"dateModified\":\"2021-10-18T18:28:39+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/open-business-model\/\"},\"wordCount\":391,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/open-business-model\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/05\/man-at-desk-outsiders-scaled.jpg\",\"keywords\":[\"Business Model Generation\"],\"articleSection\":[\"Business\",\"Entrepreneurship\",\"Sales\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.shortform.com\/blog\/open-business-model\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.shortform.com\/blog\/open-business-model\/\",\"url\":\"https:\/\/www.shortform.com\/blog\/open-business-model\/\",\"name\":\"What Is the Open Business Model? - Shortform Books\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/open-business-model\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/open-business-model\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/05\/man-at-desk-outsiders-scaled.jpg\",\"datePublished\":\"2021-10-15T12:32:00+00:00\",\"dateModified\":\"2021-10-18T18:28:39+00:00\",\"description\":\"Open-business-model companies create value through collaboration with external partners. 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