Consisting of 6 elements –
The value proposition answers the question: what are we offering to whom? It reflects explicit choices in the following three dimensions:
– target segment(s). Which customers do we choose to serve? Which needs do we seek to address?
– Product or service offering. What are we offering our customers to satisfy their needs?
– Revenue model. How are we compensated for our offering?
The operating model answers the question: How do we profitably deliver the offering? It captures business’ choices in the following three critical areas:
– Value chain. How are we configured to deliver on customer demand? What do we do in house? What do we outsource?
– Cost model. How do we configure our assets and costs to deliver on our value proposition profitably?
– Organisation. How do we deploy and develop our people to sustain and enhance our competitive advantage?
Lindgardt, Reeves, Stalk Jr., Deimler, 2013