Elements of a University Business Model

In a recent published book on business models – Alexander Osterwalder & Yves Pigneut: Business Model Generation (www.businessmodelgeneration.com/) 2009 – nine elements or building blocks are localised in order to create a business model.

According to the book, "A business model describes the rationale of how an organization creates, delivers, and captures value" (p. 14).

 

The 9 building blocks are as follows:

  1. Customer Segments: An organization serves one or several Customer Segments.

  2. Value Propositions: It seeks to solve customer problems and satisfy customer needs with value propositions.

  3. Channels: Value Propositions are delivered to customers through communication, distribution, and sales channels.

  4. Customer Relationships: Customer relationships are established and maintained with each Customer Segment.

  5. Revenue Streams: Revenue streams result from Value Propositions successfully offered to customers.

  6. Key Resources: Key resources are the assets required to offer and deliver the previously described elements...

  7. Key Activities: ...by performing a number of Key Activities.

  8. Key Partnerships: Some activities are outsourced and some resources are acquired outside the enterprise.

  9. Cost Structure: The business model elements result in the cost structure.

(www.businessmodelgeneration.com/ p. 16-7)

An Illustrative Model

The following diagram illustrates the relations between the different elements (building blocks) of the business model:

From a University Perspective

From a university point of view this general business model has to be interpreted with an open mind.

We have to take into consideration that the organisation supplying the market with a product is not a newcomer, but a university with a reputation and an established range of services to the public.

And the customer is not an ordinary buyer purchasing a commodity, but a student that wants to upgrade his/her knowledge or an employer wishing to upgrade the skills of his staff/workforce.

Furthermore, we have to acknowledge that the values to be captured by a university are not necessarily to be counted as money.

The numbers of students participating in courses and programmes might be the success factor on which subsidises are released from governments depending on the lifelong learning policies in different countries.

In some cases, participation in informal learning arrangements is seen as an obligation for a public university in return for the public financing.

For universities in general the relations to students (custumers), to society – at local, regional, national and global levels - and to businesses, organisations and institutions may be as important as the actual income from offering lifelong learning. '

 

The mission for public funded universities is to serve society by delivering research, education and information at a financially break-even level.

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