Chapter 1

Why Business Modeling?

A business model is a simple representation of the complex reality of a business. The primary purpose of a business model is to communicate something about the business to other people: employees, customers, partners, or suppliers. This chapter answers the two questions modelers face most often: what is a business model and why create one?

What is a model? A model is a simple representation of a complex reality that serves a particular purpose. We use many models in our day-to-day life: street maps, television schedules, 12-step programs, and furniture assembly instructions. We use models all the time without thinking about them.

Consider an example. You and a colleague fly to Washington, DC, to visit a restaurant. ...

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