Killing Two Birds with One Stone: Profit for Now and Learning for the Future

A ‘business model’ is commonly seen as composed of two elements: a business system and a profit model. While the latter often gains the higher profile, the former is arguably the real ‘meat’ of a firm's business model. Not only does it act as the ‘system of works’ that actually produces and delivers the firm's products or services, it is also the locus where a firm can learn about its operations and the behaviors of its suppliers and customers. This learning can accumulate to represent a considerable competitive advantage, one that risks being wasted if activities are unwisely unbundled. While the profit model earns revenues for the short term, the business system learns information for the longer term: a successful business model must aim for both these outcomes.