Teaching entrepreneurship students how to design a business model

A business model represents one of the most important, and most frequently misconstrued, concepts in entrepreneurship education. Faculty members routinely require students to develop original new product or service ideas, and, based on these ideas, to construct feasibility studies or business plans. Hence, the business plan is a de facto vehicle for translating a product idea or new business concept into a formal business enterprise. Yet, writing a business plan can often be a fairly mechanical process, where many specific questions are addressed, but the answers do not reflect a creative, well-integrated set of decisions that produce a viable, sustainable, profitable business venture. In short, students fail to produce a workable business model. As an area of study, work on business models remains in its infancy. Insufficient attention has been devoted to this area by academic researchers. As a result, the term ‘business model’ is used fairly loosely to refer to a number of different issues. No consensus exists regarding a definition, and multiple perspectives are available regarding the nature of a business model (for example, Amit and Zott, 2001; Osterwalder and Pigneur, 2010). Similarly, little is understood regarding how business models evolve, or why they succeed or fail (Chesbrough, 2012; Sosna et al., 2010). At the same time, a business model represents a powerful pedagogical tool. The purpose of the current chapter is to offer faculty members a pragmatic approach for use in teaching students the concept of a business model.