2 Types of business models

In order to understand how business models contribute to our understanding of strategy, you will now look at the different types of business models. Several classifications have been proposed. This section looks at the typology of business models proposed by Baden-Fuller et al. (2018).

This typology is based on the way value is created and captured. The process of value creation and capture can involve two parties: in this case the business model is called dyadic. If it involves three parties, the business model is triadic.

The different types are outlined in Figure 1.

Figure 1 Dyadic and triadic business model types

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At the top of Figure 1 there is a box labelled ‘Business models’. There is a line running vertically and horizontally downwards from this box into two lower boxes. The lower box on the left is labelled ‘Dyadic’ and the lower box on the right is labelled ‘Triadic’.

There is line running vertically downwards from the ‘Dyadic’ box into two lower boxes positioned vertically on top of one another. The upper box is labelled ‘1) Product business model’ and the lower box is labelled ‘2) Solution business model’.

There is also line running vertically downwards from the ‘Triadic’ box into two lower boxes positioned vertically on top of one another. The upper box is labelled ‘3) Matchmaking business model’ and the lower box is labelled ‘4) Multisided business model’.

Figure 1 Dyadic and triadic business model types

It is important to note that although the whole idea behind business models comes from for-profit organisations, the same principles are applicable in public and third sectors, since organisations are required to be sustainable in the sense of balancing costs and revenues.