55?
These 55 business models are described in the University of St Gallen Working Paper entitled The St. Gallen Business Model Navigator written by Oliver Gassmann, Karolin Frankenberger, and Michaela Csik in 2014.
What were the authors trying to accomplish?.
Identify Common Patterns in Successful Business Models
They analyzed over 250 successful companies across industries and geographies and discovered that 90% of business model innovations are recombinations of existing patterns—not completely new inventions. This insight led to the compilation of the 55 business model patterns.
Make Business Model Innovation Systematic
Instead of relying on random brainstorming or guesswork, they wanted to give companies a structured approach. They introduced the “Business Model Navigator” framework and the 4I Process (Initiation, Ideation, Integration, Implementation) to help organizations innovate methodically.
Bridge the Gap Between Theory and Practice
Much of the earlier business model literature was either theoretical or focused on startups. The St. Gallen team wanted to provide a practical, toolkit-based methodology that large and small firms alike could use to innovate existing models or create new ones.
Show That Innovation Is Not Just About Technology
They emphasized that business model innovation can create more value than product or process innovation alone—and that it is often overlooked in strategic planning.
Some memorable quotes from the paper.
- “Business model innovation is the art of enhancing advantage and value creation by making simultaneous — and mutually supportive — changes both to an organization’s value proposition to customers and to its underlying operating model.”—
- “Successful business model innovations are rarely radical inventions. More often, they result from smart adaptation of ideas that already exist elsewhere.”
- “The most disruptive business models often come from outside the industry.”
- “A company’s success is no longer defined by how well it performs internally, but by how well it fits into the business model ecosystem around it.”
- “Innovating the business model is more powerful than innovating products or services alone.”
- “The main risk is not failing to invent—it’s failing to adapt.”→
- “You don’t need to be the first to invent a business model; you need to be the first to make it work in your context.”
- “If you copy from one company, it’s plagiarism; if you copy from many, it’s innovation.”
- “90% of all business model innovations are recombinations of existing ideas.“
Here they are..
| Pattern | Description | Examples |
|---|---|---|
| Add-On | Core offering is priced competitively, but additional features or services are sold separately. | Ryanair, Salesforce, SAP |
| Affiliation | Revenue is generated by referring customers to third parties and receiving a commission. | Amazon Affiliates, Booking.com |
| Aikido | Offers a contrasting value proposition to competitors, attracting customers seeking alternatives. | Swatch, Nintendo Wii |
| Auction | Products or services are sold to the highest bidder. | eBay, Sotheby's |
| Barter | Goods or services are exchanged without monetary transactions. | Craigslist, LETS |
| Cash Machine | Customers pay upfront for products or services that are delivered over time. | Gym memberships, Magazine subscriptions |
| Cross Selling | Additional products or services are offered to existing customers. | McDonald's, Amazon |
| Crowdfunding | Funds are raised from a large number of people, typically via online platforms. | Kickstarter, Indiegogo |
| Crowdsourcing | Tasks or ideas are outsourced to a large group of people, often via the internet. | Wikipedia, Threadless |
| Customer Loyalty | Programs are designed to retain customers by rewarding repeat purchases. | Starbucks Rewards, Airline loyalty programs |
| Direct Selling | Products are sold directly to consumers without intermediaries. | Avon, Tupperware |
| E-Commerce | Buying and selling of goods or services over the internet. | Amazon, Alibaba |
| Experience Selling | Focuses on selling memorable experiences rather than just products or services. | Disney Parks, Escape Rooms |
| Flat Rate | Customers pay a fixed fee for unlimited access to a service or product. | Netflix, Spotify |
| Fractional Ownership | Ownership of a product or asset is divided among multiple buyers. | Timeshares, NetJets |
| Franchise | Independent operators use branding and systems of an established company. | McDonald's, Subway |
| Freemium | Basic services are free, while advanced features require payment. | LinkedIn, Dropbox |
| From Push to Pull | Production is driven by actual demand rather than forecasts. | Dell, Zara |
| Guaranteed Availability | Ensures product/service availability, often with compensation. | Amazon Prime, FedEx |
| Hidden Revenue | Revenue is generated from sources other than the direct customer. | Google Search, Facebook |
| Ingredient Branding | Components are branded to add value to the end product. | Intel Inside, Gore-Tex |
| Integrator | Company controls multiple stages of the value chain. | Apple, Tesla |
| Layer Player | Specializes in one layer of the value chain. | PayPal, ARM Holdings |
| Leverage Customer Data | Uses data to enhance services and generate revenue. | Amazon, Google |
| License | Revenue from licensing intellectual property. | Microsoft Windows, Dolby |
| Lock-In | Makes it hard for customers to switch due to high switching costs. | Apple Ecosystem, Adobe |
| Long Tail | Offers many niche products, each selling infrequently. | Amazon, Etsy |
| Make More of It | Uses existing resources in new ways for extra revenue. | Amazon AWS, IBM Consulting |
| Mass Customization | Combines personalization with mass production. | Nike By You, Dell |
| No Frills | Basic offerings at low price by eliminating extras. | Ryanair, Aldi |
| Open Business Model | Collaborates with external partners for value creation. | P&G, LEGO Ideas |
| Open Source | Products developed collaboratively and made freely available. | Linux, Firefox |
| Orchestrator | Coordinates a network of partners to deliver value. | Airbnb, Uber |
| Pay Per Use | Customers pay based on usage. | Car2Go, Utility companies |
| Peer-to-Peer | Enables direct trading between individuals. | eBay, Airbnb |
| Performance-Based Contracting | Compensation tied to performance outcomes. | Rolls-Royce, Siemens |
| Product as a Service | Customers pay for usage instead of ownership. | HP Instant Ink, Philips Lighting |
| Razor and Blade | Low-cost base product with profitable consumables. | Gillette, Nespresso |
| Rent Instead of Buy | Products are rented, not purchased. | Rent the Runway, Zipcar |
| Revenue Sharing | Revenue is shared among partners or stakeholders. | YouTube, App Stores |
| Reverse Engineering | Analyzes competitors to develop similar offerings. | Samsung, Xiaomi |
| Reverse Innovation | Innovations from emerging markets applied to developed ones. | GE Healthcare |
| Robin Hood | Serves underserved markets, often subsidized by others. | TOMS Shoes, Warby Parker |
| Self-Service | Customers perform services themselves. | IKEA, Self-checkouts |
| Shop-in-Shop | Operates a brand store within another retailer. | Sephora in JCPenney, Starbucks in Target |
| Solution Provider | Offers comprehensive solutions, not just products. | IBM, Accenture |
| Supermarket | Wide range of products/services under one roof. | Walmart, Carrefour |
| Subscription | Customers pay a recurring fee for continued access to a product or service. | Netflix, Spotify, Adobe Creative Cloud |
| Switchboard | Connects buyers and sellers and facilitates their interaction. | Uber, eBay |
| Target the Poor | Offers affordable solutions to low-income markets. | Grameen Bank, M-Pesa |
| Trash-to-Cash | Turns waste or unwanted resources into valuable products. | TerraCycle, Patagonia Worn Wear |
| Two-Sided Market | Serves two interdependent user groups, adding value by connecting them. | Airbnb, LinkedIn |
| Ultimate Luxury | Offers extremely high-end, exclusive products or services. | Rolls-Royce, Patek Philippe |
| User Designed | Customers actively design or co-create the product. | LEGO Ideas, Threadless |
| White Label | A generic product sold under multiple brand names. | Generic electronics, Supermarket private labels |