Another way of looking at business model complexity is priority setting. What that diagram says to me is everything is equally important. But it's not.

It seems to me you start with the value proposition, and build from there. If the model fails to generate value on the demand side (technology, differentiated service), or respond to the market dictates on the supply side (i.e., being low cost when the products are commoditized), all of the rest of the complexity is relatively meaningless. Take pizzas. What was Domino's original model? 30 minute delivery. Pizza Hut's model was demand driven, i.e., quality - you pay more for a better pizza, and that would justify the added cost and infrastructure. Little Caesars (pizza! pizza!) was value. Domino's doldrums came about because the value delivered by its model couldn't bring the returns of either of its major competitors. Obviously when you are writing operational plans to deliver on the model you get to great complexity. But it's rare, when a business is succeeding or failing, that you can't prioritize the causes, and those point to what's wrong with the model.

Moreover, in terms of leadership, my experience in huge businesses was that trying to convey a complex business model to a widely disbursed, or even not so widely disbursed, employee group was difficult at best. We had a business group leader who was a brilliant analyst, and a mediocre leader. His Powerpoint business plans (four quadrant matrices) were a tour de force, as was his post-hoc explanation of the negative variances from plan. But nobody quite knew what to do in between.

Imagine writing an article with fifty thesis sentences, none of which seem to be more important than the other. You could make a similar chart with lines running from each thesis sentence to a middle box that said "scholarly impact" and it would be about as meaningful. (In golf, it's paralysis by analysis.)

In today's NY Times business section (July 30), there's an interview with Adrian Slywotzky (who wrote the influential book Value Migration). Slywotzky discusses how business models go obsolete. Two points:

1. The thinking that goes into a business model needs to be rigorous, creative, and more than skin deep (I think that was Rip's point): "If you look at the natural history of great new product failures, it's often because they went with the standard business model, or the first feasible business model, instead of doing what good companies do, which is challenge themselves and ask, 'What are three very different business designs that we can use to take this product to market?'"

2. The models themselves all focus on a fairly simple theme, and do not look like the diagram (I think this was Gordon's point). Slywotzky's examples of good, not so good, and obsolete models come from the Toyota Prius Hybrid (see Gordon's earlier post on this), the Honda Civic Hybrid, the iPod, Onstar, Dell Direct, Samsung, General Electric (in that case, on its model for building global technology networks).

To my way of thinking a business model is critically important. It is an explanation of how a given organization does what it is designed to do. The model is the design.

In a business organization the model describes how the business makes money by creating a given product. That is, the model must describe the creation and exchange of value.

Recently I have been very curious about creating a business model for the delivery of restaurant food to homes, businesses, etc. My question is: Does anyone out there have a general idea about how such a model would be designed?

I think it is necessary for the restaurants themselves to be willing to discount their sales price in an effort to increase their volume. That is, the value the delivery service brings is increased volume of business without increased cost in bus boys, waitresses, floor space etc.

I think the receiver of the food should be willing to pay a small fee for delivery and a gratuity.

Anyway, does anyone have any general and specific ideas about how such a model would operate?

It's been done. When we lived in Birmingham, Michigan in the mid-90s, there was an outfit called "Door-to-Door" that did exactly what you describe. I suspect if you Google something like "restaurant home delivery service" you will pull them all up.