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Business model is the central nervous system of running a company whose function is to coordinate all entrepreneurial support systems for the sole purpose of achieving growth strategies where the right customer is willing to pay right price for the right products/services.

Business model is a creative intelligent way of solving your business problem of growth, sustainability, and selling the buy to the consumer; having the greatest product/services alone is not enough.  It is not just super marketing strategy.   It is also pricing strategy, it is also the product priority strategy; also of segment strategy; also of strategizing timing and priorities of the markets and consumers.

It is often difficult to develop 10-100 million dollar products.  Often products as a start-up strategy will lead to likelihoods of loss more often and more quickly.  It is much easier to develop a 5-20 million-dollar service company, compared to a 10-100 million product strategy.  The bigger the vision to develop, the more prominent are the absolute loss due to product failures.

As to why most products fail, read,

None the less whether product or service, there are so many ways an organization can compete in the market place intelligently using a business model.

For a lucid comparative discussion of 24 examples with 24 different business models/pricing strategies, see - A John Wiley resource

The Yin-Yang of Business Models: Discovery Process and Execution for excellence

The importance of business model and the need to be innovating regarding the business model in the market place does not stop even for a well-established company, though it is often identified as a critical success factor as well as a critical lift factor of a strategic KPI of start-ups. With such an approach it is easier to see multi-fold lifts due to innovative disruptive business models among the start-ups.

The yin-yang of business model discovery and business model execution and how to achieve the discovery process quickly is explained by Stefan Gross-Selbeck: Business model innovation
Traditionally, a start-up is different from well established companies.

A start up is trying to get all its support functions working smoothly and contributing to making money; it is at the same time figuring out how to do it efficiently so that it can sustain and grow, even if the margins fall; how to keep the differentiation and uniqueness as a competitive force so that newer competitions do not take away its ability to sustain and growth - Doing all with the focus of making money and at the same time, growing and sustaining in its cycles of daily operations.

A start-up is always trying to figure out its business model; it is on the discovery mode, until it becomes a well-established company where the threat of its existence is not any more a serious problem, but its sustained growth may be its problem.

On the other hand, a well-established company has been filtering out of those situations over time, and it becomes well established; mostly it is trying to optimize the resources, inputs, budget to keep sustainability and growth.  A well-established organization has figured it out already, optimized the various components of how they all come together, and it is executing its initial model that sustained and grew into more a successful continuation model, and where possible, continue to keep growth in a modest way for its stake holders.

In a brief one-word comparison, they are two different worlds of focus on what would make it a success, sustain, and become established success.  They are discovery vs. execution.

A big problem is not every company can work on both sides, and both are needed. Start-ups or well established companies, if companies were to continue to thrive, grow in the market place, they all have to have the mind-set of a startup, and yet execute on a daily basis.  If a well-established company is not facing the disruptive strategic business model from its competition, head-on, it will become irrelevant and loose its market to its competition.  So There is a systematic way to have a start-up mindset and execute on a daily basis, and the key functioning characteristics of such a mind-set are:

-         Attacker mindset to win

-         Agile mindset to win

-         Failure is ok mindset to win

So, in essence you may say that it is that the “Discovery” and “Execution” are two parts of yin-yang of business model.

A comparison of product vs. services start-up.

I want to bring out why to choose one over the other before I go for kindling your thoughts on how to execute one over the other with a plan to move from services to product.

We know something is a service (and hence the lack of it as products) when we see the following attributes
For more extensive details on how to identify something as service(and hence something is not a service) here is a list from a reference - reference at the bottom.