Is It Important for Everyone to Understand a Business Model?

In the one of a recent guest lecture I delivered SVKM's Narsee Monjee Institute of Management Studies (NMIMS) , I found myself pondering an interesting question that was raised by an audience member: “Why do you have so many business ? And why do they seem so complex?” One attendee, in particular, admitted that they didn’t fully understand our business model, which led me to reflect on whether it’s necessary—or even desirable—for a business model to be universally understood.

This question touches on a fundamental aspect of business design and entrepreneurship, one that I believe deserves more attention. The complexity of a business model is often a direct reflection of the intricacies of the business itself. Simplifying it for the sake of broader understanding might dilute its unique value proposition. In this article, I want to explore why not every business model needs to be easy to grasp, and how this complexity can actually be a competitive advantage.

Business models are essentially the blueprint of how a company creates, delivers, and captures value. They encompass everything from product development and service delivery to revenue streams and customer engagement. Given this scope, it’s not surprising that business models can become complex, especially as businesses grow and diversify.

At TRD Studios, we’ve developed a unique ecosystem that comprises multiple brands and business models. Each of these models is designed to address specific market needs, leveraging different strategies, processes, and technologies. This approach has allowed us to create a self-sustaining, interdependent ecosystem of brands, each contributing to the overall strength of our organization.

But here’s the thing: the complexity of these models is intentional. It reflects the multifaceted nature of our business operations and the diverse value we provide to our customers. Simplifying our business model to make it universally understandable would mean stripping away the layers of innovation and strategic differentiation that make TRD Studios unique.

Why Complexity Shouldn’t Be Feared

There’s a common misconception that a successful business model must be simple and easy to understand. While simplicity has its merits, it’s not always synonymous with effectiveness. In fact, a certain level of complexity can be beneficial, as it often indicates a well-thought-out strategy that addresses various aspects of the market.

Consider the analogy of a symphony orchestra. Each instrument has a specific role, and when played together under the guidance of a skilled conductor, they create a harmonious performance. The orchestra’s complexity is what makes the music rich and captivating. Similarly, a business model with multiple layers and components, when managed effectively, can create a robust and resilient organization.

At TRD Studios, we embrace this complexity because it allows us to be agile and responsive to changes in the market. It also gives us the flexibility to innovate and experiment with different approaches, without being constrained by a one-size-fits-all model.

The Role of Visualization in Business Model Design

One of the key insights I’ve gained over my years in entrepreneurship is the importance of visualization in business model design. The way we visualize our business model can greatly influence how it’s perceived and understood. This is particularly important when dealing with complex models.

In our case, we use advanced visualization techniques to map out the various components of our business model. This helps us not only to communicate our strategy internally but also to identify areas for improvement and innovation. However, it’s important to note that these visualizations are tailored to our specific needs and may not be immediately intuitive to everyone outside the organization.

And that’s okay.

A business model doesn’t have to be universally understood to be effective. What matters is that the key stakeholders—those who are responsible for executing the strategy—have a deep understanding of how the model works. For others, including potential partners, investors, or even customers, the focus should be on the value proposition and the outcomes, rather than the intricacies of the model itself.

Unique Selling Proposition: The Power of Differentiation

Another important consideration is the Unique Selling Proposition (USP) of a business model. If a business model is so simple that it can be easily replicated, it loses its competitive edge. The complexity of a business model can be a barrier to entry for competitors, protecting the uniqueness of the business.

For example, at TRD Studios, our business model is not just about delivering products or services. It’s about creating an ecosystem where each brand complements and enhances the others, generating value that is greater than the sum of its parts. This interconnectedness and the strategic thinking behind it are what set us apart in the market.

My Journey:

Reflecting on my own journey, I’ve come to appreciate the value of complexity in business design. My early experiences in various industries, from working in a factory to exploring product design, taught me the importance of adaptability and strategic thinking. These lessons have been instrumental in shaping the business model of TRD Studios.

When I first started out, I focused on learning everything I could about business systems and processes. This knowledge laid the foundation for TRD Studios’ current business model, which is built on the principles of scalability, sustainability, and innovation. Over time, as we expanded into new markets and launched new brands, the model evolved, becoming more complex but also more resilient.

Today, TRD Studios is not just a business; it’s an ecosystem of independent yet interdependent brands, each contributing to our overall success. This complexity is a testament to the journey we’ve been on and the lessons we’ve learned along the way.

Looking Ahead: The Future of TRD Studios

As we look to the future, TRD Studios will continue to embrace complexity as a source of strength. We will keep refining our business model, exploring new opportunities, and pushing the boundaries of what’s possible. Our vision is to create a global network of brands that not only deliver exceptional value to customers but also drive positive change in the world.

In conclusion, the question isn’t whether everyone needs to understand a business model. The real question is whether the model is effective in achieving its goals. Complexity, when managed well, can be a powerful tool for differentiation and success. At TRD Studios, we’ve learned to embrace this complexity, and it has become a key part of our identity.

So, the next time someone asks why your business model is complex, don’t shy away from the answer. Embrace it. After all, it’s the complexity that often holds the key to innovation and long-term success..