Starting a Tech Business: A Practical Guide for Anyone Creating or Designing Applications or Software

What Strategy?

You can think about a technology-enabled company as having three components: a product, a system that supports the product, and a business model by which the product produces earnings for the business (Figure 2.1). The product is the experience you provide to the customer. The system is the infrastructure that supports the product. The business model is the way you produce earnings with the product.

Figure 2.1 Product—System—Business Model

The relationship between these may be one to one (one product, one system, one business model), or you may have multiples of one or more of the components. For example, you could have a single product and system that you sell in multiple ways to derive earnings (multiple business models). The system may be the centerpiece of your company and product, or it may be an enabler that makes your company more competitive. One currently relevant example is the revenue models for mobile applications on smart phones like the iPhone or the various phones that support Google's Android operating system. You can often download a free version of the application that shows ads and/or has limited functionality and then choose to upgrade to a paid version (this is called the “freemium” model, in case you want to talk the talk). Other applications are available only on an ad-supported basis, others are available for purchase at a standard price. ...