Strategy and Business Models: What's the Difference?

This paper examines in detail the meaning of two frequently used—and misused—terms, namely, “business model” and “strategy”. It is argued that as used by leading thinkers these two terms might reasonably be interpreted as having roughly equivalent meanings. However, we argue that there is another distinct and potentially useful role for the term “business model”. In this role, strategies would be treated as grounded firmly in the real world, whereas business models would be treated as abstractions of firms’ real-world strategies. Such abstractions, it is argued, have attracted the attention of so many researchers because they are useful for evaluating alternative possible future ways of building profitable businesses.