Scrutinizing the Sustainability of Business Models : System Dynamics for Robust Strategies

The success or failure of a business hinges in the first place on the model that forms the basis of its commercial activities. Business models are needed in all kinds of enterprises. Often these models are not scrutinized with the necessary depth. In situations of high planning uncertainty, e.g., when starting a new business, the lack of data tools to assess the sustainability of business models tends to mislead investors and managers to superficial appraisals. The purpose of this contribution is to demonstrate how such an assess-ment can be organized, even when data are very scarce, in a way that it leads to crucial insights for strategists. We demonstrate how dynamic modeling and simulation can foster understanding, enabling decision-makers to select between sustainable versus flawed conceptions, and opening them clues for better ways of selecting and developing new strategic fields of business activity. For this aim, we have chosen a case study from e-commerce, within a family of business models which is novel and sufficiently complex as an exemplar. Additionally we have tested our findings on another business within the same sector. We show that with the help of System Dynamics modeling and simulation the test of a business model's sustainability can deliver high value to investors and man-agers, helping avoid fatal mistakes, and taking new opportunities.