bought in rural areas if discount stores were located there. At the time, most people did not share this view. (See Bradley, Ghemawat, and Foley, 1994.) Notice also that theories do not appear in the definition of a business model. a business model is made up of choices and consequences, but these are the actual choices and actual consequences as they are truly related. The term business model" refers to the real relationships. a business model representation, on the other hand, refers to a model of the business model. a business model representation integrates theories of causality that are believed to be true by the business model designer or analyst. If later they fail to hold up, there will be a break in the logic leading to business model failure ( partial or complete As mentioned above, we do not include every choice and consequence in the business model representation. There are two main ways to move from the full, true detail of a business model to a simplified, tractable representation: aggregation and decomposability. In most instances, business model representations make simultaneous use of both approaches Aggregation. Aggregation works by bunching together detailed choices and consequences into larger constructs. For example, specific incentive contracts (which may be unique to every individual in the organization) may be bunched together into a choice called"high-powered ncentives. "This captures the idea that contracts typically impose high-powered incentives on the workforce. In the business model representation, instead of detailing every contract offered to every individual, we simply write one choice: high-powered incentives. This allows a simplified representation that enhances our understanding of the organization. One can think of aggregation as 'zooming out and looking at the (real) business model from the distance. As the analyst zooms out, details blur and larger objects (aggregations of details)become clear. If one keeps one's nose too close to every choice and consequence, it is impossible to see the larger picture and understand how the business model works On the other hand, if one looks at the business model from very far away, all the interesting details are lost. It is more of an art than a science to find the right distance from which to assess a given business model. How much to ' zoom out generally depends on the question the analyst is trying to address In what follows we use the expression "level of aggregation"to refer to the extent to which we zoom out from the full business model. a high level of aggregation refers to looking at the business model from a long distance. A low level of aggregation refers to being close to the details. As we point out below, high levels of aggregation are needed when analyzing nteraction between business models of different players (or competition through business models). y. Sometimes business models are decomposable in the sense that different groups of choices and consequences do not interact with one another and thus can be analyzed in isolation. In this case, depending on the question to be addressed, representing just a few parts of an organizations business model may be appropriate. Clearly, this simplifies the analyst,'s task considerably. For example, in the case of Ryanair developed below, there are few interactions between Ryanair's choices on related businesses such as car rentals or accommodation, or on ancillary business by others, and therefore Ryanair's operative choices related directly to the management of the airline. Given this, one can understand the working of Ryanair's model without needing to be absolutely comprehensive. SE Business School-University of Navarra-5IESE Business School-University of Navarra - 5 bought in rural areas if discount stores were located there. At the time, most people did not share this view. (See Bradley, Ghemawat, and Foley, 1994.) Notice also that theories do not appear in the definition of a business model. A business model is made up of choices and consequences, but these are the actual choices and actual consequences as they are truly related. The term “business model” refers to the real relationships. A business model representation, on the other hand, refers to a model of the business model. A business model representation integrates theories of causality that are believed to be true by the business model designer or analyst. If later they fail to hold up, there will be a break in the logic leading to business model failure (partial or complete). As mentioned above, we do not include every choice and consequence in the business model representation. There are two main ways to move from the full, true detail of a business model to a simplified, tractable representation: aggregation and decomposability. In most instances, business model representations make simultaneous use of both approaches. Aggregation. Aggregation works by bunching together detailed choices and consequences into larger constructs. For example, specific incentive contracts (which may be unique to every individual in the organization) may be bunched together into a choice called “high-powered incentives.” This captures the idea that contracts typically impose high-powered incentives on the workforce. In the business model representation, instead of detailing every contract offered to every individual, we simply write one choice: high-powered incentives. This allows a simplified representation that enhances our understanding of the organization. One can think of aggregation as ’zooming out’ and looking at the (real) business model from the distance. As the analyst zooms out, details blur and larger objects (aggregations of details) become clear. If one keeps one’s nose too close to every choice and consequence, it is impossible to see the larger picture and understand how the business model works. On the other hand, if one looks at the business model from very far away, all the interesting details are lost. It is more of an art than a science to find the right distance from which to assess a given business model. How much to ‘zoom out’ generally depends on the question the analyst is trying to address. In what follows we use the expression “level of aggregation” to refer to the extent to which we zoom out from the full business model. A high level of aggregation refers to looking at the business model from a long distance. A low level of aggregation refers to being close to the details. As we point out below, high levels of aggregation are needed when analyzing interaction between business models of different players (or competition through business models). Decomposability. Sometimes business models are decomposable in the sense that different groups of choices and consequences do not interact with one another and thus can be analyzed in isolation. In this case, depending on the question to be addressed, representing just a few parts of an organization’s business model may be appropriate. Clearly, this simplifies the analyst’s task considerably. For example, in the case of Ryanair developed below, there are few interactions between Ryanair’s choices on related businesses such as car rentals or accommodation, or on ancillary business by others, and therefore Ryanair’s operative choices related directly to the management of the airline. Given this, one can understand the working of Ryanair’s model without needing to be absolutely comprehensive