Three Levels of Business Models
Three Levels of Business Models sorts your business model portfolio by how much change it represents: Existing models refined for today's customers, Adjacent models that stretch into new offers or markets, and New models that bet on what's coming - so you build a spread of models instead of betting everything on the one you've already got.
Three levels sit side by side, not in a time sequence: how far each strays from today's business on one axis, how much is staked on it on the other, from the safe core to the small long-shot bet.
Reach for this when…
- Your entire business runs on one business model and it's ageing.
- Every new idea gets forced through the existing model instead of tried as its own thing.
- Leadership talks about innovation but only ever funds tweaks to what already exists.
How to run it
- Map your Existing business model: what earns money today, refined for the customers you already have.
- Identify Adjacent models: variations reaching new customers or offers, with moderate investment and risk.
- Place a small number of New bets: models tied to emerging trends, sized as options rather than commitments.
- Set separate funding, timelines and success measures for each level, so Existing doesn't quietly starve the other two.
- Review the portfolio regularly - a model that proves itself graduates a level; one that doesn't gets cut.
A worked example
Situation. Thabo Nkosi runs a single-model logistics brokerage in Durban, South Africa, matching truck owners to loads for a flat commission - the only business model the company had ever had, and growth had flattened for two years.
Applied. He mapped it against the three levels: the commission brokerage was his Existing model, a subscription tier for repeat shippers was an Adjacent bet worth a modest budget, and a small trial leasing telematics data to insurers was a New, high-risk option ring-fenced with a fixed, non-negotiable stake.
Result. The subscription tier grew to a fifth of revenue within eighteen months and graduated to Existing. The telematics trial folded after a year, but it had cost so little that nobody in the business even noticed the loss.
The catch
The three levels are easy to draw and hard to fund honestly: Existing always has the numbers and the noise, so Adjacent and New lose their budget first whenever the core has a bad quarter. It also doesn't tell you which Adjacent or New bet is worth backing, only that some should be running at all times.
If Existing is the only level anyone in the room can describe in detail, you don't have a portfolio of business models, you have one model and two slogans.
Origin: Mark Johnson, Clayton Christensen & Henning Kagermann