Academic journal article Research-Technology Management

360[degrees] Business Model Innovation: Toward an Integrated View of Business Model Innovation: An Integrated, Value-Based View of a Business Model Can Provide Insight into Potential Areas for Business Model Innovation

Academic journal article Research-Technology Management

360[degrees] Business Model Innovation: Toward an Integrated View of Business Model Innovation: An Integrated, Value-Based View of a Business Model Can Provide Insight into Potential Areas for Business Model Innovation

Article excerpt

Long gone are the days when breakthrough technological innovation was considered the primary driver of competitiveness. Increasingly, innovative business models--the mechanisms for capturing value from technological innovation--are allowing less technologically advanced firms to displace powerful incumbents. In particular, increasing digitization across many industries has rendered old pricing and revenue models obsolete and demanded entirely new ways of capturing value. As a result, even the most traditional industries have experienced disruption emanating from business model innovation.

While it seemed logical that industries relying heavily on digital technologies (such as the telecom, video game, music, and movie industries) would be highly disrupted and struggle to find new sustainable business models, many were surprised to see traditional industries, such as hotels or taxis, radically reshuffled by the advent of new business models. In most cases, these disruptive business model innovations did not come from companies already operating in the market, but from outsiders, such as Apple (music), Netflix (movies), Rovio (video games), Airbnb (hotels), and Uber (taxis). The prevalence of these kinds of disruptions have convinced most companies of the need for business model innovation, not only to stay ahead of existing competitors but also to anticipate the emergence of new ones.

However, this kind of business model innovation, necessary as it is to maintain competitive advantage, remains difficult in practice. Many companies simply do not know where to start. The complexity of business model innovation is exacerbated by a lack of common language--there are many representations of what a business model actually is, each with its own elements and definitions--and a lack of universally applicable tools. Widely adopted frameworks, such as Osterwalder and Pigneur's Business Model Canvas, while generally adequate to represent potential business models, may not be the best tool to support business model innovation.

We seek to address this gap by presenting a 360[degrees] business model framework, one that represents all aspects of a business model from a value perspective. Such a framework can offer a comprehensive view that can direct attention to where business model innovation might have the most impact. In conjunction with other well-known tools, it can also help direct the execution of business model innovation.

Business Model or Business Models?

Given the increasing interest in business model innovation, it is not surprising that the concept has become ubiquitous over the past decade. It is used by both academics and practitioners, and it would be hard to find a startup that has not made a "revolutionary" (or "disruptive") business model the crux of its elevator pitch. However, in spite of the growing consensus around the critical importance of understanding business models and business model innovation, there is little agreement about what a business model actually is, or how it might be innovated (Baden-Fuller and Haefliger 2013).

A number of frameworks and tools are available, each relying on its own underlying notion of what a business model is. Osterwalder's Business Model Canvas (Osterwalder and Pigneur 2010) has been widely adopted by practitioners, who value its clear and concise presentation. The Canvas consists of nine key elements that address the value proposition as well as the activities and relationships required to support it. These elements are presented in a single-page graphical format, which makes it easy to survey and practical to complete. However, although the Canvas is a good general-purpose tool for describing business models, it does not address some key drivers of business model innovation associated with value creation, capture, and delivery.

Academic researchers face a more complex landscape. Partly because each study has a different focus, researchers often consider only some aspects of business models (typically value creation and value capture), while leaving out others that are not relevant to their work but are nonetheless essential. …

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