An Integrated Business Model Innovation Approach: It is Not All about Product and Process Innovation

An Integrated Business Model Innovation Approach: It is Not All about Product and Process Innovation

Roman Boutellier (Swiss Federal Institute of Technology (ETH) Zurich, Switzerland), Markus Eurich (Swiss Federal Institute of Technology (ETH) Zurich, Switzerland) and Patricia Hurschler (Swiss Federal Institute of Technology (ETH) Zurich, Switzerland)
DOI: 10.4018/978-1-61520-597-4.ch001
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This chapter will foster the understanding of business model innovation with a focus on the Information and Communication Technology (ICT) industry and e-entrepreneurship. A general overview of business models and their elements as well as an introduction to innovation alternatives will provide the necessary background for business model innovation. On the basis of Schumpeterian innovation, this chapter will pioneer in describing business model innovation as addendum to Abernathy’s and Utterback’s dynamic model of process and product innovation. Thereby an integrated business model innovation approach will be initiated overcoming the drawbacks of unilateral innovation. The integrated business model innovation approach proposes a framework for long-term differentiation and competitive advantages. Different examples, in particular ICT-ventures, will clarify the effect of integrated business model innovation.
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Not long ago Information and Communication Technology (ICT) was reserved to a few specialists. In the last decades, however, ICTs became ever easier to use and are nowadays open to the majority of western society. Modern ICTs have become part of our daily lives and have even changed our way of life. We are getting used to checking our e-mail inboxes on a daily basis, connecting with our friends via social networking websites such as Facebook (, have shown to be scoring particularly well in developing and deploying the latest ICTs. The business logic of an ICT-venture is influenced by ICT as either its products can only be developed by the means of ICTs or the ICT-venture develops new or more sophisticated ICTs itself. This chapter explains the effects of the net on business models: the Internet enables electronic products, electronic processes, new ways of reaching customers, and new value networks. The business scope of a company, which traditionally did business in the Real Economy, can be redefined on the basis of ICT-enabled business transformation (Venkatraman, 1994) and ventures can accomplish innovations in industries, in which innovation has no longer been considered as being possible anymore. An ICT-venture is typically doing business in the Net Economy. Moreover, ICT-enabled ventures can break the mold of doing business through the introduction of ICT in the Real Economy. Enterprises developing and deploying sophisticated ICTs offer their products or services on the basis of either direct electronic creation of value (e.g. Adobe Systems Inc.) or ICT-enabled creation of value (e.g. Blacksocks S.A.). The global market has tremendously increased competition and the appearance of ICT-ventures entering the global market has the potential to tighten this competition yet more. The act of establishing a venture in the Net Economy is termed “e-entrepreneurship” (Kollmann, 2006b).

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