Shaping Business Models Through Interaction: A Sensemaking and Sensegiving Approach

Introduction

This chapter explores how managers shape their understanding of the firm’s current and future business model based on their perception of the firm in their interaction with others. Managers hold different understandings of a firm’s business model and thus infer different meanings (Rozentale & van Baalen, 2021; Doganova and Eyquem-Renault, 2009; Massa et al., 2017). The authors focus on the effect of the managers’ understandings and interpretations of events in their roles as the creators and perpetrators of business model change (Bock et al., 2021; Linder and Cantrell, 2001) as business models emerge over time. This aligns with Sosna et al. (2010), who see business model development as dynamic and emerging from an initial experiment followed by a learning process where revisions and adaptions are ongoing. Hacklin and Wallnöfer (2012, p.184) similarly see business models as a stimulant for creative decision-making over time: “in developing and discussing strategic options, the business model acts more as a symbolic artefact, stimulating a creative decision-making process than as an analytic tool with a clear sequence of steps”. However, little is known about how managers form their understanding of what the firm was, what it is now, what it will be, and how it impacts the shaping of the business model

An important issue for this perspective of business model change is how managers make and give sense to their organization through interacting processes (Rouleau, 2005). This chapter focuses on sensemaking and sensegiving. A firm’s business model is shaped via sensemaking and sensegiving processes between internal and external actors and used strategically by managers of firms to create coherence and direction (Daft & Weick, 1984). The perception of the firm and its business model is seen as an ongoing process in which the current understanding is constantly reshaped and changed in the actors’ minds. In this vein, the business model represents the current thinking or established belief, or cognitive schema held by managers in firms (Massa et al., 2017).

Sensemaking is how individuals and groups construct meaning from their flows of experience (Weick, 1995). Gioia and Chittipeddi (1991) describe how the business model shapes the process of organizational change as “the meaning, construction and reconstruction by the involved parties, as they attempt to develop a meaningful framework for understanding the nature of the intended strategic change” (p. 442). The formation of individual maps or models is based upon several elements, such as past experiences, positions, skills, personality, and beliefs. The formation of maps or models depends upon where the manager finds inspiration and focus (Ancona et al., 2007; Ocasio, 1997). Sensegiving is the interaction process wherein managers influence and create meaning for others (Gioia & Chittipeddi, 1991; Weick, 2005).