The following article was written by Prof. Nicolaj Hannesbo Petersen, where he aims to help bring some clarity to the topic of Business Model Innovation with his Frequently Asked Questions.
Business model innovation, digitalization and disruption are very popular globally. They are reaching high and deserved attention from research and practice. Nevertheless, in order not just to become trendy buzzwords we have published the
Handbook of Research on Business Model Innovation Through Disruption and Digitalization (ISBN: 9781799868033). The book discuss, research and provide evidence for the aspects of the innovation of business models through disruption and digitalization. It is a comprehensive resource with 20 chapters and 425 pages by 35 authors/researchers across the globe. It is relevant for established organizations as well as startups with quest for understanding, innovating and experimenting with their business model. Target group is entrepreneurs, innovators, IT managers, government officials, students and faculty of higher education, librarians, researchers, and leaders. We provide freely and concisely answers to some of the most frequently asked questions or internet search quires of Business model innovation, Digitalization and Disruption.
How does your professional background support your ability to be an authority on this chapter's to books?
Prof. Petersen: I have worked with entrepreneurship, innovation and disruptive business models for more than ten years professionally. I am experienced as consultant for startups as well as established organizations on behalf of venture capitalist, incubators/accelerators, as self-employed entrepreneur and participation in Advisory Boards. I received in 2018 my PhD in Business Administration from University of Southern Denmark, and has recently been awarded from my research in 2021 within the global IEEE innovation and technology research network.
What is a business model?
Prof. Petersen: The short answer is that a business model is a logic, architecture or design of ‘how to do business.’ The long answer includes design aspects of a business model for creating, delivering and capturing value e.g. defining customers’ needs, how they want it and what they will pay to get it, and how an organization can organize internal and external to meet customer needs best and successful to realize value within their outer firm network. The entrepreneur or innovator are committed implicit or explicit to a description, model, narrative or mantra from which they can learn and make sense iteratively through value experimentation and transformation.
How do you define business model design, archetypes and typologies?
Prof. Petersen: There exist generic archetypes and typologies for business model designs towards digital, sustainable (social, environmental, circular) or more traditional way of doing business. However intuitively all business model designs are idiosyncratic, because they developed from the organizations means and innovators actions of value creation, value delivery and value capture.
How do you define business model components, architecture or logics?
Prof. Petersen: The business model explains the logic or architecture of organizations or firms value creation, value delivery and value capture. However, components of value creation, value delivery and value capture within a business model are often discussed and inconsistent agree upon. The most often components within research includes for
- value creation is the value proposition or offering (product, service, platformication), market segments, customer relationships and channels
- value delivery is resources, capabilities, activities, partnerships and networks
- value capture is revenue models and cost structures
What is business model innovation?
Prof. Petersen: Business model innovation is located in how an organization create, delivers and captures value. The entrepreneur or innovator articulates the logic or hypothesize, the data, and other research that support a value proposition for the customer and a viable structure of revenues and costs for the organization delivering that value.
How to business model innovate?
Prof. Petersen: To innovate is process depended, and so contingent on internal and external factors involved within the business model innovation. Popular innovation and entrepreneurship process such as design thinking, lean startup, effectuation and planning provide some direction. Overall, the level of uncertainity and involved actors (cognition and action) affect the path to business model innovation.
Difference between product, service, process and business model innovation?
Prof. Petersen: Product, service and process innovation is ‘isolated’ and component located within the business model. The business model explores more holistic and systemic innovation. Because it is not only focusing on developing new product or services as novel value or new process for delivering that value. The innovation must be in your business model, as this is where your value-creating development and implementation must materialize whether the aim is sustainable and/or economic. This means that a business model is a tool for understanding how the company creates value for its customers and thus for itself and other stakeholders.
Do business model innovation provide a competitive advantage?
Prof. Petersen: Research has found an overall positive business performance relationship with business model innovation. However most studies lack consensus what is a business model as a construct, and consistency in operationalization. Nevertheless, the business model as a concept significantly answers the fundamental question asked by managers or entrepreneurs how to build a competitive advantage and turn a profit from one’s business model. The sustainable competitive advantage difficult to obtain, and the level is depended on external as well as internal factors.
What is the outcome of business model innovation?
Prof. Petersen: The business model provides a value logic of an organization and how to achieve e.g., profitability, growth, competitive advantage, social and environmental impact, digitalization, internationalization. Why many fields such as Marketing, Strategic Management, Innovation and Technology, Human Resource Management, Entrepreneurship, International Business and many more has embraced this unit of analysis.
What is the unit of analysis of business model?
Prof. Petersen: The unit of analysis of researching business model innovation is the process of creating or transforming an organization/firm. The level of analysis is therefore the organization or firm. Why this is notable, suitable for exploring global mega trends like digitalization, sustainability and disruption affecting organization all around the world. Through the lens of the business model, we understand holistic and systematic how to create, deliver and capture value within that organization.
What is digitalization and digital transformation within the business model?
Prof. Petersen: Digitalization is more isolated, process and component oriented innovation within business model. For instance digitalizing marketing channels to include Social Media platforms. Whereas digital transformation affects the whole organization and its ways of doing business. By digital transforming the value creation, value delivery and/or value capture of the business model. Hence going beyond ‘simple’ digitalization — the incremental change of individual organizational processes and tasks.
How to develop a disruptive business model?
Prof. Petersen: Disruptive business model is often competitive positioned in an underserved market or segment through radical and innovative combinations that are more cost-effective. Often a disruptive entry arises from a product that is inferior to what is offered to the mass market but services a niche audience better.
More Books Covering Business Innovation
About the Editor
Dr.
Nicolaj Hannesbo Petersen is the former Head of Incubation at UCL University College. His research interests include international entrepreneurship, business model innovation, learning, disruption and networks. He was awarded the Presentation Award at IEEE TEMS 2021 International Conference on Technology and Entrepreneurship-Leading Digital Transformation in Business and Society, and he is an advisory Board Member at Business Hub Fyn.
Disclaimer: The opinions expressed in this article are the author’s own and do not reflect the views of IGI Global.
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