Open innovation in small and micro enterprises Abstract Open innovation has become a key strategic element to increase the generation and commercialization of innovations
increasing interconnectedness of customers (Tidd and Bessant, 2005), companies depend on their ability to innovate in order to achieve competitive advantage
competition, research on innovation management has proposed and described a shift from the traditional â€oeclosed†innovation model toward an â€oeopen
-based information and communication technologies that simplify the relationship with stakeholder groups and enable new ways of networked collaboration
Lagrosen, 2005. Many large firms such as IBM Procter & gamble or Eli lilly have already successfully adopted the open innovation approach
The Mckinsey Enterprise 2. 0 study shows that in 2008,60-70%of large, established companies were
customers and external experts into their innovation processes (Mckinsey, 2008. It has been suggested that this open innovation approach, especially
considering the potential opportunities provided through online Web 2. 0 technologies. Our empirical analysis will address three research questions.
customers (Tidd and Bessant, 2005; Chesbrough 2007) have supported a paradigm shift toward an open approach to innovation which includes â€oe †the
opportunities. Inbound open innovation refers to the practice of exploring and integrating external knowledge sources for technological development
of online information and communication technologies (ICTS) and Web 2. 0-based applica -tions. The rapid development of these technologies
opportunities to facilitate the opening of the innovation process in both directions through supporting access to external ideas and the
identification of new market opportunities for existing ideas. Depending on the individual business context, companies can make strategic use of social
developing new products and services (Mckinsey 2008). ) The use of these new technologies is a
suppliers, or other enterprises for new ways to generate idea, find solutions and integrate external
application opportunities or entire markets and support firms†marketing, sales or service activities Bernoff and Li, 2008
small and medium enterprises. SMES are clearly different from larger firms with respect to how they innovate and consequently can use open innovation
contribution of SMES to the global economy in promoting growth and employment opportunities Bednarzik, 2000; Hoffman et al.
medium-sized enterprises (SMES) are the engine of the European economy. They are an essential source
of jobs, create entrepreneurial spirit and innovation in the EU and are thus crucial for fostering
%20,9 million) of enterprises active within the EU -27†s nonfinancial business economy in 2008 were
SMES (Eurostat, 2008. Together they accounted for two out of every three jobs (66,7%)and for 58.6
economy (Eurostat, 2008. SMES play an essential role in economic and technological development Kaufmann and TÃ dtling, 2002.
innovation opportunities. Compared to large firms these characteristics permit a more rapid response to market shifts and changes in demand (Scozzi et al
to adapt and specialize their products, services and innovation attempts perfectly to the markets they
opportunities to spread risk among their small portfolios are limited often (van de Vrande et al 2009).
scope (Nooteboom, 1994), small enterprises tend to keep a smaller part of R&d in-house than large
) Only a small number of SMES can profit from intellectual property in a sustainable way
within small enterprises (O†Dwyer et al. 2009 1. 3. Open innovation in SMES. Successful inno
than larger enterprises due to characteristics such as less bureaucracy, increased willingness to take risks and faster ability to react to changing environments
However, van de Vrande et al. 2009) confirm that large firms still embrace and use open innovation
significantly more often than small enterprises Furthermore, a recent study conducted by Ebersberger et al. 2010) provides evidence that the
SMES is lower than in large enterprises. In relation to the amount of external collaboration, SMES tend
external relationships with suppliers, customers universities and R&d labs for technology scouting and idea sourcing show a higher innovation
investments and are less risky for the organization van de Vrande et al. 2009; Chesbrough, 2010
SMES that are engaged successfully in venture activities, external participation or effective in licensing intellectual property tend to be the
methodology to identify viable opportunities for outlicensing technology. However, there is a need for more studies focusing on the outbound
collaboration structures, consulting services and targeted marketing support One recent study focused on the application of
enterprises, based on staff headcount, annual turnover and annual balance sheet (European Commission, 2005. As financial data is rarely
making products and services with a very high consumer involvement. Therefore, in the investigated firms,
â€oeoften customers come to us with a specific problem and we find an adequate solution for them. â€
â€oeour customers have a lot of good ideas, which is why most of the time they take action
often develop only one product prototype for a specific customer and his/her needs and
and recognizing whether these new prototype solutions could have potential for a broader customer base,
innovation opportunities Within the small and micro firms surveyed, other external sources for ideas, inventions and inspiration
effective communication have been identified as obstacles Interviewee 6: â€oethe difficulty is to find the right customer for a new product.
fear direct competition. In my opinion, they have to overcome their worry and they have to think in a
realization of future-related investments. These problems lead to a high level of insecurity and skepticism
the final profit of the new product will be high enough to compensate for these investments. â€
3. 2. 5. Public funding and bureaucracy. Since governments have recognized the essential role small and micro firms play in future economic and
Western economies, encouraging and improving the innovative potential of small and micro firms remains at the heart of policy initiatives that provide
promotions aimed at targeted customers Interviewee 1: â€oewe are actively using our home page to illustrate our products
potential customers about our services. We are very happy about the results we achieve with this tool. â€
customers and to perfectly respond to their needs Not only managers are the driving forces behind the
customers, employees and other corporations are accepted as sources for invention. This study supports theoretical assumptions, which point out
and micro enterprises and enhance their innovation productivity References 1. Arias-Aranda D.,Minguela-Rata B. and Rodrã guez-Duarte A. 2001.
The role of entrepreneurship in U s. and European job growth, Monthly Labor Review 123 (7), p. 3
-sized enterprises: how to find alternative applications for your technologies, R&d Management, 40 (4), pp. 414-431
Economics & Statistics, 84 (2), pp. 298-309 8. Cefis E. and Marsili O. 2006.
How Smaller Companies Can Benefit form Open Innovation, Economy, Culture & History Japan Spotlight, 29 (1), pp. 13-15
Why Companies Should Have Open Business models, MIT Sloan Management Review 48 (2), pp. 22-28
Small and medium district enterprises and the new product development challenge: evidence from Italian eyewear district, International Journal of Operations & Production Management
explore the relationship between R&d and innovation, International Review of Applied Economics, 24 (1), pp. 95-102
enterprises: a process manifest, Technovation, 25, pp. 1119-1127 22. Eisenhardt M. K. 1989. Building Theories from Case-study Research, Academy of Management Review, 14
The new SME definition †User Guide and Model Declaration, Enterprise and Industry Publication 24.
The challenges and opportunities of Social Media, Business Horizons, 53 (1), pp. 59-68 38.
Effects of the Internet on the marketing communication of service companies, Journal of Services Marketing, 19 (2), pp. 63-69
44. Lasagni A. 2012. How Can External Relationships Enhance Innovation in SMES? New Evidence for Europe
Building the Web 2. 0 Enterprise 50. Morgan J. and Wang R. 2010. Tournaments for Ideas, California Management Review, 52 (2), pp. 77-97
new opportunities and limitations in the face of globalisation Technovation, 24 (2), pp. 153 52.
Theory and Evidence, Small Business Economics 6, pp. 327-347 54. O†dwyer M.,Gilmore A. and Carson D. 2009.
with the Open source Community and Innovation Performance of Software Entrepreneurial Ventures, Journal of Small Business Management, 50 (2), pp. 340-364
Firm size and types of innovation, Economics of Innovation & New Technology, 18 3), pp. 205-223
Networks, Firm Size and Innovation, Small Business Economics, 22 (2), pp. 141-153 63. Rufat-Latre J.,Muller A. and Jones D. 2010.
Creating and Selecting Exceptional Opportunities Harvard Business school Press 68. Terziovski M. 2010. Innovation practice and its performance implications in small and medium enterprises
SMES) in the manufacturing sector: a resource-based view, Strategic Management Journal, 31 (8), pp. 892-902
innovation, intra/entrepreneurship, internationalisation and the creative industries Flanders DC focuses on entrepreneurs, teachers, students, policy-makers and the general public
Bedenkers (The Inventors) classroom competition and an online game to discover how you score as
ï The Creative Economy: challenges and opportunities for the DC-regions, Isabelle De Voldere, Eva Janssens, Jonas Onkelinx and Leo Sleuwaegen, April 2006, Published in English
ï Spelers uit de televisiesector getuigen: een verkennende studie in de creatieve industrie Marc Buelens and Mieke Van De Woestyne, June 2006, Published in Dutch
ï Entrepreneurship and globalization, Italo Colantone and Leo Sleuwaegen, December 2007 published in English ï HR Tools als stimulans voor creativiteit bij uw werknemers, Kristien Van Bruystegem, Vickie
ï Foreign direct investments. Trends and developments, Frederik De Witte, Isabelle De Voldere, Leo Sleuwaegen, June 2008, published in English
ï Foreign Direct Investments. Location choices across the value chain, Frederik De Witte, Leo Sleuwaegen, May 2009, published in English
ï Identifying opportunities in clean technologies, Jan Lepoutre, April 2010, published in English ï The Legitimation Strategies of Internationalizing Flemish SMES and their Subsidiaries
2 Business model innovation in low-tech SMES...14 2. 1. Business model innovation in SMES to sidestep the commodity trap...
14 2. 2. The role of the initial business concept or vision...15 2. 3. Innovate beyond products and services:
the relevance of the experience economy for innovating SMES...22 2. 4. Different ways SMES can create value...
31 3 A dynamic view on business model innovation...37 3. 1. Stepwise discovery of new business models...
37 3. 2. The process of discovering new applications...40 3. 3. Diversify or not?..
45 3. 4. Building and exploiting reputation and brand...51 4 How SMES build new business models through open innovation?..
54 4. 1. Benefiting from open innovation: value creation...54 4. 2 Capturing value in open innovation...
Business model innovation at Curana...38 Figure 6: Case Innovacelli...42 Figure 7: Case Jaga...47
business model. A major liability is that small firms lack the required internal financial resources and technical capabilities.
products and services or how they can generate income by licensing their technology to other
innovation has been studied mainly in large, multinational enterprises, of which most have large internal R&d departments or operate in technology intensive industries.
external partners to create new products or services. An urgent need exists, therefore, to study how
open innovation ventures of large manufacturing companies, such as Xerox, P&g, Philips, Lego, and IBM. The open innovation practices of these companies have been documented widely in the
business model to seize new business opportunities and boost profitability. Their limited financial and human resources and the lack of technological capabilities force them to look for different types of
business models are crucial for unlocking the latent value of new or existing technologies 6 Technology per se has no economic value;
indeed, the economic value of technology is realized when companies develop and commercialize it through a particular business model.
In all our interviews managers emphasized that business models play a primary role in SMES in low-and medium-tech
industries, not the technology. Most SMES we examine in this report did not have internal technological competencies,
but they set up new business models to leverage commercial value from technologies that existed in other organizations
or that had been developed co with partners. They developed an open innovation network with several partners
customers by leveraging their partners†or other organizations†different competencies. In other words 11 open innovation creates new business opportunities for SMES
because they can develop business model innovations without having the required technologies in-house. Instead, SMES can leverage
A business model has two important functions: it must describe the way in which the company creates
analyzed using a business model framework. Despite the fact that the term â€oebusiness model†is used widely in the business world, academic research is relatively sparse,
because researchers define business models in different ways 8 Applying existing business model innovation) frameworks to low-tech SMES is not trivial
because the open innovation network is at the core of the business model. The existing business model (innovation) frameworks do not pay attention
to strategic partners or they incorporate them as a module in the model without analyzing interactions
with other modules in the framework. We will examine in detail, therefore, how a business model framework must be adapted to fit business model innovations based on open innovation in low-tech
SMES. Examining which implications our findings have for the theoretical modeling of business model innovation, which has received significant attention among strategy scholars,
is beyond the scope of this report Business model innovations based on an open innovation imply that there are cost-increasing effects
of technology sourcing and technology co-development 9 The new revenue streams resulting from business model innovation must be balanced against the costs of setting up
and managing the external network of partners. Moreover, SMES have limited financial means to seize new business
opportunities. Accordingly, they may have to work in several consecutive steps, which in some cases look like a bootstrapping strategy
Business models take thus a central place in analyzing open innovation in small firms. This has
implications for the structure of this report. In Chapter 2, we analyze the business model innovations of
the SMES we interviewed. First, we pay attention to how small firms develop strategies to create value
for customers. Several firms faced rapidly increasing commoditization in their product markets and had to find new ways to create value for existing or new customer groups.
experience economy as one way to create value. Besides value creation, we also examine how small
firms can appropriate part of the value they create with the new business model. Appropriating value can be non-trivial for a small company,
new ways to gain significantly more profits with the new business models. In Chapter 3, we enter the
dynamics of business model innovation. The firms that have reached the most spectacular results with their business model innovation realized this in several consecutive steps.
In SMES, new businesses are developed stepwise using new product projects as tools to move forward.
opportunities. Setting up and managing innovation partnerships for most SMES is a new challenge SMES are accustomed not to sharing information, to co-aligning objectives,
relationship between the new venture and the company that developed the technology is instrumental in producing a commercially successful venture.
The second example illustrates the opposite case: A small engineering company licensed its technology to a large company to develop a new product for
with ample opportunities to benefit from the new technology. In Chapter 6 we summarize this report†s
and deliver products or services Each of these SMES provided an interesting case to examine how SMES apply open innovatio n. We
2 Business model innovation in low-tech SMES Analyzing the open innovation activities of SMES in traditional industries starts with a broader analysis
of the business model innovation of those companies. The role of open innovation can only be
for customers in new ways and to create a more profitable business. The analysis of the business
companies we interviewed sidestep the commoditization pressure by changing their business model Next, we focus on the initial entrepreneurial act to initiate such a business model change.
In section 2. 3, we look at how several companies transitioned from products or services to experiences in their
search to offer more value to the customer. Finally, we examine the different drivers that enable SMES
to accomplish these major business model changes 2. 1. Business model innovation in SMES to sidestep the commodity trap
Many SMES face severe commoditization pressure in their markets. Just as each product or technology has a li fe cycle,
When products or services commoditize, price competition becomes predominant and results in intensive price battles and industry shake-outs.
or capitalize on new growth opportunities beyond their existing business As the burgeoning management literature on business model innovation has shown during the last
decade, SMES can take different approaches to reshaping offerings and seizing new growth opportunities. A business model defines the way companies deliver value to a set of customers at a
profit. It consists of tightly interlocking elements: companies create a customer value proposition identify key resources
and processes needed to deliver that value, and design a profit formula 11 The attractiveness and financial viability of a business model erodes over time as price competition starts
to dominate. Sooner or later, firms†existing businesses are prone to commoditization. Firms subsequently engage in so-called â€oestrategic innovationâ€
or â€oebusiness model innovation†to find new ways to create value for customers. Business success comes from satisfying real, although frequently
latent customer needs, but a customer value proposition must also deliver value for the firm as well
Companies that are successful in business model innovation gain a unique position in the competitive space that is difficult for others to imitate.
space represents the business opportunities outside a company†s current businesses that require a different business model to exploit.
Each in their own way, many other management authors have suggested methods and models to implement business models and business model innovations
SMES that successfully sidestepped the commodity trap have changed their existing business model successfully to deliver more value for the customer at a profit.
In contrast with large firms, SMES 15 sometimes develop their business model in a rather intuitive way, based on strong but informed vision
conviction or basic insight. We observed in all the SMES we interviewed that open innovation is always
embedded in the company†s broader strategic goals. The value of opening up innovation process
overall strategy or business model. We thus explore the strategy of innovating SMES in this and the
The economic value of a technology only emerges when it is commercialized in some way 14 It is the business model that determines the economic value of a new
technology by indicating how customer value will be created and how the company can capture value from that technology.
but when isolated from SMES€ strategies and business model development, they are useless in explaining why
Developing a start-up†s business model or reinventing the existing strategy of an SME usually starts
existing flavours at reduced costs to customers in the flavour and flagrance market. The value
before he decided to pursue the venture In other cases, it takes more time to articulate the customer value proposition of a new business model
in small firms. Large companies may detect new business opportunities by carefully analysing market trends, spotting new technologies with promising applications, and so on.
Small companies do not have required the resources in-house to analyse new growth opportunities systematically.
On the contrary, most of the small companies we interviewed started with a basic insight.
and the environment would increase the need for sustainable solutions Sustainability is entrenched in each part of the company, even in its logo.
that have a minimal impact on the environment (Product Sustainability; and it creates new concepts
growing need in Western societies and that customers would be willing to pay a premium for high
sleep was a useful way to discover a new business opportunity, both entrepreneurs had no idea when
considered the value proposal that the company makes to its potential customers. QOD offers customers a new meaning to the product of quilts.
Quilts have always been considered a product that keep people comfortably warm in bed. By their nature,
because the customers were not able to envisage that the properties of a functional quilt such as TEMPRAKON could actually benefit their ability to sleep well.
It took a stepwise approach of more than three years before the business model for a functional quilt was developed in great detail.
product to deliver value to customers in a way they could not anticipate themselves Curana (see p 24) is another example that illustrates how developing a new business model is a
gradual process that can take years. It is, in fact, a never-ending process. Curana is a micro-company
but it was increasingly difficult to make profits as price competition intensified over the years. The competitive landscape changed drastically in the mid
Facing rapidly declining profits, Dirk Vens, CEO of Curana, decided to change the firm†s strategy
and developing a new business model Sometimes, the business model is straightforward, as we have seen in the case of Isobionics.
This represents an instance when the company is replacing existing product offerings with a new one at
thus far examined several ways to develop a business model. Some companies, such as Devan Chemicals, start with key concepts that act as fundamental guidelines for many years.
what customers might value. Business model innovations start with articulating a customer value proposition 17
managers underlined that creating value for customers is the first and most important element in
developed by questioning existing customers. In many cases, this would be a good recipe for
but not for game-changing and highly profitable business model innovations 18 Next, business models cannot be anticipated fully in advance
and articulating them may take time Innovative business models are sometimes hard to articulate because too many questions remain
unanswered. The needs of the target customer might not be explicit. Or, it might not be clear how
have a full business plan. Game-changing business model innovations cannot be planned analytically because many of the variables relevant to their success are unknown at the o utset.
In contrast, SMES have to experiment to discover new business models. Moreover, experimentation is path-dependent
that is, early experiments and choices shape the trajectory for to evolve the business mode further
New opportunities will be discovered each time the company achieves a new step in realizing its business model 19 Figure 1:
Case Devan 20 21 22 2. 3. Innovate beyond products and services: the relevance of the experience
economy for innovating SMES New offerings can create value for customers in different ways. A company might increase the
functionality and reliability of a product; the company can offer more convenience to the customers;
or the company can reduce costs and thus the price of a product or service.
In today†s service economy many SMES wrap additional services around their products to increase customer value in exchange
for a premium price. Although selling additional services might be a viable strategy in many industries
several of the successful SMES we analysed preferred to offer genuine experiences to their customers
as a new source of value Pine and Gilmore 20 have analysed in detail how †experiences†are a new economic offering
Experiences are as distinct from services as services are from goods. Experiences have always been
around (in the entertainment business, for instance), but they have gone largely unex plored as a major driver for strategic innovation in SMES, in both manufacturing and services.
As products and services increasingly become commoditized, experiences have emerged as a next step in creating value for
customers. Commoditization makes it increasingly difficult for SMES to operate profitably in established markets where scale and scope economies become the dominant driver to gain and
sustain competitive advantages. As the next examples will show, some SMES have grown profitably by transforming existing products or services into experiences for the customer
Curana is a great example that illustrates how commodities such as mudguards and other bike accessories can be used to transform bicycle riding for the end consumers into an engaging
experience. Currently, many consumers consider bicycles part of their lifestyle. Mountain bikers racers, recreational bikers, and 65-and-older bikers, for example, all have their own bicycle style.
Bike accessories with a sleek design help shape the unique look of a bike considerably.
B†Lite as an ODM for the Accell Group, one of its major customers. Although growth and profitability
producing accessories according to specifications and prices customers set. Moving from an OEM to an ODM allowed Curana to set its own price
customers producing products with a customized design. Being an ODM would not differentia te Curana from other ODMS, however.
proposing its own ideas and prototypes to bicycle manufacturers. The innovative and unusual concepts and designs made Curana a well-known brand.
visitors would like more opportunities to assist the patient and an infrastructure that allows them to stay in the patient†s neighbourhood.
patient and his environment, with durability, functionality, usability, and a modern design. The concept has been implemented in a growing number of European, national,
of individual services (nurses, doctors, cleaning services) is not the main qualifier; indeed, more services can be quite bothersome for patients.
Instead, Prof is centred a customer approach using the patient room as a stage to improve the patient†s hospitalisation experience drastically.
Their innovation adds value to customers and helps retailers reduce costs. In fashion, rent is the most important cost factor.
customers could experience shopping and buy fashion in a novel way. Nor is optimized shopping from
customers cannot check whether the clothes they are buying in the shop really coordinate with those
DNA Interactif Fashion proposed a new business model for fashion shopping. It changes shopping for fashion goods into a completely new experience for the customer.
After scanning, customers see themselves on large screens as a virtual, three-dimensional model dressed in clothes from various collections that the
Customers can also be welcomed by a stylist with whom they discuss their personal style, but the software also can make choices for the customer depending in the
and evaluate the clothes the customers selected before they purchase. This process is called †istylingâ€.
Customers experience an additional advantage: purchases are stored in a personal, virtual wardroom, which can be consulted any time.
Moreover, customers can see online at home how they might look in a new collection.
Stylists even guide their customers through a t ransforming or restyling experience subsequently changing, adapting, or upgrading prior dressing habits to professional standards
So, far we have focused on how small companies develop new business models and how this move
allows them to sidestep the commodity trap. We narrowed our attention in this chapter to the role of
the business concept and the potential of turning business models that are product and service oriented into more profitable business models based that generate experiences for customers.
The role of open innovation is not in business model innovation is discussed not here. This is the subject of
chapter four in which the role of open innovation in new business development is analysed in detail
Curana innovated its business model primarily in response t o these shifts in the marketplace. In fact, Curana changed its business model
and embraced an ODM model and later a proactive design strategy as a competitive driver.
customers and was highly profitable for the company Changes on the demand side, however, are sometimes slow and steady.
Think about the growing awareness of companies to develop environmentally friendly or sustainable products or the increase in
environment and have a positive health effect. Similarly, Philip†s Airfryer is a product in Philipsâ€
opportunities for small companies. Likewise, the emergence of new technologies and disruptive technological developments offer similar opportunities for small firms.
Many venture capital-backed high-tech ventures have been established to explore business opportunities that can be exploited based on a new applications of technologies.
Isobionics is one of those start-ups that have the potential to change competitive dynamics in a traditional industry such as the flavour and fragrances
market. The biotechnological processes to produce these substances at a much lower cost than traditional production techniques will ignite competitive reactions,
It is interesting to note that small ventures such as Isobionics need not have required all the technology in-house.
and lead-customers. New technologies thus offer opportunities for small firms even in the so-called low-tech industry such as textiles, furniture, bicycles, food, and so on
Science or technology driven strategies are fruitful for small firms under several conditions. First, small
firms profit from pursuing markets that are too small (at least initially) to interest large companies
migrate from one technological opportunity to another. Third, when new technological developments drive competition, small firms can prosper only when they collaborate with a range of knowledge
partners: they don†t have required the in-house technology and financial resources to develop the
Shifts in government policies targeted at the business environment are another important driver of business model innovations in SMES.
Sometimes, new regulations may increase fixed costs of doing business, which drives out players that are too small to amortize the costs.
may open new opportunities for small business, endangering the position of large established firms Examples include the production of sustainable electricity or new types of media.
Changes in the environment are thus an important reason small companies experiment with new business models to revamp
or grow their business. However, we must also look at value drivers to explain successful business model innovations in SMES.
Small firms can benefit from having several advantages compared to large companies depending on the activities that drive profits in different
industries We found that SMES can have a considerable advantage because they can react quickly to changes
and in offering customized products and services to clients (particularly in business-to-business industries. Segers & Balcaen (see p 35) is a small Belgian
plastics packaging company that continuously identifies new packaging needs among its customers 33 For many other companies, Segers is preferred a supplier
New technologies also provide opportunities for small companies. New technologies often find their first applications at the edge of markets or in niche markets, not amidst the mainstream
customers will only buy a technology product when the new technology has been proven, complexity has been reduced,
opportunities for SMES to pursue embryonic markets that are too small to attract large firms.
therefore, developing technology based business opportunities should no longer be limited to university and corporate spin-offs.
what customers need from technology that is available from different types of knowledge partners. Small firms are successful as innovation
solve a problem for their customers. Their relational capital is crucial in explaining their success as
innovators. Devan Chemicals, Quilts of Denmark, and Curana are examples of how a small firm can
Some small firms sidestep commoditization by turning products or services into experiences. Jan Kriekels, CTO of Jaga (see p 47), expressed it this way:
People buy Jaga heaters because they care about the environment or because they want a sleekly designed radiator as an eye catcher in their home or business lounge
developing a new business model. A business model defines the way a company delivers value for a specific customer group at a profit.
The value of open innovation activities in SMES can only be estimated correctly within the context of their broader strategic objectives
ï New strategic objectives of a company should be analyzed via a business model innovation framework ï All firms have in common that their efforts are focused on creating value for a particular target
customer. They start with an explicit or intuitive idea of what customers might value. Business
model innovations start with articulating a customer value proposition ï Creating customer value through game-changing
and highly profitable business models will usually not be developed by questioning existing customers ï Sometimes, the business model is straightforward.
In the other cases, conceptualizing and articulating a business model is a more complex process. It may take months and even years
to clearly articulate the customer value of an idea. Innovative business models are sometimes hard to articulate
because the needs of the target customer might not be explicit, uncertainty might exist about which technologies to use and
which partners to team up with ï However, SMES should wait to innovate until they have a full business plan.
Game-changing business model innovations cannot be planned analytically because many of the variables relevant to their success are unknown at the outset.
In contrast, SMES have to experiment to discover new business models. It is driven a discovery process
ï Most of the SMES use business model innovation to fight commoditization of their products They can increase functionality or reliability of the products,
they can create more convenient products for the customers. SMES may also wrap additional services around their product or
offer genuine experiences to the customers ï Turning businesses under the threat of commoditization into genuine experiences for
customers is a difficult target for SMES but it is one of the most profitable strategies in the long
term and a way to gain more power in the industry ï Drivers for change may be quite diverse.
We identified the following drivers o New substitutes and new players in the market †sharp increase in competition
o Public policies changing the market conditions forcing SMES to overhaul their strategy o Slow, steady changes in demand:
impact are long term trends that offer great business opportunities for innovative SMES o New technologies who have the potential to disrupt incumbents in an industry are an
opportunities for SMES to pursue embryonic markets that are too small to attract large companies
to customers o Small companies may offer completely new experiences for customers. These radically new ways of offering value for customers takes time to develop and there are
too many unknowns at the outset to guarantee a market big enough to attract big
companies 35 Figure 4: Case Segers & Balcaen 36 37 3 A dynamic view on business model innovation
Business model innovation should not only be analyzed cross-sectionally, but also dynamically because they develop and change over time.
In this chapter, we analyze some aspects of business model innovation in SMES. First, we look at the possibility of changing business models.
Change may not occur just once, but several times, moving stepwise toward a business model that creates more
interesting value propositions and results in higher profitability. Second, we examine the process of discovering new applications after a small firm has introduced a new technology to solve a problem in
attention to the role of customers and innovation partners in this process. Finally, several SMES have
Developing a dynamic view on business model innovation is also important to understand the dynamics in the open innovation networks of the companies we examined.
3. 1. Stepwise discovery of new business models In the previous chapter, we described how Curana has changed its strategy from an OEM model to a
Why did he change the business model several times? Some managers continuously probe ne w business models, with each new model building on the strength of its predecessor.
Switching to a new business model creates opportunities to change it again for a second or a third time.
It is a path -dependent process in that opportunities to change the business model into a more profitable model
can only be detected after the previous business model has materialized fully. SMES thus change their business model in a stepwise way
To illustrate this concept, we take the example of Curana and use a scheme suggested by Dirk Vens
see figure 5, p 38. The scheme shows his company†s business model innovations between 1999 and
2010. Curana, a small, family-owned bicycle accessories manufacturer started as a typical OEM: it
The customers (manufacturers) determined the prices, and the company could not add value because the product was easy for other bike accessory manufacturers
manufacturers, which is why Dirk Vens chose to change his company†s business model 38 Figure 5:
Business model innovation at Curana The transformation from an OEM to an ODM model was made possible through a new product
enabled Curana to change its business model from an OEM model to an ODM model. In an ODM
of the product and price reverted to Curana based on the premium customers want to pay for a unique
Customers started to realize that Curana was becoming an important partner for their own success. Over the years, Curana
Most SME-managers would be inclined to stick to this new business model because avoiding the commodity trap and price competition are their main concerns.
Once Curana was recognized as an ODM, however, it fine-tuned a new strategic direction. Design and innovation became core activities to
changed its business model again. It established an internal design office because design had become the heart of the company.
to promote its new ideas among potential customers. In this way, the company r eceived valuable
feedback from potential customers. Realization is the fourth step. For Curana, this step started with
started from a vision based on new opportunities derived from global trends, new materials and technology, and design developments.
potential customers is delayed until a later stage in the process. Customers are still important, but they
are not driving the company†s innovation strategy. Through this strategy, Curana created bike accessories that were unique to the industry.
-trough demand Three strategic changes in a single decade may appear to be too much turbulence,
Dirk Vens was searching for a new business model that would bring growth and profitability. He started with one product development project that resulted in the
successful launch of the B†Lite and the start of the ODM business model. The B†lite, however, was not
New opportunities to create and capture value are discovered step-by-step, and each previous step is necessary to move to the next.
Let†s look again at the four business models in figure 5 (p. 38. Once Curana had adopted the ODM model,
customers) further by switching to a proactive innovation strategy. This change in strategy gave the
company more degrees of freedom to act (customers were no longer taking the initiative) and resulted
if the company had remained with the ODM business model, several competitors might already be imitating Curana†s strategy
Curana†s successive business model changes also offered it a unique position in the market. Curana
into new business opportunities. First, mercury barometers have a minimum length of 90 cm to be
accelerators in cancer treatment, and tuning engines to name a few applications require real air pressure to be measured very accurately.
spent significant energy educating customers about how to make the fries tasty and crispy in an
essentially, customers had to learn to fry again because hot air frying differs from frying in
customers via its My Kitchen Web site, different customers are already experimenting with new ingredients, meals, and so on.
and the Airfryer, explaining to customers how they could optimize the device for several frozen snacks
The food separator allows customers to fry an entire me al and can inspire snack producers to develop different combinations with the same frying time as a ready-to
Air Technology present only emerged after customers started to use the device and when other
players in the market, such as snack producers, envisioned new market opportunities. The Airfryer has now been on the market one year,
customers. The most interesting example in this respect is Curana. Although the company changed significantly in the last decade, it has always been focusing on providing solutions for bike
over time gave them definite opportunities to diversify into other markets. Curana, for instance, was invited to design lighting armatures.
including its customers. Outside that open innovation network, the company cannot rely on its reputation and it has to start from scratch to build its network
of partners and customers 27 Open innovation networks thus enable a company to deliver value in
completely new ways to its customers. They also, however, keep the company tied to the existing
innovation partners and customers. In a phrase, innovation networks enable, but they also bind Devan also shows a similar pattern of moving from one product category to another.
and some provide a more hygienic or healthier living environment. The race into ever more complex applications of chemicals coincided with a continued focus on the same type
of customers and applications. Furthermore, the innovation partners were involved in long-term contracts and formed a stable network of trusted partners that had known one another for years or
The PROF business model brings together several companies with complementary competencies to develop a new idea or
partners or customers. In several cases, the innovation network is one of the factors that limit the
or services, but it also limits the number of options for the company to change and diversity
SMES usually do not have the money to make this investment. Less expensive alternatives exist
address design, entrepreneurship, and open innovation. All these activities provided the company with more international visibility and a reliable reputation as top design company
granted to European companies that use design to create added value for their customers and know
innovation, it becomes an additional asset in for developing new business opportunities. Today, Jan Kriekels has a worldwide reputation as a thinker and evangelist of the cradle-to-cradle philosophy.
This organization analyzes the investments required for a building to reduce energy consumption to a minimum. Combining people with strong ideas and reputation with
green technology projects is an interesting recipe for successful new ventures Jaga is certainly an extreme example of how a company can build a reputation over time.
was that 25 small profit centers could work with a relative autonomy to increase creativity and
ï Successful SMES do not remain with one business model forever. They are continuously probing new business models.
Each new business model builds on the strength of the previous business model and improves its value proposition and profitability.
This constitutes a path-dependent process because new opportunities to transform the business model into being more profitable can only be detected after the previous business model has materialized
fully. In business model innovation, too much uncertainty exists to plan analytically a way to move forward.
Indeed, SMES change their business model in a stepwise way ï Business model innovations are designed to create more value
and generate more profits and increasing profitability can be the result of several changes. We have emphasized
innovating SMES can increase profitability by increasing the number of control points and creating a unique offering.
In the case of Curana, the company gained control points to differentiate itself from the competition.
In addition, its accessories were incorporated unique great designs, and combined new materials in a way no other single producer could copy
ï If a company faces serious problems in its existing markets, it will look for a (technological
solution to solve the problems. Discovering new applications for the new technology is a slow
customers, and partners ï Open innovation networks enable a company to deliver value in a completely new ways to its
customers, but they also keep the company tied to the existing innovation partners and customers.
Innovation networks enable, but they also bind ï Small companies must use relatively inexpensive but credible ways to develop a reputation or
4 How SMES build new business models through open innovation In the previous chapters, we explored how small firms can boost their competiveness in the long run
by changing their business model. So far, we have not been emphasizing the role of the innovation
open innovation as they develop new business models. We have explained already why the business model approach is useful in the context of SMES that want to improve their competitive position
Business models also play a central role in open innovation as the continuous sourcing from and
The business model literature however, has been marginalizing partnerships to outsourcing or acquiring particular activities or assets
collaboration with external partners can add value to the business model of SMES A business model describes how an SME creates value for a particular customer group and how it
captures a portion of that value. Open innovation uses the division of innovation labor to both create
labs, small firms are by default open in their search for innovations and new business opportunities
Innovation in SMES is hampered by lack of financial resources, scant opportunities to recruit specialized workers,
Business model innovation starts with discovering or recognizing new forms of value creation for a particular customer group.
and referring to any factor that enhances the total value created by a change in the business model
Examples†as we have seen in Chapter 2†are reducing costs for customers (e g.,, Isobionics increasing time efficiency, solving problems (e g.,
attractiveness of the customers†products or services (e g.,, Curana), and providing new functionalities and increasing emotional value (e g.,
and commercialize the new product or services Most SMES we studied rely heavily on value chain partners and a few additional knowledge partners
In these industries, innovations are usually the outcome of recognizing new market opportunities, with technology push innovations playing only a minor role.
innovation adventure with a new concept about how to serve customers better. In some cases
customers identified a problem themselves; in other cases, the entrepreneur devised a new concept More radical innovations require more new partners to be introduced into the network.
healthy sleep was a useful way to discover new business opportunities, the company†s entrepreneurs
Because Outlast was the engineering partner in this venture, its technical competencies were crucial in developing the microcapsules.
strong bonds with suppliers, the designer community, knowledge centers, and customers Working with external partners over the length of the value chain (from design to production and sales
leveraged the business to new opportunities that could not have been seized without collaboration Open innovation was a direct consequence of Curana†s strategy:
which it could transform into extraordinary solutions for its customers. The network was a powerful tool
competition. In this way, Jaga got in touch with promising technologies to develop low CO2 emission
create, and present a product prototype or product idea on a flyer. In an official contest, in which professional and nonprofessional designers were divided into two groups
and would be assigned dedicated engineers that could help build a prototype. In this way, the Product
PROF members (Patient Room of the Future)( see p 59) jointly created value for customers in yet
or services for specific customers 33 PROF is different: It starts from the patient†s room as customer
room should be changed to deliver value for the different stakeholders involved. Stakeholders are, in this case, the patient, nurses, doctors, family of the patient, and so on.
PROF was structured in such a way that it could progress with the new concept for a patient room and stay in tune with the
stakeholders. PROF includes both a small and a large consortium. The small one consists of a well
or deliver services that were necessary to develop a new concept of the patient room.
the stakeholders involved. All product and services innovations were aligned with and integrated in the new patient room concept,
which in turn was derived from the keywords that summarized the major challenges for the people that have experience with patients and patient rooms.
products and services into a new patient room concept also implied that their value for the usability
allows companies to implement business models that generate more profits. We provide illustrations from the SMES we have analyzed
customers on the other hand is essential for understanding how the company can continue to make profits in this way.
Close collaboration with technology partners with leading-edge competences and detailed knowledge of the challenges of textile producers are key factors that explain why Devan
Other companies make money using open innovation to move from commodity products to highly differentiated products.
offer customers the experience of a healthy sleep by adding new functionalities. They started with the
-radiators appeal to some customers because they reduce the carbon-footprint of heating houses and buildings.
because some customers value a nicely designed radiator such as the Heatwave (see figure 6). This radiator is developed by an artist
Denmark successfully sidestepped the commodity trap and now capture more value by focusing on how they can offer highly differentiated products and unique experiences to the consumer.
difficult because customers make a clear distinction between companies that offer the authentic experience and those that are copying it 34.
How do the manufacturers profit from participating in PROF? First, they gain direct access to potential
customers. Visiting the showroom has the additional advantage that potential customers can invite different manufacturers at the same time.
In the patient room, products were combined into broader solutions. It is thus necessary to look at the function or role of each product in the context of the room
of the price increase to its customers. †In an innovation network, partners are interconnected and
Cross-disciplinary and cross-industry communication around specific projects released energy and creativity among the partners involved.
company grants exclusive designs or products to its customers. In this case, the innovation partners must abide by the exclusivity rules
its business model in 2011 when it was exploring the potential of a new, revolutionary patented
business model to benefit from this promising technology in a different way 5. Open innovation also means openness in communication and in reporting among the innovation
partners. Partners have to trust each other to charge a reasonable price for the products or
services they offer to innovation partners in the network. Because partners in such an innovation
but also about sharing profits equitably 71 6. Developing an open innovation network also requires that partners manage the balance between
term open opportunities for competing companies to take market share 8. Cost control is another important management issue related to open innovation.
prototypes, tests, and services to the central firms. Each partner is preoccupied with his own part
of the new concept, whereas the central firm must keep an eye on the overall picture. Keeping costs under control is essential,
worldwide demand was a major challenge. However, to hold on to sole IP rights, QOD had to reach
Open innovation as an integral part of business model innovations In the past, the open innovation literature has focused too much on the direct benefits of open
major changes in their business model to seize new business opportunities and to boost profitability Lack of internal competencies then forces them to look for innovation partners.
benefits of open innovation-based business model changes differ from the classic open innovation benefits identified for large firms
Small firms are by default open in seizing new business opportunities because they do not have the
SMES is hampered by lack of financial resources, scant opportunities to recruit specialized workers poor understanding of advanced technology, and so on.
partners to realize major business model changes. Open innovation is a direct consequence of a small
firm†s ambition to change its business model A business model describes how a firm creates value for a particular customer group and how it
captures a portion of that value. We examined a range of possibilities how small firms jointly create
ï With which small firms a company innovates is determined largely by the new business model the
collaborating with partners are defined by the business model ï Most of the small firms that collaborate intensively do so with value chain partners and less with
partners when they discover new business opportunities, usually based on market or customer insights. Developing technology can be very important in realizing the business model,
but it is always a supporting activity ï More radical business model changes combine knowledge from unrelated fields.
Companies pull in expertise from industries and fields that have never been related previously to the current
If direct customers are the target customer, then the innovation network will most likely be small and easy to manage.
Good business models also guarantee profitability. The SMES we interviewed work together with different innovation partners to create,
innovation helps in executing business models with higher profitability. We enumerate a few possibilities ï Taking a dynamic lead in applying technologies to a particular product market
ï Moving away from commodity-like products and offer highly differentiated products (or experiences) that combine the expertise of several partners,
customers profoundly ï The combination of different fields of expertise to develop a new offering can lead to attractive
profits as long as the company can protect (or hide) a specific part of the total solution from its
In this way, increasing profits is the result of building control points for the innovating firm
3. Curana has changed its business model three times and with each step it could increase its profitability
ï The PROF example shows that firms can explore new business opportunities taking a significant
more value from the venture The most important take-away is that value cannot be extracted from the collaboration to the detriment
That implies that some partners may have to be compensated for losses, investments, or risks they take
5. Open innovation also means openness in communication and in reporting among innovation partners. Partners must trust each other on charging a reasonable price for the products or
services they offer to innovation partners in the network 6. Manage the balance between internal management of the company and external management of
necessary in most collaborative ventures ï Patenting is expensive for small firms, especially when a company has to apply in many countries
SMES have limited for instance ability to profit from their intellectual property because they lack enforcement power,
are more and more opportunities for collaboration between large and small companies. Underlying drivers for this trend toward open innovation are the shortening of product lifecycles, increasing
international competition, and growing technological complexity. More and more large companies rely on both internal and external knowledge sources to create new business
-tech) companies, usually financed by venture capital funds, represent another interesting wellspring of external knowledge for large companies.
ventures. Established companies understand how to avoid conflicts and how to align their corporate strategic objectives to grow new businesses to meet the financial objectives of venture capitalists.
which allows them to attract the ventures with the best technology Open innovation also implies that large companies have to monetize their unused technology
selling it, spinning off a venture, or even divesting a new venture that is ready to sell its
first products. Several large companies succeeded in increasing the productivity of its knowledge base 78 by searching for different external paths to the market.
department, which among other activities spins off internal ventures. Alternately, an IP-department can cross-license technologies with other large companies or license them out to other, noncompeting
Unused technologies in large companies represent a fertile opportunity for individual entrepreneurs or small firms to start a new business,
whereas the technology transfers might still require significant investments from engineering Furthermore, large firms that license technologies risk knowledge leaks with adverse competitive
Isobionics, illustrates how an external entrepreneur can establish a successful venture by licensing technology from a large firm.
the risk of increased competition in the market with the royalty income it receives from licensing the
business plan, he concluded that synthesizing flavor and flagrances using DSM€ s biotechnological process was a promising, game-changing innovation.
-organisms that could produce a specific flavor was the single largest investment for Isobionics developing a new natural ingredient was estimated to amount to approximately â 5 million.
Competition among companies producing biotechnological F&f was limited At that time, Isobionics had two main competitors, but with 3, 000 flavors it was easy to avoid
competition. Still entry barriers are given considerable the proprietary technology and the years required developing the technology
Second, Toine Janssen had to secure the required investments for his start-up once the business plan
investments to advance the technological development and commercialization of the first flavors Classic venture capital funds (VCF) were somewhat reluctant to finance Isobionics at the time it was
established, because the venture needed considerable investments which were too big a risk for VCFS
80 in an early investment stage 42 In the end, Isobionics was financed in a complex but interesting way
securing the company a broad financing base. The start-up was financed combining investments from VCFS, a regional venture capital investor in which DSM participated, bank loans, and subsidies from
local and national governments. The financing enabled Isobionics to further develop the technology and prepare the commercialization of Biovalencenetm, its first commercial product
Third, Isobionics could not prosper without the continuous technological support of different innovation partners. Isobionics is a start-up and, consequently, developing the first products and pilot production
collaboration and are eager to work with the venture Finally, Toine also had to license the technology from DSM.
In sum, Isobionics illustrates how a promising venture can be established by l icensing unused technology of a large company.
Isobionics profits from the collaboration with DSM in different ways: First, it got access to a game-changing technology
in turn, did also win from its investment in Isobionics. First, it had the opportunity to follow the evolution
of Isobionics. In this way, it gained valuable lessons about the F&f applications of its technology which
Isobionics can be acquired in case its business is becoming an interesting investment area for DSM Isobionics illustrates how a start-up can establish a business by licensing technology of a large firm
small firms cannot commercialize their own inventions because excessive investments in complementary assets are required 43
corporate venturing investments, co-development agreements, and acquisitions. Licensing agreements imply that the licensor and licensee share revenues,
prototype, but the engineers were struggling to transform the technology into a feasible consumer product.
prototype based on existing technologies. Subsequently, the company was granted a patent for this invention. The application development and pre-production was completed by a Chinese company
It still took two years to develop a prototype that could be demonstrated to potential customers.
The manager of the small company decided to license the technology to large companies active in the kitchen appliances industry that could leverage their
people saw the technology as an opportunity. Philips asked for †first rights of refusal†for a period of
Most customers and health authorities perceive that the Airfryer is a highly innovative product that
unused technology by licensing the technology or spinning off internal ventures Consequently, new opportunities exist for small companies,
but the collaboration can only be successful if the relationship is managed in an appropriate way
demonstrating that he understands how to present a business plan that makes sense for all parties.
The venture manager, therefore, must be experienced in finding the innovation champions in the company and contact the decision makers directly to keep the project on top of the pile
Let your partner pursue business opportunities in areas that do not fit your business model. In the Airfryer case, this translated into opportunities for both
partners, one focusing on the consumer market the other one on the professional market 89
6 Conclusion Many small companies today are confronted with harsh market conditions. The current economic crisis has weakened their financial health,
especially in industries that are globalizing rapidly. These changing market conditions force them to look for new ways to differentiate their products and services
or create new businesses. Because they lack the required internal resources, SME€ s often collaborate
innovation partners can seize new business opportunities become key players in growth industries and turn themselves into highly profitable companies
First, SMES create the majority of the jobs in these industries in Western economies Moreover, globalization and commoditization threaten many jobs
knowledge from external partners to create new products or services. Fourth, managing and organizing open innovation in SMES is quite specific,
business model of SMES. A quilts manufacturer defining the company as â€oea provider of healthy sleepâ€
which the company brings to potential customers (not necessarily existing ones). A radically new value proposition may offer customers new meaning to the product or service offering
The network of partners: Common in all cases is that the SMES establish a network of external
The size of the network is determined by the type of products or services the SME wants to launch
Partners may have to bear considerable risks or investments in dedicated complementary assets. In open business models,
therefore, one has to analyze the joint value creation together with the value distribution among the different partners.
Business model innovations are high-risk ventures because a firm must search for new technologies and develop new products.
their technology investments. Worldwide licensing deals can be challenging for SMES, which forces them to sublicense to other companies.
This, in turn, may endanger the open innovation venture Licensing deals can also be negotiated in a way that allows both partners to profit maximally from the
SMES change their business model in a stepwise way. In most cases companies begin with a (radically) new product or service,
SMES unfold their business model innovation in several consecutive steps, building new competencies and a stronger financial position at the same time.
Finally, a business model change creates opportunities to change a second and a third time. Curana switched from an OEM to an ODM
business model. Once the company was recognized as an ODM, it changed its business model again by proactively designing bicycle parts.
Because of this change, the company was recognized in the industry as a trendsetter. This, in turn, triggered Curana to build a brand-based strategy.
These consecutive steps propelled the company into a leading position in the bike accessory market.
company stayed tuned to the ODM business model, it would already be confronted with several competitors imitating the ODM move
The benefits and cost of relational capital. Relational capital plays a central role in developing an open
innovation based business model. The competitive strength of the SMES is no longer (only) related to its internal competencies,
but also) to its network of relationships. After some years, an SME has a large network of organizations upon which it can rely.
companies that face stiff competition have to reinvent their businesses, looking for new ways to
reposition their products and services Some of the SMES we described opened new market space,
which made their competition irrelevant at least for several years. They started with a strong vision
investments. Imagining a new product is one thing, whereas start ing the venturing process is another
He perceives the new business opportunities and his personal commitment and conviction help determine the success and development of the
We did not examine the entrepreneurship literature to analyze open innovation in SMES Clearly, potential exists to connect the two literature streams to strengthen the analysis further
which emphasizes the role of experimenting in new venture management Finally, the cases point to the need to integrate different management disciplines to understand open
The need to combine innovation management, entrepreneurship, and strategy is urgent to understand the richness of these open innovation cases.
suppliers of equipment (i), customers (ii), competitors and other firms with similar activities (iii), commercial
of readymade products/services developed by third parties (i; the acquisition of processes set up by external parties (ii;
enterprises N-SME=792 Large firms N-large=175 Mean Standard deviation Mean Standard deviation
business models: How to thrive in the new innovation landscape, Harvard Business school Press, Harvard Boston: MA
business models: How to thrive in the new innovation landscape, Harvard Business school Press, Harvard Boston: MA
Chesbrough, H. W. 2007), Why companies should have open business models, MIT Sloan Management Review, 48 (2), 22-28
There are different approaches to business models. Different authors have analyzed the business models along different frameworks. Prominent approaches are:
Afuah, A (2004), Business models: A strategic management approach, Mcgraw-hill; Morris, M. and Schindehutte, M. 2005), The entrepreneur†s business
model: Toward a unified perspective, Journal of Business Research, 4, 123-128; Osterwalder, A. 2004
The business model ontology †a proposition in a design science approach, Ph d. Thesis University Lausanne, Ecole des Hautes Etudes Commerciales HEC. 173 p;
2005), Clarifying business models: Origins, present, and future of the concept, Communications of the Association for Information systems, Vol. 16,1-25-25;
Shafer, M. S.,Smith, H. J. and Linder, J. C. 2005), The power of business models, Business Horizons, 48 (3), 199-207.
Chesbrough, H. W. and Rosenbloom, R. S 2002), The role of the business model in capturing value from innovation:
evidence from Xerox Corporation†s technology spin-off companies, Industrial and Corporate Change, 11 (3), 529-555;
. and Kagermann, H. 2008), Reinventing your business model. Harvard Business Review, December, 51-59.;and Johnson, M. W. 2010;
Business model innovation for growth and renewal, Harvard Business Press, Boston: MA 9 Faems, D.,de Visser, M.,Andries, P. and Van Looy, B. 2010;
Opportunities and challenges, Academy of Management Journal, 50 (1), 25-32. Qualitative, in depth cases are also valuable for theory building
A business model can be defined in different ways. A. Osterwalder and Y. Pigneur (2009 Business model Generation is one of the most influential books on business model innovation
besides M. W.,Johnson (2011) Seizing the white space: Business model innovation for growth 96 and renewal, Harvard Business Press, Harvard:
MA. The core ideas of this book are summarised in the following HBR article: Other definitions of open innovation have been provided by Johnson
M. W.,Christensen, C. M. and Kagermann, H. 2008), Reinventing your business model. Harvard Business Review, December, 51-59.
Business models: A strategic management approach, Mcgraw-hill Irwin. Boston: MA; R. Amit and C. Zott (2001), Value creation in e-business, Strategic Management Review, 22,493-520
and Rosenbloom and H. W. Chesbrough (2002), The role of the business model in capturing value from innovation:
te competition irrelevant, Harvard Business Review Press, Harvard: MA 13 Johnson. M. W. 2011), Seizing the white space:
Business model innovation for growth and renewal, Harvard Business Press, Harvard: MA 14 The role of the business model creating economic value from technological inventions is one of
the central themes in Chesbrough, H. W. 2003), Open innovation; The new imperative for creating and profiting from technology, Harvard Business school Press, Harvard:
Chesbrough, H. W. and Rosenbloom, R. S. 2002), The role of the business model in capturing
Isobionics†customers, notably food manufacturers, can use Biovalenceneâ¢--the first commercialized flavour by Isobionics†to create natural
M. W.,Christensen, C. M. and Kagermann, H. 2008), Reinventing your business model. Harvard Business Review, December, 51-59
seizing new business opportunities. See R. Mcgrath and I. C Macmillan (2009), Discovery driven growth:
and seize opportunity, Harvard Business Press, Boston: MA.;R Mcgrath (2010), Business models: A discovery driven approach, Long Range Planning, 43,247-261
20 Pine, B. G. and Gilmore, J. H. 2011), The experience economy, Harvard Business Review Press, Boston
MA.;Pine, B. G. and Gilmore, J. H. 1998), Welcome to the experience economy, Harvard Business Review
July-August, 97-105; GILMORE, J. H and B. J. Pine (2007), What consumers really want:
customers, Harpercollings Publishers, New york Chapter 3 23 See previous chapter for a more detailed description how Curana developed the B†Lite.
and seize opportunity, Harvard Business Press, Boston: MA, p. 13 25 Barometers used for meteorological purposes are calibrated always
2002), The role of the business model in capturing value from innovation: evidence from Xerox Corporation's technology spin†off companies, Industrial and Corporate Change, 11 (3), 529-555;
. and Allen, J. 2005), The entrepreneur†s business model: toward a unified perspective Journal of Business Research, 58,726-735;
business models, Business Horizons, 48,199-207; Osterwalder, A.,Pigneur, Y.,Tucci, C. L. 2005 Clarifying business models:
origins, present and future of the concept, Communications of the Association for Information systems Chapter 4
98 29 Chesbrough, H. 2007), Why companies should have open business models, MIT Sloan Management Review, Winter 2007,48, 2, 22-28;
Gassmann, O.,Enkel, E. 2004), Towards a theory of open innovation three core process archetypes, R&d Management Conference RADMA, Lisbon, Portugal
Cinematch) at predicting which movies customers will like based on their past preferences. Crowdsourcing contests are also possible for smaller companies †although most likely in smaller, more focused
and value conversion of tangible and intangible assets, Journal of Intellectual Capital, 9, 1, 5-24
Technology Ventures Defense mechanisms and Corporate Relationships, Administrative Science Quarterly, 53: 295†332 36 See National Research Council (2004:
Injunctions, †The Journal of Law and Economics. Vol. XLIV, no. 2, 2001,573-603) for an analysis of how
which an optimal environment can be created for microorganisms to grow and reproduce. Cultivating these mirco-organisms yields a desirable substance.
42 This is a common problem for biotech and pharma ventures 43 Two inspiring articles to understand how complementary assets play a role in the valu e appropriation of
and seize opportunity, Harvard Business Press, Boston: MA
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