Synopsis:
Entrepreneurship: Business model:
(Focus) Eunika Mercier-Laurent-The Innovation Biosphere_ Planet and Brains in the Digital Era-Wiley-ISTE (2015).pdf.txt
Advertisement-based business models empowered by Internet make customers unhappy with what they have and push them to buy something newer and â€oebetter†right now (consumerism).
The Google business model based on advertisements generates intellectual and visual pollution and is an important theft of time †time to find how to close the advertisement window
Their advertisement-based business model is copied around the world but their ethics should be reviewed †it is impossible to see a video on Youtube without losing 30 s,
but it also adopted the advertisement-based business model. The users need an effective way of searching instead of pushing tracking-based advertisement.
and hypercompetition influence the strong â€oequick business†culture amplified by innovation in marketing-and advertisement-based business model.
but economic impact is not easy to estimate because of complex business models. Some examples of social innovation:
Service is usually related to the use of products and a base of open-source business model. Designers of products have all the necessary knowledge to be used for related services, for example, software training.
or servicizing, is a part of service innovation and a new business model. The concept is based on the idea that
†ability to combine the innovative business models; †knowledge of customers, their needs and motivations;
the most difficult task is to find the right business model and to evaluate the economic impact of such activities.
of innovation as the innovation in public sector, open government, business model innovation, and innovative scheme open innovation and science 2. 0, to assist universities
The main innovation here is considering VC as an initiator of search network for identifying and combining finance, technical expertise, marketing know-how, business models, standard-setting capacity and others.
†tools supporting collaborative business models and social network applications; †technologies ensuring the robustness and security of the networks, managing identities,
The business model bloc deals with finding the right funding and/or sales the results. Based on the specific opportunities that the center identifies,
other business models can be applied. Each FC has a unique lifecycle †from the initial idea of launching an FC to its ongoing operation/transformation (and in some cases
Experimentations and Results 149 Some benefits from Future Centers Each FC develops its own business model depending on its mission.
Moreover, frequently, the business model changes over time and is modified to new circumstances and needs (or constraints) of the mother organization.
Agriculture (9), Air quality (4), Biodiversity (1), Cities (1), Construction (11), Energy efficiency (30), Industry (15), New services/business models (3), Recycling
However, the economic impact is not easy to estimate †the various business models are experimented. Some of these projects help to create jobs;
the aspects of job generation and business models should be improved. The H2020 opened the opportunity for more social
Low-cost business and the free business model generate a disastrous and slave society, managed by the almighty Google,
181 business model, 107 innovation, 62,126, 155 intelligence, 64,72, 113 watch, 79 computer science, 7†11,21, 26,69, 132 computers, 7, 13,15, 16,52
(Management for Professionals) Jan vom Brocke, Theresa Schmiedel (eds.)-BPM - Driving Innovation in a Digital World-Springer International Publishing (2015).pdf.txt
which is to sustain wealth by means of new business models. In featuring the views of global thought leaders,
or entire new business models. However, unlike most transactional processes such as purchasing, sales, or payroll, the transformational process of innovation has been underexplored by the business process management (BPM) community.
17 Charles Møller Thinking Tri-laterally About Business Processes, Services and Business models: An Innovation Perspective...
Richard Welke presents â€oethinking Tri-laterally About Business Processes, Services and Business models: An Innovation Perspectiveâ€.
He outlines the close connection of business models (as purpose of a service), services, and processes (as sequence of tasks in a service)
Thinking tri-laterally about business processes, services and business models: An innovation perspective. In J. vom Brocke & T. Schmiedel (Eds.
Business Process Innovation as an Enabler of Proactive Value Chains 29 Thinking Tri-laterally About Business Processes, Services and Business models:
An Innovation Perspective Richard J. Welke Abstract We propose a new, integrated â€oeway of thinking†about processes, services and business models.
a mini-business or â€oebusiness within a business†and therefore is governed implicitly by a business model of the process/service owner, the â€oeceo†of that business.
It can be top-down by considering its business model. Or middle-out where a specific service for an internal or external client is examined for innovation potential.
namely business models. 3 Service Business models We begin here with the assertion that any service, whether it†s consumed internally (by organization members
any business process or the service (s) it defines has implied an business model as well. Normally, and to the extent a business model is developed at all,
it is applied to the major value streams of an organization, i e.,, the principal, revenue-producing products and services.
what is meant by a business model, how best to capture it, and whom its customers are.
and summaries on business models, including an â€oeolder†but integrative summary on business models provided by Al-Debei and Avison (2010).
A summary of the current the â€oestate of the art†is provided in a whitepaper by Krcmar (2011.
and Tucci (2005), Osterwalder and Pigneur (2010)) on Business model Generation. These authors view a business model in terms of a â€oecanvas†consisting of a set of interacting concepts shown in Fig. 6. Osterwalder
and Pigneur also provide a â€oesub-canvas†to enable practitioners to more fully elaborate their â€oevalue proposition†for the offered service,
From a business model perspective, on the client side (outside-in perspective), each customer consuming the service has a problem-to-be solved (PTBS),
as seen either from Fig. 6 Business model concept associations Fig. 7 Value proposition customer-facing elaboration Thinking Tri-laterally About Business Processes, Services and Business...
as well as steps in between, are applicable to services and processes (and their associated business models). It depends on the perspective
(and tools) one moves towards the improvement end of the continuum of innovation. 4. 1 Innovating Business models
and Conclusions 5. 1 Business Model†Service†Process Connection This paper argues for a tripartite view of business model-service-process thinking and innovation.
business model (bottom up), or business model! service! process (top-down), or starting with the service (middle out) depends upon
Either way, a business model of a service and its underlying process helps to sort out the intent and competitive positioning of any service being contemplated
45 5. 2 Interaction Effects Regardless of the directionality of the business model, service and process taken,
then it is argued that a business model of the proposed service offering should precede its detailed definition.
and then when so-defined, the service should be examined through the lens of its implied business model,
by making that business model explicit. In summary, a business model, service or business process, whether proposed or existing implies the existence of the other two.
Each provides a unique and equally important perspective on the offering that offers both comprehensive definition and critique,
and presents valuable insights into improvement and innovation opportunities that are afforded not by any single perspective. 5. 3 Conclusions This paper argues that business models,
Developing a unified framework of the business model concept. European Journal of Information systems, 19 (3), 359†376.
Business model research: State of the art and research agenda. Working paper of Technische Universitat Munchen, Chair for Information systems, Munich, Germany.
Business model generation: A handbook for visionaries, game changers, and challengers. John Wiley and Sons, 1st edition, Hoboken, NJ, USA.
Clarifying business models: Origins, present, and future of the concept. Communications of the Association for Information systems, 16 (1), 1†25.
and be sustained without fundamental changes in a company†s structure, business model and business strategy. We further propose a capability layer model for understanding the insurer†s process innovation behaviour.
the idea of using the UBI in an innovative business model was initiated. A legal entity was founded and formed outside of academia (Movelo AB,
MOVING VEHICLE LOGGER) that had the role of facilitating the business model innovation based on the new technology.
and innovate their business model so (1) money is earned by both parties, and (2) high-valued traffic information is collected taking Movelo closer to its vision
and (3) the insurance company also gains new possibilities to innovate their business model by cooperating with new key partners,
business model redesign and business strategy transformation. Within the stable insurance industry structure and business environment in Scandinavia, the insurance company has no imperative and immediate motivation to transform the business strategy
and redesign the business models for auto insurance. Therefore, the process innovation with disruptive technology such as insurance telematics can†t be achieved
business process design for the core technology implementation, product/services Process Innovation with Disruptive Technology in Auto Insurance 97 implementation, individual organization readiness for innovation implementation, towards business models and the outer
i e. business strategy, business model and organization, which are conceptualized in the CLM contributes to the failure.
, organization structure, business model and strategy is stressed in this phase. Therefore, the interactions with exploitation are frozen. We discovered that in the organization layer,
business model and strategy were not ready for an exploitation of the innovated process. In other words, the process innovation does not encounter all elements that may ensure its successful up-take and exploitation (Rosemann & vom Brocke, 2010.
Christensen (1997) pinpoints that a market leader with a low risk tolerance, who is acting in a stable business environment with a functional business model
Profiting from business model innovation: Evidence from pay-as-you-drive auto insurance. Research Policy, 42 (1), 101†116.
Business model generation: A handbook for visionaries, game changers, and challengers. Hoboken, NJ: Wiley. Progressive. 2012).
innovation is seen also as applicable to the development of new service offerings, new business models, new processes or new management J. Recker(*)Information systems School, Queensland University of Technology, 2
it was the business model that centered around this piece of technology, and the novel processes with which people could interact,
but it was the App store that created an innovative and novel business model that provided a separate ongoing value proposition and added income stream.
, new products combined with new process platforms create entire new business models. Focusing on any one type of innovation in itself
can change existing businesses through the introduction of new business models (Chesbrough, 2010), products or services or can change internal procedures and culture to yield higher degrees of efficiency.
2003), or through a focus on mergers and acquisitions to source innovative new products, services or business models.
133 innovation decisions are†as noted above, complex problems under uncertainty and typically concern high risks of failure, potential lack of return on investment or even disruption or failure of entire business models
Business model innovation: Opportunities and barriers. Long Range Planning, 43 (2†3), 354†363. Clinebell, S. K,
because they focus on the evolu-tion of the firm capabilities and business models instead of on the relationship (Air) port Innovations as Ecosystem Innovations 195 between the firm and its external ecosystem†(Iansiti & Levien,
1) contextual (scope/planner),(2) conceptual (business models/owner),(3) logical system models/designer),(4) physical (technology models/builder),
His research interests include disruptive technologies and business model innovations. Ceâ'sar Augusto L. Oliveira University of Pernambuco, Brazil Ceâ'sar Augusto L. Oliveira received the M. Sc. degree in computer engineering from the Computing systems Department, University
His research interests encompass business models and various aspects of business process, supply chain and operations management.
and Conclusion References Thinking Tri-laterally About Business Processes, Services and Business models: An Innovation Perspective 1 Services and Processes 1. 1 Service Architectures and Composition 1. 2 Service Types 1. 3 Service Typology 1. 4
Service-Process Alignment Implications 3 Service Business models 4 Business model-Service-Process Innovation 4. 1 Innovating Business models
and Service-Process Offerings 4. 2 Innovating with Service Composition 4. 3 Process Innovation and Improvement 5 Summary and Conclusions 5. 1 Business model-Service-Process
2008 Innovation in Ireland.pdf.txt
we must continue to deliver consumer-driven innovative products and services as well as further developing new business models, new organisational structures and skills for innovation.
including the development of new or enhanced products and services and the introduction of new business models, new organisational structures or new work practices.
markets and business models, collaborate on skills development, pool resources for R&d or specialist equipment, and provide mutual support in a variety of other ways.
2010 OECD SME Entrepreneurship and Innovation Report.pdf.txt
Whilst this favours the SME, large corporations are adapting to become important players within this type of business model rather than treating it solely as a threat.
the growth of the knowledge economy, open innovation, increased global connections, non-technological innovation, the Silicon valley business model,
and providing products, processes and business models to fit †at the risk of failure. The entrepreneur innovates by experimenting. l The entrepreneur as a resource shifter.
since this would block the potential for new business models and technologies to emerge in the new and small firm sector.
2011 Missing an Open Goal_UK public policy and open innovation.pdf.txt
Or then again perhaps was this instead about broader changes to international business models including the shift away from large-scale single-firm R&d †farms†and towards more †open†innovation models?
others, faced with stark challenges to established business models, have turned deliberately to more †open†structures
acquire, exploit†business model. But what challenges do these changes present for the national investment landscape?
UK Public policy and open innovation Perhaps the most fundamental strategic decisions facing any company concern its core business model:
or perhaps the development of innovative new business models. 2 This section explores the notion of open innovation.
pp79-91 2 Osterwalder, A. and Piqneur, Y. 2010) Business model Generation, London: Wiley 3 Chesbrough, H.,Vanhaverbeke, W. and West, J. eds)( 2006) Open Innovation:
whose business model is fundamentally open and based on the transmission of knowledge across the firm†s boundaries.
and open innovation business models. To avoid confusion, this paper focuses on this second interpretation of open innovation as a planned process of innovation which:
are the key element of Amazon†s business model. It enables the company to process a vast number of orders at a negligible marginal cost,
its business model would depend on maintaining a high level of turnover to offset its fixed costs. However
congruent with their overall business model and innovation value chain. Are innovation value chains becoming increasingly open?
particularly in the developed world, have looked increasingly to open innovation as a potential solution to the erosion of profitability for more established business models.
for others it may force unwanted change to value chains as new competitors disrupt existing business models.
There is also some evidence that open innovation combined with strong intellectual property protection has sparked a new business model of so-called †born-global†entrepreneurial businesses. 13 The general pursuit of increasingly open innovation
UK Public policy and open innovation The proposed Copyright and Business models Centre, supported jointly by the three UK Research Councils,
(i e. non IP based services and business models in particular) †strong venture capital markets are likely to be relevant here for building into a business
and traded on the strength of its business model. As The Work Foundation outlined in a recent report to the Independent Commission on Banking,
of the business model in capturing value from innovation: evidence from Xerox Corporation†s technology spin-off companies, Industrial and Corporate Change, Vol 11, No. 3: 529-555 Chesbrough, H. 2003) Open Innovation:
Osterwalder, A. and Piqneur, Y. 2010) Business model Generation, London: Wiley Reznik, G. and Morrelli, A. 2009) †Open innovation:
2012 Evaluation_of_Enterprise_Supports_for_Start-Ups_and_Entrepreneurship-Publication.pdf.txt
Addressing market failure to support the establishment of start-ups with potential for growth based on a sustainable and viable business model is a key policy.
2012 Flanders DC Open Innovation in SMEs.pdf.txt
12 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:
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?..
51 4 How SMES build new business models through open innovation?..54 4. 1. Benefiting from open innovation:
Business model innovation at Curana...38 Figure 6: Case Innovacelli...42 Figure 7: Case Jaga...47 Figure 8:
and changing their business model. A major liability is that small firms lack the required internal financial resources and technical capabilities.
Instead, small-and medium-sized companies engage in open innovation as a consequence of their search for major changes in their business model to seize new business opportunities and boost profitability.
Chesbrough showed that business models are crucial for unlocking the latent value of new or existing technologies 6. Technology per se has no economic value;
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
because they can develop business model innovations without having the required technologies in-house. Instead, SMES can leverage external technologies by setting up a network with partners who have required the compet encies
A business model has two important functions: it must describe the way in which the company creates value
and value appropriati on can be analyzed using a business model framework. Despite the fact that the term â€oebusiness model†is used widely in the business world,
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.
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,
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
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.
Besides value creation we also examine how small firms can appropriate part of the value they create with the new business model.
but most of the firms we examined were successful in crafting 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.
and May 2011.14 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 analysis of the business model innovation, therefore, logically comes first, and the usefulness of open innovation hinges on the role it plays in achieving broader strategic goals.
In the next section, we illustrate how the different 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.
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.
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.
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.
Companies that are successful in business model innovation gain a unique position in the competitive space that is difficult for others to imitate.
White space represents the business opportunities outside a company†s current businesses that require a different business model to exploit.
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 embedded always in the company†s broader strategic goals.
when these innovation activities are placed within the S MES€ overall strategy or business model. We thus explore the strategy of innovating SMES in this
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
but when isolated from SMES€ strategies and business model development, they are useless in explaining why
or vision Developing a start-up†s business model or reinventing the existing strategy of an SME usually starts with developing basic insight into how a company can deliver value for a specific target customer.
In other cases, it takes more time to articulate the customer value proposition of a new business model in small firms.
The QOD case illustrates that developing a successful business model that ultimately changes the industry starts with nothing more than the conviction of a well-informed entrepreneur.
It took a stepwise approach of more than three years before the business model for a functional quilt was developed in great detail.
Curana (see p 24) is another example that illustrates how developing a new business model is a gradual process that can take years.
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 considerably lower production costs.
and articulating a business model is a more complex process requiring months and years to get the details just right.
We have examined thus far 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.
Business model innovations start with articulating a customer value proposition. 17 During our interviews all managers underlined that creating value for customers is the first and most important element in generating new business.
but not for game-changing and highly profitable business model innovations. 18 Next, business models cannot be anticipated fully in advance
Innovative business models are sometimes hard to articulate because too many questions remain unanswered. The needs of the target customer might not be explicit.
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. 19 New opportunities will be discovered each time the company achieves a new step in realizing its business model. 19 Figure 1:
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.
far we have focused on how small companies develop new business models and how this move allows them to sidestep the commodity trap.
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. 29 Figure 3:
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.
and the role the complementary assets play in a particular industry. 21 Shifts in government policies targeted at the business environment are another important driver of business model innovations in SMES.
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.
and 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
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
Game-changing business model innovations cannot be planned analytically because many of the variables relevant to their success are unknown at the outset.
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.
Case Segers & Balcaen 36 37 3 A dynamic view on business model innovation Business model innovation should
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 its existing product markets.
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.
These open innovation aspects will be described in detail in the next chapter. 3. 1. Stepwise discovery of new business models In the previous chapter,
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 produced steel mudguards and other accessories according to specs from bike manufacturers in Belgium and surrounding countries.
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 development project,
The B†Lite enabled Curana to change its business model from an OEM model to an ODM model.
Most SME-managers would be inclined to stick to this new business model because avoiding the commodity trap
and changed its business model again. It established an internal design office because design had become the heart of the company.
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 invented not in a straightforward or linear way. The company and its innovation partners continuously probed new solutions;
Let†s look again at the four business models in figure 5 (p. 38. Once Curana had adopted the ODM model,
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 develops new concepts and designs,
The PROF business model brings together several companies with complementary competencies to develop a new idea or concept for a particular end consumer (patient or the elderly.
It is thus too early to evaluate its effects on the company†s bottom line. 53 Key learning points 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.
and other inexpensive means. 54 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 partners in enabling or supporting these changes.
In this chapter, we examine how SMES integrate 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 28.
Business models also play a central role in open innovation as the continuous sourcing from and collaboration with partners can add value for the focal organization 29.
The business model literature however, has been marginalizing partnerships to outsourcing or acquiring particular activities or assets.
A major shortcoming in the existing literature, therefore, is to analyze how open innovation and 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 and capture value. We will look first at how the companies we interviewed jointly create value with their innovation partners.
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.
Open innovation allows companies to implement business models that generate more profits. We provide illustrations from the SMES we have analyzed.
Curana, for instance, experienced serious pressure to adapt its business model in 2011 when it was exploring the potential of a new,
therefore how to change its 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.
and stay focused on the joint value they create. 74 Key Learning Points Open innovation as an integral part of business model innovations In the past,
Rather, they focus on major changes in their business model to seize new business opportunities and to boost profitability.
Additionally, the benefits of open innovation-based business model changes differ from the classic open innovation benefits identified for large firms.
therefore, must rely on innovation 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 value with their innovation partners.
which small firms a company innovates is determined largely by the new business model the central firm wants to implement.
and the sequence of 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 technology partners.
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 industry to
and they can change over time. 75 Capturing value Good business models also guarantee profitability. The SMES we interviewed work together with different innovation partners to create
There are many ways open innovation helps in executing business models with higher profitability. We enumerate a few possibilities:
In this way, increasing profits is the result of building control points for the innovating firm. ï Profitability through open innovation can be built in consecutive steps as we have seen in Chapter 3. Curana has changed its business model three times
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
Frequently, a (radically) new vision of entrepreneurs or managers is the starting point for the business model of SMES.
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.
SMES change their business model in a stepwise way. In most cases, companies begin with a (radically) new product or service,
Therefore, some 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.
If the company stayed tuned to the ODM business model, it would already be confronted with several competitors imitating the ODM move.
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,
MA and Chesbrough, H. W. 2006), Open business models: How to thrive in the new innovation landscape, Harvard Business school Press, Harvard:
MA and Chesbrough, H. W. 2006), Open business models: How to thrive in the new innovation landscape, Harvard Business school Press, Harvard:
MA. 7 Chesbrough, H. W. 2007), Why companies should have open business models, MIT Sloan Management Review, 48 (2),
22-28.8 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;
Osterwalder, A.,Pigneur, Y. and Tucci, C. L. 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;
Johnson, M. W.,Christensen, C. M, . and Kagermann, H. 2008), Reinventing your business model. Harvard Business Review, December, 51-59.;
and Johnson, M. W. 2010; Seizing the white space: 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; Technology Alliance Portfolios and Financial Performance:
Chapter 2 11 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.
Other definitions have been provided by A. Afuah (2003), Business models: A strategic management approach, Mcgraw-hill Irwin. Boston:
and Rosenbloom and H. W. Chesbrough (2002), The role of the business model in capturing value from innovation:
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: Boston; and 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), 529-555.15 In reality, the customer value proposition is a bit more complex.
M. W.,Christensen, C. M. and Kagermann, H. 2008), Reinventing your business model. Harvard Business Review, December, 51-59.18 See, for instance, Govindarajan, V. and Trimble
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
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;
Shafer, S m.,Smith, H. J.,Linder, J. C. 2005), The power of 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;
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