It is commonly acknowledged that business model innovation carries enormous opportunities for incumbent organizations, especially when driven by digital transformation. New revenue models, highly efficient value creation mechanisms, and unprecedented interaction with the customer are only few of the numerous benefits that managers expect to see. However, less is known and discussed about the challenges of organizations that were established before the diffusion of the Internet - these organizations are sometimes known as “offline -born” - which attempt to tackle business model innovation. Lack of digital expertise, a conservative mindset, resource constraints, and fear of cannibalization of long-established business models are hurdles that can prevent incumbents from embracing this journey of change. In this context, we contribute to the business model domain with two research streams having a common denominator: offline-born organizations performing business model innovation.
The first research stream addresses the process of business model management, analyzing phases that go beyond business model design. Specifically, we shed light on how incumbents analyze, design, evaluate, implement, and control their business models. We observe this process in practice, complementing the predominantly conceptual literature. Our main contributions include the activities performed in each process phase and two approaches to business model management: on the one hand, a deterministic and waterfall approach, characterized by a high level of certainty and confidence by the management team and, on the other hand, a discovery-driven approach, in which numerous design and evaluation iterations are performed before business model implementation.
The second research stream studies the design of business models for connected products. Phenomena like internet of things and smart cities require a complex network of actors in which organizations, individuals, and objects exchange value. Existing business model representations are not fully capable of describing such networks, having rather generic elements and components. Therefore, we take a first step towards new means of representation, proposing a taxonomy of design elements to represent business models for cyber-physical systems, the combination of physical and computational processes atthefoundationofconnectedproductsT. hemaincontributionofthisresearchisaspecificsetofactors’ roles, the value they exchange and perceive, as well as their dominance in the network.