Lecture 1 How organizations can change the
way they create, capture and deliver value
Ongoing discussion about the competitive advantage, to earn money, and the
entrepreneurial part, to create new ideas.
Markides: A business model is a system of three key interdependent activities:
who is target as customers, what to offer these customers and how to serve
these customers, that is, what value-chain activities to put in place to allow the
firm to deliver value to these customers in an efficient manner.
Markides: A Business Model Innovation is the discovery of a new business model
that is either new to the worlds or new to the industry in which it is being
introduced.
Why are BM important?
BM is used as a basis for enterprise classification
o Identify competitors
o BM how an organization creates value, who, what, how, so it is
useful to classify different organizations, it tells more than the
strategies
BM is seen as an antecedent of heterogeneity in firm performance
o Tells differences in performance of different organizations
The BM is seen as a potential unit of innovation
o Change of all three elements
Typical business models:
1. Product Sales Model (Retail model)
a. Organization produces or purchases physical foods ans
2. Consultancy model
3. Subscription model
4. Marketplace model (Platform model)
5. Franchise model
6. Licensing model
Business Model Navigator
A BM provides a holistic picture of how a
company creates and captures value by
defining the who, the what, the how and
the value of business.
Examples of BMI Navigator:
Affiliation: Supporting other parties to
market products in order to benefit from successful transactions. Focus on how
and value
Digitalization: Transforming an existing product or service into a digital variant.
Focus on what who, value how.
,Leverage Customer Data: Collecting customer data to establish people’s profiles.
Focus on Value and how.
What is missing in these Business Model Typologies?
They are very static, snapshot’s of business models. Right now, at a certain
moment in time. We miss context, how can you innovate this? How will this
perform in the future?
Interaction between elements
Dynamic perspective, how does the business model perform over time?
Choices and their consequences
Business Model as choices and consequences
Choices made by executives about how the organization should
operate.
Consequences that influence the company’s logic of value creation
and value capture.
Business model as a system
We conceptualize the business model as a system of causally interrelated
variables that collectively determine the success or failure of business model
innovations.
,Art01 Markides. (2023). Business model innovation:
Strategic and organizational issues for established firms
Key conclusion
Business Model Innovation is the discovery of a new business model that is either
new to the world or new to the industry in which it is being introduced.
Innovation is not one thing but two: discovery of something new and then scaling
it up. Start-up firms may be good at discovery, but big, established firms are
good at scaling up.
Business Model is a system of three key interdependent activities – who to
target as customers, what to offer these customers and how to serve these
customers, that is, what value-chain activities to put in place to allow the firm to
deliver value to these customers in an efficient manner.
Business Model defers from strategy. First, strategy has been conceived as the
high-level choices that a firm makes. By contrast, a business model has been
defined as the configuration of activities that a firm puts together to translate its
strategy into action. The second main difference is the notion of interrelatedness
between the activities that make up a business model. Where strategy is about
combining activities.
Business Model helps strategy (1) to explain performance variation in firms that
follow the same strategy, (2) by looking at strategy through the lens of business
models, a new source of competitive advantage emerges, these conflicts can be
compared, (3) to appreciate and then exploit a new type of innovation, and (4)
by emphasizing the importance of value creation (as opposed to value transfer)
as a source of profitability.
New business models have the potential to create huge new markets on the
periphery of established markets. The innovation creates new value rather than
simply transferring value from one firm to another.
Characteristics of Business Model Innovations (1) activities of the new business
model different and incompatible with current the activities of the business
model, (2) BMI creates new markets that ‘conflict with’ and undermine the core
business, (3)
Core concept & Theoretical mechanism
This study looks at multiple definitions in the field of Business Model innovation.
There is still al lot of discussion and agreement about all the concepts within
Business Model Innovations.
Motivation of study
Digital technologies have allowed for the proliferation of new business models,
something that has attracted the attention of academic research. Much of this
research has focused on (i) understanding what a business model is and its
theoretical connection to the concept of strategy, and (ii) exploring what
business model innovation is and what its sources and outcomes are. Less work
has gone into studying the issues that established firms face in business model
, innovation – such as how to respond to the arrival of a disruptive business model
in one’s industry, or how to compete with dual business models or how to
migrate from one business model to another. This Element approaches the topic
of business model innovation from the perspective of the established firm and
examines the unique strategic and organizational issues that big, established
companies face when a new business model enters their markets.
way they create, capture and deliver value
Ongoing discussion about the competitive advantage, to earn money, and the
entrepreneurial part, to create new ideas.
Markides: A business model is a system of three key interdependent activities:
who is target as customers, what to offer these customers and how to serve
these customers, that is, what value-chain activities to put in place to allow the
firm to deliver value to these customers in an efficient manner.
Markides: A Business Model Innovation is the discovery of a new business model
that is either new to the worlds or new to the industry in which it is being
introduced.
Why are BM important?
BM is used as a basis for enterprise classification
o Identify competitors
o BM how an organization creates value, who, what, how, so it is
useful to classify different organizations, it tells more than the
strategies
BM is seen as an antecedent of heterogeneity in firm performance
o Tells differences in performance of different organizations
The BM is seen as a potential unit of innovation
o Change of all three elements
Typical business models:
1. Product Sales Model (Retail model)
a. Organization produces or purchases physical foods ans
2. Consultancy model
3. Subscription model
4. Marketplace model (Platform model)
5. Franchise model
6. Licensing model
Business Model Navigator
A BM provides a holistic picture of how a
company creates and captures value by
defining the who, the what, the how and
the value of business.
Examples of BMI Navigator:
Affiliation: Supporting other parties to
market products in order to benefit from successful transactions. Focus on how
and value
Digitalization: Transforming an existing product or service into a digital variant.
Focus on what who, value how.
,Leverage Customer Data: Collecting customer data to establish people’s profiles.
Focus on Value and how.
What is missing in these Business Model Typologies?
They are very static, snapshot’s of business models. Right now, at a certain
moment in time. We miss context, how can you innovate this? How will this
perform in the future?
Interaction between elements
Dynamic perspective, how does the business model perform over time?
Choices and their consequences
Business Model as choices and consequences
Choices made by executives about how the organization should
operate.
Consequences that influence the company’s logic of value creation
and value capture.
Business model as a system
We conceptualize the business model as a system of causally interrelated
variables that collectively determine the success or failure of business model
innovations.
,Art01 Markides. (2023). Business model innovation:
Strategic and organizational issues for established firms
Key conclusion
Business Model Innovation is the discovery of a new business model that is either
new to the world or new to the industry in which it is being introduced.
Innovation is not one thing but two: discovery of something new and then scaling
it up. Start-up firms may be good at discovery, but big, established firms are
good at scaling up.
Business Model is a system of three key interdependent activities – who to
target as customers, what to offer these customers and how to serve these
customers, that is, what value-chain activities to put in place to allow the firm to
deliver value to these customers in an efficient manner.
Business Model defers from strategy. First, strategy has been conceived as the
high-level choices that a firm makes. By contrast, a business model has been
defined as the configuration of activities that a firm puts together to translate its
strategy into action. The second main difference is the notion of interrelatedness
between the activities that make up a business model. Where strategy is about
combining activities.
Business Model helps strategy (1) to explain performance variation in firms that
follow the same strategy, (2) by looking at strategy through the lens of business
models, a new source of competitive advantage emerges, these conflicts can be
compared, (3) to appreciate and then exploit a new type of innovation, and (4)
by emphasizing the importance of value creation (as opposed to value transfer)
as a source of profitability.
New business models have the potential to create huge new markets on the
periphery of established markets. The innovation creates new value rather than
simply transferring value from one firm to another.
Characteristics of Business Model Innovations (1) activities of the new business
model different and incompatible with current the activities of the business
model, (2) BMI creates new markets that ‘conflict with’ and undermine the core
business, (3)
Core concept & Theoretical mechanism
This study looks at multiple definitions in the field of Business Model innovation.
There is still al lot of discussion and agreement about all the concepts within
Business Model Innovations.
Motivation of study
Digital technologies have allowed for the proliferation of new business models,
something that has attracted the attention of academic research. Much of this
research has focused on (i) understanding what a business model is and its
theoretical connection to the concept of strategy, and (ii) exploring what
business model innovation is and what its sources and outcomes are. Less work
has gone into studying the issues that established firms face in business model
, innovation – such as how to respond to the arrival of a disruptive business model
in one’s industry, or how to compete with dual business models or how to
migrate from one business model to another. This Element approaches the topic
of business model innovation from the perspective of the established firm and
examines the unique strategic and organizational issues that big, established
companies face when a new business model enters their markets.
