Abstract
To sustain competitiveness in contemporary, fast-paced markets, organizations increasingly focus on innovating their business models to enhance current value propositions or to explore novel sources of value creation. However, business model innovation is a complex task, characterized by shifting characteristics in terms of uncertainty, data availability and its impact on decision making. To cope with such challenges, business model evaluation is advocated to make sense of novel business models and to support decision making. Key performance indicators (KPIs) are frequently used in business model evaluation to structure the performance assessment of these models and to evaluate their strategic implications, in turn aiding business model decision making. However, given the shifting characteristics of the innovation process, the application and effectiveness of KPIs depend significantly on how such KPIs are defined. The techniques proposed in the existing literature typically generate or use quantitatively oriented KPIs, which are not well-suited for the early phases of the business model innovation process. Therefore, following a design science research methodology, we have developed a novel method for defining business model KPIs, taking into account the characteristics of the innovation process, offering holistic support toward decision making. Building on theory on linguistic summarization, we use a set of structured templates to define qualitative KPIs that are suitable to support early-phase decision making. In addition, we show how these KPIs can be gradually quantified to support later phases of the innovation process. We have evaluated our method by applying it in two real-life business cases, interviewing 13 industry experts to assess its utility.
Highlights
As a result of factors such as globalization, rapid technology change and digitization, we observe that many contemporary markets become highly dynamic in nature and evolve at an1 3 Vol.:(0123456789)accelerated pace [17, 37]
We propose the use of linguistic summarization to structure the translation of quantified intentions of business model stakeholders into qualitative statements, facilitating such statements to be used as key performance indicators (KPIs) for early phases of the innovation process
We have focused on the development and evaluation of a method supporting the definition of business model KPIs that can be catered to the characteristics and requirements of the business model innovation process
Summary
As a result of factors such as globalization, rapid technology change and digitization, we observe that many contemporary markets become highly dynamic in nature and evolve at an1 3 Vol.:(0123456789)accelerated pace [17, 37]. To sustain competitive advantage in such markets, many organizations focus on renewing or innovating their business model, to explore novel sources of value creation [41], to differentiate existing value propositions, or to avoid imitation by competitors [3]. A business model describes the logic of how an organization creates value for a customer (segment) and captures value in return [50], as well as details the resources and activities needed to do so [79]. In management literature, such (valuefocused) business models take the form of textual and visual representations [9], describing or illustrating how organizations collaborate, what business activities are conducted, what resources are deployed or exchanged and how value is created for the customer. Given its descriptive and structuring power, the business model concept has become increasingly prevalent in information systems research to explore how novel technologies can be contextualized or how they may contribute to value creation [68]
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