EVALUATING PROJECT ROBUSTNESS THROUGH THE LENS OF THE BUSINESS MODEL

Abstract

The success of large-scale innovative projects is increasingly a function of the marriage of multiple complex technologies and the ability to articulate and capture economic benefits. For corporations, the decision to pursue particular projects often hinges on the creation of, or the ability to appropriate, requisite technologies in a manner that will allow for an adequate return on investment for project shareholders. The business model is a tool that can be used to help determine whether or not a project has the necessary components for successful completion. A business model articulates a business venture's value proposition, market segment, cost and profit structure, value chain, value network, and competitive strategy. While business models are commonly used at the corporate level, they can also be applied to projects in order to convey how the potential of multiple converging technological inputs lead to the creation of sustainable economic value outputs, often in the face of technical and market uncertainty. Empirical observations from the biopharmaceutical and aerospace industries reveal that projects with incomplete business models face considerable complications, while projects with complete business models face less difficulty with respect to execution. As such, companies can use business models as a tool for making project go/no go decisions whereby only projects with complete business models are allowed to progress through the development process.