How leaders manage their business models using information

Abstract

PurposeThe purpose of this study is to explore the information leaders keep their organisations competitive by determining if their business model is under threat and/or needs changing and whether business model innovation is needed.Design/methodology/approachThis study uses a grounded theory approach to probe an area which has been so far researched very little.FindingsThe paper identifies that while quality of management information affects leaders’ decisions about whether their business model is under threat or needs changing, leaders may or may not choose to use it.Research limitations/implicationsThe research was carried out with large firms in six sectors in the UK. Research in other sectors, in smaller firms and in other countries, should be carried out to test generalisability.Practical implicationsAlthough many large firms have made very large investments into areas such as customer insight in the past few years, there may be resistance to using this information even if it indicates that a firm’s current business model is under threat, because of straightforward denial or because of the inertia associated with factors such as difficulties in changing business models or the extent to which the firm’s financial situation is based upon exploiting its current business model, no matter how much that model is under threat from firms with other business models. Therefore, in strategic reviews, firms should factor in these risks and seek to mitigate them.Social implicationsIn public sector organisations, these risks of denial or inertia may be stronger because of conservatism and lack of willingness to take the risks of change, so public sector decision makers need to be particularly aware of these risks and seek to mitigate them.Originality/valueThe theoretical contribution of this research is to add to business model and strategic management literature by explaining the role that information plays in business model choice and how its role depends on whether and how the information is used by senior management.