The business model cycle: a dynamic and user-centric perspective on business model design and change with a case study from the mobility sector

Abstract

Today, firms all over the world have to deal with dynamic business environments. Static business models are no longer valid, and lose impact faster than changes can be implemented to address the problem. Fast-moving digitalization has made information more transparent, strengthening the role of the customer. At the same time, the provider can have a much closer relationship with the user, thanks to real-time communication. To meet changing user needs and to stay competitive over time, businesses are being forced to adopt a dynamic and user-centric business model perspective. However, corporate practice does not have a process for developing dynamic business models, and user-centric business models that can be designed and changed using smart technologies have not yet been systematically integrated. To stay competitive, companies need to rise to this challenge. But how? The aim of this dissertation was to develop a dynamic, user-centric process model for business model design and change, and to evaluate the model’s ability to maintain a competitive advantage in the mobility sector. First, the differences between static, dynamic, and user-centric business models and their corresponding attributes were deduced. Then, these findings were combined into a process model using system dynamics logic. This model considers the user a co-creator of value and helps managers react to real-time changes in their business model environment. Finally, a mobility sector case study is presented to highlight the relevance of this model to real-world application. These findings were used to develop the business model cycle (BMC). In this dissertation, the phases, underlying components, activities, and connecting input and output streams of this process model are described. The BMC consists of two interlocked loops – the user phase and the provider phase – which continuously send feedback to one another. A touch point was included between the loops so that firms can observe the user in their environments and adapt their business model simultaneously according to changes in their users’ needs. This meta process model configuration makes a significant contribution to the theory of business model dynamics and customer centricity. The BMC supports the strategic management of dynamic, user-centric business model design and change activities. It describes a step by step procedure of business model design that includes ideation, prototyping, and integration of business model options. Moreover, it allows continuous monitoring of the business model environment and adaption of the model accordingly. At the same time, bidirectional interaction between the user and provider is possible, allowing the provider to adapt to their users’ needs. The BMC is unique in that these processes can take place simultaneously. The real-world case study in the mobility sector confirmed that using the BMC for strategic management maintains a lasting competitive business advantage. Taken together, these findings show that a dynamic, user-centric process for business model design and change sustains dynamic consistency between the business model’s core elements. This indicates that the internal configurational fit of the business model is in line with its external dynamics.