Unlocking the Hidden Value of Concepts: A Cognitive Approach to Business Model Innovation

Configuring a new business model through conceptual combination: The rise of the Huffington Post

Research on business model studies the cognitive processes that lead entrepreneurs to develop innovative business models. However, we still know little about how these innovative business model become known to the public to the extent that they are taken for granted as iconic representations of particular types of firms. This study advances business model innovation research by answering the following question: How do iconic business models emerge? In other words: How do innovative business models become prototypical exemplars for new categories of firms? To answer this question, we focus on the case of Airbnb – an online platform allowing home owners to rent out rooms or flats directly to travellers. We analysed how six mainstream business media publications have talked about Airbnb between 2008 (year of creation of Airbnb) and 2013. Our results show that Airbnb business model became iconic in three stages. At first, media attempted to assimilate Airbnb within its category system by drawing analogies with existing iconic business models or established market categories. During the second stage media shifted their attention away from analogies with existing firms and built a more complex understanding of Airbnb and its business model. In the third stage, Airbnb’s business model representation detached from the actions of the instigator company as media routinely referred to Airbnb as the ‘typical’ sharing economy (or peer-to-peer) firm. As media increasingly used Airbnb’s business model to define other firms’ business model, Airbnb’s business model became iconic. We contribute to business model research by theorizing the cognitive process, which underpins the emergence of iconic business models.

PurposeThe car no longer serves simply as a means of transport but is at the core of a new concept of mobility. Car manufacturers are seizing opportunities to change the traditional business model of the auto business. Innovation in this business model has become vital to survival in today’s dynamic market conditions. This paper aims to find out what factors motivate and drive business model change and what the resulting business model innovation is.Design/methodology/approachThis qualitative study is based on a single case, namely, BMW as an illustrative example of an advanced, highly innovative customer-centric service business model (BM). The study adopts a document analysis method to reveal the firm’s BMI process.FindingsFirst, the study presents a conceptual framework for business model change with the factors –motivators and drivers – that impact on the process of change. BMW’s BMI and its impacting factors are discussed based on this model. The McKinsey 7 s Model framework, the elements of which are strategy, structure, systems, shared values, style, staff and skills is used as an analytical tool to discuss new business model implementation. The study highlights the BM configuration of a traditional car manufacturer, the car as a product and the new car as a service concept.Originality/valueThis study reveals the BMI of BMW’s digital services and its key motivators and drivers. BMW mostly innovates in three key dimensions of the Business model. These are value creation, value delivery and value capture. Most of the elements in these dimensions are innovated.

Aim: In the era of mobile internet, live marketing has become a new business model for network marketing, and is a product of the interactive integration of new technology and marketing activities in the new era.Method: Based on the business model theory, combining the value creation process, using live streaming platforms such as Taobao, Tiktok, Jingdong and Amazon as examples, and adopting a qualitative analysis method, the business model elements and innovation paths of live marketing are analyzed.Findings: The research found that: (1) The live marketing model has new integrated features and new values. The combination of technical system integration and marketing activities is a hotbed for live marketing;(2) Based on the anchors influence and audiences attractiveness as the classification criteria, live broadcast sellers can be divided into super sellers, famous sellers, ordinary sellers and low-level sellers. It is a new classification proposed for the first time, which provides important evaluation contributions for understanding and distinguishing the different categories of live broadcast sellers; (3) Based on the business model canvas, this article finds that the business model innovation of live marketing illustrates the nine elements logical relationship of the business model, value proposition is the key-hub linking other elements. The business model innovation of live marketing also follows the basic laws of value creation, that is, from value proposition to value creation to value transmission, and finally to value acquisition;(4) The business model innovation path of live marketing is also the path of value rebuilding, which increasing value is the essence of the sustainable development of business model innovation.Implications/Novel Contribution: Therefore, these new findings can help non-live broadcast marketers transform their marketing concepts and methods, and improve their sales capabilities. The analysis of the business model innovation and value creation of live marketing reveals the essence of live marketing, and the mechanism of value co-creation between sellers and customers, which this research also creatively proposes its innovation model and value creation process from the perspective of the relationship between business model and value creation. Finally, the article is not in-depth study of its relationship business model innovation and value creation from the perspective of explicit knowledge and tacit knowledge.

It is argued in most academic literature that Business Model (BM) is a general model for how any business runs or should be run, it is the "blueprint of the business". Conversely we argue that no business has just one BM, one model on which it runs all its business or intends to run its business. In other words the BM can be used for "as-is" and the "to-be" businesses. However our research, in contrast to the other BM frameworks, indicates that businesses have more BMs - both "as-is" and "to-be" BMs - the multi business model approach. This was already theoretically indicated by Markides and Charitou in 2004, and again in the Casadesus-Masanell and Ricart model of 2010, but sadly no one in the BM community has followed up on this since then. It could have made a breakthrough in our understanding of BMs, Business Model Innovation (BMI) and Strategic BMI. The Multi Business Model Innovation Approach addresses the concerns in the BM community and in BMI practice to just focus on the ideation and conceptualization of BMs. "BM canvassing", innovating BM building blocks or BM dimensions when carrying out BMI, so-called "blind business model innovation", is not sufficient to run and understand a business today. BMs and BMI must address all the different levels in a business. All BMs are objects to BMI and should be used to maximize the performance and sustainability of the business. The core business and all levels BMs, such as BM dimension components, BM dimensions, BM portfolio, and Business Model Ecosystem (BMES), should all be considered for BMI. The book addresses and documents a gap in BM research and the BM community - but also proposes a generic definition and language of a BM and BMI layers. The significance and importance of this work is related to significant and unexplored possibilities that BMI offers today, and can offer tomorrow. When we thoroughly understand all levels, dimensions and components of the business and its business models, and we are able to communicate, work and innovate with business models at all levels together, then a next step in BM and BMI research and practice can be taken. It is proposed that any BMs are related to seven dimensions- value proposition, user and/or customer, value chain functions (internal), competence, network, relations and value formulae. It is further proposed that seven different levels of a BMI from the most detailed level - the BM dimension component - to the BM dimension, BM, BM portfolio, business, and the vertical and horizontal business model ecosystem layer - and these can be objects to BMI. Conceptually, the Business Model Cube was formed using the seven dimensions which could be used both in a 2D and a 3D version.

Innovative and sustainable business models in the fashion industry: Entrepreneurial drivers, opportunities, and challenges

Starting from the mid-1990s, business models have received increased attention from both academics and practitioners. At a general level, a business model refers to the core logic that a firm or other type of organization employs to achieve its goals. Thus, in general terms, the business model construct attempts to capture the way organizations “do business” or operate to create, deliver, and capture value. Business model innovation (BMI) constitutes a unique dimension of innovation, different from and complementary to other dimensions of innovation, such as product/service, process, or organizational innovation. This distinction is important in that different dimensions of innovation have different antecedents, different processes, and, eventually, different outcomes. Business models have been the subject of extensive research, giving birth to several lines of inquiry. Among them, one line focuses on business models in relation to innovation. This is a vast, somewhat fragmented, and evolving line of inquiry. Despite this limitation, it is possible to recognize that, at the core, business models are relevant to innovation in at least two main ways. First, business models can act as vehicles for the diffusion of innovation by bridging inventions, innovative technologies, and ideas to (often distant) markets and application domains. Therefore, business models speak to the phenomenon of technology transfer from the point of view of academic entrepreneurship and of corporate innovation. Thus, an important role of the business model in relation to innovation is to support the diffusion and adoption of new technologies and scientific discoveries by bridging them with the realization of economic output in markets. This is a considerable endeavor that relies on a complex process entailing the search for, and recombination of, complementary knowledge and capabilities. Second, business models are a subject of innovation that can become a source of innovation in and of themselves. For example, offerings that reinvent value to the customer—as opposed to offerings that incrementally add value to existing offerings—often involve designing novel business models. Relatedly, BMI refers to both a process (i.e., the dynamics involved in innovating business models) as well as the output of that process. In relation to BMI as a process, the literature has suggested distinguishing between business model reconfiguration (BMR; i.e., the reconfiguration of an existing business model), and business model design (BMD; i.e., the design of a new business model from scratch). This distinction allows us to identify three possible instances, namely general BMR in incumbent firms, BMD in incumbent firms, and BMD in newly formed organizations and startups. These are arguably different phenomena involving different processes as well as different moderators. BMR could be understood as an evolutionary process occurring because of changes in activities and adjustments within an existing configuration. BMD involves facing considerable uncertainty, thus putting a premium on discovery-driven approaches that emphasize experimentation and learning and a considerable degree of knowledge search and recombination.

PurposeThis paper aims to discuss hybrid organizations whose business models blur the boundary between for-profit and nonprofit worlds. With the aim of understanding how hybrid organizations have developed commercially viable business models to create positive social and environmental change, the authors contend that hybrids are altering long-held business norms and conceptions of the role of the corporation in society. Building on an analysis of the most updated literature on hybrid organizations and with the use of case study approach, the purpose of this paper is to derive managerial lessons that traditional businesses may apply to innovate their business models.Design/methodology/approachThis paper has a practical focus to help organizations to develop successful business strategies and design innovative business models. It applies emerging thinking on hybrid business models to provide new insights and ideas on the use of business models as tools for innovating and delivering value. To comply with this, first, the authors discuss the distinctive characteristics of hybrids and the hybrid business model through a concise but comprehensive review of all the literature on hybrid organization, which is still very recent. Second, we relied on a short case study that introduces information technology and digital innovation as the premises of the emergence of a new hybrid business model that adds additional elements to traditional business managers on how to learn from hybrid organizations’ avenues to innovate their business models.FindingsIn this paper, the authors aimed to shed light on the management of any organization or initiative that aims to embrace multiple and competing yet potentially synergistic goals, as is increasingly the case in modern corporations. Spotting hidden complementarities of antagonistic assets can be arduous, time-consuming, costly and risky, but businesses driven by innovation may want to keep a close eye on the expanding hybrid sector as a source of future entrepreneurial opportunities. To this regard, hybrid social ventures have the potential to shed light on ways to innovate traditional business models. The essence of studying hybrids is that firms may learn how to innovate their business models in ways that go beyond current conceptualizations, making their mission profitable, rather than making profit their only mission! The research design (literature analysis and case study) allowed the authors to disentangle different innovative business models that hybrids suggest highlight strengths and weaknesses of such business models, understand strategies and capabilities associated with hybrids and transpose all these lessons learned to traditional business managers who constantly struggle for innovation.Research limitations/implicationsThe main implication is that hybrid organizations may serve as incubators for new practices that can gain scale and impact by infusion into existing corporations. The authors can assist to a process of “hybridization” of incumbent firms, pushing the boundaries of corporate sustainability efforts toward strategies in which profit and social purpose share more equal footing.Practical implicationsFirms interested in benefiting from antagonistic assets that can have a dramatic impact on their business model innovation may want to consider some lessons: firms can attempt to build antagonistic assets into their mission, asking themselves what activities they can undertake with the potential to create (or erode) social, environmental and economic value and how these activities might be mediated by the context/environment in which they operate; they can partner with hybrids to benefit from them and absorb competencies from them, so to increase their likelihood to generate value-creating activities and to impact on wider range of stakeholders, including funders, partners, beneficiaries and communities; they can mimic hybrids on how to innovate their business model through the use of the “deliberate resource misfit” dynamic capability, mitigating negative impacts and trade-offs and maximizing positive value spillovers, both for the firms themselves and for the community.Social implicationsSharing know-how with hybrids opens up to ways to innovate business models, and hybrids are much more open to sharing lessons and encouraging others to copy their approaches in a genuine open innovation approach.Originality/valueThe main lesson businesses can take away from studying hybrids is that antagonistic assets – and not only profitable complementary ones, as the resource-based view would suggest – do not have to be a burden on profits. Hybrids ground their strategy first and foremost on their beneficiaries, thus dealing with a bundle of antagonistic assets. The primary objective of hybrids is thus to find imaginative ways of generating profits from their given resources rather than acquiring the resources that generate the highest profit. Profit is the ultimate goal of traditional businesses’ mission, but by making profit their only mission, firms risk missing out on the hidden opportunities latent in antagonistic assets. Learning from hybrids about how to align profits and societal impact may be a driver of long-term competitive advantage.

Cognitive psychological research provides an evidence-based understanding of human cognition. For example, it can inform an understanding of how phonological awareness, visuospatial processing and working memory facilitate reading. However, the evidence base around reading acquisition is constructed from a Western, Educated, Industrialised, Rich and Democratic (WEIRD) perspective, with little consideration for whether such evidence extends to Australian Indigenous populations. Given the recognised need to improve literacy outcomes for Indigenous children, there is an applied benefit in conducting cognitive research to better understand how language, culture or context might influence the development of neurocognitive processes underlying reading in remote Indigenous communities. However, it is essential that cultural cognitive research be conducted in a culturally fair and culturally safe manner. This requires critiquing and challenging standard cognitive research approaches and methodologies. Here I reflect on research that investigated neurocognitive factors associated with reading in an Indigenous context. I highlight the disjuncture between cognitive psychological research and Indigenous custom and practice and suggest that culturally safe cognitive research must embed Indigenous ways of knowing, being and doing. I assert that to work alongside Indigenous researchers as allies, non-Indigenous researchers must develop intercultural research skills. This includes building cultural competence and engaging in critical self-reflexivity.

Despite ample research on the topic of business model innovation, little is known about the cognitive processes whereby some innovative business models gain the status of iconic representations of particular types of firms. This study addresses the question: How do iconic business models emerge? In other words: How do innovative business models become prototypical exemplars for new categories of firms? We focus on the case of Airbnb, and analyze how six mainstream business media publications discussed Airbnb between 2008 and 2013. The cognitive process whereby Airbnb’s business model became the iconic business model for the sharing economy involved three phases. First, these publications drew on multiple analogies to try to assimilate Airbnb’s innovative business model into their existing system of categories. Second, they developed a more nuanced understanding of Airbnb’s business model. Finally, they established it as the prototypical exemplar of a new type of organization. We contribute to business model research by providing an elaborated definition of the notion of the iconic business model which is rooted in social categorization research, and by theorizing the cognitive process that underpins the emergence of iconic business models. Our study also complements research on the role of analogical reasoning in business model innovation. Finally, we complement the market categorization literature by documenting a case of the emergence of a prototypical exemplar.

Altering and enhancing existing business models through business model innovation has emerged as a powerful competitive strategy that can provide advantage over extended periods of time. Business model innovation also presents a fundamental counterpart for technological, product and organisational innovations. Success stories of unconventional firms disrupting markets and sustaining financial rewards over competitors through business model innovation can be found in virtually any industry. A key success factor for long-term competitiveness lies in the implementation of multiple, rather than punctual, business model innovations over time, although achieving change through successive iterations is a challenge driven by market and technological dynamics and disruption. However, the lack of empirical investigation on the dynamics of business model change over extended periods of time limits our understanding of how established firms can mimic successful innovators and reconfigure their business models over time. This thesis responds to this gap by exploring the dynamic mechanisms enabling business model development in successful, high-performing firms. It defines and examines the distinctive properties of business model development to understand what determines success in extended business model change processes. The theoretical model and research design were developed to empirically investigate the sequences of change events in business models to find patterns characterising business model development in high-performing firms. The theoretical framework deconstructs the structure of a business model using three well-accepted dimensions of value: value creation, value delivery and value capture. It treats the business model as a dynamic open system in which a firm’s dynamic equilibrium behaviour and complementarity mechanisms are the drivers of change. Then, it employs principles from organisational theory, strategic management, innovation and entrepreneurship to explore the developmental trajectories of business models by examining: (a) the agents and nature of the actions driving business model changes; (b) the frequency of business model change events; (c) the magnitude of business model change events; and (d) the order of business model change events. The exploratory, longitudinal and quantitative research design supporting this study is process- based, where business model development is formulated as a sequence of change events unfolding over time. A set of 12 financial ratios are used to examine fluctuations in a firm’s operational, economic and product-market domains that are attributable to business model transformations for a sample of 1,651 listed firms in the IT sector worldwide. This sector was selected as the research setting because of its dynamism, global size and the pervasiveness of the technologies underpinning it. Business model change events are identified through outlier detection and analysis of coordinated changes across the value creation, delivery and capture dimensions of the business models. Data were collected from a large financial database and transformed into individual sequences of change events. A validation procedure assessed the accuracy of the identification process for business model change events through qualitative data and in-depth analysis for four firms in the larger sample. Then, the individual sequences of change events were used as inputs for data mining methods of analyses, complemented by frequency domain analysis and statistical tests, which revealed the patterns of business model development in high-performing firms. The results suggest a significant association between the timing and intensity at which firms change their business models and their average performance over time. The evidence also suggests that business model change is likely to culminate in events where the value delivery dimension is altered. In terms of the frequency and magnitude of changes, high-performing firms are more likely to develop their business models through frequent and incremental alterations over time, except for mature-large firms who, compared to young-small, young-large and mature-small firms, are more likely to implement radical, less frequent changes over time. Both environmental and internal forces influence the intensity at which high-performing firms typically alter their business models, although environmental factors are more significant than internal forces. Both unconscious and deliberated actions influence business model development in high-performing firms. Unconscious actions dictated by the firm’s particular characteristics of age, size and sub-industry membership are a more significant influence than deliberated, emergent actions. This research develops the new concept of business model development, and provides a contribution to theory by empirically examining a previously unexplored process. By adopting the process-based approach, this research contributes to new thinking and research in business model innovation centred on analysing the flow of events and patterns of business model development across multiple cases. Methodologically, this research developed a research design appropriate for large samples of firms, able to analyse multiple developmental trajectories of business models in a systematic and consistent manner. The research can assist practitioners and firms’ leaders adjust established business models by providing guidance on the intensity, order and frequency of the changes required.

Purpose – Business models to date have remained the creation of management, however, it is the belief of the authors that designers should be critically approaching, challenging and creating new business models as part of their practice. This belief portrays a new era where business model constructs become the new design brief of the future and fuel design and innovation to work together at the strategic level of an organisation. Design/methodology/approach – The purpose of this paper is to explore and investigate business model design. The research followed a deductive structured qualitative content analysis approach utilizing a predetermined categorization matrix. The analysis of forty business cases uncovered commonalities of key strategic drivers behind these innovative business models. Findings – Five business model typologies were derived from this content analysis, from which quick prototypes of new business models can be created. Research limitations/implications – Implications from this research suggest there is no “one right” model, but rather through experimentation, the generation of many unique and diverse concepts can result in greater possibilities for future innovation and sustained competitive advantage. Originality/value – This paper builds upon the emerging research and exploration into the importance and relevance of dynamic, design-driven approaches to the creation of innovative business models. These models aim to synthesize knowledge gained from real world examples into a tangible, accessible and provoking framework that provide new prototyping templates to aid the process of business model experimentation.

Over the last decades, business model innovation and effectuation have been widely discussed in the literature. While effectuation represents a behavioural approach for entrepreneurs using available means for founding a start-up, business model innovation represents an approach to creating a business model with long-term competitive advantages. Designing a business model requires to focus on four dimensions: customer, value proposition, value chain and revenue mechanism. A business model innovation is referred to when an innovative characteristic can be attributed to two of the four dimensions. Both effectuation and business model innovation are valuable for entrepreneurs who are pursuing growth in dynamic and uncertain business environments. This paper elaborates on effectuation and its potential effects on business model innovation. The addressed research questions are: Is the effectuation logic a facilitating aspect of business model innovation? And to what extent do entrepreneurs apply effectuation logic and design innovative business models? The underlying data consists of business plans of 25 finalists of a Swiss innovation competition with more than 100 startups from different business sectors every year. First, the chosen sample is reviewed on the extent of the application of effectuation based on selected behavioural criteria. Second, the sample is analysed for evidence of business model innovation based on the above-mentioned business model dimensions and their innovative potential. Third, the link between the two approaches is highlighted to gain insights into the potential influence of the applied decision logic to develop innovative business models, thus providing an understanding of how entrepreneurs could leverage the advantages of effectuation in the context of innovating the business model. Further research will focus on examining critical success factors of entrepreneurial behaviour in the applied business model types and their correlations with business performance.

Innovative business models in Business-to-Business (B-to-B) settings allow suppliers to renew their business and to tighten the customer/supplier relationship while customers may benefit from more innovative and customized solutions. Astonishingly, the pace of adoption of these new business models is rather low. By now, it is still open what the final reasons for this market resistance might be. We analyze this sluggish adoption by making reference to total cost of ownership (TCO) concepts as a prominent example of innovative, service focused business models. To this end, we mirror the diffusion and the obstacles to trade in the light of the concept of the service-dominant logic (SDL), developed by Vargo and Lusch [1]. So doing, we employ the competence-based theory of the firm (CbTF) as our theoretical foundation. We propose that the diffusion of innovative service business models like TCO depends on the stage of the transition process from a goods-dominant to a service-dominant logic in business and society. Thus, we raise our research question: To what extent is the sluggish adoption of TCO business models influenced by the state of the transition process from the goods-dominant to the service-dominant logic? Due to newness and complexity of our research topic we employ qualitative research and conduct case studies to better understand the reasons of sluggish TCO adoption.

Market Resistance to Innovative Service-Focused Business Models: Insights from the Service-Dominant Logic