Product Business Model Research Articles

A system dynamics approach to product design and business model strategies for the circular economy

Abstract By means of a system dynamics computer simulation model, this paper analyzes the systemic effects of combining multiple product design and business model strategies for slowing and closing resource loops in a circular economy. In the model, green (i.e., recycled) and brown (i.e., traditional linear) products, as well as products under a PSS model, flow in a closed-loop supply chain. The model structure covers issues related to product design, product use and replacement, second-hand use, product discard, and finally, collection and processing for product recycling. Results from this research provide insights into the relationship between design considerations at the beginning of a product's life and their implications for the product's take-back stage when a new manufacturing cycle begins. The main contributions of this paper are the considerations of time delays and reinforcing feedback loops in the design of an effective closed-loop supply chain.

Measurement of Digital Activity in Medium, High-Tech and Low-Tech Manufacturing Industries

The spread of digital technologies changes production processes and business models, which has important effects for diversification of the economy. The fourth industrial revolution and the Industrial Internet of Things open up new opportunities for the introduction of technologies, having a significant impact on the production cycle, starting with highly automated production lines and ending with the large-scale implementation of technological solutions designed to improve productivity, optimize costs, quality and reliability. Defining digital transformations, primarily in the manufacturing industry as a strategic imperative for the entire economy, for the first time, based on opinions and intentions of entrepreneurs (short and medium-term), key aspects of the digitalization process in Russian medium, high-tech and low-tech manufacturing industries are revealed. A set of tendencies in the development of digital technologies by their main types is presented, the level of industry participation in digital transformation is shown, as well as many other important digital transformation processes in enterprises that are not measured by quantitative statistics. For all the studied industries, factors hindering digital transformation are identified and ranked.

The adaptation possibilities of sustainable production system best practices to the Hungarian rural environment : Case study of an energy production business model

The current paper describes a business model that contributes to people’s self-sufficiency in the field of energy production. The current society is in a position to depend on decision makers and companies in terms of used energy resources and their prices. Though renewable energies have become popular lately, many people face obstacles in order to employ them. The aim of the research is to introduce a business model which answers this customer need and could be interpreted to different economic circumstances. The presented business model has been elaborated according to the recent Dutch business environment as a green entrepreneurial start[1]up. This study deliberately avoids the detailed description of the business plan and rather highlights the core concept based on business modelling principles. This form of demonstration equips future entrepreneurs to adapt the model to certain conditions. The main message of this article is the matching pain-gain relations of certain social groups. On one hand, the local communities seeking to go energy independent. On the other hand, people who would like to conduct impact investment.

Meaning and Role of Prototyping in Entropic and Extreme Business Environment in Georgia

For a couple of years, the term entropy is gaining popularity as a term to cover the various dimensions of fast and rapidly developing, ‘uncontrollable’ business environment. The more complex and volatile an industry is – the higher is the level of entropy, that means - the harder to predict and therefore more uncertain will be process of new project or product implementation. In simple words, entropy as a measure of uncertainty or randomness, is permanently growing in nowadays business environment.
 In common use, A prototype is an early sample, model, or release of a product built to test a concept or process or to act as a thing to be replicated or learned from. Technique of prototyping becomes more efficient if analyzing of prototype occurs together with the potential consumer. Based on received feedback, or analyzing customer experience, lessons learned, company makes decision how to develop the product on the next phase.
 In Georgia, use of prototypes started with development of projects related to Information Systems. But later it was successfully applied to product development and Business model development, especially for startups and small entrepreneurs.

Modelling and analysis of a cooperative production network

In this study, we examine the cooperative production business model for a group of producers serving their own customers and also have access to external customers who can make an agreement to buy products at a lower price if a desired service level can be guaranteed. When the producers cannot meet the desired service level requirement of the external customers at the offered price on their own, they participate in a cooperative network. The network consolidates the external customers for its members and routes an arriving external customer to one of the participants. We determine the optimal production and rationing policies for each participating manufacturer as well as the optimal routing policy for the network. We also propose an accurate approximate method to analyse a network with a high number of homogeneous producers using a single queue approximation method. We show that, based on the parameters of the producers and the external market, the network can provide the desired service level for the external customers at the offered price and makes all the members increase their profit by better utilising their capacity and serving more external customers.

Digital Transformation in the Manufacturing Industries of Russia: an Analysis of the Business Tendencies Observations Results

The spread of digital technologies in the economy changes production processes and business models. The technologies associated with the fourth industrial revolution, such as the industrial Internet of Things and additive manufacturing, have a significant impact on the production cycle in manufacturing. Based on short-term and medium-term entrepreneurial opinions and intentions, this paper examines key aspects of the digitalization process in Russian enterprises, using the method of conjuncture observations and surveys, which supplements quantitative statistics. Taking into account the differentiation of the manufacturing industries into low-, medium- and high-tech, a set of trends in the digital technologies development, the industrial participation in digital transformation in the forms of the business processes digitalization and the digitalization of labor, as well as many other important indicators not measured or only partially measured by quantitative statistics is presented. For all industries, factors hindering digital transformation were identified and ranked. A survey of managers showed significant variation in entrepreneurial judgment regarding most aspects of production digitalization. Despite the fact that the transition to Industry 4.0 is taking place in Russia against the background of unfavorable trends in the business climate, the resulting opinions allow us to state that progress is obvious, although the level of immersion into digitalization processes is not yet deep. Consideration of digital activity from the point of industrial separation view, as well as taking into account the classification of industries as low-, medium- and high-tech, allowed us to identify the industrial features of this digital transformation. In particular, some technologies, such as the industrial Internet of Things, were predominantly distributed in the medium and hightech segment, while others, such as 3D printing and radio frequency identification tags, were represented in most manufacturing industries. Promising areas for continuing research on digital transformation in the Russian manufacturing include expanding the conjuncture observation program by including other industries, the development of appropriate composite indicators, an analysis of the relationship between economic indicators and digitalization, and a foresight study of the qualitative aspects of digital transformation.

The Revival of a Cultural Heritage: Hangzhou Embroidery and its Development Today

Hangzhou embroidery is a traditional embroidery handicraft in China. As a cultural heritage, it had a long history and faces a precarious situation today. The preservation of Hangzhou embroidery faces several challenges, including product marketing, business model and technological presentation. The leading role of preserving Hangzhou embroidery, Yi Hui Co.Ltd, are trying application of new technologies and organizational strategies. Nevertheless, it is not only the form, but also the content, the process that embedded the spirits of creating an artistic handicraft should also be preserved. The interaction between cultural heritage and technology and social context is key to its preservation and development.

Circular economy in corporate sustainability strategies: A review of corporate sustainability reports in the fast‐moving consumer goods sector

AbstractDespite the increasing interest of business and academic research toward Circular Economy, the investigation of its uptake by industry remains limited. To contribute to filling this gap, we perform a systematic review of 46 corporate sustainability reports in the Fast‐Moving Consumer Goods sector aiming to explore how companies incorporate the Circular Economy concept in their sustainability agenda. We focus on (i) companies’ uptake of Circular Economy, (ii) the relationship between Circular Economy and sustainability and (iii) the Circular Economy practices presented. Our results show that Circular Economy has started to be integrated into the corporate sustainability agenda. Most reported activities are oriented toward the main product and packaging, focusing on end‐of‐life management and sourcing strategies, and to a lesser extent on circular product design and business model strategies. Most identified collaborations are with businesses, whereas initiatives addressing consumers are largely missing although considered critical for the transition toward Circular Economy.

A design-thinking perspective on capability development

PurposeThe purpose of this paper is to examine the interaction between new product development (NPD) capabilities and business model innovation (BMI) by studying the adaptation of capabilities in a manufacturing firm as it adopts a service business model.Design/methodology/approachAn in-depth case study is used to identify design capabilities and document how these have been developed as the firm has adapted its NPD processes to the needs of its service business model.FindingsDesign capabilities are proposed as a facilitator of servitization, allowing a manufacturing firm to develop service offerings that build on resources such as knowledge and experience. Conversely, the scope of servitization is restricted by the extent to which these design capabilities can be updated to suit the demands of a new business model.Practical implicationsServitization is presented as an imperative for manufacturing firms, yet research has not addressed the implications for NPD nor investigated how BMI affects NPD capabilities. This study shows the need to identify whether current NPD processes help or hinder BMI and proposes how managers can adapt NPD processes to a new business model.Originality/valueA three-stage process is identified for adapting NPD processes – as BMI changes the nature of products and services required, existing processes are supplemented by design activities requiring expert knowledge, these are subsequently refined into design methods that can be incorporated into the NPD process, and eventually design tools allow automation and efficiency.

Hybrid business models for ‘Organ-on-a-Chip’ technology: The best of both worlds

Current in vitro and in vivo preclinical models often have limited predictive value for translation to the clinical setting. The emerging ‘Organ-on-a-Chip’ (OOC) technology provides a better resemblance to the human physiology through combining 3D configuration of human-derived cells with microfluidic techniques, potentially improving translation. However, due to the disruptive nature of the OOC technology, it is unclear how to best achieve a product-market fit.Data on currently employed business models was collected by 14 semi-structured interviews with representatives from OOC companies. Customer needs were collected by means of an online questionnaire among 62 (potential) end-users.Both companies and customers preferred the Hybrid business model, in which both products and services were offered. Customized services were only moderately preferred over standard services, limiting the potential for price premiums. Razor blade business models facilitate investments in laboratory equipment while locking in the purchase of disposable OOC devices.Current and future generations of in vitro technologies would benefit from combining the best of product and service business models into the Hybrid business model. Downward price pressures are expected to lead to ever-lower pricing and to facilitate more predictive, high throughput screening with a high societal impact on the longer term.

On Developing Business Models for Internet of Things-Based Products: Process and Chalenges

Many companies nowadays are struggling to understand the unprecedented complexity of developing business models for products and services based on the Internet of Things. This article aims at investigating what are the elements to be taken into account in order to create a business model for IoT-based products/services and what are the main challenges faced in this process. To address these questions, we review the literature on the creation of business models for IoT and we analyze data from an action research involving the generation of a business model for an IoT-based product - a smart locker – in a small company. We explore how this process occurred and the challenges faced.

Identification of Value Proposition and Development of Innovative Business Models for Demand Response Products and Services Enabled by the DR-BOB Solution

The work presented is the result of an ongoing European H2020 project entitled DR-BOB Demand Response in Blocks of Buildings (DR-BOB) that seeks to integrate existing technologies to create a scalable solution for Demand Response (DR) in blocks of buildings. In most EU countries, DR programs are currently limited to the industrial sector and to direct asset control. The DR-BOB solution extends applicability to the building sector, providing predictive building management in blocks of buildings, enabling facilities managers to respond to implicit and explicit DR schemes, and enabling the aggregation of the DR potential of many blocks of buildings for use in demand response markets. The solution consists of three main components: the Local Energy Manager (LEM), which adds intelligence and provides the capacity for predictive building management in blocks of buildings, a Consumer Portal (CP) to enable building managers and building occupants to interact with the system and be engaged in demand response operations, and a Decentralized Energy Management System (DEMS®, Siemens plc, Nottingham, England, UK), which enables the aggregation of the DR potential of many blocks of buildings, thus allowing participation in incentive-based demand response with or without an aggregator. The paper reports the key results around Business Modelling development for demand response products and services enabled by the DR-BOB solution. The scope is threefold: (1) illustrate how the functionality of the demand response solution can provide value proposition to underpin its exploitation by four specific customer segments, namely aggregators and three types of Owners of Blocks of Buildings in different market conditions, (2) explore key aspects of the Business Model from the point of view of a demand response solution provider, in particular around most the suitable revenue stream and key partnership, and (3) assess the importance of key variables such as market maturity, user engagement, and type of blocks of buildings as drivers to market penetration and profitability. The work presented is framed by the expected evolution of DR services in different market contexts and the different relationships between the main stakeholders involved in the DR value chain in different EU countries. The analysis also relies on the results of interviews conducted at the fours pilot sites of the DR-BOB project with key representatives of the management, operations, and marketing. These are used to better understand customer needs and sharpen the value proposition.

An exploratory study of innovation strategies of the internet of things SMEs in South Korea

PurposeThis study aims to suggest directions for innovation-driving paths for sustainable growth through an in-depth case analysis of a successful Internet of Things (IoT) in small- and medium-sized enterprise (SME) in South Korea. IoT is expected to play a significant role in the future industry 4.0 platform. Yet, little is known about how SMEs in the IoT industry (IoT-SMEs hereafter) pursue innovation in alignment with attributes inherent in the IoT.Design/methodology/approachThis study addresses relatively unexplored key research questions on innovation strategies of IoT-SMEs. To do so, we employ an exploratory research methodology, along with an extensive review of the literature in the areas of the IoT, SMEs innovation and sustainable growth strategy. Specifically, we conduct intensive individual interviews to find IoT inherent innovation attributes and a case study to explore the process of linking these attributes to innovation-driving paths.FindingsThe analysis results reveal that there exist disruptive and open innovation attributes in the IoT industry that enable IoT-SMEs to enhance their structure and process related capabilities, to create business models for products and services and to collaborate with external parties in marketing to enter the market. We excavate practical insights into driving innovation based on IoT attributes and suggest enabling paths for pursuing innovation and entering overseas markets for IoT-SMEs.Originality/valueThis study investigates an underexplored significant area of research on the relationship between IoT attributes and innovation paths. The findings provide profound theoretical and practical implications. To the best of the author’s knowledge, it is the first attempt to link disruptive and open IoT attributes to innovation paths of IoT-SMEs. The results provide directions for pursuing effective innovation in responding to the IoT market for sustainable growth.

Research on Demand Forecast of Labor Quantity of Human Resources Based on Diversified Business

In recent years, demand forecast of human resources has become an important decision-making basis for enterprises to develop human resource planning. However, it is difficult to find a unified methodology to cover all areas of business and make human resource demand forecast for enterprises with large scale group, wide business geographical scope and diversified business operations. This paper takes a large group enterprise as an example and tries to construct the human resource demands classification forecasting model according to the production and financial business model differences, which provides a selection method for human resource demand forecast of large enterprise groups.

The Routinization of Paradox Management: Managing Recurrent Tensions in Dual Business Models

The objective of our study is to uncover the micro-processes of managing repeated episodes of tensions occurrence between product and service business model. By contrasting 10 national subsidiaries, we find that whereas the unsuccessful subsidiaries pursue a bargaining process to tension management that preserves the dualism between the two business models, the successful subsidiaries upgrade from an initial synergistic process to a subsequent routinized process of tension management, which allows them to move towards a duality. Rather than bargaining for compromises between diverging interests, the successful subsidiaries engaged in promoting common overarching goals, resolving the conflict of interest, and promoting the identification of synergies. As trust in the success of the synergistic process grows, organizational members begin to learn how to resolve conflicts without their leader’s active mediation. They jointly generate and implement routines for the proactive identification of latent tensions, which enables them to identify further synergies, reinforce the mutual trust, and increasingly maintain duality between the dual business models. Our main contribution to the business model literature is a process perspective of managing dual business model tensions, which (a) shifts the literature's focus from the prior solution perspective to a process perspective; (b) replaces the one-off solutions by longer-term evolutionary processes including the emergence of routines to address recurrent tensions; and (c) shifts the focus from formal structural (and reactive) solutions to managerial (and proactive) actions required to address business model tensions. This routinization of paradox management can lead to less salient tensions and long periods of duality.

Playing with Fire: Commercialization of a Metal-Supported SOFC Product for Use in Charcoal Cookstoves for the Developing World

Metal-Supported Solid Oxide Fuel Cells (mSOFC) developed at Lawrence Berkeley National Laboratory (LBNL) and elsewhere exhibit extreme thermal shock tolerance, are mechanically rugged, and withstand deep redox cycling.[1] The cell structure is shown in Figure 1. Point Source Power (PSP) was spun out of LBNL to commercialize portable power consumer products that utilize these advantages of mSOFC technology. PSP’s primary product was the VOTO (Figure 2), designed to operate in charcoal-burning cookstoves prevalent throughout the developing world. The VOTO is fueled by biomass, and heated to 650-850°C operation temperature during cooking, producing a few Watts of electricity. The electricity is stored for later use in a handle with on-board NiMH batteries, a LED lamp, and mobile phone charging port. Technical challenges addressed at PSP include: thermochemistry in the anode chamber, identification of electrochemically-active species, mineral content of wood chars, catalyst selection, and thermal activation of the desired reactions. These have been presented previously.[2] The present paper will discuss various aspects of the complex and challenging development and commercialization of the VOTO product. Kenya has high mobile phone ownership, relatively low electrification rate, prevalent use of solid cooking fuel, widespread deployment of the Jiko-style charcoal stove (Fig 2), and relatively advanced industrial capabilities relative to its sub-Saharan neighbors. Kenya was therefore a promising choice of first target market. The California-based development team conducted iterative product-generation improvements informed by frequent interaction with end-users, a production team, and sales and distribution networks in Kenya. Early in the development cycle it was discovered that Kenyan charcoal cooking practices result in significantly lower mSOFC operating temperature than the standard protocol adopted at PSP. This resulted in significant design and form-factor changes to the mSOFC stack to increase cell temperature, and required development of catalysts to promote conversion of charcoal to electrochemically-active gaseous fuels at low temperature. It was also found that significant regional differences in charcoal quality exist. This contributed to the decision to provide compacted tablet-cards of high-quality charcoal as part of the product kit, rather than the lower-cost option of encouraging end-users to prepare their own mSOFC fuel from locally-available cooking charcoal. The possibility of mSOFC stack assembly in Kenya also contributed to the flat-pack cell housing design, in which the stack components can be fabricated from sheet metal, shipped flat, and then folded with common hand tools to achieve the final configuration. Using charcoal as the electrochemically-active fuel and as the cooking fuel (providing heat to the mSOFC stack) is challenging. Several rapid degradation mechanisms are associated with mineral (ash) components in the biomass charcoal. In oxidizing atmosphere, potassium in charcoal reacts with chromium in the stainless steel stack components, creating a volatile compound that is reduced in the cathode, depositing chromium and contaminating the cathode catalyst. Chlorine from the charcoal rapidly corrodes stainless steel in the stack components and mSOFC. Various design improvements were implemented to mitigate these failure mechanisms, including protection of the cathode by a sacrificial shield, and oversizing the charcoal fuel tablets to ensure reducing conditions throughout operation to avoid corrosive ash formation. Even so, mSOFC lifetime under daily use was limited to 2-3 months. This required a product design and business model pivot towards a razor-blade model, with a durable handle containing NiMH batteries and electronic components, and a consumable fuel cell stack. A detailed cost model for production of the mSOFC stack, durable electronics handle, and charcoal fuel tablets was developed. This model was used to determine impact of labor rates and production volume on cost. This provided guidance in planning for initial production facilities locations, as well as market size required to achieve the desired price target. Finally, the response to the VOTO from the end-user market and investment community will be summarized. [1] Progress in Metal-Supported SOFCs: A Review, M.C. Tucker, Journal of Power Sources, 195, 4570-4582 (2010) [2] Operation of Metal-Supported SOFCs with Charcoal Fuel, M.C. Tucker, M. LaBarbera, C. Taylor, C.P. Jacobson, ECS Transactions, 57, 2929-2937 (2013) Figure 1

Apparel Mass Customization Technology Based on Postponement Manufacturing

Apparel mass customization can effectively meet consumers personalized, diversified needs and reasonably control production costs and delivery time, and the postponement manufacturing is one of its core strategies. Typical cases that garment industry applied postponed strategy into the production are introduced systematically, and present two key technologies-product differentiation delay and design production modularization. Delay product differentiation which is driven into production process by accurate information, avoids the drawbacks of forecasting relying on the experience, and modularization achieves large scale production as well as get the goal of customization. The postponed manufacturing theory, methods, cases, and implementation strategy in the apparel industry field have been explained systematically in order to provide new ideas and references for the apparel enterprises which are in the transformation and upgrading process to obtain core competitiveness and to open up new production business model.

What brings the value to outcome-based contract providers? Value drivers in outcome business models

Outcome-based contracts (OBCs) are frequently seen as the most advanced level of service offering that product firms offer. To deliver OBCs, product firms have to shift from the traditional product business model (PBM) to adopting an outcome business model (OBM). This constitutes a major change that rearranges their activity system and therefore profoundly changes their value-creation process. The literature tells us little about what this change entails and the key value drivers that OBC providers focus on as they adopt outcome business models. To tackle this topic, we study four global capital equipment manufacturers that recently started to offer highly advanced forms of OBC: Bombardier, Caterpillar, Hitachi and Rolls Royce. We learn that, apart from recognized value drivers, such as efficiency, novelty, lock-in and complementarity, OBC providers draw value from what we have labelled accountability value. Second, the value drivers are more diverse in OBMs than in traditional PBMs. Third, while in PBMs there is a trade-off between value drivers, in OBMs value drivers are mutually reinforcing, as they create a synergistic interplay. At the same time, however, firms are exposed to some sources of value loss as they start providing OBCs and shift to OBMs. We contribute to the literature by connecting the OBM literature with the broader value-creation literature and identifying (specific) value drivers as they appear in the OBM context, as well as the relationships among them.

Independent music production: how individuality, technology and creative entrepreneurship influence contemporary music industry practices

ABSTRACTIndependent music production, often viewed as a niche-driven and genre-specific practice restricted to isolated and fragmented communities lacking financial and technological resources, generates a wealth of creative work and opportunities for entrepreneurship. Independent producers, artists and musicians refine their recording and promotion skills through intense dedication, creative marketing and a deep want to connect their personal ideologies with a global audience. The modest project studio, a source of creative inspiration, and cultural study, exert a powerful influence through its accessibility, simple functionality and connectivity to the Internet. The author examines some of the multifaceted cultural, ideological, technical and entrepreneurial factors contributing to a significant evolution in do it yourself (DIY) music production and distribution. The rise of this independent ‘recording class’ anticipates the many changes in the contemporary music industry and offers new production and cooperative business models.

Global Design Strategy for Cancer Patient Education Materials: Haiti Pilot Case Study

Cancer care providers at Queen Elizabeth Central Hospital in Malawi identified a need for educational materials for their low‐literacy patients. Global Oncology, a nonprofit focused on improving cancer care, research, and education in resource‐limited settings, partnered with THE MEME to develop cancer patient educational materials (PEMs). The goal of the project was to create clinically relevant and culturally appropriate low‐literacy PEMs to improve clinical care, support services, and patient adherence in resource‐limited settings. The team also aimed to develop a product strategy and business model for long‐term sustainability. The article introduces the challenge from a global health perspective and the ways design can have a significant impact. It presents the collaborative process of developing the “Cancer and You” booklet for multiple cultural contexts and focuses on the results of a pilot study in Haiti evaluating the efficacy of the design in simplifying complex medical information, facilitating patient education, and improving communication.