Business model innovation: a

temporal perspectives

Niamh O Riordan University College Dublin, Ireland

Philip O’Reilly University College Cork, Ireland

Aidan Duane Waterford Institute of Technology, Ireland

Pavel Andreev University of Ottawa, Canada

Agenda

1. Motivation

2. Definitions

3. Research gap

4. The business model innovation process

5. Discussion and future directions

1. Motivation

• The same idea or technology taken to market through two

different business models can actually yield two different

economic outcomes depending on the business model being

used (Chesbrough, 2010)

• A well-formulated and innovative business model can be used

to help your company gain competitive advantages that result

in higher profits than competitors (Afuah and Tucci, 2001)

• Legendary firms that shape their industry structures are in fact

business-model innovators (Gambardella and McGahan, 2010)

• More and more companies are re-evaluating their business

models on an on-going basis, taking a transformational

approach bringing about innovation within the organization

itself (Demil and Lecocq, 2010).

2. Definitions

• There is a lot of ambiguity about the concept of a business model:

– an approach to generating revenue at a reasonable cost that is based on

assumptions about what customers want and how they want it, and on

how the enterprise can best meet those needs, and get paid for doing so”

(Teece, 2010)

– “a conceptual tool that contains a set of elements and their relationships

and allows expressing the business logic of a specific firm. It is a

description of the value a company offers to one or several segments of

customers and of the architecture of the firm and its network of partners

for creating, marketing, and delivering this value and relationship capital, to

generate profitable and sustainable revenue streams” (Osterwalder, 2005)

– as a system of interconnected and interdependent activities that

determines the way the company “does business” with its customers,

partners and vendors (Amit and Zott, 2012)

3. Research Gap

• Managers struggle to understand the potential value of a new

business model (Bouchikhi and Kimberly, 2003; Chesbrough, 2010) and

companies struggle to innovate the business models through which

commercialisable new ideas and technologies will pass (Chesbrough,

2010)

• But the literature is skewed toward product and process innovation

(O Riordan, 2011) rather than business model innovation (Crossan and

Apaydin, 2010). The business model literature itself focuses on defining

(Timmers 1999; Osterwalder et al., 2005) or visualising (Osterwalder and Pigneur,

2010) business models

• These tools have explanatory powers, particularly when used

retrospectively but they overlook the temporal dynamics of the

business model innovation process itself don’t provide a useful

process map for organizations wishing to engage in business model

innovation (O Riordan et al., 2013; O Riordan et al., 2012; O Reilly et al., 2014).

4. The business model innovation process

Ideation

• Focuses on the identification of potential value

activities pertaining to the delivery of the

company’s products and services

– Novel activities

– Novel combinations of activities

– Novel allocations of activities amongst parties

• Opportunities for business model innovation are

greatest during this phase so tools and

techniques are proposed to stimulate ideation

Evaluation

• Focuses on evaluating each individual proposal on

its own merits, taking into account its

appropriateness for the focal firm in terms of its

– organisational knowledge

– organisational capacity

– organisational network

• A number of approaches can be used:

– Visualisation

– Experimentation

– Systematic analysis

Prioritisation

• Once business model proposals have been

evaluated individually, a comparative assessment

of viable proposals should be conducted in order

to enable the focal firm to prioritise its efforts

• As this comparative assessment should be based

on multiple criteria, a weighted decision matrix

may be useful

5. Discussion and future directions

• This research highlights the need for a more temporal view

of the business model innovation process and proposes a

three phase innovation process framework that is amenable

to IS support

• Future industry-based research is needed to test and refine

this process model

THANK YOU

Dr Niamh ‘Neve’ O Riordan

University College Dublin, Ireland.

niamh.oriordan@ucd.ie

www.niamhoriordan.com

ie.linkedin.com/in/niamhoriordan/