The three roles of business models in socio-technical transitions: Implications for research and practice Christina M. Bidmon, MIBA Dipl.-Ing. Sebastian Knab Prof. Dr. Dirk Ulrich Gilbert Department of Socioeconomics, Chair of Business Ethics and Management, Universität Hamburg
Wissenschaftliche Tagung der Erich-Gutenberg-Arbeitsgemeinschaft Köln e.V. Nürnberg, September 11th, 2014
Christina M. Bidmon, Sebastian Knab, Dirk Ulrich Gilbert
[email protected]
Background: Socio-technical systems and transitions (e.g. Geels, 2002; Geels, 2005). Socio-technical systems: The way societal functions such as energy provision or transportation are fulfilled, including: technologies, user practices, regulation, industrial networks infrastructure, and symbolic meaning.
The socio-technical system of car-based transportation (source: Geels, 2005:682)
Socio-technical transitions: Large-scale changes to a socio-technical system. How does a socio-technical transitions come about? The three roles of business models in socio-technical transitions: Implications for research and practice
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Research gap: The role of business models in socio-technical transitions has received too little attention so far. Technology
Business models
?
Socio-technical
transitions
Research on transitions: Need to better understand the role of firms within transitions (e.g. Geels, 2006)
Research on business models: Need to understand how business models can contribute to transitions (Boons/Lüdeke-Freund, 2013; Wells, 2013; Boons et al. 2013) Research on transitions “is in search of more detailed causal mechanisms, whereas the concept of a business model is (…) in search of a more structured contextual explanation” (Wells 2013, p. 42) The three roles of business models in socio-technical transitions: Implications for research and practice
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Theory: The multi-level perspective (MLP) on socio-technical systems (Geels, 2002) Socio-technical landscape: Deep structural trends, e.g. paradigms or worldviews Socio-technical regime: Dominant cognitive, normative and regulative rule-set; regime actors Niche: Protected (e.g. from market selection) spaces where radical innovation develop Multiple levels of socio-technical systems (source: Geels, 2002:1261)
The three roles of business models in socio-technical transitions: Implications for research and practice
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Theory: The multi-level perspective (MLP) on socio-technical transitions (Geels, 2002; Geels/Schot, 2007) Socio-technical landscape: Slow-changing trends create windows of opportunity Socio-technical regime: Dynamically stable: vested interests, path dependence, cognitive rules/routines
Source: Adapted from Geels/Schot, 2007:401
The three roles of business models in socio-technical transitions: Implications for research and practice
Niche: Experimenting and learning in social networks until a dominant design emerges
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Theory: A business model describes how a firm creates, delivers and captures value (e.g. Teece, 2010; Zott, Amit and Massa, 2011; Massa and Tucci, 2014). Important characteristics of the business model concept for this study: Boundary-spanning nature (Zott and Amit, 2007; Zott et al., 2011; Berglund/Sandström, 2013) Levels of business models Industry recipe (McNamara et al., 2013; Spender, 1989; Björkdahl/Holmén, 2013) Dominant design (Teece, 2010) Industry model vs. company model vs. product/service model (Giesen et al., 2007)
Relation to innovation Device to commercialize tech. innovation (Chesbrough/Rosenbloom, 2002; Chesbrough, 2007) Subject to innovation (Zott et al., 2011; Mitchell/Coles, 2003; Morris et al., 2005) Barriers and drivers of business model innovation Path dependencies and fear of cannibalization (Bohnsack et al., 2014; Velu/Stiles, 2013) Dominant logic as barrier (Chesbrough, 2010; Prahalad and Bettis, 1986; Bouchikhi and Kimberly, 2003) New technologies and environemental change as drivers (Björkdahl, 2009; Calia et al., 2007; Timmers, 1998; Sabatier et al., 2013; Dubosson-Torbay et al., 2002; Doz/Kosonen, 2010; Ramírez et al., 2011)
The three roles of business models in socio-technical transitions: Implications for research and practice
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Results: The three roles of business models in socio-technical transitions (1/3) 1 As an industry recipe, the
dominant business model design is part of the current socio-technical regime. Encompassing different regime actors (boundary spanning) Mutually reinforcing Strengthening inertial forces (internal and external) Prevents niche innovation to break through
The three roles of business models in socio-technical transitions: Implications for research and practice
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Results: The three roles of business models in socio-technical transitions (2/3) 2 As a device to commercialize radical technological innovation, the business model supports the stabilization processes:
Building social networks Business model
Fostering learning processes Attract attention and funding
Technological niche innovations
The three roles of business models in socio-technical transitions: Implications for research and practice
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3 As a subject to innovation, novel business models can be created in a niche.
Higher structuration level due to boundary spanning nature
Business model as niche innovation
Higher leverage to challenge the existing regime and change “the rules of the game“
Technological niche innovation
The three roles of business models in socio-technical transitions: Implications for research and practice
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Discussion: Implications for research and practice Implications for… Business models…
Research
Business Models
Practice
Socio-Techn. Transitions
Firms
Policy makers
…as part of the current sociotechnical regime. …as a device to commercialize technological niche innovation …as a nontechnological niche innovation
The three roles of business models in socio-technical transitions: Implications for research and practice
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Discussion: Implications for research and practice Implications for… Business models… …as part of the current sociotechnical regime. …as a device to commercialize technological niche innovation
Research
Business Models
Practice
Socio-Techn. Policy Firms Transitions Better understanding of the barriers to makers innovation related to the current business model: Reinforcing effect of dominant logic and current socio-technical regime. Emphasis on socio-technical regime actors that are not immediate business model stakeholders.
…as a nontechnological niche innovation
The three roles of business models in socio-technical transitions: Implications for research and practice
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Discussion: Implications for research and practice Implications for… Business models… …as part of the current sociotechnical regime. …as a device to commercialize technological niche innovation
Research
Business Models
Practice
Socio-Techn. Transitions
Firms
Policy makers
Business model innovation has a higher leverage to change “the rules of the game” either for unique competitive advantage or to promote corporate sustainability.
…as a nontechnological niche innovation
The three roles of business models in socio-technical transitions: Implications for research and practice
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Discussion: Implications for research and practice Implications for… Business models… …as part of the current sociotechnical regime. …as a device to commercialize technological niche innovation
Research
Business Models
Practice
Socio-Techn. Transitions
Business model innovation has a higher leverage to change “the rules of the game” either for unique competitive advantage or to promote corporate sustainability.
…as a nontechnological niche innovation
The three roles of business models in socio-technical transitions: Implications for research and practice
Firms
Policy makers
Need for collaborative business model innovation approaches and engagement of critical regime actors to change “the rules of the game”.
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Conclusion and future research The business model concept is integrated into the MLP on socio-technical transitions... …as part of the current socio-technical regime, …as a device to commercialize radical technological niche innovation, and …as a non-technological niche innovation. Business model (innovation) research profits from a contextualization of the concept through its integration into the wider socio-technical system. Firms benefit from a better understanding of the complexity of business model innovation; the importance of collaborative approaches and engagement of a wide range of actors is emphasized. Further research would profit from… …analyzing historical cases of socio-technical transitions from a business model perpective to validate the findings …longitudinal studies on ongoing transitions, e.g. the German „Energiewende“ The three roles of business models in socio-technical transitions: Implications for research and practice
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Thank you for your attention!
Christina M. Bidmon, Sebastian Knab, Dirk Ulrich Gilbert
[email protected]
Results: The dominant business model design and the current socio-technical regime are mutually reinforcing. Transition literature
1
Business model literature
The current regime serves as a selection and retention mechanism for innovation
A dominant business model design is shared in an industry as an industry recipe
The regime is dynamically stable with shared cognitive, regulative and normative rules shared in a value network and society (Geels/Schot, 2007)
The dominant logic is a strong internal barrier to business model innovation
(Geels, 2002)
Regime actors resist transitions due to path dependencies, lock-in and vested interests (Geels, 2011)
(Teece, 2010; McNamara et al., 2013; Spender, 1989; Björkdahl/Holmén, 2013)
(Chesbrough, 2010; Prahalad/Bettis, 1986; Bouchikhi/Kimberly, 2003)
Incumbents are cognitively contrained, face path dependencies and fear cannibalization (Chesbrough, 2010; Bohnsack et al. 2014; Velu/Stiles, 2013)
The three roles of business models in socio-technical transitions: Implications for research and practice
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Results: The business model supports the stabilization processes of technological niche-innovations. Transition literature
2
Business model literature
Technology, of itself, has no value; it only gains it through system interaction
Business models (BMs) unlock the latent value of technological innovation
Important stabilization processes between technological niche and regime level (Geels/Schot, 2010):
BMs facilitate the articulation of visions and support learning processes (Baden-Fuller-
(Geels, 2002; Elzen/Geels/Green, 2004)
Haefliger, 2013; Massa/Tucci, 2014)
BMs link technological innovation to other actors and elements of a value network
Building of social networks Learning processes to improve performance
(Zott et al., 2011; Berglund/Sandström, 2013)
Articulation of expectations and visions to guide learning process and attract attention and funding.
The three roles of business models in socio-technical transitions: Implications for research and practice
(Chesbrough/Rosenbloom, 2002)
BMs facilitate collective sense-making, the building of social networks and legitimacy, and the attraction of funding (Doganova/Eyquem-Renault, 2009; Massa/Tucci, 2014; Perkman/Spicer, 2010)
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Results: Novel business models can be created in a niche with a higher initial level of structuration and stability. Transition literature
Business model literature
The structuration is higher and the stability stronger when (Geels/Schot, 2007)… …cognitive structures are well articulated and rules have stabilized
BMs are narratives that describe how a firm works (Magretta, 2002; Perkman/Spicer, 2010) BMs define the transactions between multiple actors in a value network
…social networks are large and stable and activities are aligned …market structures have stabilized
3
(Zott/Amit, 2010; Matthyssens et al., 2005)
BMs facilitate collective sense-making, the building of social networks and legitimacy and the attraction of funding (Doganova/Eyquem-Renault, 2009; Massa/Tucci, 2014; Perkman/Spicer, 2010)
The three roles of business models in socio-technical transitions: Implications for research and practice
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Results – Role 1: The Business model as part of the current sociotechnical regime. Socio-technical transitions
Business model literature
The current regime serves as a selection and retention mechanism for innovation.
The three roles of business models in socio-technical transitions: Implications for research and practice
A dominant business model logic is shared by incumbents, they are interested in keeping it.
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Results – Role 2: The business model as a device to commercialize radical technological niche innovation. Socio-technical transitions
Business model literature
Technological innovation is experimented with at niche level…
Business models facilitate the articulation of visions and support learning processes.
…until a dominant design emerges...
Business models can unlock the value of technological innovation.
…and breaks through when it is aligned with more elements and actors
Business models link technological innovation to other actors and elements of a value network.
The three roles of business models in socio-technical transitions: Implications for research and practice
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Results – Role 3: The business model as a non-technological niche innovation Socio-technical transitions
Business model literature
Radical niche innovation can challenge the current regime and trigger transitions.
The three roles of business models in socio-technical transitions: Implications for research and practice
Innovative business models can challenge the dominant business model logic and may overthrow it.
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