Enhancements of business model researches towards a framework that enables quantified business model comparisons especially in the scope of trend analyses
Research Paper (postgraduate) 2017 5 Pages
Enhancements of business model researches towards a framework that enables quantified business model comparisons especially in the scope of trend analyses.
I. Significant prior research
Today, one of the major impacts of business models have been an increase in the possible business configurations a company can adopt because of the reduced coordination and transaction costs. In other words, they can increasingly work in partnerships, offer joint value propositions, build-up multi-channel and multi-owned distribution networks and profit from diversified and shared revenue streams. This, however, means that a company's business has more stakeholders, becomes more complex and is harder to understand and communicate. Everybody would understand, that the existing management concepts and tools are not be sufficient enough anymore and that new ones have to be found. For example, Rentmeister and Klein call for new modelling methods in the domain of business models. Effectively, a whole range of authors propose using the relatively new concept of business models for managing companies in the Internet era.
When you are looking for the most modern frameworks to business model development you find three major approaches. Approach number one is a very complete concept for describing a business model. Furthermore, the high level of details also allows the improvement of single components of a company. This framework is called the Business Model Canvas and has been developed by Alexander Osterwalder since 2004.
The second approach is the Business Model Navigator from the university St. Gallen. This framework is less detailed than the Business Model Canvas, but focuses more on patterns of different companies. Besides, the framework can perfectly be used when a business model has to be described fast and low detailed.
The last approach was developed for describing the mass of technology oriented companies which has been founded within the last 10 years or its products like Google, Netflix, Amazon Prime, Uber etc. This framework concentrates on the digital part of a business model. Therefore, it is a great tool for products which are only consumed via internet as well as a good addition to the business model canvas. The framework is called the DigitalValueCreation-Framework and was established by Christian Hoffmeister.
Although all three approaches have been developed within the last 13 years they partly based on others researches which will be presented in the dissertation. A first research on the literature indicates a very interesting picture. The ‘oldest’ work on business models is from 1998 while the major researches were published between 2000 und 2003.
Next to business modelling, trend analyses become more and more important to future-oriented companies. Ulf Pillkahn describes the most compelling and conceptual approach for analysing trends. This approach leads to insights about new products in the future. Unfortunately, these products have to be sold via the ‘old’ business model because this perspective is not considered in this approach.
II. Importance of the research for theory and practice
Meanwhile, there are great studies and tools available which allows a better strategic approach in gaining new source of businesses. But, all existing tools only offer the possibility to describe existing business models or to improve them. And with ‘describe’ I mean a qualitative description. That means, a decision based on quantitative data cannot be made although decision makers need these data. This problem gets more complex when the business model innovation is combined with to the tools of trend analyses. Trend analyses focus on future products or the future use of products like using television in 10 years. Trend analyses therefore work with several scenarios. Every scenario could lead to a specific business model which should be liken to each other. Which business model is the best for the future product program?
III. My interest in the topic
During my work at a consulting agency from 2008 till 2011 I had recognized that there is no need for projects which neither changes or improves existing business models nor invents new ones. I think that was not be a branches topic since I consulted several companies from different branches like GlaxoSmithKline, Toshiba, ThyssenKrupp or Procter&Gamble. After I changed my job and the company 5 years ago I can sense the need for new business models and business model revision. Being well educated in the field of strategic marketing I can say that the ‘old’ tools like the Ansoff matrix or the frameworks of Michael Porter have helped in most business projects. But these are tools that are at least 20 years old. The speed and the complexity of today’s business world is sometimes hard to challenge with these tools. For example, the Deutsche Bahn AG has to face several losses so that a we tried a new approach of earning money. This approach consists of offering services from the value chain to customers; a strategic approach which is hardly to develop because it does not fit very well to the Ansoff matrix or to the strategic management of products. Therefore, it should be handled as a new business model.
Since recognizing this need for a better management of business models in companies like Deutsche Bahn AG as well as the proven development of business models in companies like Google, Apple, Netflix, Uber etc. I am convinced that business model innovation and business model management is the new big topic in strategic management after bringing concepts like portfolio analyses, shareholder value, lean management, gap-analyses etc. to perfection during the last 50 years. Therefore, I have kept myself busy with business model development for the last 3 years.
IV. Possible research approach or research methodology
A good starting point to design science is provided by March and Smith. They outline a design science framework with two axes, namely research activities and research outputs. Research outputs cover constructs, models, methods and instantiations. Research activities comprise building, evaluating, theorizing on and justifying artefacts.
Constructs form the vocabulary of a domain. They constitute a conceptualization used to describe problems within a domain. A model is a set of propositions or statements expressing relationships among constructs. In design activities, models represent situations as problem and solution statements. A method is a set of steps used to perform a task. Methods are based on a set of underlying constructs and a representation of the solution space. An instantiation is the realization of an artefact in its environment. Instantiations operationalize constructs, models and methods.
Concerning research activities, March and Smith identify build and evaluate as the two main issues in design science. Build refers to the construction of constructs, models, methods and artefacts demonstrating that they can be constructed. Evaluate refers to the development of criteria and the assessment of the output's performance against those criteria. Parallel to these two research activities in design science March and Smith add the natural and social science couple, which are theorize and justify. This refers to the construction of theories that explain how or why something happens. Summarized, constructs, models, methods and instantiation are built to perform a specific task. These outputs then become the object of study, which must be evaluated scientifically. They have to be evaluated in order to conclude if any progress has been made. In order to do this, we have to develop metrics and measure the outputs according to those metrics. For instance, when an artefact has been applied in a specific environment, it is important to determine why and how the artefacts worked or did not work. Such research applies natural science methods to artefacts. Then, given a generalization or theory we must justify that explanation. Evidence has to be gathered to test the theory in question. Justification for artefacts generally follows the natural science methodologies governing data collection and analysis.
The research in my dissertation should base on the design science framework and essentially covers the build and some evaluate research activities and has a research output of constructs, models and instantiations.
March and Smith propose a four by four framework that produces sixteen cells describing viable research efforts. The different cells have different objectives with different appropriate research methods. A research project can cover multiple cells, but does not necessarily have to cover them all. Concerning the importance of a specific design science research its relevance and contribution in the build activity are judged on the basis of novelty of the artefact and its persuasiveness of achieving the goals it claims. In table 1 I illustrate which cells at the intersection of research activities and research outputs of March and Smith's framework should be covered by the dissertation. Each cell/intersection contains a specific research objective of the overall business model research and is addressed and explained in a specific chapter of the dissertation.
 cf. Coase (1937), pp. 386; Williamson (1975)
 cf. Rentmeister and Klein (2003), pp. 17
 cf. Chesbrough and Rosenbloom (2000), pp. 12; Afuah and Tucci (2001), pp. 115; Applegate (2001), pp. 33; Pateli and Giaglis (2003)
 cf. Osterwalder (2010): Business Modell Generation, pp. 20
 cf. Gassmann (2014): The Business Model Navigator: 55 Models That Will Revolutionise Your Business, pp. 6
 cf. Hoffmeister (2015): Digital Business Modelling: Digitale Geschäftsmodelle entwickeln und strategisch verankern, p. 320
 Pillkahn (2007), pp.
 cf. March and Smith (1995), pp. 251
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