Digital Business Model Innovation: An External Enablement Perspective and Research Agenda

 With the growing prominence of digital technologies, the business model concept has become increasingly popular in the digital innovation domain. Research on how digital technologies enable business model innovation has so far mainly taken an inside-out perspective focussing on, for example, an organization's innovation process or dynamic capabilities. 

Conversely, we present a framework that takes an outside-in perspective focusing on how digital technologies as environmental changes enable business model innovation. This framework emphasizes external enablers, which represent aggregate level phenomena from which multiple emerging ventures within the context of start-ups or established organizations can benefit. We highlight the path and functions of enablement by explaining how digital technologies as external enablers influence business model innovation through their types, characteristics, mechanisms and roles.

Our integrative framework consolidates different but related research topics for digital business model innovation, thereby shaping a research agenda with key questions to advance the field. We also see this framework as contributing to a cumulative tradition, notably by bridging the gap between more generic digital business model research and research into new business models driven by specific digital technologies or innovations. 

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Business model tooling: Where research and practice meet

 This paper is an introduction to a special issue that bundles a series of papers on business model tooling. Business model tools are methods, frameworks or templates to facilitate communication and collaboration regarding Business Model analysis, (re-)design, adoption, implementation and exploitation. 

In this introduction, we position business model tooling in the broader literature, going beyond the mere use of tooling to disseminate academic knowledge. We point out the unique contributions on business model tooling that information systems scholars can bring and give an overview of business model tools and ontologies, 

We sketch a brief research agenda comprising seven research directions: (1) design of tooling; (2) interfaces and usability; (3) evaluation and testing; (4) adoption, diffusion and commercialization of tooling; (5) privacy and security of tool users; (6) the use of tooling in business model education; and (7) future tooling enabled by big data and machine learning.

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The qualities of business models: Thinking about “...ilities”

Most people will be familiar with the ...ilities that IDEO uses for design thinking: desirability, feasibility, viability. In a previous post about the strategic change of business models, I discussed synergy, scalability, flexibility, innovativity, simplicity, and repeatability.

In their recent work (The Invincible Company), Osterwalder and Pigneur position IDEO's ...ilities on their Business Model Canvas and add adaptability to include factors from the business environment. Here I like to present some initial ideas that follow and extend the ideas from Osterwalder and Pigneur.

As presented in the picture below, the basic positioning by Osterwalder and Pigneur is followed, except that their viability (‘earning enough money’) is replaced by profitability (which more directly expresses the monetary focus).

In my perspective, viability is central and is firstly related to the value proposition. The value proposition is often seen as the key element or core component of a business model. As such it seems evident that a key concern should be whether the value proposition is viable or not.

Secondly, viability is also determined by a holistic perspective on the business model (the sum is more than the parts, how do the components fit together). As such, it also brings desirability, feasibility, and profitability together and can be seen as their ‘sweetspot.’

Thirdly, viability is also determined by how the business model fits in its business environment (adaptability) and institutional environment (legitimability). The latter deals with the broader values, logic and rules of social structures that influence stability (and change) in social life.

How should governments respond to Facebook’s Libra initiative?

"How governments should respond to Libra depends on how the company integrates the cryptocurrency into their larger business. We envision Libra being integrated into the company’s broader business model as a basis for offering financial services, or possibly an even broader set of services. Given the increasing social and economic power of large tech firms, governments should proactively start thinking of how to respond to these firms’ entrance into new industries."

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Data-Driven Business Models and Professional Services Firms: A Strategic Framework and Transitionary Pathways

Many organizations and industries are undergoing a significant transformation due to digital technologies. In our research, we study digital business model innovation in relation to Professional Services Firms (PSFs). In this conceptual paper, we contrast the traditional, human-centered, knowledge-intensive business model of PSFs with the new, computer-centered, data-driven business model that is developing due to the rise of big data, advanced data analytics and artificial intelligence. To better understand if, when and how data-driven business models may disrupt PSFs, we provide a strategic framework for identifying and analyzing the options for PSFs in relation to the nature and scope of their value proposition. We suggest several possible transitionary pathways using digital technology for augmentation or automation and the need so scale across services and industries. As such this paper provides valuable insights to academics and practitioners into how PSFs might develop new business models given the nature of their service offerings and industry positions.

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What’s new about digital innovation?

Practitioners see digital innovation as vital to their business. Academics are also increasingly paying attention to digital innovation. However, it is often unclear what is meant by digital innovation and how it differs from traditional (IS/IT) innovation. To advance our understanding of digital innovation, this paper identifies different conceptualizations of digital innovation in the IS literature and extracts common themes that can point to what is “new” about digital innovation and what is emerging as research areas for the IS discipline. 

Our research identifies two prominent digital innovation conceptualisations, based on Fichman, Dos Santos, and Zheng (2014) and Yoo, Boland, Lyytinen, and Majchrzak (2012), and presents four prominent digital innovation themes: the nature of digital technologies, digitization, digital business model innovation and digital-enabled generativity. We integrate these themes into a framework that conceptualizes digital innovation as a rippling effect starting with digital technologies and conjecture that digital innovation can become ‘hyperinnovation’ through powerful virtuous cycles.

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Repainting the business model canvas for peer-to-peer sharing and collaborative consumption

Sharing Economy businesses have become very popular recently but there is little guidance available on how to develop the respective business models. We faced this problem during a consortium research project for developing a service for electric vehicle charging that adopts the paradigm of Peer-to-Peer Sharing and Collaborative Consumption (P2P SCC)— a specific branch of the Sharing Economy. 

We use Action Design Research (ADR) to develop an adapted version of the Business Model Canvas that is specifically tailored to the needs of P2P SCC business model development. The adapted canvas is then applied to develop a business model for the proposed service. 

The learnings from the development process are formalized into a set of generally applicable guidelines for the development of P2P SCC business models. The resulting guidelines and the adapted canvas provide guidance for both researchers and practitioners who want to either develop new or analyze existing P2P SCC business models.

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Empirical insights into the development of a service-oriented enterprise architecture

Organisations use Enterprise Architecture (EA) to reduce organisational complexity, improve communication, align business and information technology (IT), and drive organisational change. Due to the dynamic nature of environmental and organisational factors, EA descriptions need to change over time to keep providing value for its stakeholders. Emerging business and IT trends, such as Service-Oriented Architecture (SOA), may impact EA frameworks, methodologies, governance and tools. However, the phenomenon of EA evolution is still poorly understood. 

Using Archer's morphogenetic theory as a foundation, this research conceptualises three analytical phases of EA evolution in organisations, namely conditioning, interaction and elaboration. Based on a case study with a government agency, this paper provides new empirically and theoretically grounded insights into EA evolution, in particular in relation to the introduction of SOA, and describes relevant generative mechanisms affecting EA evolution. By doing so, it builds a foundation to further examine the impact of other IT trends such as mobile or cloud-based solutions on EA evolution. At a practical level, the research delivers a model that can be used to guide professionals to manage EA and continually evolve it.

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The Digital Innovation of everyday things: New, Copy, Paste, Search, Save, Print, Send, etc.

With the ongoing proliferation and immersion of digital technologies into everything we use, we often wonder how the future of the things we use would look like. While it is not possible to predict this, it is possible to think about it. Chance favors the prepared mind.

Take the digital camera. The way we now go about with taking and sharing pictures is quite different from how it used to be with the film camera. One of the influences has been the information technology, in fact the digital camera probably has more in common with a computer than with a film camera. This also means that a lot of functionality associated with computers has entered the world of digital photography like ‘save,’ ‘copy,’ ‘delete,’ metadata, etc.(and we expect that this functionality works in a way similar to a computer environment, e.g., a perfect copy with one click).

One of the ways of thinking about how digital technologies influence everyday things, may be to apply these notions of computer functionality to them as a thought experiment. For example, what would ‘new’ mean in relation to a digital fridge. I could mean that it registers every new product I put in. Or I may be able to ‘search,’ by asking it if there is any fruit left or how much fruit has been consumed in the last week. I may also be able to ‘save’ so I can see overtime what has been in my fridge.

IT Consumerization and its Effects on (Strategic) IT Managment

IT consumerization is both a major opportunity and significant challenge for organizations. However, IS research has hardly discussed the implications for IT management so far. In this paper we address this topic by empirically identifying organizational themes for IT consumerization and conceptually exploring the direct and indirect effects on the business value of IT, IT capabilities, and the IT function.

More specifically, based on two case studies, we identify eight organizational themes: consumer IT strategy, policy development and responsibilities, consideration of private life of employees, user involvement into IT-related processes, individualization, updated IT infrastructure, end user support, and data and system security.

The contributions of this paper are (1) the identification of organizational themes for IT consumerization, (2) the proposed effects on the business value of IT, IT capabilities and the IT function, and (3) combining empirical insights into IT consumerization with managerial theories in the IS discipline.

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A Critical Realist Perspective of Enterprise Architecture Evolution: Conditioning and Outcomes

This paper investigates how Enterprise Architecture (EA) evolves due to emerging trends. It specifically explores how EA integrates the Service-oriented Architecture (SOA). Archer’s Morphogenetic theory is used as an analytical approach to distinguish the architectural conditions under which SOA is introduced, to study the relationships between these conditions and SOA introduction, and to reflect on EA evolution (elaborations) that then take place.  

The paper focuses on reasons for why EA evolution could take place, or not and what architectural changes could happen due to SOA integration. The research builds on sound theoretical foundations to discuss EA evolution in a field that often lacks a solid theoretical groundwork. Specifically, it proposes that critical realism, using the morphogenetic theory, can provide a useful theoretical foundation to study enterprise architecture (EA) evolution. The initial results of a literature review (a-priori model) were extended using explorative interviews. 

The findings of this study are threefold. First, there are five different levels of EA-SOA integration outcomes. Second, a mature EA, flexible and well-defined EA framework and comprehensive objectives of EA improve the integration outcomes. Third, the analytical separation using Archer’s theory is helpful in order to understand how these different integration outcomes are generated.

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Small and Medium Enterprises using Software as a Service: Exploring the different roles of intermediaries

Software as a Service (SaaS) can provide significant benefits to small and medium enterprises (SMEs) due to advantages like ease of access, 7*24 availability, and utility pricing. However, underlying the SaaS delivery model is often the assumption that SMEs will directly interact with the SaaS vendor and use a self-service approach. In practice, we see the rise of SaaS intermediaries who can support SMEs with sourcing and leveraging SaaS. 

This paper reports on the roles of intermediaries and how they support SMEs with using SaaS. We conducted an empirical study of two SaaS intermediaries and analysed their business models, in particular their value propositions. We identified orientation (technology or customer) and alignment (operational or strategic) as themes for understanding their roles. 

The contributions of this paper include: (1) the identification and description of SaaS intermediaries for SMEs based on an empirical study and (2) understanding the different roles of SaaS intermediaries, in particular a more basic role based on technology orientation and operational alignment and a more value adding role based on customer orientation and strategic alignment. We propose that SaaS intermediaries can address SaaS adoption and implementation challenges of SMEs by playing a basic role and can also aim to support SMEs in creating business value with SaaS based solutions by playing an added value role.

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Conceptualising Business Models: Definitions, Frameworks and Classifications

The business model concept is gaining traction in different disciplines but is still criticized for being fuzzy and vague and lacking consensus on its definition and compositional elements. In this paper we set out to advance our understanding of the business model concept by addressing three areas of foundational research: business model definitions, business model elements, and business model archetypes. 

We define a business model as a representation of the value logic of an organization in terms of how it creates and captures customer value. This abstract and generic definition is made more specific and operational by the compositional elements that need to address the customer, value proposition, organizational architecture (firm and network level) and economics dimensions. Business model archetypes complement the definition and elements by providing a more concrete and empirical understanding of the business model concept. 

The main contributions of this paper are (1) explicitly including the customer value concept in the business model definition and focusing on value creation, (2) presenting four core dimensions that business model elements need to cover, (3) arguing for flexibility by adapting and extending business model elements to cater for different purposes and contexts (e.g. technology, innovation, strategy) (4) stressing a more systematic approach to business model archetypes by using business model elements for their description, and (5) suggesting to use business model archetype research for the empirical exploration and testing of business model elements and their relationships.

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Exploring Shared Services from an IS Perspective: A Literature Review and Research Agenda

Shared services have gained significance as an organizational arrangement, in particular for support functions, to reduce costs, increase quality, and create new capabilities. The information systems (IS) function is amenable to sharing arrangements and information systems can enable sharing in other functional areas. However, despite being a promising area for IS research, literature on shared services in the IS discipline is scarce and scattered. There is still little consensus on what shared services is. Moreover, a thorough understanding of why shared services are adopted, who are involved, and how things are shared is lacking. 

In this article, we set out to progress IS research on shared services by establishing a common ground for future research and proposing a research agenda to shape the field based on an analysis of the IS literature. We present a holistic and inclusive definition, discuss the primacy of economic-strategic objectives so far, and introduce conceptual frameworks for stakeholders and the notion of sharing. We also provide an overview of the theories and research methods applied. We propose a research agenda that addresses fundamental issues related to objectives, stakeholders, and the notion of sharing to lay the foundation for taking IS research on shared services forward.

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One-Stop Government Portals: Transformation or Navigation

E-government is seen as a promising approach for governments to improve their service towards citizens and become more cost-efficient in service delivery. This is often combined with one-stop government, which is a citizen-oriented approach stressing integrated provision of services from multiple departments via a single access point, the one-stop government portal. While the portal concept is gaining prominence in practice, there is little known about its status in academic literature. This hinders academics in building an accumulated body of knowledge around the concept and makes it hard for practitioners to access relevant academic insights on the topic. The objective of this study is to identify and understand the key themes of the one-stop government portal concept in academic, e-government research. A holistic analysis is provided by addressing different viewpoints: social-political, legal, organizational, user, security, service, data and information, and technical. As an overall finding, the authors conclude that there are two different approaches: a more pragmatic approach focuses on quick wins in particular related to usability and navigation and a more ambitious, transformational approach having far reaching social-political, legal, and organizational implications.

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Enterprise social networks : A business model perspective

Enterprise Social Networks continue to be adopted by organisations looking to increase collaboration between employees, customers and industry partners. Offering a varied range of features and functionality, this technology can be distinguished by the underlying business models that providers of this software deploy. This study identifies and describes the different business models through an analysis of leading Enterprise Social Networks: Yammer, Chatter, SharePoint, Connections, Jive, Facebook and Twitter. 

A key contribution of this research is the identification of consumer and corporate models as extreme approaches. These findings align well with research on the adoption of Enterprise Social Networks that has discussed bottom-up and top-down approaches. Of specific interest are hybrid models that wrap a corporate model within a consumer model and may, therefore, provide synergies on both models. From a broader perspective, this can be seen as the merging of the corporate and consumer markets for IT products and services.

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Business Model Canvas or Business Model thinking?

The Business Model Canvas presents us with a great tool for the design and innovation of business models. As with every specific approach or tool, the Canvas can also bias or blind us. This can be caused by the features of the tool itself as well as from the way in which the tool is (wrongly) used.

As with every solution for solving a problem, the features of the Business Model Canvas are determined by the framing and scoping of the problem. This means that compared to other business model frameworks and tools, the Business Model Canvas has certain strengths and weaknesses (see also my discussion on different frameworks here). For example, some of specific areas where the Business Model Canvas could fall short in are related to business networks, service logic and business dynamics.

Another potential hazard with using the Business Model Canvas is that its use gets reduced to just filling out the individual building blocks. This will not provide a holistic perspective on value creation as it omits the relationships between the building blocks, e.g. Dell could offer direct sales because they targeted corporate customers going for a repeat purchase. Moreover, every business model has an underlying rational or story.  This is easily missed when one limits oneself to the individual building blocks. The idea behind Southwest Airlines' business model can be described as making flying an alternative for taking a bus or car.

So while the Business Model Canvas can be very useful for supporting the design and innovation of business models, we should not fall into the trap that we therefore assume that we do not need to also think more broadly about the logic for creating and capturing customer value.

Service-oriented business models: Service as value logic

This post is part of a series that explores service-oriented business models based on different perspectives on service.

Successful firms use business model innovation to rethink the way they do business and transform industries. However, current research on business model innovation is lacking theoretical underpinnings and is in need of new insights. The objective of this paper is to advance our understanding of both the business model concept and business model innovation based on service logic as foundation for customer value and value creation.

We present and discuss a rationale for business models based on ‘service logic’ with service as a value-supporting process and compared it with a business model based on ‘goods logic’ with goods as value-supporting resources. The implications for each of the business model dimensions: customer, value proposition, organizational architecture and revenue model, are described and discussed in detail.

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A simple Business Model Canvas example – The library

Looking for a simple example to learn and teach the Business model Canvas that is not too MBA like? Why not take something familiar like a library? Easy to map out but still very insightful. See the example I included below (as far as I remember it from when I was a kid in the Netherlands).

There are lots of ways to extent this. When you want to explore the commercial side, compare it with a book shop example. Or when you want to discuss the impact of technology, discuss how an e-book library would look like.

Where do we find services in enterprise architectures?

In recent years, enterprise architecture (EA) has captured growing attention as a means to systematically consolidate and interrelate diverse IT artefacts in order to provide holistic decision support. Since the emergence of Service-Oriented Architecture (SOA), many attempts have been made to incorporate SOA artefacts in existing EA frameworks. Yet the approaches taken to achieve this goal differ substantially for the most commonly used EA frameworks to date.

This paper investigates and compares five widely used EA frameworks in the way they embrace the SOA paradigm. It identifies what SOA artefacts are considered to be in the respective EA frameworks and their relative position in the overall structure. The results show that services and related artefacts are far from being well-integrated constructs in current EA frameworks.

The comparison presented in this paper will support practitioners in identifying an EA framework that provides SOA support in a way that matches their requirements and will hopefully inspire the academic EA and SOA communities to work on a closer integration of these architectures.

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