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.

The relevance of business models: Business model functions

The particular functions of business models will be related to the application areas. A common application area of business models is innovation. A business model can be used for mediating between market and technology. Another application area of business models is the tactical level that brings strategy and operations together. Sometimes, business models are even considered as part of strategy. Business models can also produce business requirements that can be used in information system development.

When one takes a comprehensive perspective, it can even be argued that business models are a management approach that supports the process of designing, implementing, operating, and improving the way one or more firms deliver a specific service. Maybe the other functions discussed above can be seen as different subfunctions of business models as a management approach.

In practice different applications of business models come together. We take the application of business models for electronic business as an example. Electronic business models are often presented as an innovation in a particular industry, for example, direct sales via the Internet. Moreover, a business model enables one to try out different varieties of direct sales. The direct sales model can also be seen as a strategic move to compete with incumbents who make use of intermediaries and, therefore, cannot make a move towards direct sales easily. The specification of the direct sales model can serve as an input for the information systems development identifying building blocks such as a catalogue and online payment.

Business model dynamics

In an uncertain and turbulent environment companies often have to change their business model. This is in particular the case for companies where information and communication technology (ICT) is an important driver for change. For example, with the rise of e-commerce Amazon starting developing its business model. What originally looked like an online bookshop has developed in a broad commercial and technological service provider. Nowadays, we see new Web companies like Facebook developing business models for social networking. See this article for an interesting discussion on the Facebook economy.

Most literature on business models takes a snapshot approach. It describes how a specific business model at a certain moment in time can be designed and analyzed. It does not, however, discuss the dynamics of business models. One of the exceptions is the work of Harry Bouwman and Mark de Reuver from the Delft University of Technology (see, for example, this paper).

The dynamics of business models raises the question what kind of changes are possible. To address this question I will differentiate between, on the one hand, changes of the business model and, on the other hand, changes in the business model. I will also try to label different kinds of changes, such as business model innovation, business model development, and business model life-cycle.

With changes of the business model I refer to a change in the rationale of value creation and/or value capture. This can either be a completely new business model or the transformation from one business model to another. For example, the introduction of direct sales by Dell as new company in the computer industry is often used as example for a new type of business model (at a certain moment in time, in a specific context). This may be called business model innovation. A company can also change, for example, its revenue model from subscription to advertising. This is an example of business model transformation (and innovation if it is new).

With changes in the business model I refer to a change in the business model without a significant change in the rationale of value creation and/or value capture. For example the first version of a business model may be a rough sketch and a later version may be more detailed and concrete. This can be called business model development. A business model also changes during the transition from a R&D product to a commercial product. For example, in the R&D phase different kinds of actors are important than in the commercialization phase. This may be referred to as the business model life-cycle. Finally, a business model itself can contain dynamic elements. For example, a marketplace in the organizational network implies that the actors can differ per transaction or a value proposition based upon network externalities implies dynamics in value creation. This may be called dynamic business models.

What do you think of the different kinds of dynamics? Do you have ideas about other ways of categorizing dynamics? Do you have examples of different kinds of change?

Business model fundamentals

In discussing and thinking about business models, I often find it hard to compare different business models. One thing that is needed is, of course, having a definition of what a business model is and of what a business model consists of (the concepts). As example, I often use for this the work done at the Telematica Instituut upon the STOF business blueprint method and model.

However, even when having clarity about the definition and concepts, there are still a lot of different kind of business models that are sometimes hard to compare. This makes me wonder what are the fundamental differences between these business models? What I, for now, can think of and have read in the work of other, are:

• Bundled or unbundled
  
• Push or pull
• Exploitation or exploration
• long-term or short-term
• Open or closed
• Time (dynamics)

I have summarized it in the following picture. I plan to elaborate upon it later.

Privacy as part of a business model

Currently I am working on privacy for location-based services (LBS) with a focus on the user perspective, in particular informed consent. With a colleague I discussed the role of privacy for business models and that, similar to technology push and pull, there can also be a privacy push and pull. A prominent question is whether privacy adds value for the users; do users prefer services where they can control their privacy? And does it matter which users and which services?