Business Models for Complex Service Providers

‘Business model innovation’ became one of the most popular buzzwords, used to depict firms such as Amazon, Google or Ryanair, who have created entirely new markets or disrupted the existing ones achieving at the same time stellar financial performance. While substantial interest exists, we know very little about the ‘recipe’ behind these successes. The research of the Business Models theme investigates which future business models will best enable firms to create and capture value, it explores the key determinants of a successful business model, and examines how complex service firms in particular discover, develop and implement business models effectively.

In 2011 we conducted a number of case studies to understand business model innovation of selected service providers. This resulted in a business model framework for complex service providers that has been featured in the practitioner paper 'From Processes to Promise - How complex service providers use business model innovation to deliver sustainable growth' and academic paper ‘Business model Innovation of Complex Service Providers: A Quest for Fit’. Both contributions have been presented at a number of practitioner and academic conferences; at the Strategic Management Society conference in November 2011 in Miami, this research has been shortlisted for the SMS Best Conference Paper for Practical Implications Prize.

Innovative business models: Lessons from urban ecosystems

Building on these milestones, In 2012 we have started to deepen our understanding of what business model innovation is, by switching the level of the analysis from a single service provider to the ecosystem level in order to better understand the innovation process of complex services through the case study research of cutting-edge innovation ecosystems. This project, lead by Ivanka Visnjic, is looking to explore further the frontiers of our knowledge. The research project is currently in the middle of formulating first findings on the business model innovations of the urban ecosystems, particularly looking at the practices in London, Vienna and Chicago. These findings are intended to inform private sector players who are evolving towards the provision of highly complex services that are starting to get delivered by ecosystem of providers in sectors such as transportation, utilities, industrial services, defence or ICT. First findings suggest that organisations operating in the ecosystem need to open their business models and adopt platform-like principles of functioning. We are starting to understand the skills that allow them to participate in the ecosystem-orchestrated service deliver.

The team is currently extracting the business model characteristics of the aforementioned players, extracting the best practices concerning the ecosystem positioning, business models, approaches to shape the ecosystem and attain the objectives and build relationships with other players.

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Service Business Model Capability Assessment

Another parallel research projects this year aims to strengthen our knowledge of the capabilities that Business-to-Business service providers need to transition from the product-driven to a service-driven business model. This project, led by Taija Turunen, builds directly on the findings published in the 'Process to Promise' White paper. Besides strengthening the knowledge of the business model innovation capabilities, this research project will allow us to get closer to the business needs of our partners and develop tools that help them in designing and implementing effective business models. Tools and models for service business capability development are being developed in close collaboration with our business partners and associated organizations.

The research has been carried out in the form of 4 separate case studies in Nordics. The research findings start to emerge around ecosystem dynamics and the changing nature of these when companies strive towards greater service dominance. In addition, a case study research report has been completed into the identification of elements of successful business model innovation in electric vehicle ecosystems.

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Innovation in Energy Services: New Business Models for Electric Vehicles

The aim of this case study research project is to define barriers and enablers of value creation and capture in early electric vehicle (EV) ecosystems. This research will identify the elements of successful business model innovation: value propositions, profit and loss structures, key partners and customer segments. [more]

Output:

Executive Briefing - 'When Innovation Follows Promise' - Why service innovation is different, and why that matters
Ivanka Visnjic, Taija Turunen and Andy Neely
Podcast interview on this report

Case Study Report - 'E-Mobility Services: New economic models for transport in the digital economy' Claire Weiller, November 2012

Podcast interview on this report

White Paper- 'From Processes to Promise - How complex service providers use business model innovation to deliver sustainable growth' Ivanka Visnjic, Andy Neely, Cambridge Service Alliance, September 2011

'From Processes to Promises - How complex service providers use business model innovation to deliver sustainable growth'. Presentation given at 'Business Model Innovation in Services: Delivering Competitive Advantage' conference, 21 September 2011

Researchers:

Ivanka Visnjic and Michael Barrett