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Business Model Innovation: Challenges and Opportunities

Abstract

This project addresses the transformation of firms’ business models (BM) in the context of two major changes that currently shape the business environment: the digital transformation and the transition to a circular economy.

The business infrastructure is increasingly becoming digital, enabling improved interconnections among products, processes, and services. The philosophy of digital transformation and its disruptive technologies originate changes in the firms’ business models, a “dramatic and fundamental business transformation toward demand-dynamic economics, performance-based enterprises, demand-driven supply chain services and broad-based workforce involvement and innovation” (Davis et al 2012: 145-146). It is therefore considered as a paradigm shift in terms of business and management: i) from centralized (vertical) to decentralized industrial processes and decision making, based on smart products, which know their production history and actively steer production processes by instructing machines and ordering transportation to the next production stage (Davis et al 2012; Kagermann 2015); ii) from automated to intelligent manufacturing (Thoben et al, 2017); iii) from a reactive to a predictive operational approach (Davis et al 2012).

The introduction of BM in the analysis of digital transformation implementation and impact elevates the performance implications of the digitalization beyond efficiency and productivity metrics to those that drive competitive advantage and strategic differentiation (Bharadwaj et al 2013). It is acknowledge that digital transformation is related to new logic and configuration of value proposition and revenue streams (Iansiti & Lakhani 2014; Nylén & Homstrom 2015; Porter & Heppelmann 2014). However, exists little academic knowledge on how BM for digital transfromation differ from other BM and how they should be constructed (Dijkman et al 2015).

In the same line of reasoning, The shifting to a circular economy demands the understanding of how companies can introduce circularity into their business models, that is, how companies develop and implement Circular Business Models (CBMs)(Lewandowski, 2016).A CBM can be defined as “a business model in which the conceptual logic for value creation is based on utilizing economic value retained in products after use in the production of new offerings. Thus, a circular business model implies a return flow to the producer from users, though there can be intermediaries between the two parties” (Linder & Williander, 2015: 2).

The literature on CE has already concluded that CBMs have some specific traits, since the implementation of CE principles should affect all the BM building blocks, due to the above mentioned change in the logic behind value creation, delivery and capture. However, there is still the need to understand how companies can develop and implement CBM.

 

Team Members:

Cristina Sousa

Adrana Toledo Mendes (PhD student)

 

Project outputs:

 

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