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Value Propositions for Disruptive Technologies: Reconfiguration Tactics in the Case of Electric Vehicles
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Disruptive technologies tend to underperform on attributes that are considered as key attributes of incumbent technologies and require new value propositions to increase mainstream customer appeal. Yet, how do firms reconfigure their value proposition as a way to overcome the technological inferiority of disruptive technologies? This paper conceptualizes and empirically investigates the process of value proposition reconfiguration. Based on evidence on the commercialization of electric vehicles, it explores the tactics firms use to reconfigure value propositions to increase market acceptance from mainstream customers. The paper develops a framework showing three reconfiguration tactics: compensating, enhancing, and coupling tactics.
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... Irrespective of firms' motives, the more radical the departure from the status quo, the more difficult it can be for a novel business model to break through to the mainstream market (e.g., Bidmon and Knab, 2018;Wesseling et al., 2020). For example, previous work highlighted that sustainable innovations such as electric vehicles or solar PV initially tend to underperform on attributes such as the price/performance ratio in comparison to dominant solutions with mainstream customer appeal (e.g., Bohnsack and Pinkse, 2017). Moreover, they often require behaviour change by customers and users, or novel infrastructure and regulations (e.g., Huijben et al., 2016;Wesseling et al., 2020). ...
... Due to the perceived drawbacks of sustainable products, consumers may not see the advantage of purchasing them if they think that the actual beneficiaries of their purchase are 'just' other stakeholders, such as the environment or local communities (Kronrod et al., 2012). Work on value reconfiguration tactics (e.g., Bohnsack and Pinkse, 2017) has suggested collaboration is a common approach to enhance the perceived value of a novel solution and make up for points of inferiority compared to the mainstream solution on the market. Previous literature has also shown that endorsement from a credible source improves consumers' perception of a sustainable product's value (Lin and Chang, 2012). ...
... Tesla is an example of a swallow strategy: a newcomer that can afford to "fly solo". Its electric cars were characterized by high differentiation, not only compared to conventional cars but also to other electric cars on the market (e.g., Bohnsack and Pinkse, 2017;Thomas and Maine, 2019). Features like its design, comfort and, recently, autonomous driving set Tesla models apart. ...
Over the past decade, scholars and practitioners have increasingly paid attention to sustainable business models (SBM). How to upscale SBMs is a key question in transition research, but current research has rarely adopted a firm-level perspective to discuss the scaling strategies that initiators of SBMs can use. Collaboration with other actors is one of these scaling strategies, but its adoption by firms hinges on different factors. Considering the type of initiator of the SBM (newcomer vs. incumbent firm) and the differentiation of the SBM's value proposition (high or low), we propose a framework which distinguishes four ‘scaling-through-collaboration’ strategies that firms can use. We explain each strategy with illustrative examples and discuss the array of potential partners and the incentives to pursue collaboration with them. Our work shows how firms can contribute to sustainability transitions by leveraging collaboration to scale their SBM.
... Kowalkowski (2011) theorized that an initial focus on exchange value should shift over time to use value. Bohnsack and Pinkse (2017) developed tactics for reframing VP which, they argued, would enable companies to overcome the technical inferiority of disruptive emerging technologies and increase their attractiveness to customers. ...
... Despite the potential to strategically influence expectations by developing a VP (Anderson and Narus 1998;Johnson 2001;Borup et al. 2006;Hoppmann, Anadon, and Narayanamurti 2020), empirical research on new technology VPs is scarce (Wouters, Anderson, and Kirchberger 2018). Bohnsack and Pinkse (2017) developed VP reconfiguration tactics to improve the appeal of new technologies that might initially underperform when compared to existing solutions. They argue that the proposed tactics show how a firm can change value elements to create customer appeal. ...
... As this transparency provides an insight into the company's current affairs and strategic decisions, annual reports and press releases are commonly used as a data source when exploring how a company communicates with its key stakeholders (Chapman 2020). For example, in previous analyses of VP, Bohnsack and Pinkse (2017) used press releases, and Payne and Frow (2014) used annual reports. ...
Although the literature acknowledges the importance of value proposition change, existing research on how the value proposition can change remains relatively limited. The aim of the study was to develop a framework to explore how the value proposition evolves over time in the case of emerging technologies.
Based on a single case and a processual approach, the longitudinal research design tracks changes in the value proposition over a 25-year period.
The study provides a nuanced account of how framing of the value proposition shifted from vision to network and finally to usage through synergetic relationships with customers as the firm moved from startup to IPO and ultimately to public company. On this view, the value proposition emerges as a dynamic communication process that reduces customer uncertainty about the value of new technologies, leveraging company’s resources and competencies. Research implications: The findings confirm that value proposition change can be understood as a dynamic communication process that can reduce uncertainty about new technologies and highlights the role of vision in guiding the overall evolution of the value proposition over time, including networking and usage.
The study confirms the importance of reframing the value proposition over time to address customer uncertainty about the value of new technologies, enabling companies to influence expectations by making certain benefits salient. The study also confirms the importance of adopting a proactive approach to value proposition change.
The study’s primary contribution is the development of a framework for exploring value proposition change in emerging technologies in terms of three distinct frames: vision, network, and usage.
... This paper's research approach adopts the VP framework suggested by Johnson, Christensen, and Kagermann (2008) to define VPs as a company's promise to stakeholders (for example, customers, investors, partners) on the value that its products or services bring. Value is the benefit or advantage that stakeholders obtain from investing, collaborating, purchasing, and using a firm's products or services Bohnsack & Pinkse, 2017;Priem et al., 2018;Bailetti et al., 2020). A firm communicates this value to stakeholders in the form of VPs and by reconfiguring its business strategy to reflect and deliver these VPs (Tantalo & Priem, 2016;Eggert et al., 2018;Lanning, 2020). ...
... They demonstrated how business models commonly revolve around specific VPs, as well as the significance of offering better linkages between value creation and capture processes. Bohnsack and Pinkse (2017) examined how firms could reconfigure their VPs to appeal to various stakeholders at the operational level. The authors proposed that companies could employ compensating, enhancing, and coupling mechanisms to reconfigure their VPs. ...
... The authors proposed that companies could employ compensating, enhancing, and coupling mechanisms to reconfigure their VPs. The reconfigured VP's focus is on showcasing, exploiting or mitigating the features of a firm's technology to stakeholders, such as investors, partners, customers, and users (Bohnsack & Pinkse, 2017). It was implied here that new VPs would require firms to reconfigure other related activities into their business model, such as focusing not only on their profits, but also on their ...
Balancing various stakeholder (often contradictory) expectations creates tensions when developing value propositions for a new firm. Customers, funders, owners, and society-at-large often expect different value outcomes from a firm. They therefore have different motivations for being involved in the firm. These differences in value expectations are more strongly expressed in technology-based ventures, which often rely heavily on access to heterogeneous external resources such as capital, specialised knowledge, distribution, and service. In this paper, we use a wicked problem lens to explore specific challenges for companies to mediate seemingly contradictory propositions. We use two dimensions of wicked problems involving complexity and complicatedness, and conduct a secondary analysis of seven technology venture case studies from Australia and New Zealand. We then categorise the configuration types of these firms' stakeholder value propositions in the context of their scale-up process. We contribute to the value proposition and business model development research streams by suggesting that the challenge of mediating value propositions that conflict can manifest itself in four types of configurations: easy, complicated, complex and wicked. Complicated and complex propositions are thorny, but with structures and processes in place, they can be adequately addressed. On the other hand, wicked propositions consist of many unknowns and require firms to collaborate with stakeholders to derive outcomes that align company scaling objective with stakeholder value propositions.
... The material properties of compostable bioplastics request a specific usage which limits their application. 1 When a sustainable product discourages or refuses a consumer's desired actions, its underlying technology will either have to be adapted through R&D or the product will require a change in application (Bohnsack & Pinkse, 2017). Wever et al. (2008, p. 14) argue that adoption is more likely when "mismatches between delivered functionalities and desired functionalities" are eliminated, which they refer to as "functionality matching." ...
... However, there are two shortcomings to this argument. First, when sustainable alternatives hit the market, they tend to underperform on desired functionality for some time (Bohnsack & Pinkse, 2017); full functionality matching is not very likely. Second, it assumes that sustainable product innovation is a linear process aimed at reaching performance parity with existing products. ...
... Although decarbonization might be a key selling point for EVs, Tesla has highlighted fast acceleration and a luxurious design to win over customers (Bohnsack & Pinkse, 2017). It tends to be the bundle of environmental, instrumental, and symbolic features that makes a product attractive (Delmas & Colgan, 2018;Noppers et al., 2014). ...
This conceptual paper argues that for sustainable product innovation to make a contribution to addressing sustainability issues, we need to understand not only why consumers adopt sustainable products but also what makes them use these in a sustainable way. To explain how specific product features can change the ways in which consumers engage with sustainable products in the adoption and usage phase, we draw on affordance theory. Affordances refer to the potential for agentic action of users in relation to a technological object. We develop a conceptual framework that explains how sustainable product innovation can lead to the design of sustainability affordances that stimulate adoption and sustainable usage. The framework shows how three forms of agency-material, firm, and user agency-interact and together influence a product's sustainability affordances that drive adoption and a change in consumer behavior. The framework explains how trade-offs between a product's environmental features and consumer expectations regarding desired functionalities and user experience can be overcome. K E Y W O R D S adoption, consumer behavior, sustainability affordances, sustainable product innovation, usage
... Another opportunity considered in the literature relates to the introduction of disruptive technologies from advanced economies into emerging economies through a second BMI by latecomer firms (Wu et al., 2010). Firms can also use different tactics (compensating, enhancing, and coupling) to reconfigure their value propositions (Bohnsack and Pinkse, 2017). Table 2 summarizes the challenges and opportunities of disruptive technologies, according to some of the contributions analyzed. ...
... Third, we notice a tendency of some industries, such as financial services, hospitality and automotive services, and healthcare to employ disruptive technologies in their BMs, in order to find solutions for sustainability issues and a sharing economy approach. For instance, the automotive industry is adopting sustainable mobility (Bohnsack and Pinkse, 2017), creating new sources of value by offering a superior product or service (e.g., car-sharing services and mobile applications), or by coupling their products with other services (Bohnsack and Pinkse, 2017). Similarly, embedding the sharing economy approach in the financial services industry is bringing new innovations for processes and services (Gomber et al., 2018), leading to digital banking services, products, and functionality which enhance customer experience (Gomber et al., 2018). ...
... Third, we notice a tendency of some industries, such as financial services, hospitality and automotive services, and healthcare to employ disruptive technologies in their BMs, in order to find solutions for sustainability issues and a sharing economy approach. For instance, the automotive industry is adopting sustainable mobility (Bohnsack and Pinkse, 2017), creating new sources of value by offering a superior product or service (e.g., car-sharing services and mobile applications), or by coupling their products with other services (Bohnsack and Pinkse, 2017). Similarly, embedding the sharing economy approach in the financial services industry is bringing new innovations for processes and services (Gomber et al., 2018), leading to digital banking services, products, and functionality which enhance customer experience (Gomber et al., 2018). ...
This paper has a twofold aim: to analyze the development of the digital transformation field, and to understand the impact of digital technologies on business model innovation (BMI) through a structured review of the literature. The results of this research reveal that the field of digital transformation is still developing, with growing interest from researchers since 2014. Results show a need for research in developing countries and for more collaboration between researchers and practitioners. The review highlights that the field is fragmented among disruptive technologies, shared platforms and ecosystems, and new enabling technologies. We conclude that digital transformation has impacted value creation, delivery, and capture in almost every industry. These impacts have led to the employment of a variety of new business models, such as those for frugal innovation and the circular economy.
... After all, electric cars are complex pieces of technology, and signaling their attributes to consumers can be met with resistance if not carried out properly (Mukherjee and Hoyer, 2001). Sellers of electric vehicles have been attempting to create environmental value for their target market (Bohnsack and Pinkse, 2017), but consumers do not always appreciate or understand it. ...
... Sellers of hybrid vehicles might rely on other tactics to increase customer satisfaction such as attempting to increase acceptance of their products from existing mainstream customers and integrating this into their value propositions (Bohnsack and Pinkse, 2017). Nevertheless, the result is that they also rely on delivering strong value propositions, and we hypothesize that: ...
... In contrast to electric vehicles, the technology for hybrid vehicles is relatively incremental and our results suggest that value propositions are important for driving customer satisfaction with these technologies. The focus for these types of firms should be on value propositions and be framed to illustrate how the product's benefits outweigh the perceived psychological costs (Bohnsack and Pinkse, 2017). Many sellers of hybrid vehicles use conventional franchised dealership networks rather than the advanced ones used by the leading electric vehicle manufacturers, and their buyers have different priorities since hybrid cars are usually cheaper and customers often buy them as their main transport method (Sandström, 2015;Ashique et al., 2017;Korosec, 2017;Matthews et al., 2017). ...
According to disruptive innovation theory, customers are swayed by new market entrants through low-end encroachment strategies and/or new market disruption, but these predictions do not account for the rising interest in product categories such as electric vehicles in emerging markets. To bridge this research gap, we draw comparisons between disruptive and incremental innovation to account for electric and hybrid vehicles, respectively. We explore the misalignment between technological growth and customer satisfaction by comparing the electric vehicle business model with the hybrid vehicle business model based on three parameters: channels, value propositions, and customer relationships. Primary empirical data are collected from 307 survey participants. Structural equation modeling is then employed to investigate the similarities and differences between electric vehicles based on their disruptive innovation and hybrid vehicles based on their incremental innovation. We find that electric vehicles’ unique focus on channels leads to a positive influence on their business model and customer satisfaction, while focusing on value propositions leads to positive results for hybrid vehicles. Finally, we discuss the significance of the results considering electric vehicles’ high-end encroachment strategy within the luxury segment and contrast it with the relatively low-end encroachment strategy adopted by sellers of hybrid vehicles.
... Accordingly, to manoeuvre a business model along the disruptive path (i.e. increasingly attract mainstream customers), companies are particularly asked to innovate their value proposition continuously as part of their overall business model innovation activities (Bohnsack & Pinkse, 2017;Govindarajan & Kopalle, 2006a). ...
... Hence, studies build on the argued relevance of value proposition in impacting the overarching business model (Lindič & Marques da Silva, 2011) and that of VPI in inducing disruptive dynamics (Bohnsack & Pinkse, 2017). ...
... In sum, the research argues in favour of the relevance of VPI as a micro-level of business model innovation that propels DI. Hence, we build on recent in-depth case study research, which presents this argument (Bohnsack & Pinkse, 2017;Cozzolino et al., 2018;Snihur et al., 2018;Wu et al., 2010), and refer to recent conceptual statements (Bashir & Verma, 2019;Christensen et al., 2018) when hypothesizing: ...
... The ongoing transition to EVs makes for a useful case because EVs are a radical innovation 1 (Afuah and Bahram, 1995;Dyerson and Pilkington, 2005) that requires comprehensive changes along the automotive value chain, in complementary goods and services, as well as infrastructure and payment services (Bohnsack et al., 2014). We focus on the Netherlands as there are a lot of actors active in EV-related BMI (Bohnsack and Pinkse, 2017;RVO, 2017) and because, although the country is generally one of the pioneers in EV adoption (IEA, 2018), actors pushing EV-related BMI still meet challenges when bringing such solutions to the market in an ongoing transition. ...
... The innovation of a business model, BMI, can then refer to small adaptations or radical changes such as shifting from buying a product to paying for its usage (e.g. car ownership vs. car sharing) (cf. Bohnsack and Pinkse, 2017). Similarly, literature uses the term to refer to changes in an existing firm's business model as well as to the creation of entirely new models of value creation and value capture by new ventures (e.g. ...
... The Dutch EV niche is amongst the most developed worldwide, in terms of diffusion (IEA, 2018), policy support (Wesseling, 2016), and charging infrastructure density (IEA, 2018;McCarthy, 2018). It is also a market in which many entrepreneurial ventures are actively pushing EV-related BMI (Bohnsack and Pinkse, 2017). However, although EVs are taking-off in this sense, we cannot yet speak of a full transition to electric mobility. ...
Whereas research acknowledges the potential of business model innovation (BMI) to destabilize an existing regime, the impact of a socio-technical system in transition on BMI remains under-conceptualized. To advance work in this direction, this study expands the concept of a business model design space (BMDS), which describes the opportunities and constraints to design novel ways of creating and capturing value from niche technologies available at a given point in time in a transition. Illustrated with the case of electric vehicles in the Netherlands, we show how BMI are affected by and, in turn, affect this design space. We find that the policy and the science and technology dimensions of the socio-technical system form hard boundaries to the BMDS that niche actors cannot directly overcome via BMI. Yet, BMI can push the softer industry, market, and cultural boundaries of the BMDS by supporting niche expansion via coupling novel technologies to business models that (i) conform to the current regime, or that (ii) attempt to transform the regime. This paper offers an analytical framework that connects firm-and system-level to support the exploration of questions like how much novelty niche actors can introduce into a ST-system at specific points in a transition.
... Increased concern surrounding CO 2 capture and utilization has been raised as a result of transforming these harmful emissions into valuable chemical feedstock such as formic acid products [1,2]. Captured carbon may be stored or utilized. ...
... Designing a differentiated value proposition requires a multi-faceted understanding of what customers value [31]. Customer value constitutes four dimensions: economic, functional, social, and emotional [2]. ...
This paper aims to develop a comprehensive conceptual framework of the customer value proposition of formic acid as an actual outcome of carbon capture and utilization (CCU) to support clean production and environmental sustainability worldwide. This study included different phases. The first phase was an extensive reading of the literature, followed by a content analysis of the selected literature. The aim of the content analysis was to identify key concepts and the general categories of these concepts. The final phase was a content analysis of the selected literature with the purpose of identifying the relationship between concepts. The outcome of this paper is to provide a comprehensive framework of the customer value proposition of the CCU–formic acid product and consequently support global research efforts in sustainability. This framework contains two general dimensions: market knowledge and customer value. The first dimension includes five variables: the customers’ acceptance of CCU technology, the customers’ intention to purchase formic acid produced by CCU technology, the degree of customers’ knowledge about CCU technology, the customers’ readiness for environmental issues, and the market segments of formic acid product. The second dimension includes seven variables: ecological benefits, the ecological risk of CCU, varieties of formic acid use, the pricing policy of formic acid, the variety of formic acid packages, the order size, and the order frequency of formic acid. The relationship between variables was identified according to the literature and hypotheses were developed. This study has attempted to build a more comprehensive framework containing all proposed value dimensions and market knowledge as well as identifying the relationships between variables.
... Those new value propositions were the use of battery and no tailpipe emissions, which were considered the point of untapped value and superiority (Bohnsack and Pinkse 2017). Bohnsack and Pinkse (2017) explained that the point of untapped value as the disruptive technology's elements that could add value to customers, while the point of superiority is the point at which Electric Vehicle excels compared to the others. ...
... Those new value propositions were the use of battery and no tailpipe emissions, which were considered the point of untapped value and superiority (Bohnsack and Pinkse 2017). Bohnsack and Pinkse (2017) explained that the point of untapped value as the disruptive technology's elements that could add value to customers, while the point of superiority is the point at which Electric Vehicle excels compared to the others. Moreover, Electric vehicles provide customers with a new user experience to drive clean transportation resulting in a new way of driving. ...
... In this paper, we analyse the emergence of an eco-innovative niche in the motorcycle industry in Italy: electric vehicles from 2010 to 2021. Electric vehicles can be considered an innovation that is transforming the mobility markets [13,17,18]. The registration of electric motorcycles has shown significant growth rates in the last few years. ...
... Among these, even if there have been previous attempts, the recent electric vehicles represent a secure competitor. Many research works claim that recent electric vehicles represent a radical innovation [13,17,18]. ...
The recent advent of electric motorcycles represents an eco-innovation that guarantees environmental sustainability and opens up market opportunities for firms. In this paper, we analyse firms’ entry into the motorcycle industry in Italy. The role of incumbent firms in the presence of new innovative niches is ambiguous. On the one hand, incumbents may display inertial behaviours, while on the other hand, they can exploit their experience and dynamic capabilities to promptly catch opportunities and enter the new niche. Based on an original dataset, we develop an empirical investigation of the role of incumbent vs. new firms in the electric motorcycle niche. We contribute to the literature by showing that new firms have so far revealed more vivid dynamics while incumbents seem to stay at the window, thus supporting the idea of the existence of inertia among incumbent firms in this industry. However, among the incumbents that have entered the new market niche, we show that the largest and those with experience in the production of scooters with 0–50 cc engines are the most likely to enter the new niche market.
... In addition, while entrepreneurs developing BMfS might believe that markets welcome social and environmental value (Schaltegger et al., 2016), incumbents are often resistant. They serve customer segments where such value does not drive demand (Bohnsack & Pinkse, 2017;Christensen, 1997;Gauthier & Gilomen, 2016). In mature industries, customers are so used to a certain type of value that they have developed stable preferences around it. ...
... First, entrepreneurs can design business models which are both distinctive and legitimate (Zhao et al., 2017). They can reconfigure the value proposition to increase or match customers' perceived value compared to the industry's mainstream business model (Bidmon & Knab, 2018;Bohnsack & Pinkse, 2017;Bohnsack et al., 2014). With a sustainable value proposition, entrepreneurs make BMfS distinctive by focusing on social and environmental value (Roome & Louche, 2016;Vernay & Gauthier, 2017) and incorporating alternative norms of appropriate business practices (Laasch, 2018;Randles & Laasch, 2016). ...
Addressing global sustainability challenges requires a mainstreaming of business models for sustainability (BMfS) in mature industries. However, the presence of an already dominant mainstream business model in an industry tends to hold back BMfS. This article investigates how new types of BMfS can become generally accepted and widely adopted in an industry. It presents a qualitative study of the mainstreaming of BMfS in the Dutch electricity industry. The findings show that this process depends on entrepreneurs’ capacity to (1) incorporate alternative institutional logics into the design of BMfS to achieve optimal distinctiveness and (2) to directly alter the dominant institutional logic of the industry to make it more conducive to BMfS. Furthermore, successful BMfS act as anomalies that indirectly alter the industry’s dominant institutional logic. Anomalies support a self-reinforcing loop that accelerates the mainstreaming process. We integrate these findings into a dynamic model of the mainstreaming of BMfS.
... To shed light on this observed divergence from traditional thought regarding competition and the firm's profitability, perhaps reassessing to whom a firm's value proposition applies would be worth considering. Bohnsack and Pinkse (2017) explored the idea of reconfiguring value propositions to increase market acceptance of disruptive products among mainstream customers. Whereas Bohnsack and Pinkse presented the reconfiguration concept to help attract mainstream customers to disruptive products, the idea of reconfiguring value propositions and my personal experience as a home recording studio owner caused me to think innovatively. ...
... This brings up the scenario in which a private home recording studio owner decides to operate his or her home studio more like a commercial recording studio. In alignment with the thinking of Bohnsack and Pinkse (2017), who recommended that firms reconfiguring their value proposition to attract mainstream customers to their company's disruptive product, home recording studio owners may need to reconfigure or reconsider their LVP. ...
The purpose of this multiple case study was to explore strategies that well-established home recording studio owners used to compete in the music recording industry.
... Disruptive technologies have the potential to reinvent a product by introducing new attributes that could become a key source of competitive advantage [70]. BMI is increasingly recognized as a vital component of the societal transition towards sustainability [71]. ...
Business models (BMs) are crucial for the successful market penetration and diffusion of sustainable innovations. Nonetheless, consumer preference knowledge about adopting electric vehicles (EVs) under innovative BMs is low. Drawing on existing conceptualizations of BMs, this investigation studied consumer preferences for three innovative BMs (EV-leasing; battery-leasing; B2C EV-sharing) and the traditional total purchase BM. This research aimed to analyze the growth of the EV market, as well as to understand consumer preferences regarding business models and how these can overcome the barriers to EV purchase. During this study, an empirical study was applied based on a quantitative method. Data were collected through Google Forms and disseminated via social media. Using survey data to conduct a quantitative analysis, the findings showed that most people have an interest in EVs but consider their high cost the main barrier. The environmental benefits are the main motivation for buying an EV, since people are very concerned about the environment. Regarding the innovative business models (IBMs), most people were not aware of their existence but believed that they were fundamental for EV acquisition.
... Other studies have looked into environmental entrepreneurship and the role of "hybrid green tech business models" in supporting the implementation of green technology in the incumbent industry landscape (Trapp and Kanbach, 2021), following "circular or closed loops models" (Stål and Bonnedahl, 2016, p. 79) and the ability to mediate between green innovations and valuable sustainability outcomes (Lüdeke-Freund, 2020). Additionally, studies concerned with challenges to sustainable entrepreneurship point to socio-technological path dependency (Köhler et al., 2019), limited access to bank and equity investments (Wüstenhagen and Menicetti, 2012), and lack of market attractiveness (Bohnsack and Pinkse, 2017). Specifically, commercialization processes within environmental entrepreneurship tend to depend on the ability of environmental entrepreneurs to rethink sources of entrepreneurial opportunities (Muñoz and Cohen, 2018), initiate new and adoptive business models (Freudenreich et al., 2020), and develop unique competitive advantages in a complex and dynamic context. ...
... Replacing the ICE with an electrical engine affects business models because EVs have restricted functionality due to current battery technology's limitations (Bohnsack and Pinkse 2017;Wesseling et al. 2020). To address range anxiety and a lack of charging infrastructure, companies have started offering specific-purpose vehicles; EVs were initially marketed as affordable urban vehicles or luxury vehicles with a larger battery ). ...
... This issue is far from trivial. Previous research has shown the challenges that result from depicting the benefits for society and the environment of radically new technologies (Bohnsack & Pinkse, 2017;Khan & Bohnsack, 2020). Sustainable entrepreneurs are expected to struggle with similar problems (George et al., 2021). ...
Research on sustainable entrepreneurship increasingly recognizes the transformative potential of digital technologies to mitigate and counteract grand environmental and social challenges through entrepreneurial action. However, this emerging field of research, referred to as digital sustainable entrepreneurship, is currently dispersed and fragmented and lacks the consolidated foundation to progress further. This article further establishes this nascent stream by conducting a systematic literature review offering two main contributions. First, common themes are derived from the literature (i.e., enabling value for society and environment, stakeholder inclusion, venture viability, and entrepreneurial individuals) to unravel the field's current state. Second, previous work is discussed and integrated by applying a business model perspective. Specifically, the article offers a framework that contributes to the role of business models for merging sustainability and digital technologies, reconceptualizes digital technologies as business model actors, and further develops the entrepreneur-business model nexus. Based on this, we present a comprehensive and actionable research agenda and practical implications.
... One drawback to these three adjectives is that they have been used to characterize both the technologies themselves and the types of innovation they generate in the market (Reinhardt and Gurtner, 2015;Schmidthuber et al., 2020). Moreover, researchers have often used these terms interchangeably for cases such as nanotechnology (Islam et al., 2020;Youtie and Shapira, 2008) or electric vehicles (Bohnsack and Pinkse, 2017;Liu et al., 2020). ...
Emerging technologies combine high expectations with market and technological uncertainty. Scholars are increasingly interested in the commercialization of such emerging technologies, existing studies have worked to identify the actors, dynamics, and contexts conducive to successful commercialization efforts. However, collecting and organizing the findings of these studies has been challenging as they cover a broad spectrum of technologies and have significant differences among them. To address this challenge, the present study reviews existing research on the commercialization of emerging technologies by taking the technology view, explicitly considering the technologies’ shared and distinctive attributes. We have conducted a systematic literature review covering 154 articles published in 43 journals over 28 years and structured the results around the distinct factors that allow emerging technologies to help generate innovation. Our analysis differentiates between proprietary and generic technologies to explain how new entrants and incumbents take emerging technologies to market, with substantially different paths to generating technology-based innovations. Ultimately, we use this technological heterogeneity as a lens to better understand the factors and dynamics behind how emerging technologies are commercialized and used as drivers of future innovation.
... This goes well beyond the value quantification approach, which dominates the current value proposition literature (Table 2) and provides a new understanding of the broader linguistic means, as well as specific rhetorical strategies that firms can use to communicate their value propositions. In particular, these findings extend previous empirical research on alternative value proposition communication tactics that firms can use to increase the mainstream appeal of disruptive solutions compared to incumbent technologies (Bohnsack & Pinkse, 2017;Ranta et al., 2020). ...
Food waste is a critical issue to all stakeholders in the modern society. While previous marketing research has addressed food waste from multiple perspectives, it has provided limited attention to the role of start-ups. Consequently, the purpose of this study is to explore how food waste start-ups communicate their value propositions to different stakeholders. We adopt an interpretive and sociocultural framing approach, and empirically analyse interview and documentary data from 24 different food waste start-ups. The findings from this study identify four different sociocultural frames (Salvation, Thrift, Innovation, and Normalisation) that start-ups in the food waste business use to communicate their value propositions and highlight the key features and mechanisms of each frame. This study advances contemporary B2B marketing research by demonstrating how food waste start-ups use sociocultural framing to create demand for and legitimise their novel solutions, and how sociocultural framing can be used to communicate value propositions. For managers, this study offers insights on how different sociocultural frames can be used to problematise, legitimise, and shape new business opportunities for tackling the food waste issue.
... This issue is far from trivial. Previous research has shown the challenges that result from depicting the benefits for society and the environment of radically new technologies (Bohnsack & Pinkse, 2017;Khan & Bohnsack, 2020). Sustainable entrepreneurs are expected to struggle with similar problems (George et al., 2021). ...
Sustainability and digitalization are two central discourses in entrepreneurship research, but only recently have they been discussed jointly. Scholars call for an integration of the previously disconnected research stream to investigate the transformative potential of digitalization to advance sustainable development. However, little effort has been devoted to such an integration leading to a fragmented field of research with a lack of consolidated knowledge. This article conducts a systematic review of the literature to unravel the state-of-the-art of digital sustainable entrepreneurship. We derive common themes of current work and discuss them in the light of promising theoretical perspectives to contribute to the integration of sustainability and digitalization in entrepreneurship research and offer promising avenues for future research.
... Evidence from AVs suggests the latter with its multi-sectoral dynamics. Companies such as Tesla deploy 'coupling tactics' -whereby coupled value is created by turning 'points of untapped value' into 'points of superiority' (Bohnsack and Pinkse, 2017) through collaborations with outside industry partners. To achieve the goal of successful market capture, firms are driven to invest in the next generation technologies, acquire technologies through mergers and alliances, and/or develop consortia among multi-sectoral stakeholders. ...
In this paper we examine how the rise of Autonomous Vehicles (AV) is reshaping the power dynamics in the automobile industry through competition from the information technology (IT) industry. By introducing the concept of market capture, we analyze how incumbents and newcomers pursue control over the definition, evolution, and technology of a newly emerging market. We demonstrate this with an analysis of technological acquisitions and alliance networks for 2011–2018, a period where the AV industry first coalesced and then experienced dramatic growth. By examining firm transactions through their geographic locations and an array of centrality measures, we shed light on inter-firm dynamics shaping the emergence and evolution of the AV industry. This research demonstrates how market capture can serve as a useful framework to analyze competition, cooperation, geographic patterns, and power asymmetries in the transaction network of an emerging industry.
... A growing literature has studied the role of business models to understand how firms navigate the energy transition Pereira, Specht, Silva, & Madlener, 2018;Vernay, Sohns, Schleich, & Haggège, 2019). Studies have analyzed emerging business models for sustainable energy, focusing on electric vehicles (Bohnsack & Pinkse, 2017;Bohnsack et al., 2014), solar PV technology (Vernay, Sohns, Schleich, & Haggège, 2019), smart grids (Niesten & Alkemade, 2016;Shomali & Pinkse, 2016), distributed energy resources (Burger & Luke, 2017), and demand response and energy efficiency (Behrangrad, 2015;Horváth & Szabó, 2018). These studies provide an outline of what sustainable energy business models might look like by identifying how value is created, delivered, and captured. ...
Delivering a low-carbon future depends significantly on the decarbonization of the electricity industry. Increasingly, electric utilities have experienced pressure to redefine their business model amid the need to transition to a sustainable energy system. In this study, we focus on how utilities have changed their business model to adapt to the emergence of sustainable energy innovations in the energy system and which value creation drivers they draw on. By framing the business model as an activity system, we capture how utilities expand the boundaries of their business to integrate sustainable energy activities. We analyze 756 boundary-spanning transactions (mergers and acquisitions, joint ventures, and strategic alliances) of 20 European utilities from 1990 to 2019. We find that utilities pursued 20 distinct sustainable energy activities across renewable electricity generation, smart electricity management, emerging technologies, and sustainable mobility. Preference for renewable energy activities, particularly wind generation is observed. The combination of renewable electricity generation and smart electricity management indicates a focus on systems integration. We also find preference for integrating activities through mergers and acquisitions. Utilities focus on acquiring sustainable energy activities leading to a novel bundling of activities contributing to decarbonization while reinforcing the efficiency and lock-in of their traditional business model.
... Technological innovation is a fundamental part of the competitiveness of companies (Bohnsack and Pinkse, 2017). Without the benefits enabled by technology, it is not easy to improve product and service development (Moutinho and Meidan, 1989), optimize production processes (Dolgui and Ivanov, 2020), and people training (Fichman and Kemerer, 1997). ...
This research investigates the perception, acceptance, and economic valuation of new generations of consumers concerning disruptive technologies (DT) using the modified Technology Acceptance Model (TAM) as a reference. Specifically, it analyzes a group of university students' responses after experimenting with augmented reality (AR) glasses and 3D printers. The results show an eminent interest in technology on the part of young people and a frequent acceptance of its inclusion in their daily lives, and a clear intention to acquire this type of technology someday. Likewise, social projection and self-realization should be considered by marketing managers for the positioning and support of DT's future sales among young people. Based on the existing literature and the research results, the role of technology in generations' daily lives Y and Z is discussed.
... Disruptive technologies provide opportunities for companies to connect with customers, engage in continuous dialogue, create more efficient activities and synergies between processes, and learn about market realities (e.g. Bohnsack and Pinkse, 2017;Broekhuizen, Bakker and Postma, 2018;Caro and Sadr, 2018). Disruptive technologies and the associated business transformation has implications for customers in terms of more alternatives and opportunities, informed decisions, support in the execution of different activities, and better connections and networks to relevant entities (Di Pietro, Edvardsson, Reynoso, Renzi, Toni, and Guglielmetti Mugion, 2018;Govindarajan and Ramamurti, 2018;Wunderlich et al., 2015). ...
Different theoretical perspectives in service research emphasize distinct aspects, and thereby create different views; this chapter discusses implications of adopting a customer-dominant perspective of service business. Thus, it describes customer-dominant logic, stressing the customer's primary role and the difference between customer and provider logics. This perspective results in different theoretical and practical implications than those derived from other service perspectives. Customer logic is a central concept, as customer-dominant business logic as a management approach is based on understanding customers' logics. Customer logic holistically captures the mental model and sensemaking behind customers' choices and activities. It is a coordinating concept in which the patterns of customers' overt and covert activities, experiences and goals are integrated. Service business is here used in a generic sense to include any type of service provision, commercial or non-commercial, directed toward any type of customer, including single consumers or business customers, as well as groups and collectives. For service research, the message is to recognize the different interpretations of service that arise from changing the focus from provider to customer, and more specifically to scrutinize established concepts and models and innovate new ones to fit the customer's reality. Service practitioners are advised to gain an understanding of current and evolving customer logics in order to gain and maintain a competitive advantage by being able to support customers in achieving their goals. The chapter also elaborates on related current topics in service research and the contribution of customer-dominant logic to these academic, societal, and business challenges.
... Within this stream of research, we also identified studies on drivers and barriers to BM adoption(Abuzeinab, Arif, & Qadri, 2017;Høgevold et al., 2014;Matos & Silvestre, 2013;Rauter, Jonker, & Baumgartner, 2017). Value creation and value proposition are dimensions of BM that are central in some papers (e.g.,Bohnsack & Pinkse, 2017;Hermann & Wigger, 2017;Ludeke- Freund & Dembek, 2017;. These studies are very oriented to the description of multiple aspects that characterize BMs for ES.In this research stream, we included papers that detailed specific typologies of BMs (e.g.,Gaiardelli, Resta, Martinez, Pinto, & Albores, 2014). ...
Recently, business models for environmental sustainability have gained increasing attention in the management field and among practitioners and stakeholders. This study aims to analyse the state of the art on the topic by reviewing the growing but mainly phenomenon‐driven research. In particular, by identifying main research trends and relevant gaps in the literature and by providing future research avenues, this paper advances the debate on the need for alternative concepts of doing business that go beyond the creation of economic value for a company in a way that generates value for the society.
Our article undertakes two stages of screening the available literature and selects 151 peer‐reviewed articles published between 2007 and early 2019 for the review. The paper provides the first comprehensive systematic review of business models in the field of environmental sustainability with a detailed descriptive and critical analysis and with a discussion of future research opportunities.
... Improvements tell customers that they can deliver a better service than the incumbent models (Cohen, 2018). Therefore, they try to differentiate themselves from their competitors through their value proposition (Bohnsack & Pinkse, 2017). ...
The collaborative economy brings new business models through digital platforms which compete with services that have traditionally been highly regulated. This is the case of the taxi sector. The new business models that have emerged in private passenger transport are mainly based on the customisation opportunities provided by big data, yet the traditional business model followed by the taxi sector is finding it difficult to adapt to these changes in order to remain competitive, as we can observe from a content analysis of news over the last year in Spain. In this paper, we analyse the need to raise these issues through a governance model in which all stakeholders can express their opinions, trying to achieve solutions based on consensus for real deregulation. In order to achieve this consensus, government will need to play a crucial role, despite the fact that it has recently transferred decision-making to regional and local governments.
... Therefore, the understanding of innovation must be expanded to include new business models accompanied by pure new technologies or R&D processes (Chesbrough, 2007). Flexible and dynamic business models will greatly contribute to value creation and sustainable competitive advantage, thereby allowing disruption to be managed (Alberti-Alhtaybat et al., 2019;Bohnsack and Pinkse, 2017). However, it is important to note that disruptive innovations usually adopt completely different business models that are not only economically sustainable but also consistent with existing market realities, customer expectations and competitive pressures (Chesbrough and Rosenbloom, 2002;Christensen, 2006;Cozzolino et al., 2018;DaSilva et al., 2013;Markides, 2006;Sandstr€ om, 2011). ...
Purpose
The purpose of this study is to connect disruptive innovation and sharing economy by exploring the underlying mechanisms of how a disruptive innovation–based business project creates, delivers and captures value in sharing economy through analyzing the case of bike sharing in China.
Design/methodology/approach
An elaborate case study is used to unfold the process as well as the underlying mechanism and relationships among disruptive innovation, business model, bike-sharing business and value creation in sharing economy.
Findings
Bike sharing case fits well in disruptive innovation theory. Its low price and great convenience have led to rapid development in China. However, failures to improve their products and services and build an effective business model which can create, deliver and capture value have caused the failure of many bike-sharing companies. Other factors such as strategic decision-making, internal management problems, external conflicts as well as uncivilized consumer behaviors have also inhibited the sustainable development of bike-sharing companies.
Originality/value
The theoretical contributions of this study include the following: to explore how a disruptive innovation–based business creates, delivers and captures value successfully in sharing economy. This study contributes to both research and practice on disruptive innovation and sharing economy.
... The example of car sharing used in the paper (Getaround) was explicitly chosen because it is a peer-to-peer digital platform business model. Emergent technologies in electric traction, connectivity, autonomous control, big data, and the Internet of Things are enabling the realisation of novel automobility services (Bohnsack and Pinkse, 2017;Merfeld et al., 2019;Skeete, 2018). The implications for vehicle manufacturers, their supply structures, and their attendant business models are profound, but uncertain (Bidmon and Knab, 2018). ...
This paper examines the scope for network platform business models offering ‘automobility-as-a-service’ to disrupt the existing automotive market and industry. The paper uses three examples (Getaround, BlaBlaCar and Uber) to illustrate distinct versions of the network platform business model concept. Despite expectations that automobility-as-a-service, enabled by digital platforms, may erode the market for new cars and the existing model of individual car ownership, the paper argues that it is not necessarily disruptive to the incumbent automotive companies. Rather, network platform business models via automobility-as-a-service are argued to be one mechanism by which the primacy of the car may be retained. In turn this has important implications for the durability of the automotive industry, and of the unsustainable aspects of platform business models.
... Based on these findings, new business models for electric vehicles can be developed (Bohnsack and Pinkse 2017) and general guidelines may be offered to the EV users for optimal starting times of charging sessions (Gan et al. 2013;Wang et al. 2015). More concretely, we suggest that in order to communicate with the user and to provide the financial benefits of the optimization model an aggregator could develop an app. ...
Eco-efficiency is achieved by creating more value with less environmental impact. Since small- and medium-sized enterprises (SMEs) are responsible for most of the production in the industrial output, their adoption of and awareness about elements of eco-efficiency is crucial for green growth. In this study, we investigate the attitudes of Turkish SMEs over three items concerning eco-efficiency: (1) increasing resource efficiency investments, (2) producing more environmentally compatible “green” products or services, and (3) the consumption of energy from renewable resources. To this end, we utilize data on Turkish SMEs from the 2017 wave of the Flash Eurobarometer, Small- and Medium-Sized Enterprises, Resource Efficiency and Green Markets (GESIS) dataset and conduct descriptive analyses. Our investigation of 299 SMEs from Turkey reveals that there is a distance between Turkish SMEs and the elements of eco-efficiency. Many firms criticize the administrative and legal barriers to resource efficiency investments and acknowledge the need for external support to improve resource efficiency. The results also indicate that most of Turkish SMEs are unwilling to produce green products or services. Furthermore, only a small fraction of the SMEs relies on renewable sources for self-generation. As SMEs construct a sizeable portion of the output in the economy, these results show that the contribution of SMEs to green growth will be lacking in the coming years, unless further action is taken, and supported by the Turkish government.
... A comprehensive analysis of the empirical literature indicates that research on alliance evolution has ignored the research and development of technology and the measurement of the technological lifecycle [41]. The substitution of technological innovation is restricted by the embedded innovation ecosystem [42]. Competition between old technology and substitutable technology leads to the unstable development of the current innovation ecosystem [12,43]. ...
Why does an industrial alliance upgrade sometimes quickly and sometimes very slowly? The answer to this question can scientifically reveal the key driving forces of the sustainable intergenerational evolution of industrial alliance innovation ecosystems. From the perspective of structural evolution, we analyzed and compared the key driving forces using a longitudinal case study from the 2G to 3G, and then to the 4G innovation ecosystems of China's Time Division Industrial Alliance (TDIA). The findings showed that the internal key driving forces influencing the intergenerational evolution of the industrial alliance innovation ecosystem include the superiority of the new innovation ecosystem, the sustainability of the old ecosystem, and inheritance between the new and old ecosystems. Market demand and government policy indirectly affect the intergenerational evolution by shaping the environment in which the innovation ecosystems are embedded. This research will support industrial alliances and core members in making strategic innovation ecosystem decisions and support governments in designing related policies with scientific theoretical guidance and decision-making references. In particular, this study aimed to offer inspiration for the promotion of the successful sustainable evolution of China's TDIA towards 5G.
... However, although the industry developed lower emission vehicles in response, a major mobility transition has not taken place yet (Bakker, Van Lente, & Engels, 2012;Bohnsack et al., 2015;Oltra & Saint Jean, 2009;Pinkse et al., 2014;Van Bree, Verbong, & Kramer, 2010). This most notably applies to EVs, which for a long time lacked economically viable business models (Bohnsack & Pinkse, 2017;Budde Christensen, Wells, & Cipcigan, 2012;Kley, Lerch, & Dallinger, 2011) despite several experiments . Still, within the last decade, the industry changed from an outright sceptical view, following an earlier failed attempt by General Motors (GM) with the EV1, which was eventually scrapped in 2003, to a much broader adoption of purpose-built or adapted EVs. ...
Given that entire industries face sustainability challenges, it is important to understand the dynamics that lead “firms‐in‐an‐industry” to engage in sustainable product innovation. To provide more insight into the question of how innovation activities spread from individual firm action to an industry‐wide engagement, this paper examines the automobile industry and the development of electric vehicles (EVs). The analysis covers automobile incumbents over a crucial decade for EV development in the industry, focusing on the different strategic motives that especially the so‐called “first movers” used to justify their earlier engagement. We find that EVs became a core pillar of the incumbents' technology strategies through a combination of coercive, normative, and mimetic pressures. Yet, the strategic motives to engage in EVs stayed poles apart between different companies. The insights from our study are relevant for those interested in the diffusion of sustainable product innovation and in incumbent behaviour in sustainability transitions.
This chapter presents the review of literature based on which research gaps were identified and further research undertaken to fill those gaps. The literature review helped to conceptualise the previous research studies into a framework that provides overall visualisation of the research as disseminated in the book.
Organizations are increasingly expected by their stakeholders to tackle the “wicked” problems of society. These new pressures have created a highly equivocal corporate social responsibility (CSR) environment whereby firms face competing stakeholder perspectives regarding their CSR strategy. To reduce CSR environmental equivocality and determine a CSR strategy, organizations need to effectively and efficiently identify, evaluate, and exploit CSR initiatives to create financial and social value (i.e., shared value). In this paper, we explain how organizations can optimize their shared value creation and promote the construction of intersubjective agreement, which can reduce CSR environmental equivocality. Theory is put forth that explains how the proper alignment of an organization’s level of CSR environmental equivocality, which is comprised of varying amounts of “unknowingness,” corporate entrepreneurship strategy, which promotes experimentation, and stakeholder engagement process, which facilitates information gathering and dissemination, supports the construction of intersubjective agreement. A typology of organizational shared value creation in equivocal CSR environments with four “ideal types” of organizations—Container, Explorer, Embracer, and Manager—is presented and an organization’s choice among and movement between types discussed.
Using a mixed-method approach, we assess the conditions under which digital platforms can successfully deliver their stakeholder value propositions (SVP)—declarative statements that the digital platform makes about how it adds value or solves a problem for target stakeholders—in cities. We examine the popular digital platform Airbnb in the touristic city of Barcelona and analyze the extent to which it delivers its value proposition to guests, hosts, and the city. Evidence suggests that Airbnb in Barcelona closely resembles the existing hotel industry, reinforcing over-tourism and inequality, which explains the adverse reactions Airbnb has faced from the city. We contrast this with the case of a nearby non-touristic city, Igualada, where the platform has delivered on its SVP. Our findings suggest that, while complex and gradual, the process of joint value creation between the digital platform and its stakeholders is possible and can be beneficial under conditions of mutual adjustment and business model adaptation. We uncover the substantive, localized, and dynamic characteristics of the SVP design process and discuss the academic, policymaking, and managerial implications of adequate platform design.
Disruption in marketing activities has grown as a continuous process, which has been supported by the technology and low-cost innovation over the years. Disruptive practices in markets have both positive and negative effects. Unwarned disruptions in the low-end market often downplay the multidimensional growth of companies. A resource-centric business model supported with information technology effectively serves as a customer-centric consumption model for disruptive products. However, most companies feel that in view of the increasing market size of the disruptive products, making small or incremental changes might not be enough to override the effects of disruptions. Digitalization, Internet of Things, and frugal innovations have emerged in the twenty-first century as the dynamic disruptors, coupled with the marketing strategies and customer preferences. Digitalization has enabled real-time, end-to-end supply chain visibility, improved delivery accuracy, and stock level optimization and alignment with demand planning. This chapter discusses the developmental insights of disruptive practices in Latin American Markets with focus on Mexico. Discussion is connected to various disruption touch points in marketing including product attractiveness, pricing, segmentation, and development of disruptive products. In addition, the macro- and micro-business environments influencing the strategic thinking on disruption have also been discussed in this chapter.
Digital technologies contribute to more sustainable development – but also create unintended consequences. This was an underlying theme throughout all papers in our special issue “Sustainability in the Digital Age”, edited by Christina Bidmon, Jonatan Pinkse and myself. Whether it is social media sharing, using big data, or IoT technologies for sustainable development – next to contributing to sustainable development they also often result in unintended consequences for society, firms or individuals. We find that this is due to the ‘generative properties’ of digital technologies and needs to be understood a lot better. Read here why that is the case and what is next for science
In many countries, the market for electric vehicles is not scaling up as expected despite huge public subsidies and technological progresses. One potential explanation is the absence of profitable business models that support commercialization and drive wide diffusion of electric vehicles. Business models that served conventional cars may not be appropriate for electric vehicles because of technological limitations such as shorter driving range and long charging cycles as well as higher acquisition cost. Recent years, however, have witnessed a growing body of scientific literature on electric vehicle business models. Nevertheless, the insights from this literature are fragmented and rarely address the business model with all its constituting elements. In this article, we review relevant literature on electric vehicle business models and distill key insights along each business model element. This way, our study provides a comprehensive and condensed overview of state-of-the-art research, while identifying potential directions for future research for scholars.
Based on a qualitative study of 46 small food enterprises, this article establishes a typology of 11 business models that capture value in different ways. The business models position the enterprises and their innovation endeavor in a continuum between tradition and modernity. The co-extension with tourism value propositions is examined, and prospects are particularly immanent in the following business models, which are identified in the study: Food as experience, Value chain remodeling, Genuinely authentic, and Collaboration with the active prosumer. However progressively, tourism consumption can also be the driving force for: The trademark, the SDG profile, the VIP club and Research based food production. Three models offer less opportunity for food tourism: Re- and upcycling, Franchised growth, and Born globals. The study illuminates the plasticity of food production business models. The paper contributes with insights for business actors and marketeers in food and tourism as well as for policy makers.
This paper attempts to extract Industry 4.0 indicators from relevant literature and integrate these indicators in strategy formulation by providing a categorization system according to technological, organizational, inter-organizational, and social and regulatory clusters. The identified 62 indicators are found to cover a wide range of responsibilities accounted for by specific functional teams and cross-functional teams, which collectively aim to support strategic decision-making among stakeholders. The categorization of indicators is necessary to efficiently facilitate corporate level, business level, and functional level strategies.
The introduction of electric vehicles requires contributions from multiple industries and confronts the involved actors with unprecedented challenges. While research that has been conducted on business models and innovation ecosystems has gained attention, little research has been conducted on how actors can align business models to overcome bottlenecks and demonstrate a viable ecosystem value proposition. We address this issue by presenting evidence from a qualitative multiple case study in which a focus was placed on downstream-actors in the innovation ecosystem for electric vehicles. We highlight factors that motivate actors to establish a value proposition for electric vehicles, describing their similarities and differences in terms of how they cope with bottlenecks. Our results indicate that the issues of (1) electric charging infrastructure, (2) the availability of vehicles, and (3) customer value in terms of technological properties need to be addressed simultaneously to establish an attractive ecosystem value proposition.
Battery Electric Vehicles (BEVs) is a promising technology. However, it suffers from low range characteristics thus increasing the anxiety to prospect customers and hindering its market penetration. To overcome this challenge, a range extender that can generate additional power to charge the battery could be the solution. This brief review article will highlight the prospects and challenges of range extender technology for electric vehicles. A number of automobile manufacturers have launched their Range Extended Electric Vehicles (REEVs) models and the detailed comparison will be given. Several types of range extenders will be discussed, including the internal combustion engine, microturbine, and fuel cell. Lastly, this report will suggest the use of Low Temperature Combustion (LTC) i.e Homogeneous Charge Compression Ignition (HCCI) engine be utilised as range extenders for electric vehicles.
As Industry 4.0 offers significant productivity improvements, its relevance has grown across various organisations. While it captures the attention of both the industry and the academia, very few efforts have been made to streamline useful indicators across stages of its implementation. Such work facilitates the development of strategies that are appropriate for a specific stage of implementation; therefore, it would be significant to a variety of stakeholders. As a result, this paper aims to establish an indicator system for adopting Industry 4.0 within the context of the three stages of the innovation adoption: (i) pre-adoption, (ii) adoption, and (iii) post-adoption. First, a comprehensive review was performed with a search expanding into the literature on innovation and technology adoption. Second, the resulting indicators were filtered for relevance, redundancy, description, and thorough focus discussions. Finally, they were categorised by their stage of adoption. From 469 innovation adoption indicators found in the literature, this work identified a total of 62 indicators relevant for the Industry 4.0 adoption, in which 11, 14, and 37 of them comprised the three stages, respectively. Case studies from two manufacturing firms in the Philippines were reported to demonstrate the applicability of the proposed indicator system. This work pioneers the establishment of an indicator system for the Industry 4.0 adoption and the classification of such indicators into three stages-pre-adoption, adoption, and post-adoption-which would serve as a framework for decision-makers, practitioners, and stakeholders in planning, strategy development, resource allocation, and performance evaluation of the Industry 4.0 adoption.
The disruptive innovation theory, proposed and developed by Christensen over 20 years ago, has been widely discussed and applied. However, there are still serious misunderstanding and misusing of the concept and connotation of disruptive innovation. Doubts about its practical significance and predictability also remain. In this paper, we attempt to further clarify the concept and emphasize its important role in guidance in practices through reviewing relevant literatures published in SSCI journals. Furthermore, we propose a multilevel theoretical framework to examine the influence factors of disruptive innovation by integrating various research results. We also provide suggestions and implications for future research.
The increasing popularity of electric vehicles (EVs) is known to amplify the already present peaks in electricity demand. The possibility to remotely control and influence the charging of many EVs using the Internet of Things (IoT) via an aggregator has been proposed to optimize resource usage, to alleviate peak problems, and to exploit revenues that may be harnessed from fluctuating electricity prices. However, so far, the potential hinged on the acceptance of users, particularly the willingness to change their charging behavior. In this study, we develop an unobtrusive and easily implementable optimization method. Its effectiveness is tested on 360,000 charging sessions at public charging points in Amsterdam during the year 2015, providing a realistic assessment of the effects of optimization in terms of reduced costs, change in peak demand, and long occupancy of charging points. Based on the model, an average reduction of electricity costs between 20% and 30% can be achieved, depending on the day of the week. We also show that changing EV owner’s charging preferences such as starting earlier or later can benefit certain groups of EV drivers substantially and reduce electricity charging costs up to 35%.
Disruptive innovations often struggle to enter the mainstream market, especially those that benefit society. Innovative business models can help to make inferior technologies attractive and disrupt existing market linkages. As value propositions are an integral part of business models, they can play a key role in this process. This study explores the effect of value proposition design (VPD) on the customer value of sustainable technologies in the case of vehicle-to-grid charging. The result suggests that VPD can influence the trajectory and customer value of a technology and pave the way for disruptive innovation. It suggests to focus on utilitarian or hedonic values in VPD to target the low-end or high-end market respectively; a mixed approach reduces customer value. Hence, the study establishes a link between technology, value proposition, and market disruption. The results have important implications for research and practice as they offer an explanatory framework that can help managers in designing value propositions to accelerate the diffusion of sustainable technologies.
Sustainable technologies challenge prevailing business practices, especially in industries that depend heavily on the use of fossil fuels. Firms are therefore in need of business models that transform the specific characteristics of sustainable technologies into new ways to create economic value and overcome the barriers that stand in the way of their market penetration. A key issue is the respective impact of incumbent and entrepreneurial firms’ path-dependent behaviour on the development of such new business models. Embedded in the literature on business models, this paper explores how incumbent and entrepreneurial firms’ path dependencies have affected the evolution of business models for electric vehicles. Based on a qualitative analysis of electric vehicle projects of key industry players over a five-year period (2006-2010), the paper identifies four business model archetypes and traces their evolution over time. Findings suggest that incumbent and entrepreneurial firms approach business model innovation in distinctive ways. Business model evolution shows a series of incremental changes that introduce service-based components, which were initially developed by entrepreneurial firms, to the product. Over time there seems to be some convergence in the business models of incumbents and entrepreneurs in the direction of delivering economy multi-purpose vehicles.
The current literature on business models lies mainly in the literature on strategy and competitive advantage and focuses on their role as descriptors of actual phenomenon, often by reference to taxonomic categories. In this essay we explore how business models can be seen as a set of cognitive configurations that can be manipulable in the minds of managers (and academics). By proposing a typology of business models, that emphasises the connecting of traditional value chain descriptors with how customers are identified and satisfied, and how the firm monetizes its value, we explore how business model configurations can extend current work on cognitive categorization and open up new possibilities for organisation research.
This article presents a stated preference study of electric vehicle choice using data from a national survey. We used a choice experiment wherein 3029 respondents were asked to choose between their preferred gasoline vehicle and two electric versions of that preferred vehicle. We estimated a latent class random utility model and used the results to estimate the willingness to pay for five electric vehicle attributes: driving range, charging time, fuel cost saving, pollution reduction, and performance. Driving range, fuel cost savings, and charging time led in importance to respondents. Individuals were willing to pay (wtp) from $35 to $75 for a mile of added driving range, with incremental wtp per mile decreasing at higher distances. They were willing to pay from $425 to $3250 per hour reduction in charging time (for a 50Â mile charge). Respondents capitalized about 5 years of fuel saving into the purchase price of an electric vehicle. We simulated our model over a range of electric vehicle configurations and found that people with the highest values for electric vehicles were willing to pay a premium above their wtp for a gasoline vehicle that ranged from $6000 to $16,000 for electric vehicles with the most desirable attributes. At the same time, our results suggest that battery cost must drop significantly before electric vehicles will find a mass market without subsidy.
This article investigates legitimization processes and organizations' strategies for developing and diffusing new technologies. Drawing on cases in agricultural transgenic technology and genomics in forestry, the authors provide a framework to help managers develop strategies for more efficient technology development and diffusion. Strategies that fail to consider legitimization processes, especially in controversial social environments and/or varying institutional settings, could result in costly delays or promising technology left sitting on the shelf Technology developers need to identify key technological, commercial, organizational, and societal uncertainties during the early phases of the technology's development, allowing them to shape the technology for more efficient diffusion.
The automobile industry's high costs of entry, economies of scale, and network effects from distribution, fueling, and service lead many to conclude that new entrants have no chance. Tesla Motors has overcome many barriers to pioneer electric cars. Starting with partnerships and a minimum viable product, Tesla is working to innovate and scale up. Tesla now produces a top-selling luxury car and has a market capitalization twice that of Fiat Chrysler and half that of General Motors or Ford. Tesla has shown that a startup can enter and disrupt the status quo in one of the most established industries.
Published as Edward Peter Stringham, Jennifer Kelly Miller, and J.R. Clark (2015) Overcoming Barriers to Entry in an Established Industry: Tesla Motors. California Management Review 57/4 : 85-103. © 2015 by the Regents of the University of California. Copying and permissions notice: Authorization to copy this content beyond fair use (as specified in Sections 107 and 108 of the U. S. Copyright Law) for internal or personal use, or the internal or personal use of specific clients, is granted by the Regents of the University of California for libraries and other users, provided that they are registered with and pay the specified fee via Rightslink® or directly with the Copyright Clearance Center.
Disruptive strategic innovations are not necessarily superior to the traditional ways of competing, nor are they always destined to conquer the market. Rushing to embrace them can be detrimental for established companies when other responses, including ignoring the innovation, make more sense.
Why is it so difficult for established companies to pull off the new growth that business model innovation can bring? Here's why: They don't understand their current business model well enough to know if it would suit a new opportunity or hinder it, and they don't know how to build a new model when they need it. Drawing on their vast knowledge of disruptive innovation and experience in helping established companies capture game-changing opportunities, consultant Johnson, Harvard Business School professor Christensen, and SAP co-CEO Kagermann set out the tools that executives need to do both. Successful companies already operate according to a business model that can be broken down into four elements: a customer value proposition that fulfills an important job for the customer in a better way than competitors' offerings do; a profit formula that lays out how the company makes money delivering the value proposition; and the key resources and key processes needed to deliver that proposition. Game-changing opportunities deliver radically new customer value propositions: They fulfill a job to be done in a dramatically better way (as P&G did with its Swiffer mops), solve a problem that's never been solved before (as Apple did with its iPod and iTunes electronic entertainment delivery system), or serve an entirely unaddressed customer base (as Tata Motors is doing with its Nano - the $2,500 car aimed at Indian families who use scooters to get around). Capitalizing on such opportunities doesn't always require a new business model: P&G, for instance, didn't need a new one to lever-age its product innovation strengths to develop the Swiffer. A new model is often needed, however, to leverage a new technology (as in Apple's case); is generally required when the opportunity addresses an entirely new group of customers (as with the Nano); and is surely in order when an established company needs to fend off a successful disruptor (as the Nano's competitors may now need to do).
Low-emission vehicle (LEV) technologies have grown in the 1990s, but have since experienced fluctuating interest. Initially, electric vehicles (EVs) were the most promising technology. Most large car firms developed EVs and started bringing them to the market, in limited numbers. Yet, car firms halted their EV engagement around 2001 and focused on hybrid vehicles (HVs) and fuel-cell vehicles (FCVs) instead. Hybrids found their way into the product portfolios of most car manufacturers while FCVs failed to gain traction. In 2006, car firms again committed to EVs, and on a larger scale. To better understand recurring waves of firms’ low-emission-vehicle investments in the international context, this paper explores the influence of geographically-bound government policies on car firms’ innovation strategies. An analysis of archival data from 1997 to 2010 details LEV-specific developments per region/firm, and shows the complex interplay between policies on local, national and international levels and firms’ strategies. Three mechanisms seem to shape the international LEV trajectory: (1) international policy diffusion (vertically and horizontally), (2) firms’ international operations, (3) fit between policy requirements and firm capabilities. Heeding the call for a better geographical conceptualization of technological trajectories, this paper also proposes a framework that explains co-evolution between government policies and car manufacturers.
The paper aims to generate systematically business model innovations in the field of electric mobility. It introduces a new framework, in which a business model denotes a value-focused concept with five value dimensions: value proposition, value communication, value creation, value delivery and value capture. The framework enables the classification of business model patterns, identified in the literature, according to five categories. The combination of patterns from different dimensions can lead to the systematic generation of business model innovations. But the number of business models that can result from pattern combinations can be overwhelming. Subsequently, the paper only evaluates the extent to which business model patterns that are not necessarily observed in the automotive sector can be useful for the field of electric mobility, and how they can be adapted to fit into the new context. We find that the transferability strongly depends on the actor's role in the system, if it is a manufacturer, supplier or service provider. More importantly, our analysis shows that some models such as product-to-service (e.g., car sharing service), already implemented in the automotive industry, will continue to be successful in the future because of their potential of increasing customer acceptance and technology diffusion. Many other business models-so far used in other sectors, but not in the automotive industry-may integrate the field of electric mobility. Razor and blades, own the undesirable concept, and leverage new influencers are all promising business models, if they can be fitted adequately to the new context induced by the new technology.
Purpose
– Research into the identification and development of value propositions has recently been identified as a key research priority by the Marketing Science Institute. The purpose of this article is to identify and develop a process for value proposition deconstruction that can help organizations transform their value propositions in order to gain an improvement in their competitive position.
Design/methodology/approach
– A case study of an exemplar organization in the health care sector is used to develop an approach for value proposition deconstruction. Using the business system concept as a theoretical framework, the key value-adding elements that comprise this organization's value proposition are identified. A leading financial services firm is used to demonstrate how this learning approach can be successfully applied in developing a new and innovative value proposition.
Findings
– Using the business system framework, a structured process for deconstructing value propositions is developed. This framework is extended to explicitly acknowledge the value-in-use that results from different encounters, to incorporate learning processes and to recognize its interactive and recursive nature.
Practical implications
– The authors provide practitioners with insight into how to formulate new or improved value propositions.
Originality/value
– This work addresses two important and previously unaddressed research questions: how can the process of deconstruction of an exemplar organization's value proposition provide a more comprehensive understanding of the elements that comprise a superior value offering; and how can this process be applied to other organizations seeking to improve their value proposition?
Electric Vehicles (EVs) are promoted as a viable near-term vehicle technology to reduce dependence on fossil fuels and resulting greenhouse gas (GHG) emissions associated with conventional vehicles (CVs). In spite of the benefits of EVs, several obstacles need to be overcome before EVs will be widely adopted. A major barrier is that consumers tend to resist new technologies that are considered alien or unproved, thus, policy decisions that consider their critical concerns will have a higher level of success. This research identifies potential socio-technical barriers to consumer adoption of EVs and determines if sustainability issues influence consumer decision to purchase an EV. This study provides valuable insights into preferences and perceptions of technology enthusiasts; individuals highly connected to technology development and better equipped to sort out the many differences between EVs and CVs. This group of individuals will likely be early adopters of EVs only if they perceive them to be superior in performance compared to CVs. These results can guide policymakers in crafting energy and transportation policy. It can also provide guidance to EV engineers' decision in incorporating consumer preference into EV engineering design.
The aim is to understand how private car drivers’ perception of vehicle attributes may affect their intention to adopt electric vehicles (EVs). Data are obtained from a national online survey of potential EV adopters in the UK. The results indicate that instrumental attributes are important largely because they are associated with other attributes derived from owning and using EVs, including pleasure of driving (hedonic attributes) and identity derived from owning and using EVs (symbolic attributes). People who believe that a pro-environmental self-identity fits with their self-image are more likely to have positive perceptions of EV attributes. Perceptions of EV attributes are only very weakly associated with car-authority identity.
This paper explores the role of the business model in capturing value from early stage technology. A successful business model creates a heuristic logic that connects technical potential with the realization of economic value. The business model unlocks latent value from a technology, but its logic constrains the subsequent search for new, alternative models for other technologies later on-an implicit cognitive dimension overlooked in most discourse on the topic. We explore the intellectual roots of the concept, offer a working definition and show how the Xerox Corporation arose by employing an effective business model to commercialize a technology rejected by other leading companies of the day. We then show the long shadow that this model cast upon Xerox's later management of selected spin-off companies from Xerox PARC. Xerox evaluated the technical potential of these spin-offs through its own business model, while those spin-offs that became successful did so through evolving business models that came to differ substantially from that of Xerox. The search and learning for an effective business model in failed ventures, by contrast, were quite limited.
Purpose
This paper seeks to advance the theory on value proposition and innovation by offering a framework for identifying value proposition elements.
Design/methodology/approach
A single embedded case study is conducted based on Amazon.com's innovations.
Findings
By identifying and systematically analysing innovations by Amazon.com, the concept of value proposition was decomposed into five components: performance, ease of use, reliability, flexibility and affectivity (PERFA).
Research limitations/implications
The research did not focus on the relationships between the value proposition elements and their relevance in different contexts such as product, industry or customer life cycle.
Practical implications
Managers should support their decision to innovate the value proposition based on customers' perceived value. The findings provide guidance to managers on how to uncover innovative value propositions and potentially create new demand in an uncontested market space.
Originality/value
The paper is an original attempt to correlate value proposition and innovation. It provides researchers and practitioners with a better understanding of the structure of a value proposition and how innovation can influence it.
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The three issues of measuring low-end disruptions, general measure of disruptiveness, and the criticism of Christensen's (1997) disruptiveness notion by Danneel (2004), are discussed. The aim is to add rigor to an important, substantive area of research on disruptiveness, and the first step in achieving this goal is to identify ways to measure the disruptiveness construct. This is done by elaborating the use of ex post measures to make ex ante predictions about the type of incumbents better able to develop disruptive innovations in relation to other firms. The disruptive technology framework to make ex ante predictions about the type of firms likely to develop disruptive innovations.
By focusing on strategies of competition in established industries, companies and researchers have overlooked the value of creating new market spaces where there are no competitors.These market spaces are called “blue oceans.” Although established industries (“red oceans”) are growing increasingly cluttered, few companies are currently attempting to create new markets. The U.S. wine industry provides an example of how various tools and frameworks can be applied in the creation of blue oceans.One such framework, the strategy canvas, captures the current states of play in the known market space.The four actions framework reconstructs buyer value elements by posing four key questions that challenge an industry's strategic logic and business model.When a particular wine manufacturer applied the four actions framework to the strategy canvas, it created a wine whose strategic profile broke from the competition and created a blue ocean. A third tool, the eliminate-reduce-raise-create grid, pushes firms to act on all four questions posed by the four actions framework and to create a new value curve.When expressed through a value curve, an effective blue ocean strategy has three complementary qualities: focus, divergence, and a compelling tagline. Embedded in the value curves of an industry is a wealth of strategic knowledge on the current status and future of a business. For example, when a firm's value curve zigzags, it means that the firm does not have a coherent strategy.(SAA)
Christensen's (1997) thesis of disruptive technology has been highly praised and popular with managers. Two of its premises are important and insightful. These deal with the performance path of a disruptive technology and its impact on dominant incumbents who ignore it in favor of listening to their current consumers. However, Christensen's thesis also suffers from limitations, two of which are troubling: ambiguity in the definition of disruptive technology and the logic of the sampling to test its validity. Several studies I have conducted over the years suggest that the disruption of incumbents - if and when it occurs - is due not to technological innovation per se but rather to incumbents' lack of vision of the mass market and an unwillingness to cannibalize assets to serve that market. I have developed metrics to test these concepts, along with models to predict the outcomes and financial value of strategic changes firms can make to avoid these problems.
Strategy scholars have used the notion of the Business Model to refer to the ‘logic of the firm’ – how it operates and creates value for its stakeholders. On the surface, this notion appears to be similar to that of strategy. We present a conceptual framework to separate and relate the concepts of strategy and business model: a business model, we argue, is a reflection of the firm's realized strategy. We find that in simple competitive situations there is a one-to-one mapping between strategy and business model, which makes it difficult to separate the two notions. We show that the concepts of strategy and business model differ when there are important contingencies on which a well-designed strategy must be based. Our framework also delivers a clear distinction between strategy and tactics, made possible because strategy and business model are different constructs.
Analyzes how successful firms fail when confronted with technological and market changes, prescribing a list of rules for firms to follow as a solution. Precisely because of their adherence to good management principles, innovative, well-managed firms fail at the emergence of disruptive technologies - that is, innovations that disrupt the existing dominant technologies in the market. Unfortunately, it usually does not make sense to invest in disruptive technologies until after they have taken over the market. Thus, instead of exercising what are typically good managerial decisions, at the introduction of technical or market change it is very often the case that managers must make counterintuitive decisions not to listen to customers, to invest in lower-performance products that produce lower margins, and to pursue small markets. From analysis of the disk drive industry, a set of rules is devised - the principles of disruptive innovation - for managers to measure when traditional good management principles should be followed or rejected. According to the principles of disruptive innovation, a manager should plan to fail early, often, and inexpensively, developing disruptive technologies in small organizations operating within a niche market and with a relevant customer base. A case study in the electric-powered vehicles market illustrates how a manager can overcome the challenges of disruptive technologies using these principles of disruptive innovation. The mechanical excavator industry in the mid-twentieth century is also described, as an example in which most companies failed because they were unwilling to forego cable excavator technology for hydraulics machines. While there is no "right answer" or formula to use when reacting to unpredictable technological change, managers will be able to adapt as long as they realize that "good" managerial practices are only situationally appropriate. Though disruptive technologies are inherently high-risk, the more a firm invests in them, the more it learns about the emerging market and the changing needs of consumers, so that incremental advances may lead to industry-changing leaps. (CJC)
Climate change and global resource shortages lead to a rethinking of classic individual mobility basing on combustion engines. As a result of technological improvements first electric vehicles are introduced and further market penetrations can be expected. But due to a possible wider implementation of battery-powered electrical propulsion systems in future, new challenges arise for both the classic automotive industry and further new players, e.g. battery manufacturers, the power supply industry or other service providers. Due to the various application cases of electric vehicles discussed topically, numerous business models can emerge leading to new shares in the value creation and involving new participating players. Consequently, the individual stakeholders are uncertain as to which business models are really effective with regard to targeting a profitable overall concept. Therefore, the aim of this contribution is to define a holistic approach to developing business models for electric mobility, regarding the holistic system on the one hand and giving decision support for concerning enterprises on the other hand. For this, the basic elements of electric mobility will be observed and topical approaches for business models for various stakeholders will be discussed. The paper closes with a systemic instrument for business models basing on morphological methods. --
The goal of this dissertation is to find and provide the basis for a managerial tool that allows a firm to easily express its business logic. The methodological basis for this work is design science, where the researcher builds an artifact to solve a specific problem. In this case the aim is to provide an ontology that makes it possible to explicit a firm's business model. In other words, the proposed artifact helps a firm to formally describe its value proposition, its customers, the relationship with them, the necessary intra- and inter-firm infrastructure and its profit model. Such an ontology is relevant because until now there is no model that expresses a company's global business logic from a pure business point of view. Previous models essentially take an organizational or process perspective or cover only parts of a firm's business logic. The four main pillars of the ontology, which are inspired by management science and enterprise- and processmodeling, are product, customer interface, infrastructure and finance. The ontology is validated by case studies, a panel of experts and managers. The dissertation also provides a software prototype to capture a company's business model in an information system. The last part of the thesis consists of a demonstration of the value of the ontology in business strategy and Information Systems (IS) alignment.
Corporate executives must constantly look backward, attending to the products and processes of the past, while also gazing forward, preparing for the innovations that will define the future. This mental balancing act is one of the toughest of all managerial challenges--it requires executives to explore new opportunities even as they work diligently to exploit existing capabilities--and it's no surprise that few companies do it well. But as every businessperson knows, there are companies that do. What's their secret? These organizations separate their new, exploratory units from their traditional, exploitative ones, allowing them to have different processes, structures, and cultures; at the same time, they maintain tight links across units at the senior executive level. Such "ambidextrous organizations," as the authors call them, allow executives to pioneer radical or disruptive innovations while also pursuing incremental gains. Of utmost importance to the ambidextrous organization are ambidextrous managers--executives who have the ability to understand and be sensitive to the needs of very different kinds of businesses. They possess the attributes of rigorous cost cutters and free-thinking entrepreneurs while also maintaining the objectivity required to make difficult trade-offs. Almost every company needs to renew itself through the creation of breakthrough products and processes, but it shouldn't do so at the expense of its traditional business. Building an ambidextrous organization is by no means easy, but the structure itself, combining organizational separation with senior team integration, is not difficult to understand. Given the executive will to make it happen, any company can become ambidextrous.
Examples of consumer value propositions that resonate with customers are exceptionally difficult to find. When properly constructed, value propositions force suppliers to focus on what their offerings are really worth. Once companies become disciplined about understanding their customers, they can make smarter choices about where to allocate scarce resources. The authors illuminate the pitfalls of current approaches, then present a systematic method for developing value propositions that are meaningful to target customers and that focus suppliers' efforts on creating superior value. When managers construct a customer value proposition, they often simply list all the benefits their offering might deliver. But the relative simplicity of this all-benefits approach may have a major drawback: benefit assertion. In other words, managers may claim advantages for features their customers don't care about in the least. Other suppliers try to answer the question, Why should our firm purchase your offering instead of your competitor's? But without a detailed understanding of the customer's requirements and preferences, suppliers can end up stressing points of difference that deliver relatively little value to the target customer. The pitfall with this approach is value presumption: assuming that any favorable points of difference must be valuable for the customer. Drawing on the best practices of a handful of suppliers in business markets, the authors advocate a resonating focus approach. Suppliers can provide simple, yet powerfully captivating, consumer value propositions by making their offerings superior on the few elements that matter most to target customers, demonstrating and documenting the value of this superior performance, and communicating it in a way that conveys a sophisticated understanding of the customer's business priorities.
Can you summarize your company's strategy in 35 words or less? Would your colleagues express it the same way? Very few executives can honestly say yes to those simple questions. The thing is, companies with a clear, concise strategy statement - one that employees can easily internalize and use as a guiding light - often turn out to be industry stars. In this article, Harvard Business School's Collis and Rukstad provide a practical guide for crafting an effective strategy statement and include an in-depth example of how the St. Louis-based brokerage firm Edward Jones developed one that has generated success. Any strategy statement must begin with a definition of the objective, or the goal that the strategy is designed to achieve. Since most firms compete in a more or less unbounded landscape, it is also crucial to define the scope, or domain, of the business. Perhaps most important, companies need to have a clear sense of advantage - that is, the means by which the business will achieve its stated objective. Defining the objective, scope, and advantage requires trade-offs. If a firm pursues growth or size, profitability will take a backseat. If it chooses to serve institutional clients, it might ignore retail customers. If it derives its competitive advantage from scale economies, it will not be able to accommodate idiosyncratic customer needs. Before developing your strategy and crafting your statement, you'll want to carefully evaluate the industry landscape. This includes segmenting customers and identifying unique ways of delivering value to the ones the firm targets. It also calls for an analysis of competitors' current strategies and a prediction of how they might change. The key is to find the sweet spot where the firm's capabilities and customers' needs align in a way that competitors cannot match.
This paper explores the role of the business model in capturing value from early stage technology. A successful business model creates a heuristic logic that connects technical potential with the realization of economic value. The business model unlocks latent value from a technology, but its logic constrains the subsequent search for new, alternative models for other technologies later on--an implicit cognitive dimension overlooked in most discourse on the topic. We explore the intellectual roots of the concept, offer a working definition and show how the Xerox Corporation arose by employing an effective business model to commercialize a technology rejected by other leading companies of the day. We then show the long shadow that this model cast upon Xerox's later management of selected spin-off companies from Xerox PARC. Xerox evaluated the technical potential of these spin-offs through its own business model, while those spin-offs that became successful did so through evolving business models that came to differ substantially from that of Xerox. The search and learning for an effective business model in failed ventures, by contrast, were quite limited. Copyright 2002, Oxford University Press.
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