Building Better Business Models: Capturing the Transformative Potential of the Digital Economy

Lead Research Organisation: City University London
Department Name: Faculty of Management

Abstract

This research project is exploring how firms are applying and engaging with new digital technologies to become more efficient, profitable and dynamic. While there is considerable understanding about how digital technologies allow firms to create value, there is much less understanding of how firms can use DE to sense what consumers and society needs and monetize that value and turn it into financial returns for investors, entrepreneurs and shareholders. This is part of a more general concern that the UK economy is relatively good at invention but less good at producing firms that capture its benefits in new, fast growing markets. By exploring how digital technology is transforming the three elements that make up a business model - how firms understand customers' needs, how they create value for customers, and how they capture and monetize this value - this project will generate new understanding about how digital technology can be commercialised more effectively. This knowledge will help firms in the UK generate more jobs, more economic growth and improved services to firms and the general public.

The empirical part of the project will conduct research on (a) sectors that generate digital technology such as open-source software (b) sectors that use digital technology in products of services such as digital entertainment and (c) sectors that use DE in their processes such as B2B financial services. The results will help us understand:
- (a) how firms sense and understand what their customers (and society) want using digital technologies. For example, there are now large data-sets being generated about how individuals interact with new products and services, which can increasingly be collected in real time to allow much faster feedback from customers about their likes and dislikes. Similarly, new sensors are allowing firms to monitor how other firms are using their products and services. This information, and the closer engagement with customers digital technologies allow, can be used to inform better decisions about customers' needs and faster and more effective decision making about the design of new commercial offerings.
- (b) how they create value for their customers. For example, new digital technologies allow a much larger information content to be provided with goods and services, they enhance the allocation of resources, they allow pre-emptive maintenance and allow improved financial modelling, etc. These changes are increasing the commercial opportunities between traditional sectors, where firms can create value in areas where there is limited competition.
- (c) how they capture (and monetize) that value. Digital technologies can fundamentally change markets. As a result, it is often unclear how they capture the value that they create. This was seen in the failure of many dot.com firms, but even today many firms are failing to turn the value they generate through innovation into commercial returns and profits.

The project will also engage in fundamental theoretical research about the nature of models, and modelling in the economy and explore how managers can and should use models. For this work the project draws on expertise from a wide range of academic disciplines, including philosophy of science, sociology, engineering and the natural sciences.

In all this work, the project team will engage closely with industrialists and non-academic research users in the UK government and civil society. A key part of the project involves building capacity in this area, which will be achieved through a significant investment of time and effort in training for the wider academic community and career development for junior researchers able to work closely with a wide body of other researchers across the boundaries that separate industry, academia and government.

Planned Impact

The 'Building Better Business Models' project will conduct cutting edge, industry-focused research on how business models can be better designed, built and implemented to capture the transformative potential of digital technology. The research will be undertaken by a team of leading international business model researchers (from Sussex, Glasgow, Reading, Grenoble and Wharton) that crosses disciplinary boundaries, bringing with them an understanding of what digital technology can achieve and extensive experience engaging with the industrial and public policy communities.

Impact with Industry that uses digital technology
Our impact strategy for engagement with industry is divided in three to address the sectors and companies that we are studying directly through our case studies, and a wider community of larger businesses and smaller entrepreneurial firms that should be involved in our work and hear about our results.
1. As mentioned in Work Package 2 and 3, we will engage directly with executives from the industries we are studying as part of a two way knowledge exchange process to validate our ideas, and inform them of our research findings and their implications - and we already have some letters of support that indicate enthusiasm for this work. This will include the writing and disseminating of cases and tool kits. These will include videos (that typically embody tool kits), cases that executives find motivating and revealing about good and less good business model practices relevant for DE, and other forms of electronic media communications.
2. We will also link our engagement activities to the wider business audiences. We will sharpen our tool kits and business cases for communicating to this wider audience to clarify understanding of what business models are and how they can be profitable used to exploit novel digital technologies (see also some of the other letters of support that also express enthusiasm for this activity). As noted above, cases will also address the thorny issue of how to execute new business models, which can be particularly difficult when they cut across existing activities.
3. We will undertake more directed engagement events for smaller high technology companies in this sphere. Silicon Roundabout is walking distance to Cass, and the research team is well connected to the vibrant community of smaller high technology firms.

Impact with Policy Makers and the City
We will target policy makers in various government departments, particularly BIS, and the investment funds located in the City of London that invest in both digital technology for their own use and are responsible for governance of major listed firms that are adopting new technology. Here we note it is not the size of the activity that counts, but its quality and focus - this is a small busy group.
a. Research suggests that many leading UK firms are relatively weak in their thinking about the transformative impact of digital technology, and even firms that have adopted novel digital technologies find it difficult to use it to sense customers' needs and monetize the value their investments generate. We will reach out to major City firms that include major asset management companies who pay a key role in the governance of large public companies and venture capital firms that fund and govern many mid-sized firms to communicate directly to the boards of major companies about our findings and the importance of acting quickly.
b. Improving the design and implementation of business models that exploit the potential of digital technology is also a major concern of public policy makers. Using long standing links with public policy makers across many parts of the UK government we will open up lines of communication in this arena. Effective engagement with policy makers requires a) very clear, simple messages, b) sophisticated understanding of the drives of policy making, and c) alignment with powerful actors.

Publications

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Aversa P (2017) Building a winning business model portfolio in MIT Sloan Management Review

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Aversa P (2018) When decision support systems fail: Insights for strategic information systems from Formula 1 in The Journal of Strategic Information Systems

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Aversa P. (2017) Building a winning business model portfolio in MIT Sloan Management Review

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Baden-Fuller C (2013) Business Models and Technological Innovation in Long Range Planning

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Baden-Fuller C (2019) Market sensing, dynamic capability, and competitive dynamics in Industrial Marketing Management

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Baden-Fuller C (2017) Business Models and Value in Academy of Management Proceedings

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Baden-Fuller C (2013) Business models: A challenging agenda in Strategic Organization

 
Description Our work on business models explains that the traditional strategy view needs expanding to take into account possibilities of the demand side generally and customer engagement mechanisms in particular. Traditional strategy scholars see business models as operating within the firm and its supply chain principally around issues of configuration of resources. Our work - summarized in our papers on Business Models in Long Range Planning, and on the website www.businessmodelzoo.com - stresses the importance of strategic choices in customer engagement mechanisms, and the power of using solutions or triadic-multisided mechanisms. we explain not only the value of these options but explore how they work and how they can be undertaken.
Exploitation Route Building on demand side possibilities is the big opportunity
Sectors Aerospace, Defence and Marine,Chemicals,Construction,Creative Economy,Digital/Communication/Information Technologies (including Software),Education,Electronics,Financial Services, and Management Consultancy,Healthcare,Leisure Activities, including Sports, Recreation and Tourism,Government, Democracy and Justice,Manufacturing, including Industrial Biotechology,Culture, Heritage, Museums and Collections,Pharmaceuticals and Medical Biotechnology,Retail,Security and Diplomacy,Transport

URL http://www.businessmodelzoo.com
 
Description Our award has had a major impact on a leading German Automobile component producer that has significant operations in the UK. Our award has also had major impact in the discussion of UK infrastructure, through the interventions of Professor Paul Nightingale in the UK treasury and other government departments. Our award has also had major impact on UK executives through numerous debates and speeches. Finally, our award has had major impact on entrepreneurial firms through the working of our website www.businessmodelzoo.com
First Year Of Impact 2015
Sector Construction,Digital/Communication/Information Technologies (including Software),Electronics,Financial Services, and Management Consultancy,Manufacturing, including Industrial Biotechology,Pharmaceuticals and Medical Biotechnology
Impact Types Societal,Economic,Policy & public services

 
Description Risk Management and Business Models for Bosch Group
Amount € 60,000 (EUR)
Organisation Bosch Group 
Sector Private
Country Global
Start 01/2017 
End 06/2017
 
Title Businessmodelzoo.com 
Description The Business Model Zoo™ identifies four elemental business model pathways for developing a business: product, solutions, matchmaking, multi-sided. Each pathway describes an ideal model of how a firm can engage with its customer, deliver value, and monetizes the result. It is the differences in customer engagement that are key to understanding the differences between the four business model pathways. Almost all economically sustainable business models - whether for profit or not-for-profit - fit into one of these categories. We have a Zoo™ of exemplar business model cases that includes (a) Tech City's "Future Fifty" (UK recently founded high potential enterprises with sales growth of more than 30% a year) and (b) Unicorn companies (recent start-ups with valuations of more than $1 billion) that show how our categories are enacted in the real world 
Type Of Material Database/Collection of data 
Year Produced 2015 
Provided To Others? Yes  
Impact 5,000 registered users 50,000 views 
URL http://businessmodelzoo.com/
 
Description EPSRC Building Better Business Models CREATE 
Organisation CREATe (RCUK Centre for Copyright and New Business Models in the Creative Economy)
Country United Kingdom 
Sector Academic/University 
PI Contribution Significant intellectual contributions by mutual exchange and regular meetings
Collaborator Contribution Significant intellectual contributions by mutual exchange and regular meetings
Impact NOT YET
Start Year 2013
 
Description EPSRC Building Better Business Models London School of Economics 
Organisation London School of Economics and Political Science (University of London)
Country United Kingdom 
Sector Academic/University 
PI Contribution Professor Mary Morgan, Albert Hirshman Professor, is named collaborator and has brought great intellectual value and co-authored papers
Collaborator Contribution Professor Mary Morgan is named collaborator and has brought great intellectual value and co-authored papers
Impact working paper - Business Models and Value
Start Year 2013
 
Description EPSRC Building Better Business Models Tech City 
Organisation Tech City UK
Country United Kingdom 
Sector Public 
PI Contribution The project has provided a named advisor to the Future 50 programme - Professor Baden-Fuller The project is publicising the work of Tech City and putting it into context through the Business Model Zoo The project attends events at Tech City The project joins in strategic discussions at Tech City about how they can move forward Tech City is a government supported initiative of considerable prominence
Collaborator Contribution Tech City has provided resources for establishing the Business Model Zoo and collaborated on many dimensions
Impact www.businessmodelzoo.com
Start Year 2015
 
Description Business Model Round-up - Project team and international partners 31 May 2017 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Study participants or study members
Results and Impact High level engagement with more 35 leading academics managing projects across UK and Europe on research and policy related to business models for digital economy
Year(s) Of Engagement Activity 2017
 
Description Business Model Round-up - Project team and partners 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Study participants or study members
Results and Impact High level discussion amoung UK and European and US Partners of the RCUK Business Model Project
Year(s) Of Engagement Activity 2016
 
Description CABS Conference - Track Keynote - Commercialising Research - Boosting Innovation London 6 Nov 2016 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact Chartered Association of Business Schools Annual Conference - - Practitioners and Academics involved in business
Year(s) Of Engagement Activity 2018
 
Description Cass Consultancy Society - Technology and Business Models - Keynote leader and discussion 2 June 2017 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Postgraduate students
Results and Impact Executive Postgraduate student organised conference on Consulting for Uncertainty held at Cass Business School
Year(s) Of Engagement Activity 2017
 
Description City UnRuly Workshop Event on Business Models 4 May 2016 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Industry/Business
Results and Impact Workshop for early stage entrepreneurs located in heart of London
Year(s) Of Engagement Activity 2016
 
Description Discussion of local growth strategies with Greater Brighton City Region 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Policymakers/politicians
Results and Impact Research we have undertaken fed into the growth strategy of the local Greater Brighton City Region, and their development of a Smart Specialisation Strategy
Year(s) Of Engagement Activity 2016
 
Description Discussion with BIS on Social Science and Innovation 15th Jan 2016 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Formal meeting with BIS to discuss social science and innovation policy
Year(s) Of Engagement Activity 2016
 
Description Discussion with DBIS on Innovation and Social Science 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Discussion with policy makers about the role of social science in innovation.
Year(s) Of Engagement Activity 2015
 
Description Discussion with HMT on Productivity 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Discussion with policy makers in HMT and BIS about productivity.
Year(s) Of Engagement Activity 2016
 
Description EGOS conference Presentation - 2 July 2015 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact EGOS Academic Conference Track on Translating the Business Model into Action
Year(s) Of Engagement Activity 2015
 
Description ESRC-IFM -Business Model Innovation Workshop on Business Model Innovation - Keynote panel on themes for future 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact International Workshop of Academics involved in Business Model Innovation
Year(s) Of Engagement Activity 2015
 
Description ESRC/BAE systems Seminar - Cambridge Dept of Engineering - 16 March 2016 - Keynote on Digital Business Models 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact Seminar to academics, executive students and business people on business models
Year(s) Of Engagement Activity 2015
 
Description Engagement with Office of the National Technology Advisor on technology strategy for the UK 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact We had a meeting with the Office of the National Technology Advisor to discuss innovation policy for the UK, and what research findings said about the potential issues the UK faces and how they might be addressed.
Year(s) Of Engagement Activity 2016
 
Description Evidence to the Science and Technology Select Committee 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact I gave evidence in front of the House of Commons Science and Technology Select Committee on the 22nd of Feb 2017. I also provided 20 pages of written evidence to the inquiry into Industrial Strategy.
Year(s) Of Engagement Activity 2016,2017
URL https://www.parliament.uk/business/committees/committees-a-z/commons-select/business-innovation-and-...
 
Description Host and Organiser Cass Strategy Workshop 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Major International Workshop featuring academics researching into business model issues with 25 papers and lively impactful discussions leading to many publications
Year(s) Of Engagement Activity 2016
 
Description Investment Bank in City of London (1st of March 2017) 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact Presentation on the topic of business models relevant for investment banking. Private meeting with senior executives.
Year(s) Of Engagement Activity 2017
 
Description Keynote - IPSO Facto Seminar on Media Businesses - Business Models for Media Industries - 17 Oct 2016 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact Keynote speech and debate on business models for the media industry in copyright challenge
Year(s) Of Engagement Activity 2016
 
Description Keynote Speech - Bosch BMI summit 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact Bosch BMI summit brings together executives from Bosch and all their partners, and ecosystem worth more than £50 billion and more than 50,000 employees, and focuses on digital transformation issues generally and business models in particular
Year(s) Of Engagement Activity 2017
 
Description Keynote Speech - Bosch BMI summit 12 Sept 2018 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact Keynote speech on Business Models for Bosch BMI conference for more than 100 senior executives across the Bosch Supply chain
Year(s) Of Engagement Activity 2018
 
Description Keynote Speech - Bosch BMI summit 22 Oct 2019 - Fostering the Corporate Transformation 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact Key Showcase conference for Bosch involving its own executives and executives from partners, held in Renningen Stuttgard Germany
Year(s) Of Engagement Activity 2019
 
Description Keynote Speech - Business Model Conference Venice 19 May 2017 - Venice 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Keynote at Academic Conference oriented to research and business practice
Year(s) Of Engagement Activity 2017
 
Description Keynote Speech - Business Models - First European Mico-Gas Turbine Conference - City University 14-15 Dec 2017 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Keynote speech on the business model challenges facing the industry
Year(s) Of Engagement Activity 2017
 
Description Keynote Speech - Henley Business School - Capco Conference 29 Nov 2017 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact Keynote speech on Innovative Business Models for Finance Industry to a conference of industry experts and managers from traditional banking, fintech and policy
Year(s) Of Engagement Activity 2017
 
Description Keynote Speech on Business Models to 80+ legal firms 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Industry/Business
Results and Impact Keynote speech: "strategic imperatives for better connected business world" at one day conference organised by Briefing5P, America Square, London 21 Sept 2017
Year(s) Of Engagement Activity 2017
 
Description Keynote on Business Model Zoo - Toolkit ESRC Research Seminar 4 March 2015 Bristol 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Study participants or study members
Results and Impact Keynote discussion on Business Model Zoo tool kit
Year(s) Of Engagement Activity 2015
 
Description Keynote on Business Models and Value 24 November 2016 - Grenoble GEM 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Keynote speech for audience of academics and executive PhD students all involved in teaching about or the practice of business models
Year(s) Of Engagement Activity 2016
 
Description Keynote presentations on Business Models SMS Extension Conference 20th and 21 Sept 2018 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Strategic Management Society Extension Conference mainly academics but also policy makers topic is platform economy
Year(s) Of Engagement Activity 2018
 
Description Keynote- Aahaus -Back to Business Conference - Strategizing for the Digital Age - New Value Opportunities 29 Nov 2018 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact Business Conference for the Alumni of Aahaus University - included leading Danish Business Persons
Year(s) Of Engagement Activity 2018
 
Description Meeting with OFGEM about future energy policy 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Attended a meeting between OFGEM and a number of academics working on energy policy and innovation related research activities. Discussed key policy issues facing the UK in relation to energy and climate change. Discussions also addressed problems with business models and their implementation in UK.
Year(s) Of Engagement Activity 2015,2016
 
Description Panelist for Discussion of Digital Business Models for the Creative Economy - London RA 24 June 2016 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact Showcase event for CREATe the RCUK centre for research into creative industries
Year(s) Of Engagement Activity 2016
 
Description Panelist for Launch of CREATe 26 May 2017 London Digital Catapult 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Panel discussant for "CREATE Business Model Review"
Year(s) Of Engagement Activity 2017
 
Description Presentation and discussion about research on access to finance and its impact on the economy 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Based on work that I have conducted with Marc Cowling, we presented a small seminar with questions and answers on the current state of the art in relation to access to finance and how it can be improved in the UK. We developed a simple model and explained how financing needs differed across firms lifecycles and across different types of firms, this was then related to the variety of different financing instruments to provide a holistic picture of the UK
Year(s) Of Engagement Activity 2016
 
Description RIBA workshop on Business Models for Future of Architecture 9 Nov 2016 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact FSull day workshop organised by the Business model Team for 100+ architects on the future business models in architecture, included many senior executives and working on practice issues
Year(s) Of Engagement Activity 2016
 
Description Transport Catapult - Barriers to Smart Innovation 17 June 2015 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Industry/Business
Results and Impact Round table discussion of Business Model issues in Transport and Infrastructure
Year(s) Of Engagement Activity 2015