Business Models: Fasttracking Competitive Advantage

Business decision-making is increasingly fraught with difficulty arising from complexities such as the rapidly changing market environment, intense competition, reduced product life cycles, new technologies and a cloud of information (Archibugi and Iammarino 2002). Company leaders are increasingly having to perform 'mental gymnastics' as they strive to juggle activities while still having to react to customer and client demands. Not surprisingly decision-making is an increasingly perilous and challenging activity for many firms.

Today business leaders are bombarded with information on various aspects of their business from the value proposition, dynamic capabilities, capacity building and customer segmentation. In addition, Business models are in vogue and are now an integral part of the business parlance. They provide the rationale for how an organization creates, delivers, and captures value - Osterwalder and Smith (2010), and as such are seen as the route to competitiveness, growth and profitability. Companies such as Google, Amazon and eBay are held up as examples of how new businesses models largely driven by new technologies are changing the competitive landscape (Gurley 2001). Business models came to prominence largely based on the new internet and technology led economy [see Boulton and Libert 2000), and describe the architecture of the value creation and value capture mechanisms used. In plain language, a business model describes how value is delivered to customers and customers in turn are willing to pay for the 'value' received, thus resulting in profit and sustainability for the provider [see Timmers (1998) Weill and Vitale (2001) and Rappa (2003).

The literature stresses the need for new business models as the basis of competitiveness and the only way of achieving profitable differentiation in the 21st Century - see Rentmeister and Klein (2003), (Chesbrough and Rosenbloom 2002; Afuah and Tucci 2001; Applegate 2001; Pateli and Giaglis 2003). The difficulty arises when one attempts to define and describe a business model. Most definitions are distinctly broad. For example Amit and Zott (2001:493) define business models as depicting 'the design of transaction content, structure, and governance so as to create value through the exploitation of business opportunities'. They continue by saying that a firm's business model is an important locus of innovation and a crucial source of value creation for the firm and its suppliers, partners, and customers.

However few business leaders understand how business models can be identified, formulated, assessed, revised or further developed. In the course of research carried out at the University of the West of England based on a knowledge audit of 20 firms, drawn from the ESRC priority sectors [including Retail; Leisure and Tourism; Creative Industries] and further interviews with key informants in five further businesses, it was clear that a significant number of businesses perceived that they had a business model but were unable to articulate it. This is a grave cause for concern as the business model underpins all decisions made in the company (Linder and Cantrell 2000) and can only be fit for purpose if it is clearly understood and capable of being leveraging business opportunities that arise from greater use of technology, innovation and creativity. A lack of understanding means that business models become outdated and consequently firms lose competitiveness and eventually fail to survive. Business models need to keep pace with the evolving business opportunities. Hodgson (2003:471) stresses the need to adapt to 'new and varied organizational forms devised to increase productivity and to manage an exponentially expanding number of products and processes'.

This proposed research seminar series therefore develops a research agenda focused on how to improve users' understanding and articulation of Business Models for competitive advantage and enhanced performance.

This proposal has been developed in collaboration with business users from a holistic perspective at this stage. The link between the academic and non academic partners is new, created as a result of this research seminar proposal and all partners have indicated their commitment to its successful implementation. Framing solutions to business challenges cannot be effective without the involvement of practitioners, hence regular contact with business will be maintained during the framing of each seminar, the seminar event and the dissemination of the research. This will be through a variety of means as outlined in the attached Pathways to Impact document.

The IoD and Business West are closely involved in this proposal and will provide a conduit for the ongoing interchange. Non academic users are individual business organisations, business intermediaries and advisors, professional bodies and policy makers. The role of non-academic users is fourfold:

(a) to help develop a new academic and policy-based research agenda
(b) to collaborate with academics on the dissemination of social science research findings
(c) to solicit their views on the eight seminar topic themes
(d) to contribute to the dissemination strategy for the seminar series

The series will provide a strong evidence base upon which to make decisions, allocate resources and build policy and accordingly is relevant to the wide range of non-academic users outlined.
We will ensure that key business stakeholders - business intermediaries and individual organisations, are aware of and have access to existing/new research findings; and promote the seminar series as a focal point for policy makers, intermediaries and businesses for information and commentary on issues related to business models. Consequently we see the series of seminars as contributing effectively to shaping the business policy agenda and to enhancing business competitiveness.

We envisage a small core of research users who will attend all eight seminars; the remainder will be selected and invited according to their interest and profile with a particular theme. The involvement of non-academic users will also be facilitated electronically through the creation of a dedicated seminar series website. This will ensure that both academic and non-academic users will have the opportunity to access key materials and to contribute to debates and exchange information.

Policy Involvement

Contact will be made with the Department of Business, Innovation and Skills to make the Office aware of this initiative and support has been tentatively agreed. We see this as a connection of considerable significance and look forward to developing these connections to engage policy makers at a senior level.
It is anticipated that a dialogue will be opened with BIS to foster a strategic relationship for mutual benefit. Contact will also be made with both the Scottish Parliament and the Welsh Assembly.