Bild und Farbe

2014 Science and Technology Indicators Conference 3-5 September 2014 Leiden, The Netherlands

Paving the way for a new composite indicator on business model innovations

by Franz Barjak and Marc Bill

Why bother about an indicator for business model innovations?

15/04/23 2© F. Barjak & M. Bill, 2014

• It is an important road to being successful as an organisation,

• There exists a lot of conceptual literature and popular instruments for using the concept in business practice and consulting, e.g. the Business Model Canvass (Osterwalder & Pigneur, 2009),

• Empirical evidence on BMI is limited • mostly case studies with few cases – except for Amit & Zott (2001) who looked at 59 e-

business cases,

• manually collated data sets (Hartmann, Oriani, & Bateman, 2013; Zott & Amit, 2008),

• ad-hoc non-scientific surveys from consultancies such as the BCG innovation survey or the IBM CEO survey

• While at the same time methodologically stronger innovation surveys are underused and lack indicators to inform on many aspects of innovations (Arundel, 2007; Bloch & Lopez-Bassols, 2009)

Objectives and approach1. Linking the BMI construct conceptually and empirically to established

innovation surveys and their definitions,– Mapping of BMI framework on OECD and Eurostat/CIS innovation concepts

2. Identifying gaps in the survey coverage with regard to the BMI construct,– Implementing the BMI framework in a multiple case comparison of selected BMI cases

(not reported in this paper due to constraints of time and space)

3. Developing suggestions on how to close these gaps

15/04/23 3© F. Barjak & M. Bill, 2014

Conceptualisation of Business Models and BMI

15/04/23 4© F. Barjak & M. Bill, 2014

(see Osterwalder & Pigneur, 2009; Teece, 2010; Yunus, Moingeon, & Lehmann-Ortega, 2010; Zott, Amit & Massa, 2011)

BMI: Fundamental and interconnected change of all three elements of a business model

Linking the BMI construct conceptually and empirically to established innovation surveys and their definitions

15/04/23 5© F. Barjak & M. Bill, 2014

BM com-ponent

Innovation types

Proposition

Value creation

Product innovation

1. New value propositions will in many, if not in most cases, coincide with product innovations.

Business system

Process innovation, organisa-tional innovation

2. Changes of business systems can be in the form of changes in the production processes as well as internal and external organisation and division of labour along the value chain.

Value capture

Process innovation, marketing innovation

3. A new approach for capturing value will coincide with a process and/or marketing innovation.

Reducing type I and II errors

• Combination of innovations is not included in innovation surveys

• Limitation of the analysis to SMEs (firms with <250 employees AND < 50mEUR annual turnover)

• Fundamental or radical and not only incremental change

• New or significantly improved at the level of the market or industry (not only company, but not necessarily world)

15/04/23 6© F. Barjak & M. Bill, 2014

Results – BMI in SMEs by industry according to CIS 2008 and 2010

15/04/23 7© F. Barjak & M. Bill, 2014

2.7%

7.5%

3.3%

5.3%

4.4%

2.8%

10.4%

6.2%

6.5%

6.3%

2.4%

6.4%

1.7%

5.2%

3.6%

2.2%

12.2%

5.4%

6.2%

5.5%

0.0% 5.0% 10.0% 15.0%

B: Mining

C: Manufacturing

D: Energy

E: Water & waste

46: Wholesale trade

H: Transportation, storage

58, 61-63: Publishing,telecommunications, computer…

K: Finance & insurance

71: Architectural and engineeringactivities, technical testing and…

Total

CIS 2008CIS 2010

BMI in SMEs by country according to CIS 2008 and 2010

15/04/23 8© F. Barjak & M. Bill, 2014

BMI in all and only in exporting SMEs by country according to CIS 2008

15/04/23 9© F. Barjak & M. Bill, 2014

Sensitivity

• IBM CEO Survey 2006 of mainly large firms: • 14.9% of all European respondents realised a BMI (IBM according to Bock

et al., 2011)

• Our operationalisation with CIS 2010 data for larger companies (> 250 employees)

• 18.7% of large companies in Europe meet our criteria for BMI

• In both surveys finance companies are most often business model innovators among large firms

15/04/23 11© F. Barjak & M. Bill, 2014

Summary

15/04/23 12© F. Barjak & M. Bill, 2014

• It is possible to operationalise a composite indicator for BMI with data on innovations resulting from the work of OECD and Eurostat working groups.

• Challenges which need to be addressed

– Assessing the connections between different types of innovations

– Measuring the degree of novelty of non-technological innovations

– Conceptualising and assessing revenue model innovations

• Business model innovators are a small fraction of companies

– Improve the information basis through a better measurement and quantification of business model innovators in both SMEs and large companies is a first step towards improving the conditions for BMI and lowering the barriers against it.