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Business ModelsCharles Baden-Fuller & Team

Cass Business School, City U. London& Wharton School, U. Penn

NEMIND Workshop, London, May 2014© C.Baden-Fuller not for reproduction

CENTIVE @ www.cass.city.ac.uk

Presenters: Alessandro Giudici & Simone Santoni

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Business Model is a sophisticated device

Fundamental premise is that a Business Model is a MODEL – and so we can borrow from science and social science and philosophy to make progress on the agenda.

– We cannot see a business model directly – firms are just too complex. But simplifying the world using this lens helps us with understanding how firms make choices and the consequences (e.g. Amit and Zott, 2008).

– Cognitive device to help managers see the possibilities in their world “manipulable” – like a configuration (Siggelkow, 2002) but connects outside to inside (Baden-Fuller and Mangematin, 2013)

– The underlying reason is that managers think in constructs. Business models are potentially very powerful in providing a cognitive bridge between the past (what we see has been done) and the future (performative).

– The business model could also be useful as a mechanism to classify firms in an industry that explains puzzles: e.g. “competition” (output: Baden-Fuller & Haefliger, 2013 LRP; Baden-Fuller & Mangematin, 2013 SO; + Baden-Fuller & Morgan, 2010 LRP)

© C.Baden-Fuller not for reproduction

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Our research progress

• We are developing a classification system built upon first principles related to how value is created and for whom. We draw upon sociological (Granovetter, 1985; Simmel, 1950; Uzzi, 1996) and economic literature (Roche and Tirole, 2006) as a starting point.

• We derive mutually exclusive and collectively exhaustive business model ideal categories (types) (e.g. Weber, 1904; Greenwood & Lawrence, 2005) that might be robust to changing context and time.

• We explain how these categories can be generative, and that they can be used to shed insights into what is meant by business model innovation and the role of changes in technology; and to improve theorizing, policy and empirical work.

• Preliminary output: Paper accepted for presentation at the AOM, EGOS, and SMS conference in 2015; Website with evolving library of exemplar cases (next slides).

© C.Baden-Fuller not for reproduction

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The Business Model ZooTM

© C.Baden-Fuller not for reproduction

http://businessmodelzoo.com

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Research Agenda

© C.Baden-Fuller not for reproduction

For entrepreneurs and managers, it could work as a reasoning tool:● mapping viable business models in the industry;● exploring the pay-off of alternative business models;● uncovering business model innovation opportunities.

For stakeholders – e.g. policy makers & VCs – it could work as a framing tool:● appreciating how a (new) firm creates and captures values;● assessing firms’ resource needs;● Enhancing resource allocation processes.

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External Engagement & Impact

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• Besides collecting fine-grained research data using the website, we are working towards developing it as an (auto and facilitated) diagnostic tool kit to encourage awareness about business model design and innovation.

• We are currently planning a pivoting phase in collaboration with network intermediaries – e.g. venture associations, business incubators/accelerators, and government agencies - to develop robust metrics and strengthen the library of exemplary cases.

• The aim is to engage with a community of lead users from the SME and start-up world (but not only) leveraging the multiplying power of these intermediaries and ensuring the potential for dissemination and the sustainability of the concepts and tools developed.

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Amit R. and C. Zott, 2001, Value Creation in E-Business, Strategic Management Journal, 22: 493-520 Baden-Fuller C. and M. Morgan, 2010, Business Models. Long Range Planning 43: ,156-171Baden-Fuller C. and S. Haefliger, 2013, Business Models and Technological Innovation, Long Range

Planning, 46(6): 419-426. Baden-Fuller C. and V. Mangematin, 2013, Business Models: A Challenging Agenda, Strategic

Organization, 11(4): 418-427. Baden-Fuller C., A. Giudici, S. Haefliger, and M. Morgan, 2015, Business Models: Concepts, Categories

and Consequences. Working Paper. Granovetter, M.S. 1983, The Strength of Weak Ties. American Journal of Sociology, 78(6): 1360-80.Greenwood, R. and T.B. Lawrence, 2005. The Iron Cage in the Information Age: The Legacy and

Relevance of Max Weber for Organization Studies. Editorial, Organization Studies, 26(4): 493–499.N. Siggelkow, 2002, Evolution towards Fit, Administrative Science QuarterlyG. Simmel, 1950, The Sociology of George Simmel (Wolff KH. eds). Free Press: Glencoe, IL. Uzzi, B. 1997. Social Structure and Competition in Interfirm Networks: The Paradox ofEmbeddedness. Administrative Science Quarterly, 42(1): 35-67.M. Weber, 1969 (1904), ‘Objectivity’ in Social Science and Social Policy. In Shils, E.A. and Finch H.A (eds). The Methodology of the Social Sciences. New York: The Free Press: 50-112.

References

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The Business Model ZooTM

© C.Baden-Fuller not for reproduction

http://businessmodelzoo.com