Business Model Innovation:

The case of digital platforms

Javier Cenamor
Department of Business Administration, Lund University

Let’s start at 10:00

IY1444 Digitalization & Business Development

Blekinge Tekniska Högskola
Javier Cenamor
▪ Department of Business
Administration, CIRCLE
▪ PhD in Entrepreneurship and
Innovation (Luleå University of
Technology, Sweden)
▪ Research interests: Platform
Ecosystems, Digitalization, eHealth,
Servitization, Internationalization
Javier Cenamor, PhD
Associate Professor ▪ Publications
[email protected] • Google Scholar
• Research Gate
More info
Table of contents
Topics

• Business models
• What is a business model? Definitions and examples
• What is business model innovation?

• What is a platform?
• Main research streams: definitions and types
• Examples
Business models
 What is a business model?
▪ Many definitions in the literature

▪ Some keywords:

- Architecture - Value creation and capture by different actors

- Logic - Structure of revenues and costs
- System - Product, service and information flows
- Representation - Interdependent activities / decisions
- Reflection - Content, structure and governance of
transactions

Massa, L., Tucci, C.L., Afuah, A., 2017. A Critical Assessment of Business Model Research. Academy of Management Annals 11,
73–104.
 Perspectives in business-model research

Ritter and Lettl (2018) The wider implications of business-model research. Long Range Planning, 51, 1-8
 Business-model logics
(consequence chain)

Casadesus-Masanell, R., Ricart, J.E., 2011. How to design a winning business model. Harv. Bus. Rev. 89 (1/2), 100-107.
 Business-model logics
(consequence chain)

Aversa, P., Hervas-Drane, A., Evenou, M. 2019. Business Model Responses to Digital Piracy. CMR 61(2) 30-58
 Business-model elements

Osterwalder, A., Pigneur, Y., 2010. Business Model Generation. John Wiley & Sons, Hoboken, New Jersey.
 Business-model
elements

Aversa, P., Hervas-Drane, A., Evenou, M. 2019. Business Model Responses to Digital Piracy. CMR 61(2) 30-58
 Business-model activities

Zott, C., Amit, R., 2010. Business model design: an activity system perspective. Long Range Plan. 43, 216-226
 Business-model archetypes
Product-oriented Use-oriented Result-oriented
Value Provider takes Provider is responsible Provider is
responsibility for the for the usability of the responsible for
creation
contracted services. product or service. delivering results.

Value Customer pays for physical Customer can make Customer payments
product and for the continuous payments are based on outcome
capturing
performed services. over time (e.g., units; that is, they pay
leasing). for the result.

Value Provider sells and services Provider assures the Provider actually
the product sale and usability of the physical delivers result.
delivery
service (e.g., maintenance product along with
or recycling). service.

Reim, W., Parida, V., Örtqvist, D., 2015. Product–Service Systems (PSS) business models and tactics – a
systematic literature review. Journal of Cleaner Production 97, 61–75.
 Business model visualizations, effective?
▪ Parsimony
• Degree of difference between important and unimportant
elements

▪ Scope
• Extent to which it covers a task (too extensive or too simple)

▪ Clarity
• Degree to which elements are self-evident (meaning)

▪ Rigidity
• Degree of unambiguity of elements (recurrent elements)

Henike, T., Kamprath, M., Hölzle, K., 2020. Effecting, but effective? How business model visualisations unfold cognitive
impacts. Long Range Planning 53, 101925.
 What is business model innovation?
▪ Many definitions in the literature
▪ Depends on the business model perspective
▪ Some definitions and keywords:

- Initiatives to create new value by challenging - Evolution: voluntary and

BM, roles and relations in an industry emergent changes in the
- Search for new logics and new ways of value components and links
creation and capture for the stakeholders - Learning: responses to
- Incremental changes in components, competitors
extension of BM, introduction of parallel - Lifecycle: periods of
BMs specification, refinement,
- Replacing existing BM with a new one adaptation, revision and
reformulation

Foss and Saebi (2018) Business models and business model innovation: Between wicked and paradigmatic problems. Long
Range Planning, 51, 9-21
 What is a business model innovation?
Feature Product innovation Process innovation Business model innovation

New elements introduced into a

A new product (also includes An activity system that is new to
firm's manufacturing or service
Definition services) introduced commercially the industry in which the focal firm
operation to produce a product or
to meet an external user need competes
render a service

Activity system (as structured

Unit of
Product and its characteristics Process routine(s) between the firm, customers, and
analysis
partners)

Implies changes to firm's Implies changes to the firm's

Relation Implies holistic changes to the
marketing and sales activities, production or service routines to
with the firm's value chain due to changes in
usually initiated by the firm's R&D streamline operations
value content, governance, and structure
department (middle/downstream (upstream/middle of the value
chain of relationships with stakeholders
of the value chain) chain)

Commercialization of a new Ikea's implementation of a new

Introduction of a new inventory
Example energy drink or a new checking business model to sell unassembled
management process
account furniture

Snihur and Wiklund (2019) Searching for innovation: Product, process, and business model innovations
and search behavior in established firms. Long Range Planning, 52, 3, 305-325
 What is business model innovation?

NIO Power
▪ What does this company offer?
What happened with NOKIA? And Atari?
What happened to NOKIA?
Platform approach
 What is a platform? Approaches
Internal / supply-chain Transaction platform / Platform ecosystem /
platform match maker Innovation platform
Description A core module for a product An intermediary between two A system or architecture that supports a
family or more market participants collection of complementary assets
Acad. fields Engineering Economics and Info. Systems Management
Key topics Product development: Product Industrial economics: Multisided Technology strategy: modularity,
family, modularity, market, network effects, pricing network effects, openness, innovation,
compatibility quality
Industries Automotive industry Landline phone, credit cards Video consoles

Seminal Schilling (2000) Rochet & Tirole (2002, 2006) Eisenmann, Parker & Van Alstyne, (2006)
papers Baldwin & Woodard (2010) Boudreau, (2012)

My papers Cenamor & Frishammar (2021)

Cenamor, Parida & Wincent (2019) Frishammar, Cenamor, Cavalli- Cenamor (2021)
Cenamor, Sjödin & Parida (2017) Björkman, Hernell, Carlsson (2018) Wan, Cenamor, Parker & Van Alstyne (2017)
Cenamor, Usero & Fernández (2013)

Based on Thomas et al. (2014) and Gawer (2014)

 What is a platform? Network effects
▪ Network value: The value of the platform depends on the
number of users of the platform
• One additional user represents an increase of the
(network) value for all the current users (installed base)
▪ Direct network effects: the larger the installed base, the
higher the network value, which attracts more users, which
increases the network value

DEMAND
SUPPLY SIDE
SIDE

TRANSACTION
PLATFORM

Katz, M.L., Shapiro, C., 1994. Systems competition and network effects. Journal of Economic Perspectives 8, 93–115.
 UGC Videogame platform: Roblox

COMPLEMENTORS
END USERS

Roblox will give

a handful of
game
developers Roblox will let 13+
$500,000 each users import
to build its contacts and add
future recommended
(Techcrunch, friends (Techcrunch,
9/Sept/22) 9/Dec/22)

https://corp.roblox.com/
 DEMAND
SUPPLY SIDE
SIDE

INTERMED.
PLATFORM

What is a platform? Network effects

Free as a bird - The Testbirds rebrand story - Testbirds

What is crowdtesting?
Crowdtesting is all about letting real people test digital products in
real-world conditions. By leveraging the collaborative force of
testers from around the world, and their collective knowledge,
firms can test for and realize an elevated level of user-friendliness,
usability, and functionality in your digital solutions.

https://www.testbirds.com/en/
 DEMAND
SUPPLY SIDE
SIDE

INTERMED.
PLATFORM

What is a platform? Network effects

https://stasher.com/becomeahost https://stasher.com/

DEMAND
SUPPLY SIDE
SIDE

INTERMED.
PLATFORM
 Is the industry ready for platformization?
VALUE

TRANSACTIONS
From information From physical assets

Simple and modular Complex and

REGULATION interdependent
AND RISKS

Freewheeling and Heavily regulated and

fault-tolerant risk-averse CAPACITY

INFORMATION Spare capacity Scarce resources

ASYMMETRIES

Sharing approach Asymmetries

between sides

How to tell if your industry is ready for platform transformation (2019): Based on Parker et al. (2016). Platform revolution
 Digitization of Music

Koh, B., Hann, I.-H., Raghunathan, S., 2019. Digitization of Music: Consumer Adoption Amidst Piracy, Unbundling, and Rebundling. MISQ
43, 25–45
 Digitization of Music: Spotify
4000 640

3500 560

3000 480

2500 400

Monthly Active Users (Mill.)

Euros (Mill.)

2000 320

1500 240

1000 160

500 80

0 0
Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023

-500 -80

Premium Subscribers Ad-Supported MAUs

Premium (Revenue) Ad-Supported (Revenue)
Operating (Loss)/Income

https://s29.q4cdn.com/175625835/files/doc_financials/2023/q4/Shareholder-Deck-Q4-2023-FINAL.pdf
Books
Screen Clipping

Tiwana, A. (2014) Parker et al. (2016) Cusumano et al. (2019)

 Papers

Screen Clipping
Screen Clipping

Application, table

Description automatically generated with medium confidence

Graphical user interface, text, application

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Thank you for your time!
Feel free to share any question or comment

Javier Cenamor
Department of Business Administration, Lund University