Scrutinizing Business Models using publiclyavailable information: The case ofcommunications enabled applicationsLaleh Reza...
Objective (s)Objectives:  (i)  Examine Business Models (BMs) of large suppliers of       Communications Enabled Applicatio...
RelevanceWho cares                      Why                                            Evidence that managers care        ...
Literature reviewStream                                       Key highlights of the stream                         Key Ref...
Contribution    Develops a model:         Can be used to predict circumstances whereby a change in          BM is requir...
Lessons learned  All key elements of a business model need to be internally consistent  Opportunities for BM innovation ...
Method Step                       Describe the dominant activity undertaken to produce deliverables 1 Select structures to...
Data acquisition    Data is collected from company’s secondary sources:    websites, annual reports, product/service lite...
Data analysis         Research method       Holistic single case study with embedded units         Units of analysis    ...
Research roadmap                                             Section 2                                                    ...
Results-section 1:Business Model analysis                     A Four Box Model displaying results of business model analys...
Results-section 2:Analysis of interdependencies: sample        CVP: Optimizing Communications                   Job to be ...
Results-section 2:Second set of propositions  Analysis of 43 customer cases produces 4 propositions:  1.  Customer value p...
Results-section 3:Classification of CEA market offers  CEA market offers were organized into three types:  1.  Unified Tel...
Results-section 4:Results of analysis of shifts in competition basis                    Anticipated growth curve in commun...
Results-section 5:Analysis of shifts in problem solving     Use 13 BM Canvases as a sample of analysis     Analysis is b...
Key finding                   A model for BM innovationProblem solving method                                             ...
Discussion of results    Business model canvas         Needs to be extended in four areas before application    Develop...
Conclusion    First study on how to do business by analyzing BMs    Analysis of BMs requires an understanding of two asp...
Limitations & future research  Limitations    Use of secondary sources of data    Lack of knowledge in CEA domain  Futur...
References Afuah, A. & Tucci, C. 2001. Internet business models and strategies. Boston: McGraw Hill. Amit, R., Zott, C. (2...
References Johnson, M. W. (2010) Seizing the White Space: Business Model Innovation for Growth and Renewal.     Boston, MA...
References Rappa, M. (2003) Managing the digital enterprise: Business models on the web. North Caroline State   University...
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Analyzing Business Models in Communications-enabled applications

  1. 1. Scrutinizing Business Models using publiclyavailable information: The case ofcommunications enabled applicationsLaleh Rezaie AdlThesis defense presentationTechnology Innovation ManagementSep 13, 2011
  2. 2. Objective (s)Objectives: (i)  Examine Business Models (BMs) of large suppliers of Communications Enabled Applications (CEAs) (ii)  Analyze how these companies refine and innovate their BMsDeliverables: (i)  Propositions that highlight distinct aspects of business models used by large companies that supply CEAs (ii)  A classification of communications enabled market offers (iii) A model that explains how large suppliers of CEAs improve and innovate their business models lalehadl@sce.carleton.ca Sep 13, 2011 Slide 2
  3. 3. RelevanceWho cares Why Evidence that managers care about the issues addressedTMT and executive Provides: Major sources of growth anddirectors •  A language for business modelling renewal for a company lies in it’s business model that the company •  A visual representation of BMs to follows to make money implement enterprise changes (Christensen & Reynor, 2003)Academics •  To use as a unit of analysis The use of business models as a unit of analysis is an emerging trend in management research (Zott, Amit and Massa, 2011)Entrepreneurs To understand how large companies The greatest opportunities for configure or re-configure required resources growth dont really come from to create new value propositions selling more of the same market offers to more customers, but from truly new ways to turn a profit (Johnson, 2010) lalehadl@sce.carleton.ca Slide 3
  4. 4. Literature reviewStream Key highlights of the stream Key ReferencesBM concept and notions   Taxonomy of BM Amit & Zott (2001), Rappa (2003)   Definition of the components Tapscott, Lowi and Ticoll (2000) Zott et al. (2011)BM structure   CVP, Key resources & processes, profit formula, Afuah & Tucci (2001), Hamel (2000) plus rules, norms and metrics Johnson et al. (2008)  Four Box BM   CVP, CVS, CH, CR, R$, KR, KA, KP, C$ Osterwalder & Pigneur (2009)  BM Canvas  Others: BM components (2), Seven Petrovic, Kittl and Teksten (2001),sub-models BMs, eight atomic elements Weill and Vitale (2001)BM innovation constructs   White space (within, beyond and between) Boundreau & Lakhani (2009)  White Space   Open innovation leverages internal and external Chesbrough (2009) innovation Chesbrough & Rosenbloom (2002)  Open innovation BM   Platform BMs operate based on “who sells to Christensen (2003)  Platform BMs (Integrator, product & two whom”sided platforms) Johnson (2010)   Four vector BM has two dimensions: Value  Four vector business models Venkatraman & Henderson (2008) creation and Scope of relationships  Disruptive business models   Disruptive BMs generate profits at the low endGrowth formulae   Incremental core, adjacencies, white space Evans & Schemalensee (2007)  Johnson’s model for growth & renewal   Multi-sided growth strategies Hagiu (2005)  Multi-sided growth Johnson (2010) Rochet & Tirole (2003), (2004)Communication Enabled   Eliminates human delay in business processes Becchina, Ciccarelli, Giotis & Kenny (2007)Applications (CEA) lalehadl@sce.carleton.ca Slide 4
  5. 5. Contribution   Develops a model:  Can be used to predict circumstances whereby a change in BM is required  Offers opportunities to lower costs and associated risks of improving BMs or creating new ones   Provides a process which reduces time and effort required to describe, analyze and improve how a company makes money lalehadl@sce.carleton.ca Slide 5
  6. 6. Lessons learned  All key elements of a business model need to be internally consistent  Opportunities for BM innovation arise whenever customers have jobs to be done that are not satisfied by existing Customer Value Propositions  Companies have a tough time changing their BMs for two main reasons: (i) tendency to apply same logic of launching new products (ii) rules and behavioral norms  Designing CEAs requires an in depth understanding of business processes and information flows as much as technology advancement  Platforms need to make three key strategic decisions to achieve sustainability: (i) scope definition (ii) make pricing decisions (iii) make decisions that provide differentiation lalehadl@sce.carleton.ca Slide 6
  7. 7. Method Step Describe the dominant activity undertaken to produce deliverables 1 Select structures to Review Literature analysis BMs Identify approaches to organize elements of a BM Select structures to examine BMs and BM innovation 2 Select sample Define sample criteria Identify members of population that meet the criteria 3 Build data base Collect data required to populate selected structures in step 1 Enter data into a database 4 Develop propositions Organize data on elements of business models using BM Canvas anchored around Four Box Identify unique attributes of sample canvases using Four Box BM BM Develop four propositions that highlights unique attributes of sample BMs 5 Develop propositions Organize data using Value proposition frame (johnson, 2010) anchored around Examine the inter-relationships between key elements of BMs across all market interdependencies offers Develop second set of propositions 6 Classify market offers Classify CEA market offers based on their delivered value (Bailetti, 2009) 7 Develop model for BM Develop a model using white space frame (Johnson, 2010) to explain how large innovation suppliers of CEAs improve and innovate their business models lalehadl@sce.carleton.ca Slide 7
  8. 8. Data acquisition   Data is collected from company’s secondary sources: websites, annual reports, product/service literature, press releases, analysts reports and media coverage   Required data includes but not limited to:   Communication enabled solutions: product features, functions & added value   Jobs need to be done/problem to be solved for customers, revenue models, cost structures, customer relationships, key partners & channels to market   Key resources & key processes: physical, financial & human related resources, technologies and intangible assets   Data related to basis of competition, different types of the innovation and shifts in problem solving methods lalehadl@sce.carleton.ca Slide 8
  9. 9. Data analysis   Research method Holistic single case study with embedded units   Units of analysis A business model representation for large IT/telecom companies: Nortel, Avaya, IBM, Microsoft and Cisco   Study period Jan 1, 2003 to Jan 1, 2010 gathered in Oct-Nov 2010 time period lalehadl@sce.carleton.ca Slide 9
  10. 10. Research roadmap Section 2 Section 1 Section 3 Section 4 Section 5 lalehadl@sce.carleton.ca Slide 10
  11. 11. Results-section 1:Business Model analysis A Four Box Model displaying results of business model analysis lalehadl@sce.carleton.ca Slide 11
  12. 12. Results-section 2:Analysis of interdependencies: sample CVP: Optimizing Communications Job to be done Users need consistent & optimized communication independent of location Customer Value Segment 1 Finance companies to have: Market Offers   Higher ROI from multi- vendor communication Multi vendor voice from infrastructure Avaya (CS 1000), Cisco   1 hour/week improved (CM) & IBM (Sametime) user productivity due to application integration Click to call from Corporate independent of location Portal (Packaged &   Cost saving (travel & Custom Applications) real state) for mobile employees Hot Desking to manage voice & video at any location Value proposition frame for Avaya lalehadl@sce.carleton.ca Slide 12
  13. 13. Results-section 2:Second set of propositions Analysis of 43 customer cases produces 4 propositions: 1.  Customer value proposition is more a function of the job-to-be- done than specific type of market offer 2.  Clearly defined jobs-to-be-done and better match between jobs-to-be-done and market offers results in stronger, more sustainable value propositions 3.  Cheapest market offers are not always the best solutions to provide a compelling value proposition 4.  CEA market should be segmented based on the value that communications enabled solutions provides for customers lalehadl@sce.carleton.ca Slide 13
  14. 14. Results-section 3:Classification of CEA market offers CEA market offers were organized into three types: 1.  Unified Telephony and Unified Messaging 2.  Unified Communications and Communications enabled Business Processes 3.  Communications and Collaboration Platform or Communications enabled platform lalehadl@sce.carleton.ca Slide 14
  15. 15. Results-section 4:Results of analysis of shifts in competition basis Anticipated growth curve in communications enablement lalehadl@sce.carleton.ca Slide 15
  16. 16. Results-section 5:Analysis of shifts in problem solving   Use 13 BM Canvases as a sample of analysis   Analysis is based on White Space beyond frame (Johnson, 2010)   Three types of business models are identified as results:  Solution based business models  Value adding process business models  Multi-sided platform business models lalehadl@sce.carleton.ca Slide 16
  17. 17. Key finding A model for BM innovationProblem solving method Communications enabled solutions Business Model innovation Process Unified innovation Communications: Convergence with applications Product innovation Unified Telephony OR Unified Messaging Basis of the competition lalehadl@sce.carleton.ca Slide 17
  18. 18. Discussion of results   Business model canvas  Needs to be extended in four areas before application   Developed model for business model innovation  Application to different domains  Innovation as the third key driver lalehadl@sce.carleton.ca Slide 18
  19. 19. Conclusion   First study on how to do business by analyzing BMs   Analysis of BMs requires an understanding of two aspects: key elements of BMs and how these elements work together   A vocabulary for business models accelerate decisions about how to do business in CEA domain   Two features make business models of large suppliers of CEAs distinctive: (i) structure of their BMs (ii) pattern in improving and innovating their BMs lalehadl@sce.carleton.ca Slide 19
  20. 20. Limitations & future research Limitations   Use of secondary sources of data   Lack of knowledge in CEA domain Future research   Examine business models in start-ups   Explore how multi sided approach changes the way CEA companies do business lalehadl@sce.carleton.ca Slide 20
  21. 21. References Afuah, A. & Tucci, C. 2001. Internet business models and strategies. Boston: McGraw Hill. Amit, R., Zott, C. (2001) Value creation in e-business. Strategic Management Journal. Vol 22, No 6/7, p493-520. Anthony, S.D., Erying, M., Gibson, L. (2006) Mapping your innovation strategy. Harvard Business Review Bailetti, A.J., 2010. Blueprint and approach to grow revenue in small technology companies. Open Source Business Review. June 2010:Growing Business. Boudreau, K. J., Lakhani, K. R. (2009) How to manage outside innovation. MIT Sloan Management Review Evans, D.S., Schmalensee, R. (2007) Catalyst code: The strategies behind the world’s most dynamic companies. Harvard Business School Press, Boston, MA. Chesbrough, H. W., & German, A. R. (2009) How Open Innovation Can Help You Cope in Lean Times. Harvard Business Review Christensen, C.M. & Raynor, M. E.(2003) The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: HBS Press Chesbrough, H., Rosenbloom, R.S. (2002) The role of business model in capturing value from innovation: evidence from Xerox corporation’s technology spin-off companies. Industrial and Corporate Change, 11/3:529-555 Hedman, J., Kalling, T. (2001) The business model: A mean to understand the business context of information and communication technology. Institute of Economic Research. School of Economics and Management, Lund Universitet. Johnson, Mark W.; Christensen, Clayton M.; Kagermann, Henning. Re-inventing your business model. Harvard Business Review, Dec2008, Vol. 86 Issue 12, p50-59 lalehadl@sce.carleton.ca Slide 21
  22. 22. References Johnson, M. W. (2010) Seizing the White Space: Business Model Innovation for Growth and Renewal. Boston, MA: HBS Press Kanaparti, S. (2008) A distributer SOA model for unified communication services. IEEE International Conference on Web Services. Linder, J., Cantrell, S. (2000) Changing business models: Surveying the Landscape, Accenture Institute for Strategic Change. Magretta, J. (2002) Why business models matter? Harvard Business Review. Vol 80, No. 5, p.86-92. Mantena, R., Sankaranarayanan, R, Viswanathan, R. (2007) Exclusive licensing in complementary network industries. SSRN 979330. Mahadevan, B. (2000) Business models for Internet-based e-commerce: An anatomy California Management Review 42 (4), 55-61. Nortel Technical journal, Issue 5, Next-Generation Applications and Services articles, March 2007 Osterwalder, Lagha & Pigneur (2002). An Ontology for e-business models. European Journal of Operational Research. Proc. of the 15th e-commerce conference. Bled, Slovenia. Osterwalder, A., & Pigneur, Y. (2009) Business Model Generation: A Handbook for Visionaries, Game Changers and Challengers Petrovic, O., Kittle,C., Teksten R.D. (2001) Developing business models for e-Business. SSRN 1658505. Porter, M. (2001) Strategy and the Internet. Harvard Business Review, Vol. 79, No. 3, p62-78. Rake, J., Holschke, O., Offermann, P., & Bub, U. (2009) Communication-enabled business processes as a service. 13th International conference on intelligence in next generation networks. ICIN 2009. lalehadl@sce.carleton.ca Slide 22
  23. 23. References Rappa, M. (2003) Managing the digital enterprise: Business models on the web. North Caroline State University. Rochet, J.C. and Tirole, J. (2001) Platform Competition in Two-Sided Markets." Mimeo, IDEI. Rochet, J.C., Tirole, J. (2003) Platform Competition in Two-Sided Markets. Journal of the European Economic Association. Vol.1, p990 1029. Rochet, J.C., Tirole, J. (2004) Two-sided markets: An overview. Mimeo, IDEI University of Toulouse. Rybczynski, T., & Shetty, M. (2005) Unified communications: where the world is heading. Financial Executive. Vol 21, p31-33. Tapscott, D., Lowi, A., Ticoll, D. (2000) Digital capital: Harnessing the power of business webs. Harvard Business School Press, Boston, MA. Timmers, P. (1998) Business Models for Electronic Markets. Journal of Electronic Markets, 8 (2): p3-8. Treacy, M. and Sims, J. (2004) Take command of your growth. Harvard Business Review Venkatachalam, L., Dhara, K.K., Krishnaswamy, V., & Vernick, M. (2008) Communication enabled web applications: the evolution of computer telephony integration. IEEE. June. p275-278. Venkatraman, N., Henderson, J. C. (2008) Four vectors of business model innovation: Value capture in network era. Book chapter from Strategy to Execution, book, Springer. Weill, P., Vitale, M.R. (2001) Place to space: Migrating to e-business models. Harvard Business School Press, Boston, MA. West, J. (2003) How open is open enough? Melding proprietary and open source platform strategies. Research Policy. 32(7), p1259-1285. Zook, C. (2007) Finding your next core business. Harvard Business Review Zott, C., R. Amit & L. Massa. 2011. The business model: Recent development and future research. Journal of Management. 37(4): 1019-1042. lalehadl@sce.carleton.ca Slide 23

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