Introduction to a technique for systematic processing of textual information from the firm’s published reports. The technique focuses on data collection, data classification, and data display to enable further analysis and change pattern identification. Publicly presented for the first time on 23 September 2014 at the Strategic Management Society's Annual Meeting in Madrid, Spain to an audience of esteemed strategic management scholars from around the globe.

1. 23 September 2014
A TECHNIQUE FOR TRACKING BUSINESS MODEL RENEWAL
Sergejs Groskovs
PhD candidate
Aarhus University
sg@badm.au.dk
John Parm Ulhøi
Professor
Aarhus University
Strategic Management Society
AnnualMeeting 2014
Madrid, Spain
23 September 2014

2. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
HOW CAN WE IDENTIFY A PATTERNIN BUSINESS MODEL CHANGE?
›EXAMPLE
›Consider a case of a Danish high-growth firm, TriforkA/S.
›Established in 1996 and went public in 2007.
›Current offerings are software development, conferences, trainings and courses, and consulting to diverse private and public sector organizations.
›In 2006-2012 revenues and EBITDA were increasing at a CAGR in excess of 25%.
›Did the firm change its business modelover this time? How exactly? Why?
›PROBLEM WITH AMOUNT OF DATA
›From late 2007 till early 2014 the firm was listed on the Copenhagen Stock Exchange (NASDAQ OMX) and has filed:
›an IPO prospectus,
›7 annual reports,
›17 quarterly and half-year reports,
›146 news announcements.
SLIDE 2
171documents
57relevant documents
818 pages

3. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
HOW CAN WE IDENTIFY A PATTERNIN BUSINESS MODEL CHANGE?
›PROBLEM WITH LITERATURE
›Business model innovation represents an effective vehicle for organizational transformation and renewal (Demil& Lecocq2010), facilitates technology commercialization (Chesbrough 2010; Gambardella & McGahan2010), and improves firm performance (Teece2010; Zott& Amit 2008).
›Yet studying the phenomenon of business model change is not straightforward. Regrettably, not much progress has been made in the development of applicable methods* ever since the first calls were voiced (Pateli& Giaglis2004).
›The problem we came to realize is thatnot a single concrete technique for detecting business model change patternshas been described in a dedicated method paper.
›The approaches introduced in empirical papers are not sufficiently explicit, leaving researchers with poor grounds for replication or for follow-up studies.
›This unfortunate state of affairs leaves a gap in the literature and thus tends to block further development of the field. SLIDE 3
* We have conducted a systematic search for journal articles in the Thompson Reuters ISI Web of Knowledge database. We used keywords “business model” in combination with “innovation”, “change”, “dynamics”, “renewal”, or “evolution” in the title of the paper. The query returned 88 records, of which 43 papers indeed focused on the process of change from one business model to another in the context of for-profit established firms.

4. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
SYSTEMATIC QUALITATIVECONTENT ANALYSIS OF REPORTS
›PROPOSED SOLUTION
›The purpose of the paper is to introduce a technique for systematic processing of business model related textual information from the firm’s published reports.
›The technique focuses on:
›data collection;
›data classification;
›data display for further analysis.
SLIDE 4

5. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
TECHNIQUE (1/7): CHOOSE BUSINESS MODEL DEFINITION
›AMIT & ZOTT
›The business model describes the system of interdependent activitiesthat are performed by the firm and by its partners and the mechanisms that link these activities to each other. (Zott& Amit 2010)
›A business model is a bundle of specific activities—an activity system—conducted to satisfy the perceived needs of the market [content], along with the specification of which parties (a company or its partners) conduct which activities [governance], and how these activities are linked to each other [structure]. (Amit & Zott2012)
›TEECE
›The essence of a business model is that it crystallizes customer needs and ability to pay, defines the manner by which the business enterprise responds to and delivers value to customers, entices customers to payfor value, and converts those payments to profit through the proper design and operation of the various elements of the value chain. (Teece2010)
›DEMIL & LECOCQ
›Further elaborating on the Penrosianfirm view, we assume that a BM can be described with three core components: its resourcesand competences, its organizational structureand its propositions for value delivery. (Demil& Lecocq2010)
›OSTERWALDER
›A business model is a conceptual tool that contains a set of elements and their relationships and allows expressing the business logic of a specific firm. It is a description of the value a company offersto one or several segments of customers and of the architecture of the firm and its networkof partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams. (Osterwalder, Pigneur& Tucci2005)
›etc… etc… etc…
SLIDE 5

6. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
TECHNIQUE (2/7): COLLECT QUOTATIONS
SLIDE 6
57relevant documents
818pages
_______________________
171 relevant quotations
DATE
QUOTATION
2008Q1
“In 2008, the majority of Trifork’semployees participated in the [new] employee stock ownership plan, where each employee could invest up to 22,000 DKK of his/her gross salary in the period between February 2008 and February 2009.” (Annual Report ‘08)
2008 Q1/Q2
“The first six months as a listed company for Triforkhave been characterized by great activity and strong growth in revenue. The growth in revenue is partly due to general growth in most areas, and the extra revenue is from InterpriseConsulting and Delta Software, which were acquired in the fall of 2007. The company has mobilized resources to integrate and renew its internal systems in the finance and project management area.” (Half-Year Report ’08)
2009
“The overall market situation in 2009 was affected by the financial crisis and the impact it had on the Danish economy. In 2009, Triforkregularly aligned activities, and therefore, in spite of the economic crisis continued to show a positive development.” (Annual Report ‘09)

7. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
TECHNIQUE (3/7): CLASSIFY ACC/ TO ACTIVITIES
SLIDE 7
Service
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
(Firm) Infrastructure Management
Human Resource Management
Technology Development
Procurement
SUPPORT
ACTIVITIES
PRIMARY ACTIVITIES
(Porter 1985)

8. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
EXAMPLECONT’D
SLIDE 8
DATE
QUOTATION
VALUE CHAIN
ACTIVITY
SUBACTIVITY
2008Q1
“In 2008, the majority of Trifork’semployees participated in the [new] employee stock ownership plan, where each employee could invest up to 22,000 DKK of his/her gross salary in the period between February 2008 and February 2009.” (Annual Report ‘08)
HRM
Employee retention
2008 Q1/Q2
“The first six months as a listed company for Triforkhave been characterized by great activity and strong growth in revenue. The growth in revenue is partly due to general growth in most areas, and the extra revenue is from InterpriseConsulting and Delta Software, which were acquired in the fall of 2007. The company has mobilized resources to integrate and renew its internal systems in the finance and project management area.” (Half-Year Report ‘08)
IM
Administration
TD
Technology development
2009
“The overall market situation in 2009 was affected by the financial crisis and the impact it had on the Danish economy. In 2009, Triforkregularly aligned activities, and therefore, in spite of the economic crisis continued to show a positive development.” (Annual Report ‘09)
ALL
ALL

9. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
TECHNIQUE (4/7): CLASSIFY ACC/ TO ACTIVITY ELEMENTS
SLIDE 9
GOVERNANCE————————— CONTENT
GOVERNANCE————————— CONTENT
GOVERNANCE————————— CONTENT
(based on Amit & Zott)

10. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
EXAMPLECONT’D
SLIDE 10
DATE
QUOTATION
VALUE CHAIN
ELEMENT
ACTIVITY
SUBACTIVITY
GOV
CON
STR
2008Q1
“In 2008, the majority of Trifork’semployees participated in the [new] employee stock ownership plan, where each employee could invest up to 22,000 DKK of his/her gross salary in the period between February 2008 and February 2009.” (Annual Report ‘08)
HRM
Employee retention
X
X
X
2008 Q1/Q2
“The first six months as a listed company for Triforkhave been characterized by great activity and strong growth in revenue. The growth in revenue is partly due to general growth in most areas, and the extra revenue is from InterpriseConsulting and Delta Software, which were acquired in the fall of 2007. The company has mobilized resources to integrate and renew its internal systems in the finance and project management area.” (Half-Year Report ‘08)
IM
Administration
X
X
TD
Technology development
X
X
2009
“The overall market situation in 2009 was affected by the financial crisis and the impact it had on the Danish economy. In 2009, Triforkregularly aligned activities, and therefore, in spite of the economic crisis continued to show a positive development.” (Annual Report ‘09)
ALL
ALL
X

11. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
TECHNIQUE (5/7): CLASSIFY ACC/ TO CHANGE TYPES
›Cavalcante, Kesting & Ulhøi (2011)
›We distinguish between four different types of business model change: (1) business model creation; (2) business model extension; (3) business model revision; (4) business model termination.
›Von Krogh & Cusumano(2001)
›Duplicationstarts with a coherent vision of products, technologies and customer segments. But unlike scaling, the vision must include goals for geographical expansion. The vision of IKEA founder IngvardKampradwas to go beyond Sweden and democratize the furniture industry throughout Europe by making new products affordable to the masses.
›Winter & Szulanski(2001)
›Replication, a familiar phenomenon sometimes referred to as the "McDonalds approach," entails the creation and operation of a large number of similar outlets that deliver a product or perform a service.
CHANGE TYPESAT ACTIVITYLEVEL
+
creation, a new activity is added to the business model
–
termination, from now on the activity is not conducted in this business model any more
=+
extension, a subactivity is added to the existing parent activity
=–
revision by termination, a subactivity is terminated from the existing parent activity
=+–
revision by termination and creation, a subactivity is terminated and at the same time another subactivity is added to the existing parent activity
==
replication, an existing activity is copied to a different place
=
no change, the activity is executed in this reporting period just as before
SLIDE 11

12. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
EXAMPLECONT’D
SLIDE 12
DATE
QUOTATION
VALUE CHAIN
ELEMENT
TYPE OF CHANGE
ACTIVITY
SUBACTIVITY
GOV
CON
STR
=
==
+
–
=+
=–
=+–
2008Q1
“In 2008, the majority of Trifork’semployees participated in the [new] employee stock ownership plan, where each employee could invest up to 22,000 DKK of his/her gross salary in the period between February 2008 and February 2009.” (Annual Report ‘08)
HRM
Employee retention
X
X
X
X
2008 Q1/Q2
“The first six months as a listed company for Triforkhave been characterized by great activity and strong growth in revenue. The growth in revenue is partly due to general growth in most areas, and the extra revenue is from InterpriseConsulting and Delta Software, which were acquired in the fall of 2007. The company has mobilized resources to integrate and renew its internal systems in the finance and project management area.” (Half-Year Report ‘08)
IM
Administration
X
X
X
TD
Technology development
X
X
X
2009
“The overall market situation in 2009 was affected by the financial crisis and the impact it had on the Danish economy. In 2009, Triforkregularly aligned activities, and therefore, in spite of the economic crisis continued to show a positive development.” (Annual Report ‘09)
ALL
ALL
X
X

13. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
2008-Q1
2008-Q2
2008-Q3
2008-Q4
2009-Q1
2009-Q2
2009-Q3
2009-Q4
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
BUSINESS MODEL
Infrastructure Management
Administration
General management
HR Management
Employee recruiting
Employee retention
Employee development
Technology Development
Development of technologies
Procurement
Procurement of inputs
Inbound Logistics
Processing of inputs for conferen
Processing of inputs for consulting
Processing of inputs for education
Processing of inputs for software
Operations
Conference production
Consulting project execution
Education course production
Software development
Outbound Logistics
Conference delivery
Consulting project delivery
Education course delivery
Software implementation
Marketing & Sales
Customer acquisition
Customer retention
Selling product to customers
Service
Conference post-delivery support
Consulting post-delivery support
Education post-delivery support
Software post-implement support
Changes in the business model of a Danish high-growth firm, 2008-2009
TECHNIQUE (6/7):
DISPLAY CONSISTENTLY ACROSS PERIODS

14. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
2008-Q1
2008-Q2
2008-Q3
2008-Q4
2009-Q1
2009-Q2
2009-Q3
2009-Q4
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
GOV
CON
STR
BUSINESS MODEL
Infrastructure Management
Administration
=+-
=
=+-
=+-
=
=+-
=
=
=
=
=
=
=
=
=+-
=
=
=+-
=
=
=+-
=
=
=+-
General management
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=+-
=
=
=+-
=
=
=+-
=
=
=+-
HR Management
Employee recruiting
Employee retention
+
+
+
=
=
=
=
=
=
=
=
=
=
=+
=+-
=
=
=+-
=
=
=+-
=
=
=+-
Employee development
=
=
=
=
=
=
=
=
=
=
=
=
=
=+
=+-
=
=
=+-
=
=
=+-
=
=
=+-
Technology Development
Development of technologies
=+-
=
=+-
=+-
=
=+-
=
=
=
=
=
=
=
=+
=+-
=
=
=+-
=
=
=+-
=
=
=+-
Procurement
Procurement of inputs
Inbound Logistics
Processing of inputs for conferen
Processing of inputs for consulting
Processing of inputs for education
Processing of inputs for software
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=+-
=
=
=+-
=
=
=+-
=
=
=+-
Operations
Conference production
=
=
=
=
=
=
=
=
=
=
=
=
=
=+
=+-
=
=
=+-
=
=
=+-
=
=
=+-
Consulting project execution
=
=
=
=
=
=
=
=
=
=+
=+
=+
=
=
=+-
=
=
=+-
=
==
=+-
=
=
=+-
Education course production
=
=
=
=
=
=
=
=
=
=
=
=
=
=+
=+-
=
=
=+-
=
=
=+-
=
==
=+-
Software development
=+
=+
=+
=
=
=
=
=
=
=+
=+
=+
=
=+
=+-
=
=
=+-
=
=
=+-
=
==
=+-
Outbound Logistics
Conference delivery
=
=
=
=
=
=
=
=
=
=
=
=
=
==
=+-
=
=
=+-
=
=
=+-
=
==
=+-
Consulting project delivery
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=+-
=
=
=+-
=
=
=+-
=
=
=+-
Education course delivery
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=+-
=
=
=+-
=
=
=+-
=
=
=+-
Software implementation
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=+-
=
=+
=+-
=
=
=+-
=
=
=+-
Marketing & Sales
Customer acquisition
=+
=+
=+
=
=+
=
=
=
=
=+
=+
=+
=
=
=+-
=
=
=+-
=
=
=+-
=
=
=+-
Customer retention
Selling product to customers
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=+-
=
=
=+-
=
=
=+-
=
=
=+-
Service
Conference post-delivery support
Consulting post-delivery support
Education post-delivery support
Software post-implement support
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=+-
=
=
=+-
=
=
=+-
=
=
=+-
Changes in the business model of a Danish high-growth firm, 2008-2009
TECHNIQUE (7/7):
IDENTIFY PATTERNS BY ZOOMING OUT/IN

15. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
CONTRIBUTION
›Our contribution to the development of the business models literature is threefold:
›First, based on a systematic literature review we analyze existing methods for studying and measuring business model changes.
›Second, we propose a new technique for systematic qualitative processing of information on business model changes for pattern detection.
›Third, we advocate for the use of secondary data such as firms’ reports as a sufficient data source for use with this technique.
SLIDE 15

16. BUSINESS MODEL TRACKING TECHNIQUE
SERGEJS GROSKOVS
PHD CANDIDATE
23 September 2014
IMPLICATIONS
›RESEARCH
›The data processed in this manner can be used in research e.g.:
›to study patterns of business model change longitudinally and retrospectively by using existing reports of firms;
›to link patterns of change to performance of firms (further development required).
›PRACTICE
›…and in practice e.g.:
›to understand strategic development trajectories of competitors, partners, suppliers, customers;
›to support investment decisions in M&A deals by understanding the strategic fit between the acquiring and the target firm, or in stock trading.
SLIDE 16

17. 23 September 2014
THANK YOU & KEEP IN TOUCH
Sergejs Groskovs
PhDcandidate
Aarhus University
sg@badm.au.dk
http://www.linkedin.com/in/sergejsgroskovs
http://www.twitter.com/sgroskovs