This document discusses digital disruption of business models and value creation. It provides perspectives on business models from various theoretical approaches and how digital technologies have transformed value chains into value networks. Case studies are mentioned that examine how new forms of collaboration and networks in the digital economy create multiple and unpredictable outcomes. Frameworks are presented for understanding entrepreneurial processes that experiment, organize, and anticipate value during innovation to stabilize emerging business models and value propositions.

1. Digital Disruption of the Value Creation
Ecosystem-- How new business models
emerge
Lorraine Warren, University of Southampton
Ted Fuller, Faculty of Business and Law, Lincoln,
University
ISBE, 2013, November

2. Business model?
• Term draws on many theoretical and conceptual approaches (Zott
et al, 2011; Camison and Villar-Lopez, 2010; Casadesus-Masanell
and Ricart, 2010).
• Simple expressions of how a firm will make money (Stewart and
Zhao, 2000) through to far more powerful understandings that
attempt to capture the full range of stakeholder relationships
necessary to firm prosperity (Baden-Fuller and Morgan, 2010).
• In these wider systemic perspectives, the business model is, at
heart, an integrating construct that can explain value creation in
different contexts (Zott and Amit, 2010).
• Taking a broader system view brings actor independencies and
interactions to the foreground of our understanding of business
model development. Thus, value creation transcends business
frontiers (Amit and Zott, 2001; Dyer and Singh, 1998; Chesbrough,
2003).

3. Perspectives..
• value chain analysis, innovation theory, transaction cost theory, the
resource based view and strategic process approaches (Amit and
Zott, 2001).
• industrial organization, resource based view and strategic process
perspectives to explain how information and communication
technologies create value Timmers, 1998; Hedman and Kalling,
2002).
• Transaction cost theorists emphasise structural and behavioural
interactions (Zott and Amit, 2010; Amit and Zott, 2001; Tapscott,
2001; Tapscott et al, 2000).
• Chesbrough (2003, 2006) and Chesbrough and Rosenbloom, 2002)
highlight open business model capacities in relation to the potential
to create value across organizational boundaries

4. Digital Economy?
• Firstly, falling prices in a range of areas have lowered entry barriers to new
forms of technological innovation: widespread access to broadband
technologies; smartphones and tablets; social media; increasing
availability of government datasets to the public.
• Secondly, traditional incubation pathways have been supplemented by
free-form crowd-driven patterns of activity, often linked to social media,
such as crowd funding (de Buysere et al, 2012) or the intricate
multidisciplinary ‘barcamp’, or ‘unconference’ style events, (Kemp et al,
2012).
• Digital Economy (Normann, 2001) has liberated us from so many
constraints of time, place, actor and constellation.
• Yoo et al (2012) point out how the Digital Economy has transformed what
we think of as the horizontal and the vertical in terms of competitive
space and sector
• ‘Disposable’ business model? Ries (2012) Blank (2011) Osterwalder
&Peigneur (2010)

5. Case studies underway
• 3DBare
• http://benjaminmawson.com/3DBARE/

6. Region of interest
FFE

7. FFE
•
•
•
•
•
•
Many unanswered questions
Markham et al, (2010)
Boocock, Warren et al, (2009)
Barr et al, (2009)
Collaborative, network, project based innovation
address multiple contexts and levels presenting
an analytical challenge to management
researchers (Pettigrew et al, 2001)
• Multiple and indeterminate outcomes

8. Systems in a complex dynamic (unpredictable)
economy
From
Stability and
Variation
To
Flows, emergence and
temporary structures
(small worlds ->
disruptive innovation)
Situation analysis
Experiments and
models
Sustainability as
engineering
resilience
Sustainability as
evolutionary
agility

9. Value-creating ecologies
•
•
•
•
Consumers to co creators of value
Value chains to value networks
Product value to network value
Simple co-operation or competition to complex coopetition
• Individual firm strategy to strategy in relation to value
ecologies
•
•
Hearn, G. and C. Pace, Value-creating ecologies: understanding next generation business systems.
foresight, 2006. 8(1).
Hearn, G., Roodhouse, S. and Blakey, J. (2007), From value chain to value creating ecology,
International Journal of Cultural Policy, 13, 4, pp. 419-436.

10. Entrepreneurial processes in creating and
protecting value
• Experimenting
– New structural practices
• Reflexive Identity
– What do we take as value in our interactions with
others?
• Organising
– What should be our everyday practices?
• Sensitivity to Conditions
– Anticipation of threats…knowledge… reaction…
propensity to survive…

11. Social Structure
(Level E)
Written
texts (procedures, laws, regulations); material systems and infrastructures
(architecture, urban design, communication and transport networks)
Stable Emergents
Group sub-cultures,
(Level D)
group slang and catchphrases, conversational routines, shared
social practices, collective memory)
Ephemeral Emergents
Topic, context,
(Level C)
interactional frame, participation structure; relative role and status
Interaction
Discourse
(Level B)
patterns, symbolic interaction, collaboration, negotiation
Individual
Intention, agency,
(Level A)
personality, cognitive process
The Emergence Paradigm (Sawyer 2005, p211), showing the ‘circle of emergence’ (p220), i.e. that area which is subject
to social emergence

12. Emergence
• Entrepreneurial
relational processes
• Emergents with
causal properties
Anticipation of value
during innovation
Fuller, T. and Warren, L (2008) Sustaining entrepreneurial business; a complexity perspective on processes that produce
emergent practice, International Entrepreneurship and Management Journal, Vol 4/1, pp1-17
Fuller, T. and Warren, L., Thelwall, S., Alamdar, F. and D. Rae (2010), Rethinking Business Models As Value Creating
Systems, Leonardo Transactions , VOLUME 43, ISSUE 1, 2010
Warren, L. and Fuller, T. (2010), Capturing The Dynamics Of Co-Production And Collaboration In The Digital Economy,
Leonardo Transactions , VOLUME 43, ISSUE 2, 2010
Warren, L. and Fuller, T., (2009) Contrasting approaches to preparedness: A reflection on two case studies International
Journal of Enterprise Information Systems 5/3, 60-71

13. Emergents as value models:
•
•
not ‘real’ artefacts such as products and services
temporal visions of alternate futures consisting of interlinked, multilevel constructs that
resonate between:
– Past, present and future products and services
– Past, present and future technologies (perhaps supported by tangibles such as proof of
concept, prototype, IP)
– Past, present and future markets or organising domains (perhaps supported by market
research or constructions of future industry sectors)
– Past, present and future dominant logics (extant and potential business practices, relations
with stakeholders, consumer/societal behaviours)
– Past, present and future business models, relating the creation and capture of value: (e.g.
economic, technological, social, cultural, artistic, environmental)
– Past, present and future identities, expertises
•
Emergents embrace a discursive understanding of some, or all the above elements, an
entity to support the exchange of value in all its forms.

14. Stabilisation of value model
Processes of value
creation (EROS
processes)
Processes of value
capture:
Attraction of resource,
causality
Value
Model
Processes of stabilisation:
Tangibles (IP, contracts, proof of
concept, prototype, business plan,
incubator)
Intangibles (reputation, track record,
identity, expertise)
Products,
Services….