Paper in Brief (XIX): Geissdoerfer et al. (2017): The Cambridge Business Model Innovation Process

[Note: This is the 19th post in our “Papers in Brief” series. This series offers a special service as it explains the core ideas of chosen research papers in a nutshell.]

Papers in Brief (XIX) by Martin Geissdoerfer

Geissdoerfer, M.; Savaget, P. & Evans, S. (2017): The Cambridge Business Model Innovation Process, Procedia Manufacturing, Vol. 8, pp. 262–269,  http://dx.doi.org/10.1016/j.promfg.2017.02.033

Background

To realise their sustainability ambitions companies do not only require new technologies but innovations on the business model level (Rashid et al., 2013). To facilitate the design of more sustainable business models, a range of new tools and techniques have been developed (see e.g. Bocken et al., 2013; Breuer et al., 2018; Hamburg Workshops 1-3). While this resulted in the design of a wide range of promising business models, only very few are successfully implemented. There is a considerable design-implementation gap (we explore this further in Geissdoerfer et al., under review).

This paper describes first steps in the development of the “Cambridge Business Model Innovation Process.” This is a framework developed to guide organisations’ business model innovation efforts and map the necessary activities and potential challenges. We introduce the framework and present an exploratory attempt of applying it to a social start-up. The preliminary result of this experience led us to build a comprehensive research agenda that aims at developing tools and processes to help organisations in bridging the design-implementation gap in sustainable business model innovation.

The framework

Picture4

Figure 1: The Cambridge Business Model Innovation Process

The Cambridge Business Model Innovation Process (CBMIP) is a comprehensive guiding framework that is both (1) a map that shows what activities and challenges are generally expected when engaging in sustainable business model innovation; and (2) a tool to ideate and plan the different phases and identify challenges customised for the specific needs and context of the company. The version presented in the paper comprises eight steps:

  1. Ideation: The purpose of the business model innovation and its key stakeholders are defined, and the value proposition and first conceptual ideas are ideated.
  2. Concept design: A first rough conceptualisation of the key business model elements is developed and documented.
  3. Virtual prototyping: A range of prototypes is generated and revised to refine and communicate the business model concept. The phase also comprises benchmarking with solutions and concepts from other parties.
  4. Experimenting: Key assumptions and variables of the concept are tested in simulations and field experiments, ideally through randomised controlled trials.
  5. Detail design: An in-depth analysis and detailing of all the elements of the business model and interactions between these elements is conducted.
  6. Piloting: The entire concept is tested by running a first limited version of the business model in a subsection of the target market.
  7. Launch: The business model is rolled out across all responsible organisational units and the target market.
  8. Adjustment and diversification: The business model is revised according to initial plans, expectations, and strategic fit. Based on this evaluation, adjustments and diversifications are made and, depending on the comprehensiveness of the necessary changes, the entire business model innovation process may be repeated.

The case study

cambridge_SBMI_model3

Figure 2: The Favalley case study

To test the CBMIP framework and identify opportunities for improvement, the framework was used with the Cambridge-based start-up, Favalley. Favalley is a social start-up that aims at offering (1) free tutored online coding courses for marginalised youths in slums, and (2) matching of the youth with employers. The company charges a recruitment commission to improve and expand the programme.

We conducted series of workshops from the very beginning of the start-up through the first three phases of the Cambridge Business Model Innovation Process: (1) ideation, (2) concept design, and (3) virtual prototyping. To do so, we followed a modified procedure of the Value Ideation approach (see Papers in Brief VIII). The process has proven to be very valuable for the founders, providing a more systemic approach for the generation of its SBM. It provided all the necessary input for the company’s business plan and predicted all the major challenges that the business ran into.

Iterative and circular

Round

Figure 3: The CBMIP is circular and iterative

The process turned out to be far from linear in the case study. Multiple iterations and feedback loops to previous stages happened during and after the workshop. In most companies, a business model innovation process is not a singular event but will be followed by another one to address the shifting challenges and opportunities in its environment, resources, and capabilities

What we do now

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Figure 4: Research agenda

The Cambridge Business Model Innovation Process (CBMIP) is the synthesis of a robust basis of literature, which in turn is based on a comprehensive basis of real-life industry evidence. Nevertheless, we think it is essential to empirically test the resulting framework with a range of different organisations, so we have developed three research cycles to do so.

The first deliverable is the CBMIP, a first version of which was presented. After further refinements and tests, this framework will guide companies through their business model innovation process and map their activities and potential failure modes. The second deliverable will be a tool development framework for the development of a management toolbox that supports organisations in mitigating the failure modes that cause the design-implementation gap. The third research cycle will use this tool development framework to deliver customised management tools that address the challenges and activities of business model innovation for each of the eight CBMIP phases.

Besides its broader contributions to knowledge in the fields of business model innovation, corporate sustainability, and the emerging field of sustainable business models, this work will benefit managers and society at large. Managers will benefit from the provided guidance and the anticipation of challenges related to sustainable business model innovation. This leads to better business models, generating more customer benefit, shareholder value, and economic growth. Consequently, it would also create more social, economic, and environmental value for a broader set of stakeholders.

 Contact: Martin Geissdoerfer. Learn more.

References

Bocken, N. M. P., Short, S., Rana, P. and Evans, S. (2013) ‘A value mapping tool for sustainable business modelling’, Corporate Governance, 13(5), pp. 482–497. DOI

Breuer, H., Fichter, K., Lüdeke-Freund, F. and Tiemann, I. (2018) ‘Sustainability-Oriented Business Model Development: Principles, Criteria, and Tools’, International Journal of Entrepreneurial Venturing, forthcoming. ResearchGate

Geissdoerfer, M., Vladimirova, D. and Evans, S. (2017) ‘Sustainable Business Model Innovation: Review and Research Agenda’, Journal of Cleaner Production, (under review).

Rashid, A., Asif, F. M. A., Krajnik, P. and Nicolescu, C. M. (2013) ‘Resource Conservative Manufacturing: an essential change in business and technology paradigm for sustainable manufacturing’, Journal of Cleaner Production, 57, pp. 166–177. DOI

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