The Concept of Business Model Scalability

Abstract

Purpose: The purpose of the article is to de ne what scalable business models are. Central to the contemporary understanding of business models is the value proposition towards the customer and the hypotheses generated about delivering value to the customer which become a good foundation for a long-term pro table business. However, the main message of this article is that while providing a good value proposition may help the rm ‘get by’, the really successful businesses of today are those able to reach the sweet-spot of business model scalability.

Design/Methodology/Approach: The article is based on a ve-year longitudinal action research project of over 90 companies that participated in the International Center for Innovation project aimed at building 10 global network-based business models.

Findings: This article introduces and discusses the term scalability from a company-level perspective. It il- lustrates how managers should be using this term for the bene t of their business by focusing on business models capable of achieving exponentially increasing returns to scale, thus ful lling the objective of making it applicable for business decisions and not merely an abstract economical concept. The article nds ve pat- terns of business model scalability that all companies, regardless of industrial a liation, can use to their advantage. Especially the role of stakeholders in the business model is highlighted in achieving scalability.

Research limitations/implications: Limitations relating to qualitative research con ne the generalisation of the ndings. The implication of this research is that achieving scalability is not solely a matter of digitalizing business models. Rather, there are a number of speci c business model con gurations that support scalability and the mechanisms to do this are not merely characterized as digital.

Practical implications: This article provides managers with a concrete roadmap for how to work towards busi- ness model scalability including suggested managerial processes and how to facilitate these.

Originality/Value: The power of business models lies in their ability to visualize and clarify how rms’ may con gure their value creation processes. Among the key aspects of business model thinking are a focus on what the customer values, how this value is best delivered to the customer and how strategic partners are leveraged in this value creation, delivery and realization exercise. This paper couples these advantages with a structure for identifying scalability, and hence stronger business models.

Author Biography

Christian Nielsen, Business Model Design Center, Aalborg University

Christian Nielsen, Ph.d., is Professor at Aalborg University in Denmark. He is Director of Business Model Design Center (BMDC, www.bmdc.aau.dk), the worlds first interdisciplinary research center focusing on business models. Christian has previously worked as an equity strategist and macro economist focusing specifically on integrating Intellectual Capital and ESG factors into business model valuations. His Ph.d. dissertation from 2005 won the Emerald/EFMD Annual Outstanding Doctoral Research Award, and in 2011 he received the Emerald Literati Network Outstanding Reviewer Award. Christian Nielsen has a substantial number of international publications to his record and his research interests concern analyzing, evaluating and measuring the performance of business models.

For further information on Christian's professional and academic profile see: 

@Linkedin: dk.linkedin.com/in/christianhnielsen/

#BMBUZZ: http://bit.ly/bmb2014v

ORCID ID: http://orcid.org/0000-0001-5050-5793

 

Published
16-04-2018