BUSINESS MODEL INNOVATION – A GAMBLE OR A MANAGEABLE PROCESS?

  • Yariv Taran Department of Business and Management
  • René Chester Goduscheit
  • Harry Boer

Abstract

Purpose: Any business model innovation process involves a certain level of uncertainty, complexity and, in effect, risk. A sloppy approach towards the management of risk may result in catastrophic, sometimes even fatal, consequences to a company’s core business. Although risk, risk appetite and risk management are relatively well-established concepts, their role in business model innovation is not well understood. The objective of this paper is to investigate how the risk associated with the innovativeness of a business model innovation, an organization’s risk appetite, and its risk management approach interact to affect the success or failure of a business model innovation process.

Design: Retrospective case studies of business model innovations undertaken by three industrial companies provide the empirical basis for this paper. These companies were selected based on their relatively successful, yet somewhat different, business model innovation experiences over the years, and focused on the, in total four, cases in which they failed to implement their new business model attempts successfully. The reasons that led to these failures are discussed.

Findings: Important factors explaining the business model innovation failure of these cases, appear to be the company’s risk appetite, the risk associated with the radicality, reach and complexity of the business model innovation, the management of risk, and especially the association between these factors.

Originality:  There are many lessons to be learnt from the aftermath of a failed attempt in terms of what not to do and what to improve a next time. The cross-case analysis produced six testable propositions that enhance our understanding of business model innovation success/failure, with particular focus on: characteristics of the business model innovation; overall innovation management; risk, risk appetite and risk management; and interactions and fit between these constructs.

Keywords: Business Model Innovation; Risk Management; Retrospective case studies.

Author Biography

Yariv Taran, Department of Business and Management

Yariv Taran, Ph.D, is an Assistant Professor at the Center for Industrial Production at Aalborg University in Denmark. He received his bachelor’s degree in Management and Sociology at the Open University of Israel, and M.Sc. in Economics and Business Administration at Aalborg University. His research focuses on Business Model Innovation and Innovation Management. Other areas of research interests include intellectual capital management, knowledge management, entrepreneurship and regional systems of innovation. He holds numerous international publications to his record.

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

http://personprofil.aau.dk/115453

Published
10-02-2020