Particularly in B-to-B settings we can observe quite often that the optimism of companies launching innovative business models (e.g. performance contracting, total cost of ownership models, build-operate-transfer solutions) fades away quite soon. The related value propositions often sound reasonable from both the customer's and the supplier's viewpoint - but finally the adoption is so disappointing that suppliers finally drop their initiatives. In some prior research with focus on German-speaking countries we found out that the way of thinking and the entire business perspective of decision-makers matters. This can be explained in terms of 'dominant logics' residing in organizations (e.g. Freiling & Dressel 2014, International Small Business Journal). However, maybe you have other reasons in mind. Please tell.
By the way, if you want to present own research on this topic, maybe the attached call for papers is interesting for you.
Dera Jörg,
maybe the innovative business model does not suit the individual company. At the moment we are investigating the business model development of a Danish family-owned company in B2B and observed similar problems. Let me know if you need more information maybe via email.
Best regards,
Britta
You might be interested in this:
Kettunen, J., Penttilä, T. & Kairisto-Mertanen, L. (2013). Innovation pedagogy and desired learning outcomes in higher education, On the Horizon, 21(4), 333-342.
Dear Britta and Juha,
Thanks for your input. And, yes, Britta, I'll send you an e-mail.
Best, Jörg
Hello,
I am no expert on this, but i have a feeling that people get over-enthusiastic pretty quickly and many times forget to do the necessary work on their strategy and identification of the targer market. I think that even if you find your taget group you still need to encompass some of the subtle differences that may be among them that may make someone like what you have to offer a bit less than others and possibly drive them away.
Uncontrollable environmental jolt is also capable of sending any firm to early grave.
Good point, Justin. However, sometimes I saw business model innovators expecting these jolts, awaiting them impatiently - but they did not come (e.g. prevented by powerful lobbying etc.). Later on, those innovators found themselves among the losers.
well spoken Jorg, i think the application of complete enterpreneurial orientation is important. that is autonomy, competitive aggressiveness, proactiveness, risk taking and innovativeness-Lumpkin et al 2011. all are important for continuity and resilience
Well said Svein... There's always a problem when people start to give the concept of systems or technology a personality as though they have some sort of artificial intelligence associated with them... I remember having debates with technocrats in Australia about the development and implementation of OHS Management Systems, and having to remind them that there is no evidence that these systems actually stop workers from having accidents.... People stop people from having accidents.... The old analogy comes to mind that "guns don't kill people. People kill people"... Likewise, Systems don't fail businesses. People fail businesses....
The rate of strategy failure has been estimated by many researchers as being close to 70 to 90%. There are however other (less quoted) studies that point to rather smaller rates of failure (8 to 20%). The reasons why innovative/entrepreneurial initiatives fail, however, might have much in common with the reasons why other strategies fail. The list of obstacles to an effective implementation of a good strategy is extensive and there is a considerable body of literature on this topic in the strategic management field and in the change management field. If you think this literature might be useful in any way, may I point to you two papers: Cândido and Santos (2011) Is TQM more difficult to implement than other transformational strategies; and Cândido and Santos (forthcoming) Strategy implementation: What is the failure rate? Journal of Management and Organization.
Intriguing question! Rather than attempting to give direct answers, I would suggest you consider what type of research program is needed to develop these answers. In particular, I suggest to re-read Osterwalder's "design science" doctoral dissertation in which he developed the skeleton of what later became the BM Canvas. This dissertation, defended at Lausanne, is available online. The design science literature/approach offers a set of methods and tools to uncover the (non-)conditions under which a given business model is successful or fails. A good start is e.g. the article by Denyer, Tranfield & Van Aken in Organization Studies 2008). See also several of my articles in Organization Science, ET&P, BJM, and other journals.
Svein is absolutely right. The question assumes that you can fully identify and include every variable that influences such fails (and you know the relations and self-enforcing dynamics between these). I think you need to choose a particular theory and within the scope of this theory you can try to find answers. But to explain such failures from reality is nearly impossible. Maybe it wasn't the right time, the customers lie, the CEOs do not trust each other, or the simply the responsible person was ill when the important decisions were made. Possible reasons could be endless. Additionally, a business model is a system of components and/or activities (depending on your understanding). How to identify the single element that causes the fail?
What Georges says about design science literature/approach and the set of tools to uncover the (non-)conditions under which a given business model is successful or fails let me think about failing... What means failing? If I remember right, design sciences says a lot of testing and trail-and-error. Is the first error already a fail? Maybe your identfied fails are just a single point in a row of testing. If they lost too much resources, maybe these companies do not understand a business model implementation as a trail-and-error process...and that's the reason why they fail so hard.
But one starting point would be interesting: Does the business model play a role anyway? Or was it an organisation problem? Or a problem between both?
Sorry, more questions than answers...
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