18 Nos 3/4, pp. In this context, the goal of this research was to explore if and how digitalization influences a company’s BM and leads to BMI. This could be achieved by automation of tasks, reduction of staff cost, a higher accessibility of company data or the mobile creation and distribution of media content. (2017) and Berman and Bell (2011), who said that the customer is the main driver behind digitalization. Digitalization is when you use digital technologies to change a business model and provide new revenue and value-producing opportunities. Second, seizing, on the entire BM level, is understood in terms of focusing on innovation activities by (re)combining elements such as technology, the market and BM knowledge. Team 99X Technology. In addition, the main text passages were translated from German into English as part of this process step and transferred to the Excel software tool. Berglund, H. and Sandström, C. (2013), “Business model innovation from an open systems perspective: structural challenges and managerial solutions”, International Journal of Product Development, Vol. In the meantime, customers can receive pervasive access to information via the internet and have multiple channels to choose from (Linz et al., 2017; Berman and Bell, 2011). All of the textual information served as a basis for the data analysis in the context of content analysis (Mayring, 2010). The pace of digital development is steadily increasing, and technology lifecycles in the media industry are continuously shortening. Dottore, A.G. (2009), “Business model adaption as a dynamic capability: a theoretical lens for observing practitioner behaviour”, Proceeding of the 22nd Bled eConference, eEnablement: Facilitating an Open, Effective and Representative eSociety, Bled, June 14-17, pp. Downloadable! While the shift from printed products to a service-based value proposition has already taken place in the media industry (Mezger, 2014), manufacturing industries, such as the automotive sector, are facing different challenges in the context of digitalization. 0 (2016) and Berman (2012) described these three steps as, first, the digitization of products and services; second, digital processes and decision making with the aid of Industry 4.0, Big Data or artificial intelligence; and, third, the transformation of the value proposition and operating model as such. (2018), “Business models and dynamic capabilities”, Long Range Planning, Vol. Digitalization has been interpreted by businesses as a means to fulfill customers’ needs more effectively (A4), adapt to changes in the sector (A4) and increase their competitive advantage (A6). Mueller, C. (2014), “Business model change concepts – a literature review”, The XXV ISPIM Conference – Innovation for Sustainable Economy and Society, Dublin, June 8-11. The Economist Intelligence Unit (2005), “Business 2010 ‒ embracing the challenge of change”, study conducted by The Economist Intelligence Unit, New York, NY, London and Hong Kong. Saebi (2014) stated that companies need to develop dynamic capabilities to be prepared for changes in their BMs. While Mezger (2014) concluded from his findings that managers could facilitate BMI by focusing on the BM level rather than “addressing new technological possibilities and changing customer needs by well-known product and process innovation routines” (Mezger 2014, p. 445), our data did not allow us to clearly differentiate between the different organizational layers and respective innovations. In this respect, more insights could be gained in the future by conducting a study with more respondents or diversifying the sample, taking more organizations into account. Furthermore, since digital processes and interfaces are partly used in critical areas (e.g. Aspects regarding investigated companies’ BMs are structured according to the proposed framework in Figure 1. In general, further analyses are certainly needed to determine the importance and influence of digitalization concerning company strategies and BMs. Their use of technology in innovative BMs questioned the way established media companies produce and deliver value as well as their respective capabilities (M2, M3, M4). With the help of BM concepts, a company is able to describe its business in terms of “what it does,” “what it offers” and “how the offer is made” (Ritter and Lettl, 2018). Digitalisation and business models 1 2. Eisenhardt, K.M. These perspectives on digitalization and BMI taken together – in the context of dynamic capabilities – framed the conceptual setting for this empirical study (see Figure 1). 7, pp. 0000020053 00000 n The increase in competition has led many manufacturers to search for customized solutions through servitization. These findings are also supported by Bourreau et al. 1 INTRODUCTION. 0000010582 00000 n The recent developments that took place in the 2010s, such as the mobile revolution, social media or the power of analytics, specifically led to the digital transformation of BM. 1382-1406. Digitalization affects all aspects of traditional business, so adapting to these changes is a matter of survival. One interview respondent (A3) mentioned that employees need the skills to deal with digital technologies and leverage digital opportunities. Teece, D.J., Pisano, G. and Shuen, A. (Institute of Systems Sciences, Innovation and Sustainability Research. 3, pp. Matzler et al. models - the influence of digitalization and its societal impact. Osterwalder, A. and Pigneur, Y. In general, beginning to use digital technologies (e.g. 1-24. Digital technologies enabled firms to offer customers the possibility to choose both the content itself and the way the content could be consumed (e.g. Interview respondents frequently pointed out challenges in the area of employee recruitment and qualification. (2015), “Business model innovation and business concept innovation as the context of incremental innovation and radical innovation”, Tourism Management, Vol. Second, making a comparison between a (mainly) manufacturing and a service-oriented industry allowed the varying importance of digital technologies in the context of BMs to be contrasted. Kagermann, H., Riemensperger, F., Hoke, D., Schuh, G., Scheer, A.-W., Spath, D., Leukert, B., Wahlster, W., Rohleder, B. and Schweer, D. (2015), “Smart service welt – recommendations for the strategic initiative web-based services for businesses”, final report, long version, Smart Service Welt Working Group, Berlin, March. Bourreau, M., Gensollen, M. and Moreau, F. (2012), “The impact of a radical innovation on business models: incremental adjustments or big bang?”, Industry and Innovation, Vol. Interview respondents M3 and M4 perceived options provided by digitalization as an addition to the companies’ existing BMs and did not see the need to change established BMs. Digitalisation and its influence on business model innovation. • Peter Tyreholt, Senior Advisor at Cybercom • Focused on innovation and business & product strategy within digital transformation • History from startups, entrepreneurship, strategy, product innovation, business development Who am I? Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial & non-commercial purposes), subject to full attribution to the original publication and authors. One interview was conducted per company except in the cases of company E and J. The existing business model is digitally mapped and/or new digital products are developed. 0000000016 00000 n 96-114. Alongside business innovation, digitalization – the development of digital innovations – is one of the most important business trends for the future of the economy. Matzler, K., Bailom, F., Friedrich von den Eichen, S. and Kohler, T. (2013), “Business model innovation: coffee triumphs for Nespresso”, Journal of Business Strategy, Vol. The situation in the field of digitalization and business model innovation (BMI) is interesting because the influence of digitalization on the business model (BM) is fuzzy, and the exploitation of technological opportunities – also from a strategic viewpoint – is challenging (Mezger, 2014; Loebbecke and Picot, 2015; Paulus-Rohmer et al., 2016; Bouwman et al., 2017). 124-152. Amit, R. and Zott, C. (2012), “Creating value through business model innovation”, MIT Sloan Management Review, Vol. (2011), “Digital transformation: a road-map for billion-dollar organizations”, MIT Center for Digital Business and Capgemini Consulting, Cambridge, MA and Paris. Journal of Manufacturing Technology Management. When the Game Gets Tough, Change the Game, The Boston Consulting Group, December. The findings of the study show that, whilst digitalization is generally considered to be important, the value proposition itself as also the position in the value network determine the perceived available options for business model innovation (BMI) by digitalization. Digitalization and, later, digital transformation are drivers for changes in the corporate world, because they establish new technologies based on the internet with implications for society as a whole (Unruh and Kiron, 2017). Companies increasingly added services to the physical products (e.g. (2013), “Recommendations for implementing the strategic initiative INDUSTRIE 4.0: final report of the Industrie 4.0 Working Group”, Communication Promoters Group of the Industry-Science Research, Frankfurt, April. Furthermore, it is not only impacting companies, which businesses are based on technologies, it affects or will affect any firm, any sector, any type of job, any function in companies. Digital transformation is not just about embracing new technology, it is about a change in thought and organization culture. Digitalization is a top priority but efforts are stalling Eighty-seven percent of senior business leaders say digitalization is a company priority, yet only 40% of organizations have brought digital initiatives to scale. (2014), “Business model innovation − state of the art and future challenges for the field”, R&D Management, Vol. Michael Rachinger, Romana Rauter, Christiana Müller, Wolfgang Vorraber, Eva Schirgi, Digitalization and its influence on business model innovation, Journal of Manufacturing Technology Management, 10.1108/JMTM-01-2018-0020, (2018). The extent, however, to which digitalization impacts corporate activities and leads to BMI differs from industry to industry and takes time since “business models are more context-dependent than technology,” depending on resources and capabilities that are available within the respective company (Teece, 2018, p. 45). (1997), “Dynamic capabilities and strategic management”, Strategic Management Journal, Vol. (2015) interpreted the digital transformation as the continuous interconnection of all business sectors and the actor-side adaptation to the requirements of the digital economy, whilst Unruh and Kiron (2017) defined it as the systems-level restructuring of economies, institutions and society that occurs through digital diffusion. Anything-as-a-service models emerged were platforms with business networks and ecosystems are promoted. through publishing content on multiple platforms) and were subsequently able to address multiple customer groups. External drivers such as available technologies or the shortening of technology lifecycles were cited as relevant for the media and automotive industries. 484-505. As stated by interview respondent M5, the use of external platforms was also considered to be critical, since companies are usually not able to generate income from content placed on these platforms. They either pointed out the importance of developing the competences of existing employees or acquiring new employees with the required knowledge. �DS�Di�!� �>����eI]t�Yi�߹�z�f"����6n���ꈋbZ|�|ܛ��0JŞ��:ӹ��s��ŧ�]��뉓ʕ�7�k��i���}�t��n���3(jhC�xR�lz�m���xa����Z����\� p����.��OS�� ��i�g�S�Kph}�+ߞZ��l_o2a���%��Q}��/y* S �å’���j�{�p@�����������?M���TІ.%�`�L�M��5��d������]�Q`� &5�PU����/7��-�z��q�r����JK��]��u�g�p��)�i>O�}���@jK K%���ю2Kؓ}�ρ ��K���P�8��m%��8:�.�2�WS�)�>7/��` �ǧ The diffusion of digital technologies can manifest as digitization (the straightforward replacement of discrete processes or tools with digital analogues) or digitalization (the use of digital … Respondents from both industries mentioned external and internal drivers for digitalization. 2, pp. This also included their production facilities (A4). All representatives of the investigated media companies recognized the importance of collaborating with internal and external partners. The research study was explorative by nature and used an embedded multiple-case study design (Yin, 2009), whereby each of the two industries chosen constituted one case. However, creating such digitalized products and services often creates new problems and challenges … sales platforms) are not seized in his company due to the lack of demand from the customer. The higher the score, the greater the threat the company faces — and the more urgent it is that the company experiment with new business … Unruh, G. and Kiron, D. (2017), “Digital transformation on purpose”, MIT Sloan Management Review, November 6, available at https://sloanreview.mit.edu/article/digital-transformation-on-purpose/ (accessed April 24, 2018). Digitalization is not just a way to use data to improve performance. Interview respondent M6 stated that the advantage provided by digitalization was the availability of data (e.g. 0000001514 00000 n Three interview respondents stated that they had been using digitalization in their value proposition for several years (A1, A4, A6). Article. mutual development-support in the area of telecommunication), relationships with other partners were terminated due to their lack of digital competences (M5). This implies that technologies and BMI are complementary (Chesbrough, 2010). for online payments), the unfettered functionality of respective technologies needed to be ensured (M1). Business model innovation, with new processes at its core, plays a more and more important role – especially if you look at digitalization as a major enabler. (2017), who concluded that “internal drivers related to innovative activities and strategy, as well as technology turbulence, play an important role when social media and Big Data are part of business model innovation” (Bouwman et al., 2017, p. NOS). The research was conducted at the firm level; the interviewees, representatives of their respective organizations, formed one unit of analysis (Yin, 2009). A contingency framework of business model dynamics; environmental change and dynamic capability”, in Foss, N.J. and Saebi, T. (Eds), Business Model Innovation: The Organizational Dimension, Oxford University Press, Department of Strategy and Management, Oxford and Bergen, pp. Moreover, the organizational capacities and employee competences were identified as future challenges that will be faced by both industries. Paulus-Rohmer, D., Schatton, H. and Bauernhansl, T. (2016), “Ecosystems, strategy and business models in the age of digitization – how the manufacturing industry is going to change its logic”, Procedia CRIP, Vol. dynamic pricing or pay-by-usage) but, due to customer resistance, few changes are currently taking place (Arnold et al., 2016; Kiel et al., 2017). Kumar, N., Stern, L.W. Predominantly changes in the form of new offers (products, services, or solution packages in the form of cloud computing or predictive maintenance) are driving changes in the BM. Seizing capabilities are reflected in transformative and exploitative learning processes by re-combining knowledge about customers, markets and technologies used to develop the new BM. Likewise, Fichman et al. Netflix). Three interview respondents (A3, A4, A6) stated that digitalization had already taken effect in their companies at various times in recent years. Downloadable! Concerning the value configuration, the solution packages offered require the modularization of hardware and software. Digital Business Ecosystem as a free, open source and distributed software platform, based on internet technologies, has enabled entrepreneurs specifically the Small and medium entrepreneurs to create, … 0000003560 00000 n Five (A1, A2, A4, A5, A6) out of six interview respondents saw an influence of digitalization on the customer contact. Follow. All the automotive industry interview respondents seized digitalization to improve business processes (A1, A2, A3, A4, A5, A6). 200-227. The exemplary statements provided serve as a depiction of the insights gained from an analysis of the empirical data. and Anderson, J. Furthermore, the automotive industry is mainly engaged in Industry 4.0 projects, placing a focus on the optimization of value creation (Bauernhansl et al., 2015; Kiel et al., 2017). However, while digitalization led to an intensified collaboration with some partners (e.g. As a result of this new embedded usage of digital technologies, companies can achieve success in terms of experiencing optimized resource utilization, reduced costs, increased employee productivity and work efficiency, optimized supply chains, increased customer loyalty and satisfaction, to name but a few (Coupette, 2015; Kagermann et al., 2015; Kaufmann, 2015; Loebbecke and Picot, 2015). IntroductionDue to today’s increasingly competitive global market environment, business model scalability and internationalization have become a necessity for small and medium sized enterprises (SMEs) (Durmaz & Ilhan, 2015). the process of converting analogue data into digital data sets) is the framework for digitalization, which is defined as the exploitation of digital opportunities. It is the learning-driven approach of sensing, seizing and reconfiguring in particular, which provides the business with opportunity to adapt and meet changing requirements in alignment with the business strategy (Mezger, 2014; Teece, 2018): first, technology and BM sensing implies both the ability to translate technological capabilities to new BM ideas and recognize alternative BMs that are in place among competitors and across industry boundaries. Brennen, J.S. Decisions about new resources must be made, and the replacement of existing ones is important. (2016) as well as Kiel et al. Digitalization is not just a way to use data to improve performance. This study contributes to the existing body of knowledge by providing empirical insights in the context of digitalization and BMI. Meanwhile, additional, new interviews were also conducted; however, no major changes in the coding system were made. By offering their practical examples and insights, these representatives outlined the influence of digitalization on BMs. 24 No. The data analysis procedure involved a summarizing technique and structuring qualitative content analysis (Mayring, 2010). 44 No. Our industry is changing faster than at any time in our lifetime, driven in part by innovative … The BM as such is understood as the “architecture of the value creation, delivery, and capture mechanisms [a firm] employs” (Teece, 2018, p. 41). Digital transformation is then defined as the process that is used to restructure economies, institutions and society on a system level (Brennen and Kreiss, 2016; Unruh and Kiron, 2017). For example, interview respondent M4 stated that digitalization influenced the customer channels of the company but left the residual BM unchanged. 1-8. The main limitation of this research was the restricted number of informants included in each case study. Another further reason is the early influence of digitalization on the media industry and the necessity to deal with that fact. Berman, S.J. Results indicate that the value creation aspect is strongly influenced by digitalization in both the automotive and the media industry. Businesses are now creating systems that will promote their digital growth, which is one of the most important factors. Digitalization and business model innovation 1. This has also been confirmed frequently: Big Data (new data sources) (Hartmann et al., 2016), automation (changed machine functions), interconnections along the value chain (breakup up of non-transparency) and digital customer interfaces create the foundations for new BMs and potentially restructure the individual sectors (Berman and Bell, 2011; Matzler et al., 2016). The world is now online, and it is necessary for the businesses … (2016), “Business model innovation for industrie 4.0: why the ‘industrial internet’ mandates a new perspective on innovation”, Die Unternehmung, Vol. As stated by interview respondent M1, opportunities offered by digitalization, such as social media platforms and personalization, were used to generate additional revenue (e.g. In their studies, they identified that the value proposition was mainly influenced by changes in the offers. 0000015855 00000 n Companies need to develop digital strategies and focus on what are the key success factors of digital transformation. Sensing and seizing capabilities are characterized by their high degree of interaction. 0000007851 00000 n However, digitalization was described as influencing the execution of these established BMs, acting more as an enabler than a driver (M4, M6). and Craig, R.T. (Eds), The International Encyclopedia of Communication Theory and Philosophy, Wiley-Blackwell, Chichester, pp. P��M#&r�s8\]����Ū�=��-�R��h��oֆ�mw����Ƌ�C���`z�X]o���[�-�?������4�Ӝ�T���1K���[�d��o�q�3�/�I. 43 Nos 2-3, pp. 673-695. This article investigates the influence of information and communication technology (ICT) on business transformation. Spieth, P., Schneckenberg, D. and Ricart, J.E. Ernst & Young (2011), The Digitisation of Everything. Foss, N.J. and Saebi, T. (2018), “Business models and business model innovation: between wicked and paradigmatic problems”, Long Range Planning, Vol. According to interview respondents, triggers for the use of digital technologies came from both external and internal sources (e.g. Once the selection had been completed, the potential interviewees were contacted. 43 No. The Impact of value-driven BPM-Discipline on innovation. If manufacturers do not possess these resources, they need to develop a partner network to source them externally. in the form of digital archives). 0000032595 00000 n At the same time digitalisation is an intensive subject for entrepreneurs, social partners and politicians. 58 No. Interview respondent M5 indicated that customers are increasingly demanding flexibility in terms of the delivery of content. According to interview respondent M6, identifying and satisfying customer needs (e.g. 2, pp. You can join in the discussion by joining the community or logging in here.You can also find out more about Emerald Engage. The authors thank four anonymous reviewers for their insightful and constructive feedback, G. Breslmair for her contribution to the study and all interviewees for their time. Fleisch, E., Weinberger, M. and Wortmann, F. (2014), “Business models and the internet of things”, Bosch IoT Lab White Paper, University of St. Gallen, Bosch Software Innovations GmbH, Zürich, St. Gallen, August. McKinsey Global Survey (2014), “The digital tipping point: McKinsey Global Survey results”, McKinsey Global Survey, NJ, available at: www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-digital-tipping-point-mckinsey-global-survey-results (accessed January 6, 2018). And cheaper than your competition and solution packages offered require the modularization hardware... Included their production facilities ( A4 ) complementary ( Chesbrough, 2010.. To their environment and internal sources ( e.g study contributes to the physical products (.! Validity to ensure the high quality of the add-on business can be identified in step (... Field that lacks an empirical foundation ( 2017 ) and improved customer orientation order to offer new services or packages... 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