Despite the academic contributions surrounding the concept of business model (see Zott et al., 2011; Spiet et al., 2014; Markides, 2013; Chesbrough 2007), designing R&D business models remains a challenge. The complexity has... [ view full abstract ]
Despite the academic contributions surrounding the concept of business model (see Zott et al., 2011; Spiet et al., 2014; Markides, 2013; Chesbrough 2007), designing R&D business models remains a challenge. The complexity has been explained by various reasons such as heterogeneity of research streams from which the business model concept emerges like information systems, strategy, innovation management, and entrepreneurship leading to a multitude of business model definitions (Zott et al., 2011). Moreover, the multidimensional and boundary-spanning nature of the business model concept complicates the study of its dimensions (Spieth et al., 2014). The corollary is the lack of a reference framework to design R&D business models fitting with innovation strategies (Wei et al., 2014). What is largely missing from the current academic understanding is a more all-inclusive approach to designing R&D business models that draw from the literature on open and user innovation. It benefits our study in two ways: first, the R&D function apart from being deeply rooted in organizational theory must explore solution content that lies outside the traditional boundaries of the firm in an arranged format. Such engagements with the non-traditional partners are likely to take place in a form of an open call based on tournaments or contests that are either time bound or reward based. In both the cases, the problem is identified prior to designing the call for the community to provide solutions. Second, the R&D business model must account for ideas and solutions for problems are not identified by the traditional internal organizational setup rather by users that take on the role of lead users and solution providers.
Business model is used for both strategy formulation as well as strategy implementation when defined as a framework, a conceptual tool or as a logic (Zott and Amit, 2008; Chesbrough and Rosenbloom, 2002; Teece, 2010). The business model design is intrinsically related to the technological innovation strategy a firm develops (Baden-Fuller and Haefliger, 2013). The fit between the technological innovation strategy and the business model design is required for firm growth (Wei et al., 2014). Through time, new technological innovation strategies appeared completing / supplanting the traditional closed process-based R&D strategy: open innovation (Chesbrough, 2007); user innovation (Von Hippel and Katz, 2002; Von Krogh and Von Hippel, 2006), crowdsourcing (Boudreau and Lakhani, 2013). Thus, depending on the technological strategy that firm retains, the business that should be designed can take distinctive forms: there is not a one-size fits all technological strategies business model (Teece, 2010).
We argue that user and open innovation can provide valuable contributions for designing R&D business models as well for the conception of a R&D business model generic framework. Open business models require very specific capabilities and configurations for both value creation and value capture (Lichtenthaler, 2011; Aversa et al., 2015). Moreover, business models vary depending on strategic choices such as choosing to establish outside innovation through competitive markets or collaborative communities, which, for instance implies a difference in the value capture mechanism and leads to three platform business models: integrator, product or two-sided platform (Boudreau and Lakhani, 2009). When a firm, such as Merck challenges pharma R&D paradigms and adopts a user innovation strategy, it had to adapt its creation model (Boudreau and Lakhani, 2013). By configuring the business model for both value creation and value capture activities, firms might benefit from the scalability that broadens users’ reach and eventually value creation (Baden-Fuller and Haefliger, 2013).
Aiming at filling this gap, we build a R&D-centric business model framework. The framework will contain the main business model dimensions identified in the literature classified according to five variables (figure 1) as well as the forms they can take in light of user and open innovations’ nature. We use the tripod metaphor to argue that an alignment and a coordination is required between the organizational components, user and open innovation activities. Organizations innovating their R&D business models to embrace open and/or user innovations potentials need to have a clear understanding of the different R&D business models’ dimensions, their forms and their possible configurations leading to R&D business model archetypes.
Value creation
Value proposition
Value capture
Value Drivers
D1; D2; … Dn
D’’1; D’’2; … Dn
d1; d2; … dn
Configurators
D’1; D’2; … D’n
D’’’1; D’’’2; … D’’’n
d’1; d’2; … d’n
By 1st August, we expect to have developed a preliminary version of the R&D Business Model framework. We also expect to have identified some forms that take the R&D business model dimensions with regard to open innovation and user innovation. We aim at discussing these dimensions and their forms at the conference. Moreover, we would like to discuss some of the questions that we explore in this study such as:
1- How do organizations design their business models to fit with open innovation and user innovation?
2- What are the value drivers in each of the innovation strategies?
3- What types of business models can be designed for each innovation strategy?
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