As explained by interviewee 6, new business models can only be successful if all organizational departments are aligned:
„On the organizational side, what you really need to do always is that you cannot approach it one-sided from digital marketing e-commerce only, unless you have the total freedom to place on a website and you don't care about anything else. But you need to have the buy-in of a commercial organization that's actually going to sell it and also bring it forward in their activation. You need to have a business owner behind it that is willing to own the proposition.
You need to be super aligned with finance, supply chain and legal and those departments - that is absolutely critical.“
are oftentimes hindering people to transform or change the way in which they have worked previously. Here, it becomes essential for organizations to reduce the complexity of innovations to employees and introduce change management initiatives to decrease the risk of internal resistance. A second theme which was frequently highlighted by interviewees 6 and 9 was the importance of IT/IS infrastructure to scale business model innovations which require the creation of entirely new digital processes, tools, and systems. Inherently, new innovations require IT tools to evolve constantly and consequently require frequent investments in IT.
Respondents highlighted that even if the value proposition corresponds greatly with consumers, the new business model oftentimes fails due to the expensive infrastructure needed to scale the innovation. As highlighted by interviewee 9:
“You need to make sure that it's (BMI) scalable and this is very expensive to do for one or only for one or two organizations. (…) A lot of times we end up failing to take that solution and deliver it (…), because you need typically to tailor your systems to their specific needs. “
Direct to Business (D2B)
Respondents 5, 15 and 16 especially highlighted the themes customer connectivity and IT/IS infrastructure. This is not surprising as inherently D2B is concerned with making it easy for customers to do business with Philips via digital channels. Respondents highlighted that successful BMI is dependent on finding the right solution for the customer and the future of new business models should charge customers for the actual value they consumer obtains from a business model. Here, it becomes vital to understand consumer needs in order to measure the market potential of a BMI. This can be supported by creating direct channels for customer feedback, such as NPS which measures customer happiness based on a variety of factors. As Philips is moving towards electronic ordering, the role of IS & IT infrastructure becomes increasingly important to simplify the product portfolio for consumers. For D2B it is especially important to align the business with IT and integrate the two former silos. IT can play an
of the innovative business models that D2B is currently developing like the punch-out solution which allows customers to order in their internal procurement systems but retrieve further information from Philips’ e-store require the creation and management of smart software solutions for customers. As described by interviewee 5:
“You need an additional capability which is how do I deliver software to a customer. Now that sounds easy. (…) You do want to install it almost automatically at the customer site. So there you need to have capabilities on how to deliver software, how to manage software from a distance, how to manage the security of that because you don't want to mess with the security of a hospital. So those are all new capabilities that come with a being a software company instead of a hardware company.“
Digital Platforms (DP)
Interviewees 4, 8, 11, 14 and 17 from DMEC’s digital platforms (DP) department specifically highlighted the themes customer connectivity, strategic collaborative innovation and organizational structure, processes & routines. Inherently, customer connectivity is essential for DP as the department is among other things focused on managing the technical platforms used by Philips globally to support and enhance customer interactions. Respondents specifically highlighted the importance of the design of user interfaces, engagement, and customer expectations. Market intelligence teams are researching trends and competitors to grasp evolving consumer needs and how to leverage new business model innovations.
Furthermore, the complexity of Philips’ matrix organizational structure was mentioned frequently as a challenge to obtain an end-to-end perspective on BMI. A siloed way of working makes it hard to use and connect data points across different domains. Respondents wish for more encouragement of experimentation and risk-taking and a connection of tools, technologies, people, and processes. Lastly, DP is emphasizing the need for strategic collaborative innovation for successful BMI. At the moment, DP is collaborating with third
parties such as insurances to explore new subscription-based business models that creates a new value proposition for consumers which Philips alone would not be able to deliver.
Respondents also stressed the possibility to collaborate with firms that possess data which allows Philips to tailor their targeting for consumers.
Project Management Office (PMO)
Interviewees 2, 3 and 13 from PMO highlighted the themes organizational agility, strategic alignment, and leadership & organizational culture. Employees from PMO are responsible for DMEC’s agile transformation and aim to strengthen the organization’s agility. Furthermore, tools like the agile portfolio framework and portfolio review meetings help to define the collaborative processes between teams and hence simultaneously improve strategic alignment.
These meetings also contribute to the role clarification and the creation of interchangeable squads to strengthen organizational agility. Noticeably, respondents from PMO highlighted the importance of leadership & organizational culture. This is not surprising as the agile transformation is challenging structural inertia and requires leadership training and change management. Respondents stressed the importance of a committed leadership that challenges employees.
Direct to Consumer (D2C) Operational Capabilities:
o Organizational Structure, Processes & Routines o IS/IT Infrastructure
Direct to Business (D2B) Operational & Dynamic Capabilities:
o IS/IT Infrastructure o Customer Connectivity
Digital Platforms (DP) Strategic, Operational & Dynamic Capabilities:
o Customer Connectivity
o Strategic Collaborative Innovation
o Organizational Structure, Processes & Routines Project Management Office
(PMO)
Strategic & Dynamic Capabilities:
o Organizational Agility
o Leadership & Organizational Culture o Strategic Alignment
Figure 2. Capabilities per organizational tribe.