Master Thesis
Business Model Meacasa:
Which meta-model is best for business model innovation? A case study
University of Amsterdam Faculty Economics and Business Master of Business Studies Student Name: Anske Idsinga Student Number: 6008798 Date: august 24, 2014 Supervisor: J. Kraaijenbrink
Preface
This thesis is the final proof of competence for obtaining The Master of Science degree in Business Administration of the Amsterdam Business School. The University of Amsterdam under the authority of Jeroen Kraaijenbrink has supervised this thesis. The research, within this thesis, has been executed with help of the Meacasa company. Meacasa is a start up company in the Netherlands. They develop and sell houses for affordable prices. The research focuses on what meta-model is best to use for business model innovation. Meacasa is used as a case study where the academic criteria of the research have been tested.
I would like to take this opportunity to express my gratitude to the management of Meacasa, they have made this research possible. Furthermore, I also want to thank my thesis supervisor, Jeroen
Kraaijenbrink, for his feedback and patience during the writing process of this thesis. I want to thank my wife and family for their emotional support. Special gratitude goes to the student support office of the Amsterdam Business School, thank you for supporting me during the years.
Amsterdam, August 2014, Anske Idsinga
Abstract
In academic literature, there are different meta-models to be found that can be used to describe Business Models. In this study there is an in-depth description of three of these meta-models: firstly, the Business Model Canvas, a model based on a practical point of view. Secondly, the model of Johnson, this model is based on a business approach. Finally, the model of Chesbrough, this model is based out on an academic approach. Unfortunately, literature is not clear on what meta-model is best to use in practice. This research investigates which meta-model is best to use in practice. The problem statement and the research questions are:
‘Which of the available meta-models is most suitable for business model innovation?’ 1. What is a business model?
2. Which meta-models are available in the current literature about business models? 3. What are the strengths and weaknesses of these meta-models?
The research is conducted as follows; firstly, a literature study is conducted to explore meta-models that are available in the business model literature. Secondly, a workshop is held with management of Meacasa (the company were the case study is conducted). In this workshop three meta-models are used and discussed based on preconditions given by Meacasa and academic criteria. Finally, the meta-models methods are assessed during an in-depth group discussion by use of the Delphi method.
Based on the results of this research the meta-model of Johnson seems the best fit for business model innovation. Based on academic literature and the results of this case study, this model beats Business Model Canvas by photo finish. Decisive in this is that the starting point of the model is customer value proposition. According to the case study the model of Johnson provides the best insight for innovating the current business model.
However, from the literature study it can be concluded that the Business Model Canvas is the most complete model when it comes to business model innovation. But also the model of Johnson is positively reviewed in the literature study. In the end the model of Johnson is selected as best model for business model innovation, because it is best applicable in practice. Moreover, the model focuses on new business and facilitates continuous redevelopment of the business model.
The model of Chesbrough is valuable for gaining insights in strategy and the value chain, but according to this research it is too academic to use in a real life context.
However, the Business Model Canvas and Model of Johnson could use a more strategic component, especially in the field of competitive strategy. Beside these models it would be advisable to use also a more strategic supplement model like the marketing mix, to gain a profound insight in what happens in the environment of the company to stay competitive in the long run.
Preface ... 2
Abstract ... 3
Chapter 1 Introduction ... 6
1.1 Problem indication ... 6
1.2 Problem statement and research questions ... 7
1.3 Research method (summary) ... 8
1.4 Thesis outline ... 8
Chapter 2 Literature review and theoretical framework ... 9
2.1 Strategy and Business models ... 9
2.2 Business Models ... 12
2.2.1
Definitions Business Models ... 13
2.3 Meta-models ... 15
2.4 Alternative meta-models ... 17
2.4.1 Business Model Canvas ... 17
2.4.2 Meta-model of Johnson, Christensen and Kagermann ... 19
2.4.3 Meta-model of Chesbrough and Rosenbloom ... 22
2.5 Overview of meta-models ... 23
2.6 Criteria meta-models ... 24
Chapter 3 Research design ... 26
3.1 Selection of research method: Case study ... 26
3.2 Description of the Meacasa case ... 27
3.2.1 The new product ... 27
3.2.2 The senior market ... 27
3.3 Research Method ... 29
3.4 Operationalization of the meta-model criteria ... 31
3.4.1 Preconditions criteria Meacasa for meta-model ... 31
3.4.2 Academic criteria ... 32
3.4.3 Evaluation method for criteria ... 32
Chapter 4 Review meta-models ... 34
4.1 Review business model canvas ... 34
4.2 Review meta-model of Johnson, Christensen and Kagermann ... 36
4.3 Review meta-model of Chesbrough and Rosenbloom ... 37
4.4 Table review meta-models ... 38
Chapter 5 Results Workshop Meacasa ... 39
5.1 Results preconditions Meacasa ... 39
5.1.1
Easy to use ... 39
5.1.2 Facilitation of adjusting business model ... 40
5.1.3 Necessary changes ... 40
5.2 Results elements of Shafer et al. ... 42
5.2.1 To what extent the meta-model gains insight in strategic choices ... 42
5.2.2 To what extent the meta-model gains insight in the value network ... 43
5.2.3 To what extent the meta-model gains insight in creating value ... 43
5.2.4 To what extent the meta-model gains insight in capturing value ... 44
5.3 Results functions of Osterwalder et al. ... 46
5.3.1 To what extent is the meta-model suitable for understanding and sharing ... 46
5.3.2 To what extent is the meta-model suitable for analyzing ... 47
5.3.3 To what extent is the meta-model suitable for managing ... 47
5.3.4 To what extent is the meta-model suitable for prospects ... 48
5.4 Preference meta-model Meacasa ... 50
5.4.2 How would you rank the models? ... 51
Chapter 6 Conclusion & Discussion ... 53
6.1
Conclusion ... 53
6.2.1 Discussion ... 54
6.2.2. Limitations research ... 55
6.2.3 Recommendation future research ... 55
Appendix 1 Reference list ... 57
Appendix 2 Websites ... 62
Appendix A Evaluation Form ... 63
Appendix B Form group discussion ... 64
Appendix C Filled in evaluation form BMC ... 65
Appendix D Filled in evaluation form Johnson ... 66
Appendix E Filled in evaluation form Chesbrough... 67
Appendix F results group discussion preconditions Meacasa ... 68
Appendix G results group discussion elements of Shafer ... 69
Chapter 1 Introduction 1.1 Problem indication
Meacasa is a start up company in the Dutch housing market. Its mission is to redefine the Dutch home (construction) market. The Meacasa goals are to change the housing market in the Netherlands, like Easyjet, Route Mobiel and Alex have done before in their respective industries.
In 2011, three young entrepreneurs founded Meacasa: Harold Pieters, Bas Groothelm and Mark Mangelmans. They had been working together at Heijmans in the Netherlands for a few years. During this period they always regarded themselves as entrepreneurs. For an entrepreneur it is important to recognize opportunities, according to Baron (2006) this is widely viewed as a key step in the entrepreneurial process. And indeed these entrepreneurs found a real opportunity. During their working period, the high construction fees of new houses in the Netherlands triggered them. They were convinced there had to be a more cost and time efficient way to construct new houses in the Netherlands. Furthermore, they saw that due to the financial crisis and strict mortgage regulations, for many first time buyers the dream of home ownership became hard to accomplish.
The founders of Meacasa got together to brainstorm in 2009. They found a way to construct new houses at lower and affordable prices, while still maintaining very high quality standards for construction. Meacasa found that using strategic alliances, with specialized suppliers in prefab constructions, allowed them to build high quality affordable houses with limited building time. They estimated that prices could be cut by at least 15%. According to Meacasa this is possible making the construction process as efficient as possible. In the following two years, the entrepreneurs spent much time and energy to create a business plan, which they used to attract investors and to make deals with suppliers. In the beginning of 2011, they left their jobs and founded Meacasa.
In their business plan, it is stated that Meacasa wants to serve the Dutch housing market with two core products: affordable starter homes and living proof houses for seniors. In 2011, 2012 and 2013, Meacasa already have developed and sold a few successful projects for the first segment.
Meacasa now feels that it is time to market their second product (houses for seniors) as well, for this to be successful the company need to adjust their current business model. The current business model focuses on their first product, while now they want to sell the second product as well.
In this research Meacasa is used as a case study, for answering the problem statement. This will be combined with academic research about business models.
1.2 Problem statement and research questions
Meacasa wants to enter the market with their new product for seniors. To do so, according to director Groothelm, the company needs to change the current business model. Meacasa is aware of the questions that viable business models should answer, as mentioned by Magretta (2002):
• Who is the customer?
• What does the customer value?
• How do we make money with this product in this business?
In the academic literature there are multiple models available for describing a business model. These models are called meta-models. According to Osterwalder et al. (2005), a meta-model is a useful tool to describe what elements a business model should consist of. So by using a meta-model a business model can be described. In academic literature, there are different meta-models to be found. Osterwalder et al. (2010) describe the Business Model Canvas. Their model is based ona practical point of view. Johnson et al. (2008) based a meta-model on a business approach. Chesbrough et al. (2002) based a business model on an academic approach. Unfortunately, the literature does not make clear what meta-model is best to use in practice. The meta-models as described in literature differ in their approaches. The goal a company has for using a meta-model determines what model to use. In this research the researcher will investigate what meta-model is best to use in practice for business model innovation. For business model innovation it is important to know what criteria make a meta-model suitable for innovation, so that a company, that wants to innovate, can use the best fit meta-model for their business model selection.
This leads to the following research question:
‘Which of the available meta-models is most suitable for business model innovation?’
To help answer this question the following sub-questions have been defined: 1. What is a business model?
2. Which meta-models are available in current literature on business models? 3. What are the strengths and weaknesses of these meta-models?
The first question is to gain insight in what a business model is, according to academic literature. The second question is to gain in-depth insight in three different meta-models. The third question is to gain insight in these strengths and weaknesses of the meta-models.
1.3 Research method (summary)
This research is an explorative case study. Firstly, a literature study is conducted to explore meta-models that are available in literature on business meta-models. Secondly, a workshop is held with management of Meacasa. Finally, the meta-models methods are assessed during an in-depth group discussion using the Delphi method. In chapter three there is a more extensive description of the research method.
1.4 Thesis outline
The second chapter consists of a theoretical discussion that will lead to a conceptual model. In the third chapter the method of research is discussed. The fourth and fifth chapters provide the results of the research. In the last chapter there is a discussion on the results of the research.
Chapter 2 Literature review and theoretical framework
This chapter consists of a more detailed description on business models. In the first paragraph there is a description on strategy and business models. Secondly there is a description on the definition of a business model and what business model is about. Furthermore, there are three different meta-models mentioned. The first three paragraphs are for answering the first two sub-questions of the research. Finally, criteria of meta-models are mentioned, these criteria are necessary to be able to assess the meta-models.
2.1 Strategy and Business models
Today, many markets are very dynamic and changes are all around us. A strategy that has a winning formula today may not prevail tomorrow. New products, market segments, products modifications, media are changing rapidly even more and more (Aaker 2008). This means that strategies of (new) businesses are different from how they were in the past. According to Aaker (2008), strategy not only has to win in the marketplace of today, but also in tomorrows, where the customer, the competitor set or the market context may all be different. To keep up with all these changes, strategists need refined and new perspectives, tools and concepts (Aaker 2008).
Eisenhardt and Sull (2001), discuss in their research that simple rules strategy helps entrepreneurs to respond quicker on changes. According to these authors, a simple rules strategy exists of simple rules for conducting a strategy. Furthermore, a simple rules strategy will help employees more to see more opportunities for discovering creative solutions for problems or market opportunities. This strategy helps firms to be more innovative. Moreover, Eisenhardt and Sull (2001) found that in the last couple of years many small ventures have grown quickly in turbulent markets (e.g. Google). Eisenhardt and Sull (2001) are convinced that this was made possible by use of simple rules strategy that works as a strategic framework. Moreover, they state that young entrepreneurs often lack the knowledge and simply the time to implement difficult strategies. According to these authors, it is possible to react quicker and it will give them more time to come up with new and innovative ideas.
Furthermore, according to Porter (2004), a company can outperform rivals only if it can establish a difference a company can preserve. Also according to Porter (2001, 2004), strategy is about how all the elements of what a firm does fit together and the essence of strategy is choosing to perform activities differently than rivals do. So Porter takes competitors into account. In this line of reasoning, Magretta (2002) mentions a similar definition but now for specifically for business models. According to Magretta (2002), a business model is a system in how the all the parts of a business fit together. Both definitions seem similar, however, DaSilva and Trkman (2013) argue that business models differ
from strategy in two ways:
1. Strategy shapes the development of capabilities that can alter current business models in the future. A strategy sets up dynamic capabilities that constrain possible business models to face either upcoming or existing contingencies. Thus, strategy entails devising dynamic
capabilities able to respond to contingencies through the organization’s business model. Business models are then bounded by the firms’ dynamic capabilities (DaSilva and Trkman 2013).
2. Every organization has some business model but not every organization has a strategy. Furthermore, strategy reflects what a company aims to become, while business models describe what a company really is at a given time (DaSilva and Trkman 2013).
Figure 1: DaSilva and Trkman: Strategy versus Business model
As shown in figure 1, strategy has a long-term perspective while business model have a more short-term perspective. Moreover, Ricart et al. (2010), state that business models and strategy are different concepts; ‘a business model is the direct result of strategy but it is not itself strategy’. This view is supported by Shafer et al. (2005), they state that a business model facilitates testing, analysis and validation of strategic choices for a company. But in itself it is not a strategy.
Furthermore, Magretta (2002), argues that business models factor out one critical dimension of performance, namely competition: a competitive strategy will explain how to outperform your rivals. Moreover, Chesbrough and Rosenbloom (2002) argue that there are three differences between strategy and business model:
1. A business model creates value for customers and designs the model around delivering the expected value. Where, in strategy the competitive threats of current or new entrants play a central role.
2. In a business model the creation of value is for the business, and it is assumed that the model is being financed out of internal resources, hereby the financing issue is not very prominently in the business model. On the other hand, in strategy the value is created for shareholders, and gives another perspective on the financial issue.
3. A business model construct assumes that knowledge, about customers and third parties, is cognitively limited. Moreover, strategy requires analytic choice and calculation, which assumes that there is a lot of reliable information available.
In summary the literature suggest; that strategy is defined at a higher level of abstraction; it is about the long-term direction of an organization. Business models are defined at lower level of abstraction, every company implicitly has some sort of business model. In this specific research we are interested in the shorter-term perspective, like discussed by DaSilva and Trkman (2013), i.e. the business model perspective.
2.2 Business Models
In this paragraph the business model perspective will be described in more detail, to better understand business models.
Firstly, according to Chesbrough and Rosenbloom (2002), the business model is a concept that is often linked with the Internet. Furthermore, through the upcoming of Internet, the attention for the business model concept widened quickly (Chesbrough and Rosenbloom 2002). Moreover, Jacob and Ulaga (2008) argue that businesses constantly offer services or products to their respective markets. But only in the last couple of years, the integration of products and services has been seen as a possibility for growth and competitiveness for businesses. They consider the business model to be a crucial point in to the integration of products and services.
Osterwalder and Pigneur (2010) state that Business models are representations of firm operations, strategies and relationships that define their business logic. Moreover, Elbers (2010) state that a business model describes how a company delivers, creates and captures value based on the strategic choices the company makes. Osterwalder and Pigneur (2010), endorse this view and they have delivered also a contribution in the business model field. They state that; the main contribution of a business model stems from the fact that it enables the creation of practices that help companies to capture, understand, design, analyse and change their business logic. Furthermore, Osterwalder and Pigneur (2005), mention in earlier research: ‘A business model is a conceptual tool containing a set of objects, concepts and their relationships with the objective to express the business logic of a specific firm. Therefore we must consider which concepts and relationships allow a simplified description and representation of what value is provided to customers, how this is done and with which financial consequences.’
Moreover, Baden- Fuller and Morgan (2010) suggest that business models have a multi-employable character as models. These researchers state that business models are not just:
i) Recipes
ii) Scientific models iii) Scale and role models
Also according to these authors, a business model can play any or all of these different roles for different firms or purposes. The business model will often play multiple roles at the same time. This explains not only why the idea of business models seems to be so pervasive but also still challenging to understand. At the same time the business model concept is potentially rewarding for the future of management research (Baden- Fuller and Morgan 2010).
2.2.1 Definitions Business Models
In the academic literature there are many definitions to be found for business models. Coombes and Nicholson (2013), found in their research several different definitions of a Business model:
Author Definition
Osterwalder and Pigneur (2010)
A business model describes the rationale of how an organization creates, delivers and captures value.
Amit and Zott (2001)
A business model depicts the content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities.
Afuah (2004)
A business model is a framework for making money. It is the set of activities that a firm performs, how it performs them, and when it performs them so as to offer its customers benefits they want and to earn a profit.
Chesbrough (2007)
At its heart, a business model performs two important functions: value creation and value capture. First, it defines a series of activities, from procuring raw materials to satisfying the final consumer, which will yield a new product or service in such a way that there is a net value created throughout the various activities. Second, a business model captures value from a portion of those activities for the firm developing and operating it.
Teece (2010)
A good business model yields value propositions that are compelling to customers, achieves advantageous cost and risk structures, and enables significant value capture by the business that generates and delivers products and services.
Shafer (2005)
A business model is a representation of a firm's underlying core logic and strategic choices for creating and capturing value within a value network and it is this core logic for creating and capturing value that is the basis of a business model.
Zott and Amit (2007)
A business model elucidates how an organisation is linked to external stakeholders, and how it engages in economic exchanges with then to create value for all exchange partners.
Johnson et al. (2008)
A business model consists of four interlocking elements that, taken together, create and deliver value. These four interlocking elements consist of
customer value proposition, profit formula, key resources and key processes. Figure 2: Definitions of Business Models Coombes and Nicholson (2013)
In all definitions the word value (or value proposition) plays a dominant role. So it is fair to state that it is the key function of a business model: to create or to deliver value.
However Osterwalder et al. (2005), state there is a continuum in the use of the term business model in the academic literature. According to Osterwalder et al. (2005), there are authors that use the term
business model simply to refer to the way a company does business and there are other authors that emphasize the aspects of the business model. There is a difference between these two points of view; the first refers to the way a firm does business and the second viewpoint refers to a conceptualization of the way a firm does business. So, this second point of view helps to reduce the complexity to an understandable level for managers.
2.3 Meta-models
Osterwalder et al (2005), state that meta-models consist of relationships and elements that reflect the complex entities, which they aim to describe. In other words, a meta-model conceptualizes the business model (Osterwalder et al. 2005). In this line of reasoning, according to Osterwalder et al. (2005): ‘for business models the quest is to identify the elements and relationships that describe the business a company does. Thus, the business model concept can best be understood as a conceptual view of a particular aspect of a specific company. The meta-model then defines the words and sentences that we use to describe this view’
Osterwalder et al. (2005) believe that authors that write about business models can be classified in three different categories as can be seen in figure 3. According to Osterwalder et al. (2005), these categories can, but do not have to be, hierarchically linked. The categories the researchers mention are:
1. Authors that describe the business model concept as an abstract overarching concept that describe all real world businesses (Osterwalder et al. 2005).
2. Authors that describe a number of different abstract types of business models, each one describing a set of businesses with common characteristics (Osterwalder et al. 2005). 3. Authors presenting aspects of or a conceptualization of a particular real world business
model (Osterwalder et al. 2005).
As shown in figure 3, within the research of Osterwalder et al. (2005), the first category consists of the elements that belong in a business model; what a business model is and how meta-models
conceptualize the elements what belong in a business model. The business model is seen as an abstract concept that describes what a company does in order to make profit. Furthermore, according to
Osterwalder et al. (2005): the business model definition gives an idea of what a business model is. In addition the meta-model defines what elements are to be found in a business model. Furthermore, according to Poernomo (2006) a meta-model can specify attributes, constraints, structure, and associations to model a specific domain of interest within a set of rules and building blocks.In this research the first category of Osterwalder et al. (2005) is being used; specifically the meta-model concept for business models. So the meta-models are important in drawing up the business models, to use the business models properly, it is important to investigate carefully what meta-model to use.
2.4 Alternative meta-models
In this paragraph three alternative meta-models methods are described and reviewed. In the previous paragraphs the business model concept has been discussed, now there is a link toward a more hands on approach: description of three viable meta-models that are useful to describe a business model. Firstly, a description of the meta-model business model canvas is given. This meta-model has been selected because of its practical approach; the model is mainly mentioned in practical literature. Secondly, there is a description of the meta-model of Johnson, Christensen and Kagermann. This model has been selected because of more business-like approach of the model; the model is mainly mentioned in articles of the Harvard Business Review. Thirdly, there is a description of the meta-model of
Chesbrough and Rosenbloom. This model has been selected because of the more academic approach. The model is mentioned in academic literature.
2.4.1 Business Model Canvas
In their book Osterwalder and Pigneur (2010) have developed a concept (meta-model) called the Business Model Canvas. The Business Model Canvas is a conceptual tool designed to help businesses to discuss, map, design and (re-)invent (new) business models (Osterwalder and Pigneur 2010), see figure 4.
Osterwalder and Pigneur (2010) have developed a business model design approach surrounding on ‘how an organization creates, delivers, and captures value’. This seems in line with the earlier mentioned definitions. The Business Model Canvas consists of nine key building blocks, which are a blue print of how a firm can make a profit. The nine building blocks embrace the four main areas of a company: customers, supply, infrastructure and financial viability. The business model is a blue print for the strategy that will be implemented (Osterwalder and Pigneur 2010).
As discussed before, the Business Model Canvas exists of nine building blocks that need to be addressed. These building blocks are:
1. Customer segments: the different groups of people a company wants to reach or attend, 2. Value Propositions: the value which is being delivered for the customers,
3. Channels: through which channels the customers segments want to be reached,
4. Customer Relationships: type of relationship does each of the customer segments expect to establish and maintain,
5. Revenue streams: value customers are willing to pay,
6. Key Resources: key resources the value proposition requires, 7. Key Activities: key activities the value proposition requires, 8. Key Partners: key partners the value proposition requires,
9. Cost structure: the most important costs inherent of the business model.
There is no fixed order to fill in the building blocks of the Business Model Canvas. However,
according to the blog of Kraaijenbrink, one of the strengths of the model is that it can be used for two main approaches: inside-out strategy (left to right, start with key resources) and outside-in strategy (right to left, start with customer). Both ways lead towards a business model.
2.4.2 Meta-model of Johnson, Christensen and Kagermann
In their research Johnson et al. (2008) have developed a meta-model that can be used to reinvent existing business models. Johnson (2010) details this meta-model in his book. He identifies that to render the most essential elements of value creation in clear language, a four-box business model framework is needed. Johnson (2010) believes that the framework provides the structure needed to categorize and reveal all of the issues that must be addressed before a business adapts to a new business model. In this line of reasoning, he mentions the framework will provide a road map to transformational growth, innovation and renewal.
However, according to Johnson et al. (2008), managers do not have in-depth knowledge of their current business model to understand when the model needs to be changed towards a new business model. In their study they also concluded that new business models often seem unattractive for
stakeholders. But, to see the opportunities in the market, Johnson et al. (2008), advise on a road map to alter the current business model:
1. Identify an opportunity of customer needs.
2. Construct a blueprint for laying out how a firm will fulfill the identified needs into making a profit.
3. Compare the new model with old model to identify how much needs to be changed to grasp the opportunity.
As mentioned earlier, there is a blueprint (meta-model) available for fulfilling identified needs into making a profit. According to Johnson et al. (2008), a business model exists of four interlocking elements that together deliver and creates value. These elements are:
1. Customer value proposition: a successful firm is a firm that has found a way to create value for customers (most important element to get right).
2. Profit formula: this is the description how a firm creates value for itself while providing value to the customers.
3. Key resources: these are the assets to deliver the value proposition towards the selected customers. Focus here lies on the key elements that create value for customer and firm. Also, it is important to identify how these key elements interact.
4. Key processes: these are operational processes that allow a firm to deliver value towards the customers again and again.
Furthermore, according to Johnson et al. (2008), these elements are the building blocks of every business. They state: ‘The customer value proposition and the profit formula define value for the customer and the company, respectively; key resources and key processes describe how that value will be delivered to both the customer and the company’. Moreover, Johnson et al. (2008), mention that the power of this model is in the strong and complex interdependencies of the different elements and that changes in one of the elements (can) effect the other elements.
Moreover, Johnson et al. (2008), state that each successful company already conducts an effective business model. But by ‘systematically identifying all of its constituent parts, executives can understand how the model fulfills a potent value proposition in a profitable way using certain key resources and key processes. With that understanding, they can then judge how well the same model could be used to fulfill a radically different customer value proposition—and what they would need to do to construct a new business model (Johnson et al. 2008)’.
For an overview of the four elements see figure 5. When using this meta-model, users should start with the description of the customer value proposition, profit formula and then the key resources/key processes.
2.4.3 Meta-model of Chesbrough and Rosenbloom
Chesbrough and Rosenbloom (2002), argue that the business model provides a coherent framework that takes technological characteristics and potentials as input, and converts them through customers and markets into economic output. Furthermore Chesbrough and Rosenbloom (2002), state that the business model is conceived as a focusing tool that mediates between economic value creation and technology development. Moreover Chesbrough and Rosenbloom (2002), argue that businesses need to understand the cognitive role of the business model. They mention that it is important to sell technology in ways that will allow companies to capture value from their technology investments. This is the case when opportunities presented by technologies do not fit the companies’ current business model.
Chesbrough and Rosenbloom (2002) developed a meta-model with six different functions: 1. Articulate the value proposition
2. Identify a market segment and specify the revenue generation mechanism 3. Define the structure of the value chain
4. Estimates the cost structure and profit potential
5. Describe the position of the firm within the value network 6. Formulate the competitive strategy
According to Chesbrough and Rosenbloom (2002), these six functions collectively serve the ambition to define a path to scale up the business and to justify the financial resources to realize the model.
When using this meta-model, the user should begin with articulating a value proposition based on opportunities in new available technology. This needs a clear definition of what the product will be and in what form the client may use it. Secondly, the business model then has to specify a specific market segment that could be targeted with the new technology. Also it has to be aware of the fact that different customers have different needs. Thirdly, the user needs to define the structure of the value chain. This is required to create and distribute the offering and complementary assets needed to support position in the chain. Fourthly, the user has to think about the cost structure and the value potential for the organization, in the end an organization needs to earn money from their technology product. Fifthly, a user should describe the position of the firm within the value network. This needs to be done to link suppliers and customers. Finally, a user should formulate the competitive strategy. This is necessary to identify by which the innovating firm will gain and hold advantage over rivals.
2.5 Overview of meta-models
In paragraph 2.4 three different meta-models have been discussed. These meta-models consist of different elements. In this paragraph a quick overview of these different elements is given, see table 1. The table is based on the table mentioned in the research of Osterwalder et al. (2005). Furthermore, there is one element added (competitive strategy) based on the meta-model of Chesbrough et al. This element is added because the model of Chesbrough, explicitly addresses this point.
Table 1
At first glance, based on the information in this table, the Business Model Canvas seems to be the most complete meta-model as it covers the most elements (9 elements). Although, the model of Johnson comes close with 8 covered elements. Whether the Business Model Canvas is actually the best fit will have to be confirmed by the case study and a literature evaluation of the meta-models.
2.6 Criteria meta-models
In paragraph 2.4, the business model methods (meta-models) have been discussed. In this paragraph there is a discussion about the criteria a meta-model should fulfill. These criteria are necessary to be abled to assess meta-models.
Firstly, according to Ricart et al. (2011), a good business model will fulfill three criteria of an effective model:
• The business model has to be aligned with the company’s goals; the choices, which were made while designing the model, should make it possible for the company to reach their goals. So the meta-model should link the company goals explicitly.
• The business model has to be self-reinforcing; the choices, which are made during the design process, should be complement another. It is important that there is an internal consistency. So the meta-model should make sure that it facilitates consistent information.
• The business model has to be robust; the business model should be able to sustain
effectiveness over time. The business model should make it possible to be protecting against threats like imitation, substation and slack. So the meta-model should make it possible to gain insights in possible threats.
Besides the criteria of an effective model Osterwalder et al. (2005) describe general roles for the business model concept. Explicitly they mention this for the use of formally described business models (meta-models). According to the research (Osterwalder et al. 2005) there are five categories of functions that the business model concept can fulfill. These functions are:
1. Understanding and sharing the business model: ‘business models help to capture, visualize, understand, communicate and share the business logic’ (Osterwalder et al. 2005).
2. Analyzing the business model: ‘business models can improve measuring, observing, and comparing the business logic of a company’ (Osterwalder et al. 2005).
3. Managing: ‘business model concept helps ameliorate the design, planning, changing and implementation of business models’ (Osterwalder et al. 2005).
4. Prospects: ‘the business model concept can help foster innovation and increase readiness for the future through business model portfolios and simulation’ (Osterwalder et al. 2005). 5. Patenting of business models: ‘companies in e-business can patent e-business processes and
even entire aspects of their business model’ (Osterwalder et al. 2005).
successful business model creates a heuristic logic that connects technical potential with the realization of economic value.’ The criteria they mention are:
• A business model defines a path to scale up the business.
• A business model justifies the financial capital needed to realize the model.
Furthermore, Shafer et al. (2005), mention that there is confusion about what business models are and how business models can be used. To help understand how business models can be used, Shafer et al. (2005), preformed an extensive review of business model definitions in the academic literature. They found in their research 12 different definitions of a business model and identified 42 different business model components. Shafer et al. (2005), clustered these 42 into 4 main components of a business model, these 4 main components should always be available into a business model. The components are:
1. Strategic choices; customer, value proposition, capabilities/competencies, revenue/pricing, competitors, output, strategy, branding, differentiation, mission.
2. The value network; suppliers, customer information, customer relationship, information flows, product/ service flows.
3. Creating value; resources/assets, processes/ activities. 4. Capturing value; cost, financial aspects, profit
In the following table (table 2), a summary is given of the different criteria a meta-model should fulfill. The criteria of Shafer et al. (2005) are most complete while they conducted extensive research in the business model domain. These elements will be used later in the research for the case study. Shafer et al. (2005) conducted a thorough research where they found multiple business model
components in multiple researches. As their research is more complete it makes it suitable for this case study. Furthermore the functions described by Osterwalder et al. (2005) will be used. Because
specifically these functions describe in-depth which function a business model can fulfill.
Furthermore, regarding to all these different criteria, it is not unthinkable that for specific cases other specific criteria are necessary. So these criteria could difference per specific case.
Chapter 3 Research design
In this chapter a description of the Meacasa case is given. Meacasa is trying to find the right meta-model for designing a new business meta-model. Firstly, there is a discussion on why a case study is appropriate. Secondly, the Meacasa case is introduced. Thirdly, the research method is defined. And finally, there is a description of how the identified criteria of the meta-models are used in this research. 3.1 Selection of research method: Case study
In this paragraph there a description is given of what research method is appropriate. Firstly, Saunders and Lewis (2012) recognize three main purposes of research: exploratory, descriptive, explanatory. According to Saunders and Lewis (2012) an explorative research is to gain (new) insights in possible consistencies. This research is an exploratory study because it aims to seek new insights about meta-models for business model innovation.
Saunders and Lewis (2012), state that a case study involves the investigation of a particular contemporary topic within its real-life context, using multiple source of evidence. The case study strategy has the ability to generate answers to question about the “why?”. Verschuren and Doorewaard (2010) state a case study is a research strategy in which the researcher tries to gain a profound insight into one or several objects or processes that are confined in time and space. For this reason the case study is often used in exploratory research (Saunders, Lewis and Thornhill 2007).
This research is intended to search an answer for why one of the meta-models is the best fit for business model innovation. So, this research is a case study and to be more specific a single case study. Verschuren and Doorewaard (2010) describe a single case study as only one case that is thoroughly examined, preferably where the emphasis lies on triangulation of methods. Triangulation of methods can be reached, for example, by a combination of individual interviews and a group discussion (Verschuren and Doorewaard 2010). According to Saunders and Lewis (2007) a single case study if often used where it represents a unique case. Conversely, a single case is selected when it provides an opportunity to observe and analyze a phenomenon that few have considered before.
In this research Meacasa is suitable for a single case study, because it is a unique case within the Dutch home construction market. Meacasa is looking for opportunities to innovate their business model in order to enter a new market segment. Furthermore, the company makes it possible to thoroughly examine the research question about meta-models. Meacasa poses the question, in a real life context, what meta-model to use for their new product market combination (business model innovation). They have questions about why they should prefer one meta-model to another.
In this research, also a literature study is conducted for gaining insights in meta-models for business model innovation. Within this literature study academic criteria are identified. These criteria are used within the case study.
3.2 Description of the Meacasa case
In this paragraph an in depth description of the Meacasa case is given. This case will be used in the research in combination with literature review to answer the research question.
Meacasa is ready to market their new product for seniors. At this moment Meacasa is unsure how to change their business model into a future proof business model. Moreover, Meacasa is unaware which model fits best to change their current business model. So Meacasa want to know which meta-model they can use for their new business meta-model.
3.2.1 The new product
According to Director Groothelm, the new product is designed to provide seniors the ability to live as long as possible in their own environment. The intention of the product is to prepare the house for changing needs due to changing health conditions over the years. Director Groothelm states; ‘the moment personal health deteriorates; our customers will not be forced to leave their homes. All the facilities, like a first floor bedroom and in-house storage room for a scoot mobile, are present in our homes. As extra service to our customer we offer extra features depending on their personal needs. In our product we offer the possibility to create an extra bedroom and bathroom or a room for hobbies. Furthermore, we can create gardens which are strictly accessible for its residents which gives a more secure feeling.’
3.2.2 The senior market
According to CBS (2012) the number of elderly people, in the Netherlands, will increase significantly in the coming years. The numbers of seniors (65 years and older) are expected to rise from 2.7 million in 2012 till 4.7 million in 2041. Until 2060 it will remain up and around 4.7 million. In the coming years the number of people in the age category 65 till 79 will increase dramatically. From the year 2025, the age category 80 and older will even rise more significantly (‘dubbele vergrijzing’). In 2040, 26 percent of the Dutch population will be older than 65. The main reason for the rising number of elderly is that in the past was a wave of new born, the so-called baby boom. Baby boomers are people born between 1946 and 1970. Since 2011, the baby boomers are reaching the age of 65. Furthermore, health care has improved and that has the effect that life expectancy has increased, people simply live longer.
Sherman and Cooper (1988) state that the senior market can provide attractive business opportunities for companies. Unfortunately, companies frequently fail in their strategy to win the loyalty of this market segment. According to Sherman and Cooper (1988) this failure is often the result of misunderstanding the senior market.
Contrary to popular belief, elderly people are not a homogeneous group. Companies that have a strong focus on the market for the elderly should take into account different segments; these segments go beyond familiar stereotypes. The studies of Sikkel and Keehnen (2004, 2005, 2006) provide insights into consumer behavior (in respect of finance, health care, food, housing) of the entire group of elderly. Sikkel and Keehnen (2004, 2005, 2006) conclude that elderly differ in many aspects. Furthermore, to better understand the elderly segment a profound insight of the different elderly segments is required. Unlike other markets the senior market can be divided into segments. For this case it is necessary to understand what the seniors market looks like. In this section a short summary of segmentation of the seniors.
Luijkx et al. (2004, 2005, 2006), have investigated the needs of elderly (55+) regarding to facilities in the area of housing, care and welfare. The concluded that there are five segments of elderly:
1. ‘De vitalen’: elderly with a cosmopolitan lifestyle. Furthermore, they hardly have need for special provisions.
2. ‘Vooruitkijkende vitalen’: vital elderly, but they keep more in mind that defects can come with the years. Therefore, they wish for changes in the home so they can stay there for longer time period.
3. ‘Alleen redzamen’: elderly with experienced feelings of loneliness. These elderly can still reasonably manage themselves with help from others and tools.
4. ‘Cognitief beperkte redzamen’: elderly that need many modifications in their homes, assistance and care.
5. ‘De hulpbehoeftigen’: elderly people that need help, care and adjustments in their homes. They also need personal care; on average these elderly are 75 years old.
3.3 Research Method
In this paragraph the research method of the research is described. This research is conducted through four steps. These steps are:
Step 1 Evaluation meta-models based on literature (strengths/ weaknesses)
In step 1 an extensive literature study on business models is conducted. In chapter four the weaknesses of the meta-models based on secondary sources (blogs and academic literature) are being mapped. Unfortunately, in the academic literature there are almost no review articles available about the Business Model Canvas approach. However, there are bloggers that commented on the Business Model Canvas, these bloggers are used as input for the short review. If necessary for the other meta-models blogs will be used as well. The meta-meta-models criteria, mentioned in chapter 2 and 3, will be empirical researched by use of the Meacasa case through use of a workshop.
Step 2 Workshop Meacasa
In a workshop, with management of Meacasa and an investor (in total five respondents), the three meta-models (the Business Model Canvas, the model of Johnson, the model of Chesbrough) are filled in with the information of the Meacasa case. The Delphi method will be used to evaluate the meta-models based on the criteria of Meacasa and selected criteria of the academic literature. The Delphi method is an interviewing technique that resembles both a group interview and a written poll (Verschuren and Doorewaard 2010). The Delphi method has the big advantage that participants can form a well-considered opinion in which various viewpoints have been placed next to each other. Also the researcher has the opportunity to obtain an overview of the various points of view about the subject, in this case the meta-models (Verschuren and Doorewaard 2010).
The workshop is conducted on Saturday 16th of august 2014. Participants of the workshop are: the three directors and founders, one project leader and an investor in the company. Due to privacy and strict confidentiality issues, Meacasa wants no names published in the results section. For the same reasons, the company also does not want the filled in meta-models to be published in this thesis. That is why in the result section of the research only the initials of the respondents are shown, the initials of the respondents are: BG, HP, MM, RdJ and EG.
1. Evaluation meta-models based on literature (strengths/ weaknesses) 2. Workshop Meacasa based on Delphi Method: -Individual evaluation -Group discussion 3. Analyze meta-models (with literature criteria and Meacasa
preconditions)
4.
Selection meta-model for business model innovation
The selection of these participants is based on the fact that Meacasa is a small company and these are the people most directly involved. The workshop is set up in different rounds of research, just like the Delphi method prescribes. The Delphi method has, according to Verschuren and Doorewaard (2010); different rounds of analysis, in the last round opinions are put together. In the workshop the rounds are as follows:
• Round 1a: Respondents and researcher fill in Business Model Canvas
• Round 1b: Respondents fill in individually evaluation form together with researcher • Round 2a: Respondents and researcher fill in the model of Johnson
• Round 2b: Respondents fill in individually evaluation form together with researcher • Round 3a: Respondents and researcher fill in the model of Chesbrough
• Round 3b: Respondents fill in individually evaluation form together with researcher • Round 4: Group discussion
Firstly, within the Delphi method, after every meta-model has been filled in; the management will individually fill in an evaluation form (see form 1 appendix a). The researcher will do this together with the individual participants. This is done to meet the standard of the Delphi method and to gain insight in the individual opinions.
After rounds 1a till 3b, there is a group discussion round with all participants. This discussion is to gain a well-considered opinion about meta-models. The group discussion will be done by use of open questions, (see form 2 appendix b). Goal of the group discussion is to identify the best meta-model for business model innovation.
Step 3
In step 3, the researcher analyzes the outcomes of the workshop. These results are shown in chapter 5. This chapter includes the results of the individual evaluation forms and the results of the workshop per criteria. The individual results are aggregated and shown with the mean and mode of the total results of the respondents. The mode is used to show the score that has been mentioned the most. This provides extra insight in the scores of the respondents. Moreover, in this research the results of the workshop will be linked with the outcomes of the literature review (See: Chapter 6).
Step 4
In step 4, the best meta- model will be selected for business model innovation. Furthermore, there will be a discussion for future research (See: Chapter 6).
3.4 Operationalization of the meta-model criteria
In the literature review there are several criteria mentioned for meta-models (See: chapter 2.6). This research will use the selected criteria. However, Meacasa also has some additional criteria that need to be addressed in this research. In the next paragraph the chosen criteria will be transformed into a questionnaire that will be used in the workshop.
3.4.1 Preconditions criteria Meacasa for meta-model
Chapter 2.6 has shown that it is possible for specific cases to have specific criteria. Meacasa, has some additional preconditions, in order to be able to use a meta-model for their business model innovation. For the company it is important that these preconditions are fulfilled.
Meacasa is a small company with limited resources. The founders have not much time and resources to spend on business model innovation due to time and budget constraints. The company tries to operate in a low cost structure. This means that the founders hire as little as possible. As a consequence they have to do pretty much everything themselves. Furthermore, the academic knowledge level within the organization is limited. So if a meta-model is to difficult to understand or to difficult to explain it takes to much time of the already limited time and budget. Moreover, Meacasa wants to be able to adjust their business model as quickly as possible. If the founders identify an opportunity, they want to be able to react as soon as possible. So this means, according to Meacasa, that the new business model should be easy to use and adjust, and the meta-model has to facilitate this.
Furthermore, the new business model should only facilitate the necessary changes within the current business model. According to Meacasa, in this case, there are no changes in cost structure and partnerships within the new business model. The target market is changing, but Meacasa will not use other partners to build the homes for seniors. Furthermore, again to limited resources, the model should have the right focus for the founders of the company.
This leads to the following preconditions for Meacasa:
1. The meta-model should be easy to use
2. The meta-model should facilitate an adjustable business model
3.4.2 Academic criteria
As discussed in chapter 2.6 there are criteria for meta-models to be found in academic literature. Next to the pragmatic preconditions of Meacasa, these literature criteria are used in this research.
Firstly, the criteria of Shafer et al. (2005) are used in this research. This leads to the following criteria for evaluation of the meta-models in this research:
1. To what extent the meta-model gains insight in strategic choices 2. To what extent the meta-model gains insight in the value network 3. To what extent the meta-model gains insight in creating value 4. To what extent the meta-model gains insight in capturing value
Secondly, to conduct a more valid research and to gain insight on what level the meta-models fulfill the functions of a business model, some of the functions of Osterwalder et al. (2005) are used in this research as well. The functions that are being investigated are; understanding and sharing the business model, analyzing the business model, managing business model, prospects. The patenting of business models is out of scope while this function is mainly for companies in e-business environments and that is not the case with Meacasa. This leads to the following criteria for evaluation of the meta-models in this research:
1. To what extent is the meta-model suitable for understanding and sharing 2. To what extent is the meta-model suitable for analyzing
3. To what extent is the meta-model suitable for managing 4. To what extent is the meta-model suitable for prospects
3.4.3 Evaluation method for criteria
The first evaluation form consists of three parts, (see form 1 appendix a). In part one the respondents are asked to evaluate the meta-model based on the preconditions of Meacasa. In part two the
respondents are asked to evaluate the meta-model based on the four components of Shafer et al. (2005). In part three the respondents are asked to evaluate the meta-model based on the functions Osterwalder et al. (2005) recognize.
Furthermore, the respondents are asked why they gave their specific score. The Likert scale scores are there to collect qualitative information, in other words to facilitate answers for the “why?” question in the evaluation forms. In this research the Likert scale is:
Secondly, after the individual evaluations there is a central group discussion in order to discus what meta-model is the best choice in the Meacasa case. In this group discussion there are four subjects to discuss concerning the meta-models:
1. Preconditions Meacasa
2. Elements of Shafer et al. (2005) 3. Functions of Osterwalder et al. (2005) 4. Preference Meacasa
The researcher will fill in the results of the group discussion. This form (see appendix b) consists of four parts. In part one there are questions based on the preconditions of Meacasa. In part two there are questions based on the elements of Shafer et al. (2005). In part three there are questions based on the functions of Osterwalder et al. (2005). And in the last part there are a few general questions about what model Meacasa prefers, see appendix b.
Chapter 4 Review meta-models
In this chapter the three meta-models are reviewed. In chapter two the three meta-models have been discussed extensively. This chapter maps the weaknesses of the meta-models based on secondary sources. In the next chapter the criteria, as mentioned in chapter two, are used for an empirical research.
4.1 Review business model canvas
Firstly, where Osterwalder et al. (2010) mention that the Business Model Canvas is a hands-on tool the blog, http://zzp-log.nl/businessmodel-canvas-het-ei-van-columbus-voor-zzpers/, describes that answering the questions that are related to the nine building blocks are not so easy to answer as they seem to be. There is a real challenge to get to the right level of answers to the business model canvas questions. The business model canvas is possible to fill in with low quality answers that will lead towards superficial business model.
Secondly, Kraaijenbrink describes in his blog, http://kraaijenbrink.com/2013/01/more-limitations-of-the-business-model-canvas/, five relevant shortcomings of the business model canvas, which have an impact of the tools strategic value. The shortcomings of business model canvas according to
Kraaijenbrink are;
1. The model excludes an organizations strategic purpose, it does not take into account the strategic purpose of firms. The model lacks a link with companies mission, vision and other strategic goals.
2. The model excludes a notion of competition or competitors, it does not take into account that companies have to deal with competitors and might forced to change their strategy.
3. The model mixes different levels of abstraction, not all of the nine elements are at the same level of abstraction. This can be confusing when using the model.
4. The model does not set any priorities, it does not explain which building block is the most important one to start with or which ones are priority number one, two etc.
5. The model is hard to visualize through use of the nine different building blocks. Users of the model could become disorientated when they read all the information from the canvas.
Thirdly, Ash Maurya mentions shortcomings of the business model canvas and he even purposes changing four of the boxes of the model (http://practicetrumpstheory.com/2012/02/why-lean-canvas/).
According to Maurya, start-ups fail because they waste time, money and effort for building the wrong product. The business model canvas can contribute to a lack of proper problem understanding from the start. Furthermore, companies often have many numbers where they base their steering on in an attempt to manage the uncertainties, but there are only a few key metrics that matter. The business model canvas does not focus on this element. Moreover, if a company achieves some level of business success, it will be inevitable that competitors will enter the market. If the company does not have a defense system against the competitors it stands a real change of loosing their market share, the business model canvas does nothing to protect against the competitors
(http://practicetrumpstheory.com/2012/02/why-lean-canvas/).
In an attempt to close these gaps, Maurya developed a new variant of the business model canvas. The author, proposes to change 4 boxes of the business model canvas (See: figure 6). Maurya,
http://practicetrumpstheory.com/2012/02/why-lean-canvas/, suggest four of the boxes of the business
model canvas should be relieved;
• Key Partners; ‘When you are an unknown startup with an untested product, pursuing key partnerships from day one can be a form of waste. Over time, partners can become critical to optimize of the business model, but the risk here is not the lack of partners but can rather be traced back to inefficiencies in the business model’.
• Customer Relationships; ‘start every product with a direct customer relationship and then identify the appropriate path to customers, given your Solution and Customer Segment. This seems better captured by the existing Channels box’.
• Key Activities and Key Resources; ‘these boxes are more outside-in focused, these boxes helps outsiders looking in to understand what the company does’.
4.2 Review meta-model of Johnson, Christensen and Kagermann
The meta-model of Johnson et al. (2008), always begins with designing a new costumer value
proposition. However, the current model misses the notion on where the company is going to compete on. According to Eyring et al. (2011), the model is more complete when you add two competing elements: competing on price and competing on differentiation. The adding of these elements changes the model of Johnson et al. (2008), see figure 7. Moreover, it enables companies to choose between competing strategies as can be seen in figure 7. An additional effect is that it makes it more clear how to fill in the meta-model after the customer value proposition has been identified, this makes the model easier to visualize than it is now.
Figure 7 Eyring et al. (2011)
So, if a company wants to compete on differentiation: firstly, the model establishes the customer value proposition. Secondly, the resources and processes needed to deliver the customer value proposition. And thirdly, the cost of which determines the price required in the profit formula (Eyring et al. 2011). If a company wants to compete on price: firstly the model establishes the customer value proposition. For the rest this model proceeds in the opposite way than previous described. So secondly, it
establishes the price. Thirdly, the cost structure is established. Finally, the processes and resources required are established (Eyring et al. 2011).
Besides the competing elements, this current meta-model lacks the notion of risk. According to Gilbert and Eyring (2010) success comes quicker to ventures that systematically eliminate risk in the right order by use of right methods and resources. Furthermore, quick risk identification is important. An entrepreneur always should ask the question what is the most important uncertainty in his business model (Gilbert and Eyring 2010). These elements are not covered by the previous described
meta-4.3 Review meta-model of Chesbrough and Rosenbloom
In this paragraph the meta-model of Chesbrough is reviewed. Firstly Chesbrough (2001) argues, that there are three types of problems that incumbents have in managing technical discontinuities:
managing external linkages, managing internal complexity and managing institutional environmental differences. According to Chesbrough and Rosenbloom (2002), this meta-model discusses the first two types but does not discuss the third one. This is a missed opportunity for this model.
Secondly, just like the meta-model of Johnson, there is no risk assumption in this meta-model as well. Furthermore, where the other two meta-models have clear visual model, Chesbrough and
Rosenblooms’ model is more mentioned in text. This could imply that story telling by using this model is more difficult than the other two meta-models.
Thirdly, according to Chesbrough (2010) business model innovation is very difficult to achieve but very important. The meta-model is helpful but not enough, because organizational processes also need to change. The organizational changes are not mapped by the meta-model. Businesses need to adopt an effective attitude toward business model experimentation to be successful.
Fourthly, according to Chesbrough (2010) organizations need to identify internal leaders for business model to be successful. These leaders need to manage the process of delivering a new business model to be successful. The current meta-model also does not describe this as well.
Fifthly, according to Chesbrough (2010) the culture of a company needs to find a way to embrace the new business model while maintaining the old model until the new one can take over entirely. The meta-model does not describe this process.
4.4 Table review meta-models
In the previous paragraphs three meta-models have been reviewed by use of multiple sources. In this paragraph there is a table, see table 3, for an overview of the different limitations of the meta-models.
Table 3: Weaknesses Business Models
By using this table and the previous paragraphs, it is possible to identify the weaknesses of the meta-models based on the literature review. As shown in Table 3 there is no clear ‘winning’ model. It is remarkable that both Business Model Canvas and the Model of Johnson et al. miss the notion of competitive strategy. This is consistent with our findings in paragraph 2.5: only Chesbrough et al. include the competitive notion. Secondly, none of the models are presumed to have proper risk identification. This is remarkable while entrepreneurship is about taking calculated risks. Furthermore, all of these meta-models seem to have some visualization issues according to the literature sources. This seems rather strange as, for example, Business Model Canvas is described as a conceptual tool designed to help businesses to discuss, map, design and (re-)invent (new) business models (Osterwalder and Pigneur 2010). This implies that the Business Model Canvas has strong visualization capabilities. Osterwalder and Pigneur (2010) however, state in their book that the concept is easy to use and visualize. This visualization point feels a little arbitrary based on personal preferences.
Furthermore, in the review of Chesbrough it is mentioned that: ‘organizations need to identify internal leaders for business model to be successful’. These topics are also not covered by both the Business Model Canvas and the model of Johnson. In the literature on these models, there is no mention of this.. So this point should also be added as a weakness of Business Model Canvas and the model of
Johnson. Moreover, this is also the case for the notion of the change culture of a company. In the review of Chesbrough, this point comes forward as well. Again Business Model Canvas and model of Johnson do not mention this subject, and should be added for both models to the review as well. Finally, there is identified a threat for superficial answers when using the Business Model Canvas. It is not unthinkable that this is also the case for the other two models, due to the nature of meta-models. Although, in literature, the threats of superficial answers given when using the meta-model of Johnson and the meta-model of Chesbrough are not discussed. This point should also be added as a possible weakness for these models as well.
