среда, 1 февраля 2023 г.

55 Business Model Patterns. #11 Digitization

 


This pattern relies on the ability to turn existing products or services into digital variants, and thus offer advantages over tangible products, e.g., easier and faster distribution. Ideally, the digitization of a product or service is realized without harnessing the value proposition which is offered to the customer. In other words: efficiency and multiplication by means of digitization does not reduce the perceived customer value.


How they do it: Cewe digitized the process of creating and ordering individualized products, utilizing your own fotos. Through their website, customers can create their products remotely at anytime and have them shipped to their home.

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Pattern Co-Occurrence

Below, the pattern "Digitization" is analyzed based on co-occurrence, in order to get insights into how this business model pattern is applied in combination with other patterns within the firms we studied.


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A digital transformation business model for innovation (chapter)


4 Results


Figure 1 The Digitization business model framework.

In  Figure  1,  we  present  a  first  graphical  version  of  the  digitization  business  model

innovation framework. The model is depicted as a directed graph whose components are

causally linked. The nodes represent components of the business model framework and

contain descriptions of typical effects resulting from digitization. 

The way to read this model is to start with a node that is affected by digitization, e.g.

shifting from products  to digital  features will  typically create  new  value  propositions,

such as real-time data, a potential for data analytics, remote access, etc. Often, this will

generate new digital,  bidirectional channels,  etc. As such, the  model is an explanatory

model of current changes in businesses. However, it is also possible to exploit the model

structure for the study of the consequences of going digital.  The model then should be

read in sense that a change in a component will naturally imply a predicted change in the

connected  components.  Importantly,  such  a  causally  connected  business  model  thus

naturally  supports  a  more  general  analysis  of  the  consequences  of  going  digital  for

previously unseen cases and can be tested and further improved. Of course, it is possible

to  describe the  model in  more detail,  e.g. going  back to  individual  case studies.  For

reasons of legibility this information is not include in the Figure above.

In this model, there is an important link from the channels component to customer

relations and back to activities (with a potential added circle from channels to customer

segments to customer relation for the case where the new digital channels also open new

customer groups). These links are built from the consideration of hybrid value creation

(Reichwald & Piller 06, Velamuri 10) often triggered by digitisation. Although the joint

value creation of businesses and their customers does not rely on being digital, it is

particulary widespread in the digital world and has been labelled co-creation, open

innovation, crowdsourcing etc.

The model clarifies that – as products or services shift towards digital, it can be

expected that the associated channels become digital. This is direct consequence of the

underlying technology characteristics – low-cost, direct and bidirectional. This in turn

induces a change in the customer relationship and will often naturally lead to open

innovation approaches that exploit the bidirectional communication for the design of

products/services. For the innovation practitioner this suggests to include hybrid value

creation approaches whenever a product is equipped with a digital component.

5 Discussion

The  model  presented  here  aims  to  represent  both  empirical  objects  and  empirical

characteristics  of  phenomena  businesses  experience  when  going digital.  It  models  in

particular  components of  business models and  assumes an  underlying causality  in the

linkages between components following changes in any given component. The model is

both descriptive  of a set of  cases described in literature, structured using technical and

economic  characteristics  of  information  and  communication  technology,  but  also

predictive with respect to yet  unseen cases of  digitization. Causality is  modelled using

directed  links  that  suggest  consequences  in  a  component  resulting  from  changes  in

another.

The underlying motivation behind this paper is to provide such causal linkages as a

central element in improved economic models of innovation processes. It has previously

been argued for the theory of innovation management research  that innovation research

(and management research in general) exhibits a lack of causal models. This lack often

unnecessarily opens  the whole  field to  severe criticism as it  makes it very hard,  if not

impossible, to test and validate research results. The model presented here is only a first

step and should be tested with novel cases of digitization and, where necessary, refined

further. 

Secondly, the model offers a systematic approach to the study of effects on business

models  of  going  digital.  We  have  already  seen  how  the  change  in  one  component

(products)  generates  consequential  changes  through  a  range  of  components  (up  to

‘activities’).  In  order  to  model  this  change,  it  was indeed  necessary to  introduce added

causal links (not present in the Schallmo and Brecht (10) framework). It is to be expected

that more  such links  will be  identified when studying a large number  or perhaps  more

detailed case examples.

Thirdly, from a practical perspective, the model can be used to develop  or to refine

new  digital business  models.  It offers  an opportunity  to study  the whole  spectrum of

potential  changes  induced  by  digital  technologies  starting  from  an  existing  business

model.

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