The Business Model Innovation Process in High-Tech Start-ups: When, What and Why Changes in a Business Model occur

Abstract: As the process of business model innovation has not been highly researched on and as start-ups face the threat of failure due to a lack of a suitable business model, the purpose of this master thesis was to describe and visualise the process of business model innovation of start-ups as well as to discover the patterns within their processes. Thereby, we aim to provide a better understanding of the process and managerial implications. To achieve the purpose, we examined (1) how often changes of the business model occur, (2) how many building blocks in the business model changed per event, (3) what parts of the business model changed, (4) what caused these changes and (5) how change in one building block of the business model effects the other building blocks. To observe the business model innovation process, we collaborated with five high-tech start-ups and therefore conducted a qualitative research in form of a multiple case study. In our research study, we identified that changes occur three times within the first year of the business model innovation process with a sequence of three to five months. Further, we can conclude that the iterative process is characterised by a slightly declination trend. The parts that change in the business model depends on the antecedents and the effects between the building blocks. Nonetheless, we observed that the first changing event includes changes in the building blocks ‘customer segments’ and ‘value proposition’. In regard to what caused the changes, we observed that the most significant antecedents are customer feedback and need of knowledge which have the greatest impact on the building blocks ‘customer segment’ and ‘key resources’. Outstanding effects between building blocks of the business model canvas included the positive interrelations between ‘customer segments’ and ‘value proposition’ and between ‘value proposition’ and ‘key resources’. In total we concluded, that the creation of the fit between the two building blocks ‘customer segments’ and ‘value proposition’ are the most crucial and should be created early in the process. Further, in order to provide the potential to identify as many errors within the business model and the opportunity for strong changes, customers and other stakeholders should be included in the process of business model innovation to allow the appearance of as many as possible antecedents. Finally, we suggest keeping a balance between how often changes occur and how many building blocks are modified per change.