The Business Model House : A Study in Business Model Decision-Making Tools

University essay from KTH/Entreprenörskap och Innovation

Abstract:

In the world of today, constant change is the “new normal”. The context of our global economy calls for a new set of entrepreneurial leaders; leaders who embrace and diligently find the way forward for their organizations. In this context, leading decision makers need efficient tools for smart business model decision-making. (Ries, 2011) Thus, this thesis sets out to answer following questions, with the purpose to inform those seeking a fundament for advantageous business model decision-making.

MAIN QUESTION: Can the Business Model Canvas be an advantageous tool for business model decision-making in large enterprises?

SUB QUESTION 1: What are the limitations of the Business Model Canvas in the decision-making process?

SUB QUESTION 2: What modifications might be applied to increase the relevance of the Business Model Canvas as a tool for large enterprises?

To answer these questions, the thesis presents relevant theory regarding key concepts behind the business model, frameworks and tools commonly used in the startup community (the Business Model Canvas, Customer Development, Lean Startup, and Lean Canvas), as well as an overview of the concepts of strategy and dynamic capabilities.

The empirical procedure begins with hybrid brainstorming sessions and in-depth interviews, and continues with a workshop and evaluation interviews and questionnaires. The empirical work is conducted with Microsoft Sweden Services’ executive leadership team, spanning a time period of approximately one month.

The results are derived by reviewing the empirical findings in light of theory.

In short, the results show:

(1) That five out of six leadership team members regarded the Business Model Canvas (BMC) as a 4 or 5 on a 1-5 scale, ranging from “Prefer traditional tools” (e.g. a business plan), to “Prefer the BMC”

(2) That the following areas where identified as “Key areas of improvement” by the leadership team (number of members considering this a key area for improvement in brackets): Connection to strategy (4/6), Connection to organizational capabilities (3/6), Connection to values (2/6), Mixing different levels of abstraction (1/6), Connection to compete (5/6), Ability to track development over time (4/6)

The results are then discussed and analyzed, presenting critique of and limitations to the tools, as well as suggesting modification and a new model, The Business Model House (The BMH), which was created by this researcher and is based on following decisions:

  • Integrate chosen aspects of the BMC and the Lean Canvas

  • Add a foundation of values

  • Add a ceiling of strategy

  • Add an intersection of dynamic capabilities

  • Add a third, optional, dimension capturing the transition between business models and innovation accounting.

The purpose of these development decisions is to offer a more holistic and yet simple tool for business model decision-making.

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