Towards the Future in Urban Public Transportation : Exploring Business Models for Innovation & New Business Entry

Abstract: This Master’s thesis explores the importance of creating a new form of business model that incorporates a more substantial focus on innovation business strategy, geared towards the public transportation industry. It specifically explores how multinational companies (MNCs) in urban public transportation can use their internally developed technologies to enter new businesses beyond their current core. Due to the complexity of this topic, the thesis covers three major issues. First, it is important to determine the values that the technology offers to the new business and which strategy should be used to delivered these values. Second, it is necessary to create an appropriate business model to successfully commercialize the innovation. Third, it is essential to find suitable ways to integrate this business model into the company organizational structures. To provide new approaches and perspectives, this research project uses a single case study, a leading public transportation MNC and one of its innovative technologies to enter a new business. For confidentiality, names, empirical data, analysis and recommendations for the company have been excluded from this publication. Findings reveal that Blue Ocean Strategy and its fundamental value innovation theory can be used in coordination with a traditional business model approach and corporate venturing theory to provide a more complete picture of the stages of business strategy in entering a new business in public transportation, with a more distinct focus on the innovation aspect. Given the findings, an MNCs should first determine the new value that their technology brings to various external stakeholders and find a way to communicate and market it in an untraditional way, focusing on emotional as well as functional appeal. MNCs should then consider various positions they can take in a new business, in determining the ideal commercialization strategy to pursue. MNCs should bear in mind that value is enhanced through collaborations both inside and outside the industry. This strategy can be chosen based on a variety of factors, such as monetary and strategic aims. Lastly, MNCs should consider how to enhance value through the appropriate organizational integration strategy for the new business. The proposed business model incorporates the interrelationship between the Blue Ocean theory, with business model and corporate venturing strategies, to create a business model approach that provides a better understanding of the decision-making processes, risks, and value, of an internally developed innovation, and the impact on an MNC’s core business.