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Teece (2010) "Business Models, Business Strategy and Innovation

22 important questions on Teece (2010) "Business Models, Business Strategy and Innovation

What is the essence of a business model?

Defining the manner by which the enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit

What does the business model reflect?

Management's hypothesis about what customers want, how they want it, and how the enterprise can organize to meet those needs, get paid for doing so, and make a profit

What is the purpose of this article?

To understand the significance of business models and explore their connections with business strategy, innovation management, and economic theory
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Why do business models need to be more customer-centric?

Developments in the global economy have changed the traditional balance between customer and supplier. New communications and computing technology, and the establishment of reasonably open global trading regimes, mean that customers have more choices, variegated customer needs can find expression, and supply alternatives are more transparent.

What are the five elements of a business model?

  1. Select technologies and features to be embedded in the product/service
  2. Determine benefit to the customer from consuming/using the product/service.
  3. Identify market segment to be targeted.
  4. Confirm available revenue streams
  5. Design mechanisms to capture value

Where is a business model about?

The benefit the enterprise will deliver to customers, how it will organize to do so, and how it will capture a portion of the value that it delivers

What is the difference between a business model and a business strategy?

A business model is more generic than a business strategy

What are the four steps to achieve sustainable business models?

  1. Segment the market
  2. Create a value proposition for each segment
  3. Design and implement mechanisms to capture value from each segment
  4. Figure out and implement ‘isolating mechs’ to hinder or block imitation by competitors and disintermediation by customers and suppliers.

What are the barriers to imitating business models?

  1. Implementing a business model may require systems, processes and assets that are hard to replicate
  2. There may be a level of opacity that makes it difficult for outsiders to understand in sufficient detail how a business model is implemented, or which of its elements in fact constitute the source of customer acceptability
  3. Even it is transparently obvious how to replicate a pioneer's business model, incumbents in the industry may be reluctant to do so if it involves cannibalizing existing sales and profits or upsetting other important business relationships.

What are the key issues in designing a business model?

Figuring out how to deliver value to the customer – and to capture value while doing so – it is not enough to do the first without the second.

What is the profiting from innovation framework?

An effort to help entrepreneurs and strategists figure out appropriate business models/designs and technology strategies by delineating important features of business model choice, and predicting the outcomes from those choices.

Which two extremes modes does the framework recognize by which innovators can capture value from their innovation?

  1. Integrated business model, in which an innovating firm bundles innovation and product together and assumes the responsibility for the entire value chain from A to Z including design, manufacturing, and distribution.
  2. Outsourced business approach (licensing)

What do companies have that choose for the integrated business model?

Companies have the rights assets already in place and are well equipped to do this; but the framework also indicates when the internal development and commercialization strategy is a necessity

When can a company choose to license?

One could license - and expect the licensing model to work - only if one had strong intellectual property rights: without them the licensee might well be the one who captures value, at the expense of the innovator.

What is in between outsourced and integrated business models?

Hybrid approaches involving a mixture of the two approaches

How can the profiting from innovation framework be considered?

As a tool to help design business models, and using it allows one to map business model selection to type of innovation, while simultaneously enabling one to figure out where intellectual property monetization through licensing is likely to be viable, and where it's not, or where some kind of vertical integration is indicated.

Why is it hard to secure strong intellectual property protection for scientific knowledge?

Because basic research usually ends up in scientific publications

What doe economists call 'public goods'?

investment in scientific research

Do technological innovations need to be matched with business model innovation?

If the innovator is to capture value.. YES! The more radical the innovations and the more challenging the revenue architecture, the greater the changes likely to be required to traditional business models.

What is the role of discovery, learning and adaptation?

Designing a new business model requires creativity, insight, and a good deal of customer, competitor, and supplier information and intelligence. There may be a significant tacit component. One needs to distil fundamental truths about customer desires, customer assessments and the capabilities of competitors when designing a commercially viable business model. Changes of good design are greater if entrepreneurs and managers have a deep understanding of user needs. 

Is traditional market research enough to identify as yet unarticulated needs and/or emerging trends?

No. Changes with respect to the relative merits of particular organizational and technological solutions to customer needs must also be considered

What does selecting the right architecture and pricing model for a business require?

Not just understanding the choices available, but also assembling the evidence needed to validate conjectures and hunches about costs, customers, competitors, complementors, distributors and suppliers. A keen understanding of customers needs and customers willingness to pay, as well as competitors positioning and likely competitive responses

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Artikelen capturing value from innovation 2016

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