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How do they do it? Understanding business model innovation in the context of disruptive innovation
(2018)
Globalization, digitalization and increasingly shortened lifecycles of consumer and business goods require companies to be continuously innovative. Under these domains of innovation, disruptive innovation has developed as a popular term amongst scholars and practitioners alike (Christensen, Raynor, & McDonald, 2015). In fact, the concept of disruptive technolo-gies was introduced to explain the failure of incumbent businesses in times of change (Bower & Christensen, 1995). Later, research broadened the concept towards disruptive innovations thereby going beyond technologies alone (Yu & Hang, 2010). Indeed, recent literature stresses the embracing business model that needs to be designed appropriately to make use of the technology and push it forward in the process of disruption. Subse-quently, current research concludes that disruption in its core is a “business model problem, not a technology problem” (Christensen, 2006).
Despite the recognition of the relevance of a firm’s business model for disruption, a clarifi-cation of the business model concept in the disruptive innovation process appears to be necessary in two dimensions. First, there is only limited knowledge regarding the actual design of (potential) disruptive business models. Second, from a dynamic perspective, less is known about how organizations manage the process of disruptive innovation until their business model yields a disruptive effect in the market.
The PhD research project aims at shedding light on the role of the firm’s business model in regard to the concept of disruptive innovation. Insights from this research project will not only add to a deeper understanding of disruptive innovation from a theoretical perspective but also deliver guidance for managers facing an increasingly changing environment.
Multi‐sided platforms are becoming increasingly relevant in understanding industry changes. The literature has focused on the inception and growth of platforms, neglecting how entrants develop and grow disruptive platforms. To address this shortcoming, we study an entrant that was spun off from an established catalog retailer and is steering a multi‐sided disruptive platform in the German fashion retail industry. We conduct a longitudinal study on how the entrant leverages the relationships with its multiple platform sides during 2014–2019 by analyzing secondary data using topic modeling and qualitative content analysis. We propose three levers: (1) “guarded inception,” which is the collaboration with a knowledgeable partner unaffected by disruption to quickly overcome the chicken‐and‐egg problem; (2) “activating force multipliers,” which is the strategic orchestration of complementors being contractually tied to the entrant and working to extend the entrant's value network. Enabled by these two levers, the entrant was (3) “building on others” to develop the platform along a disruptive path while circumventing internal limitations and external resistance. We contribute to the intersection of the literature strands on platform and disruptive innovation by showing how the entrant strategically leveraged its different platform sides over time to develop and grow a disruptive platform.
This research case study presents a novel way to study the development and growth of a multi-sided disruptive platform built on digital technologies. The corresponding business model unfolds industry-changing dynamics eventually changing competition logic in established markets. Despite the appeal of those models, developing and managing such a multi-sided disruptive platform is challenging because multiple platform sides need to be strategically aligned to develop along a disruptive path. Hence, scholars and practitioners are increasingly debating about the dynamics arising in the development and growth of such platforms. The focal case study discusses a research project which contributes to those debates:
This case study discusses how we used topic modeling and qualitative content analysis to make sense of a large amount of historical data from and about multiple platform sides to understand the strategic management and alignment mechanisms that unfolded over time. We discuss how we studied an entrant that was spun off from an established catalog retailer and is steering a multi-sided disruptive platform in the German fashion retail industry. We present how we faced the challenges of collecting data from multiple platform sides and how we used topic modeling to overcome data asphyxiation (i.e. difficulties in making sense of an overwhelming amount of qualitative data). Readers of this case study are equipped with practical insights about a) studying the development of multi-sided platforms over time, and b) using topic modeling and qualitative content analysis as complementing methodological approaches.