12/02/16 Why do mul/ple business models co-­‐exist in ‘servi/zed’ firms? Laura Phillips Servi/za/on •
•
•
•
Shift from product to service, from ‘thing’ to
outcome
Not just traditional manufacturing industries
Deregulation, technology, globalization and
competitive pressures = economic push
Customers demanding more
•
Positioned as a strategic response to changes
in external environment.
•
‘Success’ is controversial (Visnjic and Van Looy
2013, Neely 2008, Suarez et al., 2013)
Suarez, Fernando F., Michael A. Cusumano, and Steven J. Kahl.
"Services and the business models of product firms: An empirical
analysis of the software industry." Management Science 59.2
(2013): 420-435.
1 12/02/16 Servi/za/on •
Leads to changes in business model
•
A “blueprint for how a company does business” (Osterwalder et al., 2005)
•
The model must link the workings inside the firm to outside elements including the
customer side (explaining how value is created) and how that value is captured or
monetized (Baden-Fuller and Mangematin, 2013).
•
Three parts
1.  Value proposition
2.  Creating value
3.  Capturing value
•
Transformation changes all three simultaneously
How do firms transi/on? •  Are firms ‘moving’ from State A – State B
•  They have multiple BMs
•  Pluralistic vs. Evolutionary – how patterns, paths might differ
•
Research challenge – longitudinal research
•
Why do multiple business models co-exist in servitized firms?
•
Theoretical lens - Institutional theory
•
(Cusumano, Michael A., Steven J. Kahl, and Fernando F. Suarez. "Services, industry
evolution, and the competitive strategies of product firms." Strategic management
journal 36.4 (2015): 559-575.)
2 12/02/16 Ins/tu/onal Theory •  Foundational work ‘similarity across organisations’ (Di Maggio and Powell 1983).
Isomorphism.
•  Mechanisms of institutional change (see for example Greenwood and Meyer (2008)
Ketokivi and Schroeder (2004), Lai et al. (2006),Liu et al. (2010))
•
1.
Coercive isomorphism
2.
Mimetic isomorphism
3.
Normative isomorphism
Di Maggio and Powell
1.  Coercive, formal (regulatory bodies) and informal (societal pressures)
2.  Mimetic, Frequency/outcome based, copying what successful firms are doing, adopted even
when there is no evidence of success.
3.  Normative, norms and standards, professionalization, SoPs, recruitment policies, training,
often through professional organizations, become TfGs and embedded systems.
Lewin Force Field Analysis 3 12/02/16 Method •
Single case to develop new ideas and insights
•
Organisation that is engaged in the process of change
•
Leading wealth management firm that manufactures and provides a range of pension
and investment products and services to financial advisers and private consumers
–  “As a result of changing market dynamics, we expect to see a change over time in the type
of customers we target….we will need to transform, from a business primarily aimed at
intermediaries to one centred on the end customer.”
–  “We explore a number of alternative business models - from a product manufacturer and
B2B to a service-based organisation and B2B and B2C”
•
12 months
•  27 face-to-face semi-structured interviews
•  Strategy and marketing documentation (c. 500 pages) and external reports
(c. 1,000 pages)
•
Themes and patterns: VP, Vcr, Vap - drivers
•
‘cutting and sorting’ (Ryan and Bertand 2003)
Methods Three business models:
4 12/02/16 Findings Pressure Regula/on Business Model 1 Advised Consumers Business Model 2 Direct Findings Pressure Constraint Regula/on Business Model 1 Advised Consumers Business Model 2 Direct Regula/on Consumers Organisa/on 5 12/02/16 Findings Pressure Constraint Regula/on Business Model 1 Advised Consumers Business Model 2 Direct Compe//on Business Model 3 Hybrid Regula/on Consumers Organisa/on Conclusions •  Several coercive, mimetic and normative forces that characterise the organisation’s
internal and external environment and create both opportunities and obstacles for
organisational and strategic change.
•  The organisation’s response is to accommodate these conflicting forces rather than to
engage in contestation and conflict (Besharov and Smith 2014).
•  Theoretical explanation for why servitized organisations operate multiple business
models simultaneously where push forces lead the organisation to change while pull
forces inhibit change (Lewin 1951)
•  The co-existence of multiple business models was not an envisioned, strategic intent
but rather emerged as a result of changes in the external environment.
6 12/02/16 Gap Implica/ons of mul/ple IL •
•
What is/will happen
(Besharov and Smith 2014).
1.  Contestation and conflict
2.  Co-existence
3.  Logic blending
7 12/02/16 Types of Logic Mul/plicity within organiza/ons High
Multiple logics are core
Contested
Aligned
Extensive conflict
Minimal conflict
organizational
Estranged
Dominant
functioning: other logics
Moderate conflict
No conflict
to organizational
functioning
Degree of
Centrality
Low
One logic is core to
are peripheral
Low
High
Logics provide contradictory
Logics provide compatible
prescriptions for action
prescriptions for action
Degree of compatibility
Besharov, M.L. and Smith, W.K. (2014), "Multiple Institutional Logics in Organizations: Explaining Their Varied Nature and Implications", Academy
of Management Review, Vol. 39 No. 3, pp. 364-381.
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