Business Model & Process Innovation

Literature Review

Introduction
The purpose of this literature review is to investigate and present the professional interpretations, viewpoints and attitudes on the topic of Business Model & Process Innovation. This will be achieved by comparing and contrasting various different academic works by experts in the field. The literature review aims to address the following questions with regard to Business Model & Process Innovation:

1. What is Business Model Innovation and its key characteristics?
2. What is the role of technology in Business Model Innovation?
3. What are the barriers to Business Model Innovation?
4. How can these barriers be overcome?

1. What is Business Model Innovation and what are its key characteristics?
When attempting

However this view is opposed by (Teece, 2010, p.174) who believes rather that understanding the concept of Business Models and BMI is the key to utilizing the correct technologies to deliver value. This point is supported by (Baden-Fuller and Haefliger, 2013); “developing the right technology is a matter of a business model decision regarding openness and user engagement”. (Wortz, Schilke and Ulrich, 2010) illustrate the influence technology has had on the BMI process of different firms. In particular they state how the introduction of Web 2.0 technologies has greatly affected the business processes of companies. They outline four factors of Web 2.0 that must be considered by companies (particularly e-businesses) undertaking BMI; Social Networking, Interaction Orientation, Customisation and Personalisation, and User Added Value. This model is explained further in Figure 2. (Bower and Christensen, 2000) maintain that disruptive technologies cause disruptive innovation. They define Disruptive Technology as “technology that has the potential for revolutionizing an industry”. They also use as an example in order to explain this theory: When Sony released their first transistor radios, they sacrificed sound fidelity but created an entirely new market

The barrier of disruptive innovation is evident also in the work of (McGrath, 2010) who mentions how conventional video rental businesses like Blockbuster were gazumped by the new online business model of Netflix. See Figure 3 for example (Culp et al, n.d). Another example of this would be XtraVision, who have had to amalgamate with HMV for both companies to survive. Chesbrough states how there can be a lack of data involved with new opportunities, which can only be generated over time. He also gives mention to further barriers such as the costs and time commitments involved with testing a newly improved business model, and the period of co-existence between the incoming and the old business models that can occur, (Chesbrough, 2010). (Smith, Binns and Tushman, 2010) draw attention to the barrier of human conflict when process improvements and BMI takes effect. They outline that complex business models can mean contradiction of different business areas, which brings competition for resources that can cause conflict between these