Conceptualizing and qualifying disruptive business models

Schiavi, Giovana Sordi; Behr, Ariel; Marcolin, Carla Bonato

doi:10.1108/RAUSP-09-2018-0075

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Research Paper • RAUSP 54 (3) • Jul-Sep 2019 • https://doi.org/10.1108/RAUSP-09-2018-0075 copy

Conceptualizing and qualifying disruptive business models

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Abstract

Purpose

This paper aims to elaborate a set of characteristics that conceptualize and qualify a disruptive business model.

Design/methodology/approach

The literature on disruptive business models will be analyzed using the latent semantic analysis (LSA) technique, complemented by content analysis, to obtain a more precise qualification and conceptualization regarding disruptive business models.

Findings

The results found described concepts already described in the theory. However, such findings, highlighted by the LSA, bring new perspectives to the analysis of the disruptive business models, little discussed in the literature and which reveal important considerations to be made on this subject.

Research limitations/implications

It should be noted, about the technique used, a limitation on the choice of the number of singular values. For this to be a problem in the open literature, the authors tried to work not just with the cost-benefit ratio given the addition of each new dimension in the analysis, as well as a criterion of saturation of the terms presented.

Practical implications

The presentation of this set of characteristics can be used as a validation tool to identify if a business is or is not a disruptive business model by managers.

Originality/value

The originality of this paper is the achievement of a consolidated set of characteristics that conceptualize and qualify the disruptive business models by conducting an in-depth analysis of the literature on disruptive business models through the LSA technique, considering the difficulty of obtaining precise concepts on this subject in the literature.

Disruptive business model; Innovation; Technology

Data-driven categories	Characteristics of DBM
Disruptive technologies and innovation	DBM represents a link between business models and breakthroughs in technology and innovation (Christensen & Raynor, 2003Christensen, C. M., & Raynor, M. (2003). The innovator’s solution: Creating and sustaining successful growth, Boston, MA: Harvard Business School Press.)
	Disruptive technologies and innovations are best seized when combined with the innovation of business models (Chesbrough & Rosenbloom, 2002Chesbrough, H., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: Evidence from Xerox Corporation’s technology spin-off companies. Industrial and Corporate Change, 11, 529-555.; Christensen & Raynor, 2003Christensen, C. M., & Raynor, M. (2003). The innovator’s solution: Creating and sustaining successful growth, Boston, MA: Harvard Business School Press.; *Johnson et al., 2008*Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 86, 50-59.)
	The exploration of a new technology or an innovation process requires an evaluation and a re-adaptation of the business models and the products or services offered (Chesbrough & Rosenbloom, 2002Chesbrough, H., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: Evidence from Xerox Corporation’s technology spin-off companies. Industrial and Corporate Change, 11, 529-555.)
	Conflict between established business models and the new models required for disruptive technology or innovation (Christensen & Raynor, 2003Christensen, C. M., & Raynor, M. (2003). The innovator’s solution: Creating and sustaining successful growth, Boston, MA: Harvard Business School Press.)
	New technologies influence business models while creating opportunities and challenges for organizations (*Bashir et al., 2016Bashir, M., Yousaf, A., & Verma, R. (2016). Disruptive business model innovation: How a tech firm is changing the traditional taxi service industry. Indian Journal of Marketing, 46, 49-59.; Sainio, 2004*Sainio, L. M. (2004). A framework for analysing the effects of new, potentially disruptive technology on a business model case – Bluetooth. International Journal of Electronic Business, 2, 255-273.)
	Emerging economies can introduce emerging technologies and innovations originated from more advanced economies through secondary innovations into business models (*Wu et al., 2010*Wu, X., Ma, R., & Shi, Y. (2010). How do latecomer firms capture value from disruptive technologies? A secondary business-model innovation perspective. IEEE Transactions on Engineering Management, 57, 51-62.)
	The disruption of disruptive innovations in business models varies, in the short and long term, when technology-driven or market-driven (Habtay, 2012Habtay, S. R. (2012). A firm-level analysis on the relative difference between technology-driven and market-driven disruptive business model innovations. Creativity and Innovation Management, 21, 290-303.)
	The exploration of emerging technologies and innovations within DBM provides the offering of products and services that reach new markets, making it possible to obtain competitive advantage and bring the failure of the companies (Bower & Christensen, 1995Bower, J. L., & Christensen, C. M. (1995). Disruptive technologies: Catching the wave. Harvard Business Review, 73, 43-53.; Christensen, 1997Christensen, C. M. (1997). The innovator’s dilemma: When new technologies cause great firms to fail, Boston, MA: Harvard Business School Press.; Christensen & Raynor, 2003Christensen, C. M., & Raynor, M. (2003). The innovator’s solution: Creating and sustaining successful growth, Boston, MA: Harvard Business School Press.; Hwang & Christensen, 2008Hwang, J., & Christensen, C. M. (2008). Disruptive innovation in health care delivery: A framework for business-model innovation. Health Affairs, 27, 1329-1335.)
	Disruptive technologies and innovations bring a very different value proposition to the market and deliver products and services with greater simplicity, convenience, affordability and lower costs (Bower & Christensen, 1995Bower, J. L., & Christensen, C. M. (1995). Disruptive technologies: Catching the wave. Harvard Business Review, 73, 43-53.; Christensen, 1997Christensen, C. M. (1997). The innovator’s dilemma: When new technologies cause great firms to fail, Boston, MA: Harvard Business School Press.; Christensen & Raynor, 2003Christensen, C. M., & Raynor, M. (2003). The innovator’s solution: Creating and sustaining successful growth, Boston, MA: Harvard Business School Press.; Hwang & Christensen, 2008Hwang, J., & Christensen, C. M. (2008). Disruptive innovation in health care delivery: A framework for business-model innovation. Health Affairs, 27, 1329-1335.; *Pereira et al., 2015Pereira, S. A., Imbrizi, F. G., Freitas, A. D. G., & Alvarenga, M. A. (2015). Business model as an inducer of disruptive innovations: The case of Gol Airlines. International Journal of Innovation, 3, 28-42.; Sainio, 2004Sainio, L. M. (2004). A framework for analysing the effects of new, potentially disruptive technology on a business model case – Bluetooth. International Journal of Electronic Business, 2, 255-273.; Yovanof & Hazapis, 2008*Yovanof, G. S., & Hazapis, G. N. (2008). Disruptive technologies, services, or business models?. Wireless Personal Communications, 45, 569-583.)
Value proposition to costumers	DBM arises to replace existing business models, redefining what an existing product or service is and how it is delivered to customers, through new technologies and innovation processes (Hwang & Christensen, 2008Hwang, J., & Christensen, C. M. (2008). Disruptive innovation in health care delivery: A framework for business-model innovation. Health Affairs, 27, 1329-1335.; Markides, 2006Markides, C. (2006). Disruptive innovation: In need of better theory. Journal of Product Innovation Management, 23, 19-25.; Mitchell & Coles, 2004Mitchell, D. W., & Coles, C. B. (2004). Business model innovation breakthrough moves. Journal of Business Strategy, 25, 16-26.; *Wu et al., 2010*Wu, X., Ma, R., & Shi, Y. (2010). How do latecomer firms capture value from disruptive technologies? A secondary business-model innovation perspective. IEEE Transactions on Engineering Management, 57, 51-62.)
	Great concern and attention of DBM with the selected market segment, seeking new forms of value creation that sensitize consumers (Magretta, 2002Magretta, J. (2002). Why business models matter. Harvard Business Review, 80, 86-92.; *Bashir et al., 2016*Bashir, M., Yousaf, A., & Verma, R. (2016). Disruptive business model innovation: How a tech firm is changing the traditional taxi service industry. Indian Journal of Marketing, 46, 49-59.)
	The formation of the new organizational models can be associated with business projects with defined objectives, based on the delivery of value to a specific market segment, through the definition of a structure, resources and specific activities (*Bashir et al., 2016Bashir, M., Yousaf, A., & Verma, R. (2016). Disruptive business model innovation: How a tech firm is changing the traditional taxi service industry. Indian Journal of Marketing, 46, 49-59.; Magretta, 2002Magretta, J. (2002). Why business models matter. Harvard Business Review, 80, 86-92.; Simmons et al., 2013*Simmons, G., Palmer, M., & Truong, Y. (2013). Inscribing value on business model innovations: insights from industrial projects commercializing disruptive digital innovations. Industrial Marketing Management, 42, 744-754.)
Maintenance of existing business models	New business models in the market pose direct and severe threats to the maintenance of traditional and stabilized models (Chesbrough, 2010Chesbrough, H. (2010). Business model innovation: Opportunities and barriers. Long Range Planning, 43, 354-363.; Christensen, 1997Christensen, C. M. (1997). The innovator’s dilemma: When new technologies cause great firms to fail, Boston, MA: Harvard Business School Press.; Gilbert, 2005Gilbert, C. (2005). Unbundling the structure of inertia: Resource versus routine rigidity. Academy of Management Journal, 48, 741-763.)
	DBM bring about radical changes in the market, disrupting leading and stabilized companies, making their existing business models obsolete (*Gassmann et al., 2013Gassmann, O., Frankenberger, K., & Csik, M. (2013). The St. Gallen business model navigator. Working Paper, Institute of Technology Management, University of St. Gallen, Switzerland.; Johnson et al., 2008Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 86, 50-59.; Osiyevskyy & Dewald, 2015Osiyevskyy, O., & Dewald, J. (2015). Explorative versus exploitative business model change: The cognitive antecedents of firm-level responses to disruptive innovation. Strategic Entrepreneurship Journal, 9, 58-78.; Yovanof & Hazapis, 2008*Yovanof, G. S., & Hazapis, G. N. (2008). Disruptive technologies, services, or business models?. Wireless Personal Communications, 45, 569-583.)
	It is fundamental for managers to have an entrepreneurial behavior, with the purpose of analyzing the market as well as the business, seeking new ways of delivering value to consumers, to seize the opportunities and escape the threats that come with new business models (*Bashir et al., 2016Bashir, M., Yousaf, A., & Verma, R. (2016). Disruptive business model innovation: How a tech firm is changing the traditional taxi service industry. Indian Journal of Marketing, 46, 49-59.; Chesbrough & Rosenbloom, 2002*Chesbrough, H., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: Evidence from Xerox Corporation’s technology spin-off companies. Industrial and Corporate Change, 11, 529-555.)
Pattern within DBM	Patterns of business models can be used to interpret the environment and anticipate how to perform the intended business through the knowledge of the elements related to DBM (*Amshoff et al., 2015*Amshoff, B., Dülme, C., Echterfeld, J., & Gausemeier, J. (2015). Business model patterns for disruptive technologies. International Journal of Innovation Management, 19, 1-22.)

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[1] *Corresponding author Giovana Sordi Schiavi can be contacted at: giovanaschiavi@hotmail.com Associate Editor: Flavio Hourneaux Junior