Designing Business Models for the Internet of Things
This article investigates challenges pertaining to business model design in the emerging context of the Internet of Things (IOT). The evolution of business perspectives to the IOT is driven by two underlying trends: i) the change of focus from viewing the IOT primarily as a technology platform to viewing it as a business ecosystem; and ii) the shift from focusing on the business model of a firm to designing ecosystem business models. An ecosystem business model is a business model composed of value pillars anchored in ecosystems and focuses on both the firm's method of creating and capturing value as well as any part of the ecosystem's method of creating and capturing value. The article highlights three major challenges of designing ecosystem business models for the IOT, including the diversity of objects, the immaturity of innovation, and the unstructured ecosystems. Diversity refers to the difficulty of designing business models for the IOT due to a multitude of different types of connected objects combined with only modest standardization of interfaces. Immaturity suggests that quintessential IOT technologies and innovations are not yet products and services but a "mess that runs deep". The unstructured ecosystems mean that it is too early to tell who the participants will be and which roles they will have in the evolving ecosystems. The study argues that managers can overcome these challenges by using a business model design tool that takes into account the ecosystemic nature of the IOT. The study concludes by proposing the grounds for a new design tool for ecosystem business models and suggesting that "value design" might be a more appropriate term when talking about business models in ecosystems.
|Keywords||business model, design tool, ecosystem, Internet of Things, IOT, value, value design|
|Journal||Technology Innovation Management Review|
Westerlund, M, Leminen, Seppo, & Rajahonka, Mervi. (2014). Designing Business Models for the Internet of Things. Technology Innovation Management Review, 5–14.
|Publisher's version Final Version|