Research Festival 2012, April 19-20. Copenhagen, Denmark Includes some examples of business model innovation and examples of companies that haven't innovated their business model.

1. Sustainable growth in a
sustained crisis
- The business model as a tool to innovate
Getting the terminology right: Kasper V Roldsgaard
“In economics, sustainable growth refers to External lecturer, Dott. Mag., M.Sc.
increases in profits, adjusted for changes in the CBS – Department of Innovation and
relationship between revenues and costs, which Organizational Economics (INO)
can be sustained over long periods of time” The Wedge, office # K3.48
(author’s definition, 19-04-2012).  21688671
 kro.ino@cbs.dk

2. Best practice example of
non-sustainable growth
DSB Financial highlights1999-2011
14000
Total revenues
12000
Profit for the period
Amounts in DKK million
10000
(Or loss)
8000
6000
4000
2000
0
-2000
-4000
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Fig. 8. The growing gap of costs. Source: DSB Annual Reports 1999-2011. To close the growing gap, DSB suspends two contracts: a)
the Swedish coast line of the Oresund region in 2011 [contract period: 2009-2017] and b) the Väst region in 2012 [contract period:
from 2010 to 2018].

3. RQ: How can the curve’s evolution
be explained?
Financial highlights1999-2011
1200
1000 a Financial result
800
Amounts in DKK million
Best case scenario
600
b e
400
200 Indicative trendline:
0 -84.72x + 1023.2
R² = 0.3825
-200
-400
-600
-800 c
-1000 d
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: DSB Annual Reports

4. Suggestion: Drift with the environment
Fluid model- adapt to the situation Agile tactic:
Act, then probe. Collect information
(but if a crisis
Executive
domain
Expert
domain
from the market.
Analysis:
Starting point
emerges then act)
Inside-out Railway Expert
perspective management panel
If chaotic Railway
Outside-in situation emerges, regulation
perspective then act
(a) (b)
Cynefin framework (Snowden, 2007) Correlated logic
Radical logic Distinctive logic
Complex Knowable
Probe. Adapt prior Analyze. Utilize
expectations of data and expert
how things work. knowledge.
If a chaotic
situation Chaotic Known
emerges, Act. Then revise if Define laws.
then act. required. Just don’t Categorize and
do nothing. codify standards.
Disruptive logic Incremental logic
(c) (d)
Fig. 18. Fluid model - adapt to the situation. The Cynefin framework is to designed to evaluate complexity science from new and different viewpoints based
on the assumption that design choices are influenced by multiple factors in our environment and our past experiences (Snowdon & Boone, 2007). The scheme
provides an initial overview to protect the Spanish railway against some of the pitfalls observed in the Scandinavian railway market, while developing
forward-looking disruptive ideas.
4

5. Today’s program
• Search for business model
• Case examples
• Business model canvas

6. Musikbranche, filmbranche,
spilbranche, avisbranchen,
bogbranche, ejendomsbranche,
”DONG er i dag nr. ét i verden, hvad angår havvind, i kraft af en
enestående knowhow, processtyring og forretningsmodel. Men DONG
er ikke kapitalstærk nok til at fastholde sin andel på et marked, hvor
langt større selskaber kører sig i stilling til kampen om den forventede
tidobling af havmøllekapaciteten i 2020.”

7. 1 En model (for at tjene penge)
Hvor naiv kan man være? Vi har at gøre med et kommercielt
foretagende, som store amerikanske venturekapitalister, […] og en
kinesisk rigmand har investeret millioner af dollar i. De vil se en
forretningsmodel. De vil se et afkast. […] Det er forretning med
stort F.
Kilde: Føhns, H. ”Julegave ødelægger forretningsmodel, Facebook fandt en smart model, men en
diamantring satte sig fast i forretningens tandhjul”. Information, publiceret 11-12-2007
2 Et koncept (for at tjene penge)
”den forretningsmodel for havmølleparker [...] er så smart, at
DONG’s store tyske konkurrent på det europæiske marked [...]
annoncerede, at man nu vil rejse kapital til sine vindmølleprojekter
på lignende måde. [Ekspert udtaler:] Den største kompliment, du
kan få, det er, når konkurrenterne kopierer dine koncepter.”
Kilde: Nielsen, J. S., "Schurs show mod Eldrup rammer DONG", 16-03-2012.

8. Nøgleord: Bæredygtig økonomi, psykologi, politk,
(kunder, værdi, krise, success, finansiering,..)
Forretningsmodel penge (127)
Forretningsmodel investering (43) Forretningsmodel krise (44)
Forretningsmodel finansiering (13) Forretningsmodel succes (48)

9. MP3-player/iPod?

10. Disruptive/game-changing system
“Game changing value
rated by the market”

11. Not if you ask
me… take a look at
this “Memory is an
enemy”
Icon of “serious play” with
technology (2007) Author of “The Technology
of foolishness” (1971)
Source: www.hu2.com/store/stay-hungry-stay-foolish-sticker.html, January 25 2012

12. Best practice example of disruptive logic –
or icon of “serious play” with technology

13. Business model
inertia
“Many companies fail not because they do
something wrong, but because they keep
doing what used to be right thing for too long -
and thus suffer from the rigidity of their own
business models.” (Doz and Kosonen, 2010)

14. Business model
innovation
There are many reasons why the incremental innovation doesn’t just
grow into the [disruptive] world. The strategy is a hindrance to free
thinking, at least for the grant portion of the innovation, but perhaps
also for the development of new business models for existing services.
We can also see that the risk picture becomes much more diffused in
the [disruptive] innovation world because we have no experience in
these new areas. (p. 616) (Elkjær, 2011)
Tabula rasa rationality
“[Disruptive] innovation requires a product or service in terms of tabula rasa, which mentally can be
an almost insurmountable barrier in the innovation process.” (p. 616) (Elkjær, 2011)

15. Visualizing the curve
3. 4.
Searching for an
innovation hotspot
2.
“The business
environment itself is a
choice variable: firms
can select a business
environment or be
1. selected by it: they can
also shape it.”(Teece,
2010)
Fig. 16. Visualizing the disruptive curve. Source: Based on Hobcraft P., 2012b, “The pathway curve methodology”,
The Agility Innovation Specialists, Online: http://innovationfitnessdynamics.com/2012/02/14/the-pathway-curve-
methodology, Published 2012-02-14, Retrieved 2012-04-03.

16. Existing
INPUT focus? OUTPUT
loses design battle
Nearly always
Nearly always Mostly this design leads to loss of
problematic  competitiveness over time
design option
Examples: Spanair, DSBFirst, Nokia
design battle
Nearly always wins
Often under- Transforms industry structure
estimated or  and/or shifts behavioral trends
overlooked
design option Examples: Ryanair, AVE, Apple.
Possible  Evolution of the
problem dominant logic

17. Taxonomy of dominant design logics
Track 1 Track 2 Track 3
1.
2.
3.
4.
Fig. 14. Dominant design logic. Source: Based on Hobcraft (2012) “Your dominating innovation design is?”,
The Agility Innovation Specialists, Online: http://paul4innovating.com/2012/02/01/your-dominating-
innovation-design-is, Published 2012-02-01, Retrieved 2012-04-03.

18. Progression in small steps
We need to solve
specific problems
BIG BANG – HIGH RISK SERIES OF SMALL STEPS
“Problem-based”
“Black Hole” investment strategy
investment strategy
Examples Examples
a. DSBFirst licences a. AVE trains in Spain (lines, rolling stock)
b. IC4 trains in Denmark b. Mobile tickets (sms, app..)
c. Travelcards (planning) c. Travelcards (realized)
”The concept of a business model lacks theoretical grounding in economics or in business studies ... [the absence of]
business models in economic theory probably stems from the ubiquity of theoretical constructs that have markets solving
the problems that – in the real world – business models are created to solve.” Source: Teece, D. (2010:175, emphasis
added), Business models, business strategy and innovation, Long Range Planning 43. 18

19. Why do we exist?
Challenging the normal way
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20. MANAGEMENT
EXERCISE
Handouts + posters
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21. Business model
canvas
21 21

22. One big idea, multiple perspectives
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