A viable business model is crucial for the successful commercialisation of disruptive technologies. The cloud computing industry provides an ideal example for exploring how various elements of a business model contribute to a product's success (or failure). We examine how Amazon.com, Salesforce.com and Siebel responded to the disruptive power of the cloud computing technology. Our findings suggest disruptive technology per se is not the reason for the collapse of large corporations, but rather the failure to adapt or create new business models to incorporate novel technology. Our findings have direct implications for strategic managers and entrepreneurs seeking to leverage disruptive technologies through the right business model.
PurposeThis paper seeks to advance the theory on value proposition and innovation by offering a framework for identifying value proposition elements.Design/methodology/approachA single embedded case study is conducted based on Amazon.com's innovations.FindingsBy identifying and systematically analysing innovations by Amazon.com, the concept of value proposition was decomposed into five components: performance, ease of use, reliability, flexibility and affectivity (PERFA).Research limitations/implicationsThe research did not focus on the relationships between the value proposition elements and their relevance in different contexts such as product, industry or customer life cycle.Practical implicationsManagers should support their decision to innovate the value proposition based on customers' perceived value. The findings provide guidance to managers on how to uncover innovative value propositions and potentially create new demand in an uncontested market space.Originality/valueThe paper is an original attempt to correlate value proposition and innovation. It provides researchers and practitioners with a better understanding of the structure of a value proposition and how innovation can influence it.
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