Business Model Innovation after Disruptions: A Process Study of an Incumbent Media Organization

Abstract

We investigate the process through which incumbents respond to disruptions by opening up their business models. We conducted a longitudinal study (1995-2016) of a major media publishers responding to the Internet. We find that incumbents increase the access to external knowledge to seize opportunities and fend off low-end disruptors.

Megatrends and Disruptors and Their Postulated Impact on Organizations

“…One would assume that an HPO, defined as "an organization that achieves financial and non-financial results that are exceedingly better than those of its peer group over a period of five years or more by focusing in a disciplined way on that what really matters to the organization" [5], p5, is ideally positioned to deal adequately with megatrends and disruptions. After all, in general these megatrends and disruptions are difficult to manage for organizations as they often require modified or even completely new business models and ways of working, which is difficult for many organizations to achieve, especially on short notice [6]. In contrast, HPOs are known to be well able to cope with changing circumstances because of their flexibility and adaptability and can thereby be assumed to be able to better deal with these megatrends and disruptions [7].…”

“…In addition, most of the literature on HPOs is backward looking, i.e., it mainly looks at what organizations have done (past tense) to deal with current changing circumstances to become high-performing. It barely addresses how these organizations can, or have to, deal with longer-term changing circumstances, specifically with megatrends and disruptors [6].…”

Future-Proofing the High-Performance Organization

“…A high-performance organization (HPO), defined as "an organization that achieves financial and non-financial results that are exceedingly better than those of its peer group over a period of five years or more by focusing in a disciplined way on that what really matters to the organization" [6] (p. 5), is seen as an organization that potentially thrives because of these disruptions. This is because average-performing organizations, let alone badly performing ones, in general, have great difficulty in managing disruptions, as these often require a modified or new business model and new ways of working [7]. In contrast, HPOs are known to be well able to cope with changing circumstances because of their flexibility and adaptability [6].…”

“…However, the HPO literature indicates that the above is especially true for short-term challenges, as an HPO is agile and can adapt quickly to problems and opportunities that (suddenly) appear, either internally or in the external environment. This agility is not necessarily suitable for changes that (often gradually) take place over a longer period (the megatrends) or for major short-term sharp changes with a high impact (the disruptors) [7].…”

“…Unfortunately, the current academic literature on HPOs does not give them much guidance in this matter, as preciously little has been published on this matter yet [3]. The HPO literature is mainly backward-looking, i.e., it looks at what organizations have done (past tense) to deal with current changing circumstances to become high-performing but does not discuss how they can deal with megatrends and disruptors [7]. To address this gap in the literature and thus help HPOs prepare for future developments, we started a study with the goal of identifying how HPOs should adapt to megatrends and disruptors in such a way that they will remain high-performing.…”