Value proposition-driven reconfiguration of business models in dynamic industries: a design-science approach

Abstract

PurposeThis paper aims to better understand and structure the process of business model (BM) redesign in dynamic industry contexts by exploring the interactions of BM components through a configuration and design-science lens. While these interactions have been investigated broadly in the BM literature, detailed studies on their properties and structures are limited.Design/methodology/approachA design-science methodology was utilised to conceptualise a BM design artefact based on literature, the components' interactions of which were investigated and iteratively validated through a case study of an organisation going through a BM change. The artefact served as a framework to capture the case firm's BM and value proposition through semi-structured interviews.FindingsThe results suggest that the interaction of BM components is represented by the value proposition as an integrating mechanism, which can be expressed as a combination of tangible, intangible and monetary inter-component flows. The value proposition, rather than being pre-determined and static, is dynamic and evolves as its flows are exchanged across the value creation, delivery, customer and capture components of the BM. These exchanges and interactions are facilitated by the components' input-process-output capabilities and drive BM reconfiguration through five value flow “properties”, expressed in terms of change in quantity, speed/frequency, composition, quality and value.Research limitations/implicationsWhile developed with inputs from a complex business environment that provides a rich research context, this work acknowledges the trade-off between in-depth single case analysis in theory building, and the need for follow-on research to address the limiting contextual variables and extend generalisability.Practical implicationsThe study offers a framework-based sequence of activities that managers can adopt for the BM design process in dynamic industry environments.Originality/valueThis work contributes to BM theory by setting out a mechanism that helps better understand interactions of BM components in dynamic environments, while also challenging the established definition of the value proposition concept – a key BM component – thus presenting significant implications for theory.