Learning from failures in business model innovation: solving decision‐making logic conficts through intrapreneurial efectuation

Established organizations need to adapt their current business models (BMs) to match dynamic changes in their environment. Alternatives to the established BM usually incorporate a diferent logic of how value is created, ofered, and captured. When selecting and implementing the best BM alternative, organizations have to make decisions on several highly uncertain questions: What will the future look like, on what basis should we take action, how do we act under risks and limited resources, and how should we behave in light of unexpected events and towards outsiders. Firms can apply the logic of causation or that of efectuation when mak-ing these decisions. In this context, we apply a longitudinal single case study of a manufacturing company encountering a digital transformation journey. In this case study, we investigate the shift from a product-based to a smart service model and the underlying process of decision-making in the context of business model innovation(BMI). From our case study, we identify latent conficts resulting from two difer-ent BM logics: the logic of value ofering, creation, and capture of the dominant(established) BM versus that of the new one. We show that logic conficts become especially visible when actors cannot reduce uncertainty about the new BM efec-tively. These conficts fnally inhibit the change of the dominant BM to the new one. Sensemaking in the company about the latent logic conficts within the BMI process reveals the need to change its decision-making logic from managerial causation to intrapreneurial efectuation. The fndings from our study contribute to entrepreneurship and institutional theory while highlighting the concept of institutional intra- preneurship for BMI. Our results suggest separating the alternative BM from the existing one. This separation can reduce cognitive uncertainty associated with BMI processes through logic pluralism, i.e., building a new decision-making logic in par- allel to the old one. We contribute to the BMI literature by adding logic conficts of BMI and the decision-making logic of an organization to the list of important con- tingency factors that infuence the execution and outcome of a BMI process.

Journal or Publication:
Journal of Business Economics
Sebastian Brenk
Dirk Lüttgens
Kathleen Diener
Frank Piller
Year Published
Relevant Principles:
Affordable Loss
Bird-in-Hand (Means)
Crazy Quilt (Partnerships)
Effectuation Process
Lemonade (Leverage Contingencies)
Pilot-in-the-Plane (Control vs. Predict)
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