Short answer

Integrate business model innovation with technological development, focusing on building collaborative ecosystems to deliver and capture value from smart solutions.

Field
Innovation & Design
Source
International Journal of Operations & Production Management (2021)
Method
Case Study
Evidence
Strong effect

Transitioning to smart solutions necessitates a continuous and discontinuous interplay between evolving business models and digital technologies, impacting value proposition, delivery, and capture. This innovation & design research insight is drawn from a 2021 study published in International Journal of Operations & Production Management. Using Case study, researchers explored how this design variable affects real-world outcomes. The key design takeaway: Integrate business model innovation with technological development, focusing on building collaborative ecosystems to deliver and capture value from smart solutions.

Study
Innovation & DesignHigh ImpactStrong effect

Digital Servitization Requires a Dynamic Business Model Evolution

Transitioning to smart solutions necessitates a continuous and discontinuous interplay between evolving business models and digital technologies, impacting value proposition, delivery, and capture.

International Journal of Operations & Production Management · 2021

01

Key Findings

  • 01Successful smart solutions require an ecosystem value delivery system involving suppliers, distributors, partners, and customers.
  • 02Multiple value capture mechanisms (efficiency, accountability, shared customer value, novelty) emerge once ecosystem relationships are aligned.
  • 03Digital servitization involves stages of both discontinuous (new value propositions/delivery systems) and continuous (improvement of existing elements) interplay between business models and digital technologies.
02

Application

Design takeaway

Integrate business model innovation with technological development, focusing on building collaborative ecosystems to deliver and capture value from smart solutions.

How to apply

When designing a new smart product or service, map out the potential ecosystem partners and consider how the business model will evolve to support its long-term success and value capture.

Project actions

  • 01Consider how your design project could evolve into a service or smart solution over time.
  • 02Think about who else needs to be involved (partners, suppliers) for your design to succeed.
03

Method & Evidence

AimHow do manufacturing companies transition from product-centric offerings to smart, digitally-enabled solutions through the evolution of their business models?
MethodCase Study
ProcedureThe research examined a Chinese air conditioner manufacturer, Gree, analyzing its transformation into a provider of smart solutions. This involved understanding changes in its value proposition, value delivery system, and value capture mechanisms, driven by digital technologies like AI and IoT.
ContextManufacturing industry, specifically the transition to digital servitization.

Variables

IV["Digital technology adoption","Business model elements (value proposition, delivery, capture)"]
DV["Digital servitization success","Smart solution offering"]
CV["Company size","Industry sector"]
04

Strengths & Limitations

Strengths

  • +Provides a process perspective on digital servitization.
  • +Integrates business model theory with technological innovation.

Limitations

It can be challenging to fully research the business model evolution of a company without direct access to internal strategic documents.

Reliability & validity

The case study method provides rich, in-depth data but may have limited generalizability. Triangulation of data sources (e.g., interviews, company reports) would enhance validity.

Think critically

To what extent does the 'discontinuous' aspect of business model change create significant risks for established manufacturing companies, and how can design mitigate these risks?

05

Design Principles

"Embrace iterative business model evolution as a core component of digital product development."

For design practitioners, understanding this dynamic interplay is crucial for developing products and services that not only leverage new technologies but also fundamentally reshape how value is created and captured. It highlights the need for a holistic approach that integrates technological innovation with strategic business model adaptation.

06

What This Means for Your Design

To make smart products that work well, companies need to change how they do business, not just the technology. They have to work with others and find new ways to make money from their smart ideas.

How to use in your project

  • 1.Use this research to justify why your design project needs to consider business model implications beyond the initial product concept.
  • 2.Reference the continuous and discontinuous interplay to explain the iterative nature of design and development for smart solutions.
07

Add to My Project

08

Quick Cite

Paragraph starter

The transition to digital servitization, as exemplified by companies like Gree, underscores the critical need for design projects to integrate business model evolution with technological advancement. This research highlights that successful smart solutions are not solely product-driven but emerge from a dynamic interplay between continuous improvement of existing business elements and discontinuous creation of new value propositions and delivery systems, enabled by digital technologies. Therefore, a comprehensive design approach must consider the formation of value-generating ecosystems and adaptive value capture mechanisms.

09

Source

International Journal of Operations & Production Management

On the road to digital servitization – The (dis)continuous interplay between business model and digital technology

journal · 2021

View source

Questions About This Research

What does the research say about digital servitization requires a dynamic business model evolution?
Integrate business model innovation with technological development, focusing on building collaborative ecosystems to deliver and capture value from smart solutions. Evidence: International Journal of Operations & Production Management (2021).
Why does "Digital Servitization Requires a Dynamic Business Model Evolution" matter for design?
For design practitioners, understanding this dynamic interplay is crucial for developing products and services that not only leverage new technologies but also fundamentally reshape how value is created and captured. It highlights the need for a holistic approach that integrates technological innovation with strategic business model adaptation.
How can designers apply this research?
Integrate business model innovation with technological development, focusing on building collaborative ecosystems to deliver and capture value from smart solutions.
What were the main findings?
Successful smart solutions require an ecosystem value delivery system involving suppliers, distributors, partners, and customers.. Multiple value capture mechanisms (efficiency, accountability, shared customer value, novelty) emerge once ecosystem relationships are aligned.. Digital servitization involves stages of both discontinuous (new value propositions/delivery systems) and continuous (improvement of existing elements) interplay between business models and digital technologies.
What research method was used?
Case Study.
How strong is the evidence?
Evidence strength is rated Strong effect, based on a 2021 journal from International Journal of Operations & Production Management.
What should I do differently in my next project?
When designing a new smart product or service, map out the potential ecosystem partners and consider how the business model will evolve to support its long-term success and value capture.
What are the limitations?
The study focuses on a single case, which may limit the generalizability of findings to other industries or company sizes.