Effectuation, Foolishness, Bricolage

Just how are business models created in entrepreneurial, technology firms?

A group of upcoming people have devised the term effectuation to mean that the entrepreneur is effectual on their environment - influencing and shaping it, rather than simply adapting to it. Effectual entrepreneurs don't even try to forecast, but do. There are connections with the idea of bricolage ... making do with what is available and building upon it.

And foolishness ... how does it help? Well, maybe there is a bit too much emphasis on being rational on building models and developing business plans when in fact the reality is too fluid and uncertain for it to be useful. A bit of unstructured thinking helps keep the firm on the pro active route, influencing its environment and renewing its capabilities, rather than being overtaken by the creosote bush conundrum (another pic of the bush.)

Is it a lot of fluff, or useful contributions to thinking in entrepreneurshp and commercialization?

BUSINESS MODEL AND product market strategy in australian biotechnology ENTREPRENEURIAL firms: exploratory study.

A paper to be presented at Tsinghua University later in March, 2008, at the Annual Conference of the Academy of Innovation and Entrepreneurship.

Abstract

The business model (BM) concept is a relatively new subject of academic research, though the term has been used extensively by practitioners. Even with the rapid growth of publications in this area, there remains a vague boundary around the topic and no universally accepted classification. Large scale empirical research on the relative effectiveness of different models is at the infancy stage.
This study follows the integrative theoretical approach suggested by Amit and Zott [1] and the empirical approach adopted in Zott and Amit [2] and Malone et al [3]. We replicate [2] and extend it to Australian biotechnology IPOs in 1999-2004, testing the fit between BM design and product market strategies, and their effect on business performance. Early results suggest that the efficiency design theme is appropriate, but that complementary theory is required for a better fit with the industry’s characteristics.

Key Words— Business model, commercialization, entrepreneurship, biotechnology, IPO

[1]. R. Amit and C. Zott, "Value creation in E-business". Strategic Management Journal, 2001. 22(6-7): p. 493-520.
[2]. C. Zott and R. Amit, "The fit between product market strategy and business model: implications for firm performance". Strategic Management Journal, 2008. 29(1): p. 1-26.
[3]. T. W. Malone, et al., Do Some Business Models Perform Better than Others? 2006, SSRN.

Sony: Winning the DVD Battle But Losing the Innovation War?

The war is dead, the war is starting ... now, the platform technology seems decided for HD DVD, the war within the market can begin ... consumers stand to win handsomely, but so do stakeholders in the providers of successful complementary products and services.

The view the blog on the Harvard Business School site: click

Here, I have charted the rise of BM in the academic field, extending the data already published. The words 'In Title' relate to the right-hand axis...

Source: (Osterwalder, Pigneur et al. 2005) p3 for data 1990-2003; updated from my own searches, using the same words, in Business Source Complete database.

From Osterwalder, Pigneur et al, (2005) at p3:

To detect the origins and particularly the surge of the business model discussion we applied a method successfully used by Abrahamson [Abrahamson and Fairchild 1999] to study management discourse. It consists of tracing the appearance of a specific management term in a large number of journals to study its evolution. We electronically searched the titles, abstracts, keywords, and full texts of all articles in the Business Source Premier database of scholarly business journals for the word string "business model" [cf. Stähler 2001]. The search included several variations of the original term like "e-business model", "new business model" or internet business model". The results are shown in Table 2.

Osterwalder, A., Y. Pigneur, et al. (2005). "CLARIFYING BUSINESS MODELS: ORIGINS, PRESENT, AND FUTURE OF THE CONCEPT." Communications of the Association for Information Systems 16: 1-25.

Technical Revenue: Your business model called; its leaving (and its not coming back)

Paul Tyma has a nice little piece on how business models die (eg CDs /music), but the encumbants keep on trying to flog the dead horse, because they're so used to it and they liked playing by their own rules:


Technical Revenue: Your business model called; its leaving (and its not coming back)


Well, Chesbrough and Rosenbloom found in their research at Xeros that success can make it difficult for organisations to introduce new business models. See "The Role of the business model in capturing value from innovation: evidence from Xerox Corporation's technology spin-off companies" in Industrial and Corporate Change v11, n3, pp529-555.

The old framework remains, the culture is built up and the size and inertia make it difficult to see the world differently.

Maybe the 1st thing that catches attention is that researchers are behind the times relative to practictioners. The term 'business model' and its variants had been used by businesspeople well before it appeared in the academic journals.

That's fine, I think.

If researchers are describing and making order of the world we observe, then it has to be out there, in the wild, before it can be observed.

What matters, next, is if the research is conducted in a way that is valid and that it adds value to practitioners.

I particularly like the work of Zott and Amit, who have been putting real meat on the theory - and have been integrating varous strands of theory to create a new area of analysis.