Business Model Innovation as a Countermeasure to Changing External Environments - A Case Study of a Professional Service Firm in the Nuclear Power Industry

Abstract

There is still considerable lack of theoretical foundation when it comes to the subject of business model innovation. However, what previous studies in the field have shown is that business model innovation is a favorable way to hedge against dynamic changes in a firm’s external environment. The main objective of this study was to investigate the approaches to business model innovation of a small professional service firm facing a dynamic change in its external environment. The second objective of this study was to add to current theory by comparing the outcomes of the focal firm’s business model innovation initiatives to existing studies on success and failure criteria of business model innovation initiatives. For the comparison to other business model innovation initiatives a typology consisting of the dimensions reach, radicality and complexity of the initiative was used. The study was performed in form of a single case study focusing on an individual firm. The focal firm is active in the nuclear power industry and faced a dynamic change in its external environment during a downturn within this industry in the years 2014-2015. The empirical data was primarily obtained from interviews conducted with the people involved in the initiatives. The findings of this study are that the firm engaged in two major business model innovation initiatives where one was to expand the services in the current industry, a reinventor approach, and the second was to expand the services into new industries, an adaptor approach. The outcome resulting from the reinventor approach was considered to be a success whilst the outcome resulting from the adaptor approach can be considered a failure. The results of the outcomes have been shown to align with previous theory on the topic which also strengthens the generizability into other industries of the theory. Deeper studies of the two different initiatives show that there are many aspects to consider when engaging in business model innovation. One of these things is that the firm needs to thoroughly understand its current business model as well as the implications the business model innovation initiative has for the current business model. Another aspect needed to be considered is to add systematicity to their general approach towards business model innovation.