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Do You Know Your Customers? Do You Love Them? Reevaluating Value Creation for Customers through Business Model Innovation
Halmstad University, School of Business, Engineering and Science, Centre for Innovation, Entrepreneurship and Learning Research (CIEL), Business Model Innovation (BMI). HMS Industrial Networks AB, Halmstad, Sweden.ORCID iD: 0000-0002-5892-7955
Halmstad University, School of Business, Engineering and Science, Centre for Innovation, Entrepreneurship and Learning Research (CIEL), Business Model Innovation (BMI). Shanghai Dianji University, School of Business, Shanghai, China.ORCID iD: 0000-0003-2111-5977
Halmstad University, School of Business, Engineering and Science, Centre for Innovation, Entrepreneurship and Learning Research (CIEL), Business Model Innovation (BMI). Shanghai Dianji University, School of Business, Shanghai, China.
2019 (English)In: Proceedings of The IIER International Conference, The IIER International Conference , 2019, p. 6-16Conference paper, Published paper (Refereed)
Abstract [en]

What customers want is one thing, but what they actually need and what they desire is something else. In this paper we define existing customer needs as something that customers know and are aware of, can express, and new customer needs as something that customers do not yet know and are not yet fully aware of. Just like in a Johari window. Companies usually go for the former because the latter is more difficult. Particularly when the customer desire is more psychological in character. Business models are valuable innovation tools because they can turn even an old and less novel technology into a successful innovation, but as stated by Chesbrough, at the heart, a business model performs two important functions: value creation and value capture. However, how can you create value when customers don’t know what they actually need? When they cannot express what they actually desire? Maybe a deeper interaction is required, interpreting the customer’s needs, reading between the lines, inferring what is going on underneath the surface, and collaborative prototyping. This study was based on an exploratory, inductive research approach influenced by grounded theory, studying three Swedish technological companies: Axis, HMS and Sectra. Using grounded theory coding techniques, a typology of seller and buyer needs was created based on four categories: unconstrained needs, undoubtful needs, unconventional needs, and uncertain needs. The results show that depending on which category the company resides, the typology can help managers decide when it is appropriate to listen closely to customers, and when it is not. When they want to fulfill existing customer needs and when they want to fulfill new customer needs. However, discovering new customer needs requires close interaction with customers. Especially when you want to discover not just what customers know that they want, but also what they do not yet know that they actually need. Intimacy is needed when you really want to come close to customers and really want to explore and understand their deep desires.

Place, publisher, year, edition, pages
The IIER International Conference , 2019. p. 6-16
Keywords [en]
Business model innovation, customer desire, typology of buyer and seller needs, value capture and value creation
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hh:diva-40381OAI: oai:DiVA.org:hh-40381DiVA, id: diva2:1341716
Conference
193rd IIER International Conference, Wellington, New Zealand, 7-8 October, 2018
Available from: 2019-08-09 Created: 2019-08-09 Last updated: 2019-08-12Bibliographically approved
In thesis
1. Embedded Innovation: Exploring the Dynamics of Innovation
Open this publication in new window or tab >>Embedded Innovation: Exploring the Dynamics of Innovation
2019 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

For this dissertation I aimed to explore HMS Networks AB and how HMS managed to transform their potential ideas into innovations. My purpose was also to develop knowledge and understanding of the dynamics between exploration of new ideas and exploitation of old solutions, which can support HMS in developing future innovations. My research orientation thus led me to perform a longitudinal study to learn about HMS' past, present, and future, from the perspective of key actors, their performed activities, and how they were affected by different events in their process of creating innovation. My approach enabled me to learn how HMS managed to create their two Anybus® innovations in the past and what they did to become a market leader in the industrial communication industry. I also used a metaphorical perspective to understand how HMS created their two innovations in the past and what HMS could do to create more innovations in the future. I used an inductive and qualitative research approach substantially influenced by grounded theory to collect empirical data that were periodically and chronologically sorted and categorized for the study of key actors and how their activities and different events changed over time. I conceptualized the collected empirical data to discover latent social and psychological processes and behavioral aspects of people in their process of creating innovation. And through my analysis I constructed two main concepts - "embedded innovation" and the "dynamics of innovation" - to capture how companies co-exist in symbiosis and create a higher value together compared to what they can do on their own, to how companies survive long-term.

Embedded innovation mainly captures how companies, as organisms, struggle for survival within their (often turbulent) environment, and how they embed themselves with other organisms within their environment. Embedded innovation also focuses on capturing the needs of the different organisms within the environment, such as customer needs, employee needs, supplier and partner needs, as well as the need of the focal organization itself. Embedded innovation therefore considers the process of creating "innovation ecosystems" and performing "business model innovation" as instrumental techniques for embedding the different organisms in the environment with each other, which also makes the concept of "embeddedness" a central aspect for embedded innovation. The dynamics of innovation captures the difficulty of innovation over time and that the ever-changing environment expects its organisms (its companies and their employees) to balance the different dualities of organizational life, especially the two phases of diversification (the process of exploration) and focus (the process of exploitation). Consequently, learning how to balance between these two processes is of key importance for the organism's survival and for innovation.

The study of HMS was also complemented with a study of two other companies, namely Axis Communication AB and Sectra AB, in order to gain more knowledge on the dynamics of innovation from their perspective. A strategy for diversifying close to the knitting was also proposed, since the dynamics of innovation relies on this strategy, which offers a new perspective for managers on how to balance between exploration and exploitation. This dissertation therefore intertwines embedded innovation with the dynamics of innovation, by focusing on balancing between exploring new possibilities and exploiting old certainties for the creation of innovation.

Place, publisher, year, edition, pages
Halmstad: Halmstad University Press, 2019. p. 342
Series
Halmstad University Dissertations ; 59
Keywords
Embedded innovation, dynamics of innovation, diversification, exploration and exploitation
National Category
Business Administration
Identifiers
urn:nbn:se:hh:diva-40386 (URN)978-91-88749-26-0 (ISBN)978-91-88749-27-7 (ISBN)
Public defence
2019-09-06, O104, Linjegatan 12, 10:00 (English)
Opponent
Supervisors
Available from: 2019-08-12 Created: 2019-08-12 Last updated: 2019-09-11Bibliographically approved

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Lysek, MichalDanilovic, MikeLiu, Jasmine Lihua

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