Sara Fallahi:the antecedents and processes of business model innovation
Sara Fallahi explores how the processes of business model innovation unfold. "Most companies find it extremely challenging to innovate and refine established business models", she says.

The antecedents and processes of business model innovation

​A good business model is essential for creating and capturing value, yet many firms fail at innovating their business model. In her thesis, Sara Fallahi has studied business model innovation processes in multiple industrial and organizational contexts - and is surprised by how often they emerge unintentionally when solving problems with existing business models.
​How would you describe your research in one sentence?
I have studied why and when established firms innovate their business models and how the processes of business model innovation unfold.
Tell us about your research!
The business model is the firm’s underlying core logic for how it creates and captures value. Companies are under constant competitive pressure to find new ways of creating and capturing value to remain competitive. Many firms however fail at innovating their business model due to several organizational and cognitive barriers and obstacles as introducing a new business model in parallel to an existing one, or replacing established business models with an advantageous one has proven very difficult. In my thesis, I have studied business model innovation processes in multiple industrial and organizational contexts such as manufacturing, automotive, construction, publishing and home furnishing.
Why is this important?
Competitive pressures have pushed business model innovation up the agendas of managers in many firms. Acknowledging that most companies find it extremely challenging to innovate and refine established business models raises the question of how the process of business model innovation can be organized and managed to overcome the underlying uncertainties and complexities. To address this question, it is necessary to understand how business model innovation processes unfold which has been the purpose of my thesis.
Why do you think this area is so interesting?
We are living in an era where phenomena such as globalization, cross-fertilizations of technologies and industries, and digitalization are transforming several established industries and businesses. For managers to understand how to use these new technologies and capture value from them, they need to rethink their business models which may influence their decisions on who their customers are, what type of value they can create for those customers, or how they can profit and stay competitive. When and how managers realize the need to change a business model, how they create that change, or how they react to a change forced by another party such as their competitors are some of the questions that have intrigued me in my research.
What are your most important research findings?
My observations supported the distinction of two approaches to business model innovation: purposeful and unintentional. In the thesis, I discuss how purposeful business model innovations tend to be more planned and started with attentive cognitive search for a new business model including recursive conceptualization, creation, and evaluation of alternative business models. Selected business models were later implemented in one or several markets and adapted according to customer evaluations. On the other hand, unintentional business model innovation processes took off from an existing business model and the new business model emerged as an outcome of the resolution of one or a number of major business model problems. I also discuss how antecedents to business model innovation may help in explaining why in some cases the new business model emerged unintentionally and in other cases purposefully.
Was there anything that surprised you during your research?
When I started with my studies, I sort of expected to be able to find one generic process of business model innovation, or at least I expected to find that firms have a clear plan or roadmap for how they innovate their business models. To find out that in many cases the business model innovation was not a deliberate initiative of top management and rather emerged unintentionally and as an outcome of solving major problems with the existing business model was both interesting and quite surprising.
What new knowledge and perspectives do you bring forward in your research?
In recent years, as business model innovation has become one of the priorities of practitioners, the topic has also attracted the interest of many scholars and research on business models and business model innovation has grown significantly over the past decade. Publications focusing on the process dimensions of business model innovation are relatively recent and quite scattered in terms of the theoretical lenses and empirical contexts used for their studies. At times, they also provide conflicting assumptions and findings; for example, some portray business model innovation processes to be conceptual and analytical while others explain these processes to be highly experiential, and based on trial-and-error learning. My research attends to connect these findings and further expands them by showing that in fact both cognitive and experiential activities are needed during business model innovation, and the processes of business model innovation consist of multiple shifts between these two modes of learning. My thesis further contributes to business model innovation literature by introducing problem as an alternative mechanism and theoretical construct that can explain why firms embark on each mode of learning and why they shift over time.
What do you hope for your research to lead to?
I hope managers who are working with or are interested in working with design and development of new business models can apply the findings from my research in their work. In particular, in my thesis I discuss three implications for practitioners in relation to supporting skunkworks during early phases of business model innovation, initiating early business model discussions to support other innovation activities, and creating flexible structures for organizing parallel business models.
Text: Ulrika Ernström
Sara Fallahi is a PhD at the Department of Technology Management and Economics, the Division of Entrepreneurship and Strategy.

Published: Fri 12 Jan 2018.