INNOVATIVE BUSINESS MODELS: PECULIARITIES OF FORMATION AND DEVELOPMENT. SPEECH AT THE SCIENTIFIC AND THEORETICAL SEMINAR OF THE DEPARTMENT OF ECONOMIC THEORY OF THE YAROSLAV MUDRYI NATIONAL LAW UNIVERSITY ON 22TH JANUARY 2019

Author
, associate professor, Kharkiv, Pushinska, 77

In heading

 Scientific discussions and reviews;

Signed print

 10.06.2019

Issues number

 2019 - № 2 (37)

Page

 172-182

Type of articles

 Theses of the report at conference

Code UDK

 330.44:005.591.6

ISSN print

 2411-5584

Abstract

 The report is dedicated to examining the content, factors, and technologies of the innovative transformation of contemporary business models.
To demonstrate the influence of a business model on functioning of an organization, the author has outlined several facts. Kodak, Lerman Brothers, Motorola, and Nokia are examples of leading companies, which, having had neglected relevant transformations of their business models, rapidly lost market shares. A wide range of histories of business success is grounded on applying an innovative business model rather than a product. For
instance, Amazon, Apple, Skype, eBay, IKEA are companies, which have proposed an innovative approach to supply of existing goods/services.
A business model describes a way of creating, delivery, selling, and retaining the value by an organization. It contains the following elements: target consumers, price supply, a value chain, and a mechanism for earning profit. A change of any component causes changes of the others.
Systematically reviewing the elements of a business model, managers estimate whether there is a need for transforming: under a dynamic environment, a business model must evolve. Long-term competitive success and sustainable development of contemporary companies depend on such evolvement.
Changes of a business model are necessary if: a) there are opportunities to: meet demands of a large group of consumers, which are not satisfied with offered commodities; commercialize new technology; create a product to perform the “work” none has tried to perform; b) there are threats: implementing technological innovations, which cheapen current supply or change its content; a need for the reaction to changes in terms/methods of competition. Expansion of technologies of the digital economy and business models based on platforms stipulate inevitability of transforming business models of companies in all the sector of economy.
Business models displaying the logic of a present sectoral business system (a value chain) and being inherent to a majority of companies in a sector are traditional. Only a certain company in a sector applies an innovative business model. Such model is usually grounded on forming a new way of supply, which shifts emphasis within a value chain and creates the new value for consumers.
The innovative transformation requires changes of at least two elements of a business model and transcends the dominating sectoral logic. To accomplish this goal, managers make greater use of templates: 90% of successful innovative business models contain elements of already existing ones and are non-trivial for a certain sector only. An innovation implies recombining and transferring elements of business models from other sectors in own sector (mainly those, the logic of which significantly differs from the logic of a template dominating in a “lending” sector). The emergence of innovative business models fosters transformations in sectors, redistribution of monetary flows, and changes of rules for doing business. Subsequently, successful business models transform into typical ones and do not benefit company in the sphere of competition any more.
In the context of searching for effective technologies for the innovative transformation of business models of contemporary companies, researching the potential and risks of different forms of open innovation models is of considerable importance.

Keywords

 None

Reviewer

External reviewer

Article in PDF

 172-183

Bibliography

 None

Code DOI

 10.31359/2411-5584-2019-37-2-172

22.01.2019