INSO-2-2014 - Understanding and supporting business model innovation
Specific challenge: Technologies as such do not have a specific value. Their value is determined by the business models used to bring them to a market. The return on Europe's investments in technology and process development therefore depends not only on the overall framework conditions for innovation and entrepreneurship, but also on effective business models. However, many European enterprises, whether large or small and medium sized, lack awareness and tools to innovate their business models. Against this background, the challenge addressed by this topic is to facilitate innovation in business models and allow a maximum number of companies to innovate their business models.
Scope: A business model describes how a company communicates, creates, delivers and captures value out of a value proposition. Current thinking summarises the functions of business models as: articulating the value created for users by the offering; identifying a market segment; defining the structure of the value chain required and the position of the firm in this value chain; formulating the competitive strategy.
Innovation in business models mainly comes from new activities (content), new linkages between activities (structure) new markets (context) and/or new partners (governance). Inspiration for business model innovation can come, for instance, from business models developed in other business sectors (transfer) or from analyses of patterns in business models (system). Open innovation, emerging collaborative business models and new partnership mechanisms also mean innovation in business models for SMEs and bigger companies. Further research is needed on business model innovation and the successful implementation of business models. Within the scope of this research is to explore new knowledge how it happens and investigate access to this knowledge and the capacity of companies to adjust their existing business models.
The focus in addressing the specific challenge is therefore, with equal weight, on the following four dimensions:
- advancing existing knowledge about business model innovation, e.g. by identifying patterns, exploring management structures, analysing the potential of transfer across sectors and EU member states;
- making this knowledge easily accessible;
- developing mechanisms how to adjust the knowledge to individual companies, and
- reaching out, possibly via existing channels, to a maximum number of companies.
Different models of ownership and different management structures, including those that make use of employee involvement and emphasise workplace innovation, are within the scope of this topic. Due attention should be given to the gender dimension in developing business models and multi-disciplinarity, as well as to the broader social and environmental aspects of business model development and implementation. Specific sectors can be targeted as long as the transfer of business models across sectors is included in the approach. The aim is to turn into a self-sustainable platform after the end of the EU funding.
The Commission considers that proposals requesting a contribution from the EU of EUR 3 million would allow this specific challenge to be addressed appropriately. Nonetheless, this does not preclude submission and selection of proposals requesting other amounts.
Expected impact: This topic will advance current understanding and awareness of business model innovation. It will produce new knowledge on business model innovation which will enhance European competitiveness and help address social challenges. European companies, including SMEs, will examine and change their business models, adopting solutions that increase their competitiveness.
At least 10% of Europe's 20 million SME should be reached, including the micro-enterprises with up to 10 employees and achieving a broad geographical coverage across the European Union. The impact will also be an increase of Europe's attractiveness for innovators and contribution to the overall objectives of Innovation Union. At company level, it will help companies to develop new or strengthen existing business models and thus grow in terms of jobs and turnover.
Type of action: Research and innovation actions