Business Model Innovation in Living Labs

Project Information

BUMILLA

Grant agreement ID: 324510

Project closed

Start date 1 January 2013

End date 31 December 2016

Funded under

• Specific programme "People" implementing the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007 to 2013)

Total cost € 740 139,67

EU contribution € 740 139,67

Coordinated by

INSERO AS
Denmark

Periodic Report Summary 1 - BUMILLA (Business Model Innovation in Living Labs)

BUMILLA – Business Model Innovation in Living Labs
The BUMILLA project consortium consists of the two universities, Aston University (UK) and University of Gothenburg (SE), as well as the Danish company, Insero E-Mobility. The general and principal aim of the project is to create a long-term strategic partnership between these academic partners and the company of Insero E-Mobility. In short, the BUMILLA collaboration focuses on creating and testing new electric vehicles business models within a living lab setup, in order to help a wider uptake of electric vehicles for the better of e.g. European citizens.

Project objectives
The three main project objectives of the BUMILLA project, as set out for in Annex 1 of the Grant Agreement, are:

1) To conduct multidisciplinary research on product user profiles in living lab product testing (the role of technology architecture)
2) To develop a framework for business model innovation in living lab settings (the role of business models)
3) To experiment with public-private partnership (PPP) models supporting a combined technology and business model approach (the role of the coherent framework)

Theoretical focus on business models and living lab
The BUMILLA project kicked off with a meeting at Aston University in January 2013. Here, the basic details were agreed upon in terms of administrative routines, partner roles and communication routines. The project group also agreed about the main research objectives and made a detailed plan of the first work packages, which included:

• desk research on the state-of-the-art within business models research
• definitions of the possible business models to be tested in the living lab and criteria for the choices
• desk research on the living lab concepts and methodologies

As part of the project setup, Insero E-Mobility recruited an experienced researcher, Roberto Biloslavo (Slovenia), for a year to be responsible for the attainment of the research objectives of the project, including the ones just mentioned. This recruitment took place from June 2013-May 2014, during which a lot of multidisciplinary and detailed desk research was done on business models and living labs, including on more than 25 different business model frameworks and four living lab methodologies. In the end, two particular business models were found to be most relevant to BUMILLA: cell phone (i.e. leasing with different range and pricing options) and pay-as-you-go (i.e. pay-per-km), while the iLab.o Labs methodology – in a slightly adapted and electric vehicle specific version – was found to be the most suitable living lab solution.

Trial design and data collection
The BUMILLA living lab trial started out in January 2014, when 19 families living in or around the small village of Stenderup outside of Horsens (DK) were handed an electric vehicle, a Nissan Leaf, to be theirs for the duration of a year. The families have only just returned the vehicles now, at the end of January 2015, after a year of testing the technology in everyday usage. That is to say that 18 of the families have returned the vehicles, as one chose to purchase theirs having grown fund of it during the trial.

During the yearlong trial, a lot of data collection has taken place in order to paint a valid picture of the advantages and challenges of a business model. This in the shape of:

• subjective data from semi-structured in-depth interviews in order to get mental models of the participants concerning their expectations and concerns about the electric vehicle
• questionnaires in order to get quantifiable data concerning the attractiveness of the business models
• travel and charging diaries in order to log their daily mobility over a period of time

The variety and combination of subjective and objective data collection methods, the latter e.g. conducted via data loggers in the vehicles in order to continuously record parameters such as mileage and trip length, provides valuable insights into potential advantages and disadvantages of the business models.

Finally, in the fall of 2014, as the trial was slowly nearing its end, we conducted an online survey of how much people, including the existing trial participants, would be willing to pay in a monthly lease for an electric vehicle model such as the world’s bestseller, Nissan Leaf.

Main results so far
Besides continuously strengthening the strategic collaboration between the academic and private company partners, the project so far has achieved creating a strong electric vehicle living lab setup, as well as having developed a framework for how to test new business models within this setup. This in order to find new ways of improving the uptake of electric vehicles across Europe.

In terms of the data collection, one of the interesting finds so far, and something, which have been of great focus in BUMILLA, is concerning peoples price sensitivity towards electric vehicles. Interestingly, the pre-trial questionnaire showed that 23 % of the participants would consider purchasing an electric vehicle after the living lab trial, while 21 % would consider leasing one. In the end, only one family bought their vehicle, but several others investigated the opportunities of continuing on a lease, as was the case during the trial. However, ultimately, many decided against this due to one main factor: the price. Compared with similar conventional vehicles and the performance they offer in terms of range, the electric vehicles were considered by most to be too expensive.

This price sensitivity towards a relatively new technology with different characteristics than a corresponding product (the conventional car) was, as previous mentioned, also tested via an online survey using e-mails and social media to get people to bid (it was set up as an auction), what they would realistically pay on a monthly basis for an electric vehicle. As it turns out, people were generally not interested in paying the market price, nor the price of a similar conventional car in the shape of a VW Golf. One reason often mentioned being the lesser range, which was deemed to make the product less desirable/usable.

Expected final results
It is expected that the BUMILLA project will deliver a tried and tested e-mobility specific living lab setup making it possible to innovate on and test new electric vehicle business models in order to, among others, help facilitate a larger and wider uptake of electric vehicles across Europe. An added effect of this will be the improvement of citizens’ health issues due to electric vehicles being more environmentally friendly (less CO2 emissions and noise pollution) than today’s conventional petrol and diesel cars.

Testing and demonstrating business models within a living lab setup creates a faster way to market, as the user-involvement allows one to catch any teething problems – whether technological, practical or such – at an early stage of developments. Making it e-mobility specific allows this particular living lab to distinguish itself from other living lab setups and create specialised facilities and results. Thus, such a way of setting up business model generation and testing within e-mobility will also help accelerate the market introduction of new products and as such help create sustainable businesses and jobs.

Project website (sub-site on Insero's company website): http://insero.com/en/current-projects/bumilla/