Business Model Innovation in a Mature Industry - A Case Study at Parker Hannifin SCS
Examensarbete för masterexamen
Management and economics of innovation (MPMEI), MSc
Changes in the environment, driven by globalization and technology development, give ground to instability and uncertainty within industries. Consequently, stable business models are challenged by disruption of previous industry boundaries and competition. While close innovation become progressively ambiguous, firms grow further dependent on external sources for innovation. Furthermore, translated to original equipment manufacturers, actors are subjected to developments in technology, customer behavior and tough market sentiments. In response to the changing dynamics, actors are found to invest in business model change to adapt to the new environment. In turn, the pressure is transferred onto suppliers, where Parker Hannifin SCS must engage in similar investments and align with prevailing changes, not to face the risk of business model obsolesce or incompatibility with its customers. Yet, as the business model is an interdependent system, an alteration in one dimension will require accordingly adjustment in the remainder parts. The aim of this thesis is to understand how a company within a mature industry proactively can engage to innovate the business model. To fulfill this purpose, the research is designed as a qualitative case study, with focus on how the focal company should organize to take on a proactive approach to innovate their business model. This thesis presents a process purposed to provide a structure for how a mature firm can approach proactive business model innovation. The process comprises 4 phases Assessment, Analysis, Alignment and Adaptability, including detailed sub-steps. The aim is to proactively explore external sources of innovation, rather than awaiting triggers, hence spur ideation that can enable break-outs from industry recipes. Analyzing the process application at Parker Hannifin SCS, it is found that a formal process with support and incentive to question habitual methods should be provided from the internal organization. Furthermore, a cross-functional team outside of hierarchal structure can ease the decision making and information flow, while creativity could benefit from a distinct mixture of participants in terms of team composition, with both well experienced and new employed with diverse backgrounds. Continually, the project team should be appointed so that competency within each business model dimension is covered, concerning the total system of value creation, proposition and capture. Still, it is essential that each member is open to challenge and adjust accustomed approaches. It is essential that SCS secure financial capacity to invest in the innovation process and to try various business models. As the process circulate around collaborative business development, it requires top management support for a culture and organizational mindset that is open to collaborations. Further, to comprehend the necessity of such mindset in order to improve probability of success with the possibility to achieve superior value creation through the value chain, thus increase market share and strengthen competitive positioning towards competing actors.
Övrig industriell teknik och ekonomi , Innovation och entreprenörskap (nyttiggörande) , Other industrial engineering and economics , Innovation & Entrepreneurship