As open business models, in which knowledge, competencies and resources from external firms are integrated into the business model of a company, become more widespread, companies with traditional closed business models are striving to determine if they should follow suit, and when. By understanding the antecedents of open business models — the internal and external factors that encourage or require the move to openness — companies can make a more informed decision on whether (and when) to change and adapt their business models.
Traditional closed business models still dominate in today’s business world, but more and more companies are looking at the opportunities created through open collaboration and exchange with business model partners. Pioneering companies such as SAP put themselves at the centre of a vibrant ecosystem of active partners.
The question for corporate executives is when to take steps in this direction and exactly how. The study of open business model firms can help to answer this question by revealing the antecedents of open business models: the external and internal factors that promote openness. Through multiple case studies involving eight major firms with open business models, a team from the University of St Gallen identified five such antecedents:
These five antecedents offer guidelines for when and to what extent openness should be introduced. The first step, however, is to understand the four levels of open business models. The Open R&D and open innovation business models are limited to the R&D function of the company. The difference is that with open R&D, openness with partners plays a minor role; with open innovation, the firm is highly dependent on openness.
Open business architecture and the fully open business model extend beyond R&D to other functions of the company. The difference again is the importance of openness in the strategy. In the fully open business model, the dependence on openness is at its highest level.
Which of these four open business model options is right for your organization? This is where the antecedents can help. Different antecedents call for different open business models, although often more than one.
For example, the business model inconsistency antecedent usually calls for openness to extend beyond R&D; missing elements in your business model most likely involve other functions. On the other hand, if your business model innovation is being driven by the need to create and capture new value or by industry convergence, openness in your R&D function might be enough to respond. But not always. If the convergence dramatically changes the industry, for example, you may need help in a variety of functions.
Pushing openness throughout the firm is a risky step, however, which is why companies with previous experience with collaboration and open business model patterns antecedents are more likely to attempt the high dependence on openness required by the open business architecture and fully open business model.
The process of matching antecedents with business models is neither simple nor obvious. However, by identifying the situations that apply to your company — whether you have previous experience with collaboration, whether other companies in your industry have open business models, whether new market entrants are dramatically reconfiguring your industry, to take just three examples — will lay the groundwork for discussion and help frame potential business model solutions.
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