Business model innovation in the South African ICT and financial services sector

Abstract

The only constant is change itself. The purpose of this research study was to investigate how companies manage business model innovation to compete effectively in a changing business environment. In the business environment the winds of change are generated by factors such as increasing competition, changing customer needs, deregulation and technological advancement that includes the network-era. Despite theories that companies compete effectively by adopting one of the three generic strategies of cost leadership, differentiation and focus there are prominent business model innovation examples that illustrate the value of business model innovation for gaining competitive advantage. As business model innovation supports companies gain competitive advantage differentiating business models in ways that are hard to replicate for incumbents and new entrants. In addition business model innovation is linked to company growth and financial performance with the fasted growing companies as those that undertake business model innovation. Such is the importance of business model innovation that a mediocre technology commercialised with a good business model is of a greater value than a great technology supported with a mediocre business model. Despite these explicit potential benefits of business model innovation and growing interests from both research and academic community research in business model innovation is still in its infancy with need for research in areas such using the business model concept to anchor identification of information systems impact, the business model innovation process and on how companies manage business model to compete effectively in a changing business environment. This research study is an effort to contribute in the research gap by investigating how companies manage business model innovation to compete. A pragmatism approach that strive for to a problem solving approach that takes into account existing knowledge and experience in business model innovation both from theory and practice to fuel best practice in business model innovation. Six case studies were selected from companies in the Information Technology Communication and financial services sectors in South Africa. The key findings from the study is a conceptualisation of managing business model innovation to compete in a changing environment is a complex activity with interrelated concepts of business model innovation drivers, process and business model components that are redesigned. These conceptualisation is used to develop a business model innovation framework that contributes to theory and practice in business model innovation. Furthermore, the research study identifies the importance of both entrepreneurial and inspirational leadership and quality of staff as important conditions under which the proposed conceptual framework would most likely support companies in managing business model innovation to compete in a changing business environment. As the proposed conceptual framework As such the proposed conceptual framework could serve as a basis for further empirical research that is both qualitative and quantitative. Such future work could assist in evolving and validating theoretical coherence, practical relevance and applicability of the conceptual framework elements in manging business model innovation to compete effectively in a changing environment. In terms of contribution to practice proposed conceptual framework with the detailed analysis of the business model innovation drivers, process and business model components may a useful guideline in undertaking a business model innovation