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The Many Sides of Business Model Innovation

Published online by Cambridge University Press:  03 February 2022

Christopher L. Tucci
Christopher L. Tucci*
Affiliation:
Imperial College London, UK
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Type
Dialogue, Debate, and Discussion
Information
Management and Organization Review , Volume 18 , Issue 1 , February 2022 , pp. 209 - 211
Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press on behalf of The International Association for Chinese Management Research

I enjoyed reading the paper ‘Business model innovation and experimentation in transforming economies: ByteDance and TikTok’ (Ma & Hu, Reference Ma and Hu2021) and the response by Li (forthcoming). The main point of Ma and Hu's paper was that companies in emerging economies can experiment with new business models in their home markets and then bring some of that experimentation into other markets. It is sort of the ‘reverse innovation’ (e.g., Govindarajan & Euchner, Reference Govindarajan and Euchner2012) taken from the product space and applied to new business models. The role of technology in this story is to enable new services originally targeting a different demographic with a different medium (cf., Amit, Snihur, & Zott, Reference Amit, Snihur and Zott2021).

Li (forthcoming) has a problem with this interpretation of the ByteDance case. He argues that ByteDance had very little business model innovation (BMI) but rather took a savvy approach to internationalization. Li argues that the role of technology in the ByteDance case is more of a means for reducing ‘paradoxical’ tensions between local responsiveness and global integration, i.e., for enabling not business model innovation but rather ‘transnational’ strategies as developed by Bartlett and Ghoshal (Reference Bartlett and Ghoshal1989).

What does it take for a company to be successful over the long term? We know that it requires a great strategy, excellent operations, financial controls, effective marketing, a solid business model, routines for ‘future-proofing’, and so forth. There are many elements that need to interact for company success. So it is natural that when we see a successful company, different people, depending on their disciplinary background, can attribute different elements as the ‘main reason’ why a company is successful.

Furthermore, what does ‘business model innovation’ actually mean (cf., Massa & Tucci, Reference Massa, Tucci and Hitt2021)? There have been many different definitions published over the years (see Foss & Saebi, Reference Foss and Saebi2017 for a more complete discussion). The lowest bar probably addresses the question: has any one conceptual component or element of a business model (cf., Abdelkafi, Makhotin, & Posselt, Reference Abdelkafi, Makhotin and Posselt2013; Afuah & Tucci, Reference Afuah and Tucci2003; Osterwalder, Pigneur, & Tucci, Reference Osterwalder, Pigneur and Tucci2005) changed? For example, if a company has a new customer segment or new source of revenue. Others (e.g., Demil & Lecocq, Reference Demil and Lecocq2010) discuss how firms may engage in BMI by evolving or adapting different elements over time. Several authors impose a ‘novelty’ constraint, or propose that ‘non-trivial’ changes in a business model must occur before it rises to the level of BMI (cf., Foss & Saebi, Reference Foss and Saebi2017).

Even more extreme, some authors propose that BMI must involve using business models for the first time in an industrial sector (see Massa & Tucci, Reference Massa, Tucci, Dodgson, Gann and Phillips2014 for a more complete discussion). For example, GM creating a bank to lend money to people to buy cars would not be considered BMI since banks already existed and it just reinforced car sales, whereas iTunes would be since such a platform for buying and selling music did not exist on any scale at the time Apple introduced it.

It seems as if Li (forthcoming) is holding ByteDance to this much higher bar, whereas there are many other definitions, such as Mitchell and Coles (Reference Mitchell and Coles2004: 17): ‘By business model innovation, we mean business model replacements that provide product or service offerings to customers and end users that were not previously available. We also refer to the process of developing these novel replacements as business model innovation’ that would easily encompass ByteDance's history. I think that if both Ma and Hu (Reference Ma and Hu2021) and Li (forthcoming) had engaged a little more deeply with the above literature, the stances would be better defined and then we could argue whether the internationalization component or the business model innovation component was more or less critical in ByteDance's success.

To conclude, I think this is a very interesting debate and believe these two pieces will make for excellent reading in global business management courses or even executive modules on business model innovation. The topic is current and engaging, and there are many sides to the discussion that we can have in class about what, ultimately, led to ByteDance's success.

Footnotes

accepted by Deputy Editor Johann Peter Murmann

References

REFERENCES

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