Prototyping in Business Model Innovation: Exploring the Role of Design Thinking in Business Model Development

Abstract

This study proposes a theoretical framework for business model prototyping (BMP), one in which design thinking is applied as a means of facilitating business model innovation (BMI). The value of design-led approaches in the development/management of innovation have received increasing recognition in the past decade, as the concept of design thinking (e.g., Brown, 2008; Martin, 2009) has gained broader application and credibility. In parallel, the concept of BMI has been discussed increasingly in research on innovation, as business models have garnered enhanced acknowledgement as a fundamental aspect in innovation management (Schneider & Spieth, 2013). Although experimentation for BMI is argued to be of importance (e.g., Chesbrough, 2010), the ways in which design thinking might inform prototyping of BMI is less articulated. Thus, the research provides a framework for prototyping business models in the process of BMI, and a first theoretical foundation for the subject. The framework is developed by combination of insights from a thoroughgoing literature review with expert interviews, multiple institution-level case studies, and a series of validation interviews. The literature review articulates the concept of prototyping in BMI and covers three topics in-depth: innovation, business models and design thinking. Expert interviews capture the perceptions and orientations of practitioners, and case studies explore various contexts of business model development in social enterprise, university division, governmental organisation and private company. The validation interviews use feedback from industrial experts to aid and revise the framework and combining theoretical and practical perspectives. On the basis of integrated findings, the thesis contributes to knowledge in three ways. First, it aims to bridge design methodology research and innovation management 3 research by articulating prototyping in design with business model innovation. Second, it proposes a theoretical framework for business model prototyping that incorporates four dimensions — purpose, process, context and engagement. This framework provides a theoretical foundation for further research in the area. Third, the thesis reframes prototyping not as a method or a tool but as a methodology (i.e., a conceptual framework and mode of thinking) that supports the management of business model development and innovation