Business Models Management Models Julian Birkinshaw London Business
Business Models & Management Models Julian Birkinshaw London Business School Copyright Julian Birkinshaw 2014
Types of Innovation Management model innovation Business model innovation Product or Service innovation Technological innovation Operational innovation Copyright Julian Birkinshaw 2014
Some companies with innovative business models Copyright Julian Birkinshaw 2014
Some companies with innovative management models Copyright Julian Birkinshaw 2014
Some definitions • Business Model: “the content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities” (Amit and Zott, 2001) • Management Model: “The choices made about how work gets done inside the organisation” (Birkinshaw, 2008) Copyright Julian Birkinshaw 2014
Management as a set of conscious choices Business Model Management Model Choices firms make about: • Sources of revenue • Coordinating activities • Cost structure • Making decisions • What to make / buy • Motivating employees • How to make a profit • Defining objectives Copyright Julian Birkinshaw 2014
Management Model: Related bodies of literature • Contingency / Configuration theory – Structures and systems fit with environment – Different archetypes can be identified (e. g. Burns & Stalker, Greenwood & Hinings) • Organization Culture – Beliefs, norms, practices shape behaviour – Different cultural models can be identified (e. g. Denison, Goffee &Jones) Copyright Julian Birkinshaw 2014
A management model framework Coordinating Activities Bureaucracy Making Decisions Hierarchy Emergence Collective Wisdom Defining Objectives Linear Alignment Obliquity Motivating Employees Extrinsic Intrinsic Traditional Principles Alternative Principles Copyright Julian Birkinshaw 2014
Emergence Shared Space: An intriguing analogy Copyright Julian Birkinshaw 2014
A management model framework Coordinating Activities Bureaucracy Making Decisions Hierarchy Emergence Collective Wisdom Copyright Julian Birkinshaw 2014
Collective Wisdom 65% 91% Copyright Julian Birkinshaw 2014
A management model framework Coordinating Activities Bureaucracy Making Decisions Hierarchy Defining Objectives Linear Alignment Emergence Collective Wisdom Obliquity Copyright Julian Birkinshaw 2014
Obliquity Goals are best achieved indirectly If you want to get to point A, aim at point B Copyright Julian Birkinshaw 2014
Two perspectives on goal setting “We must continuously achieve superior financial and operating results while simultaneously adhering to high ethical standards. ” “To improve the quality of life for the communities we serve. ” Copyright Julian Birkinshaw 2014
A management model framework Coordinating Activities Bureaucracy Making Decisions Hierarchy Defining Objectives Linear Alignment Motivating Employees Extrinsic Traditional Principles Emergence Collective Wisdom Obliquity Intrinsic Alternative Principles Copyright Julian Birkinshaw 2014
Extrinsic and Intrinsic Motivation Theory X Theory Y We work to live We live to work Effort is driven by material rewards Effort comes from intrinsic need to achieve Copyright Julian Birkinshaw 2014
Ends Means Management model = explicit choices on these four dimensions Bureaucracy Hierarchy Linear alignment Extrinsic Loose Means, Tight Ends Emergence Collective Wisdom Obliquity Intrinsic Loose Ends, Tight Means Copyright Julian Birkinshaw 2014
Four models Loose “Quest” Model “Discovery” Model “Planning” Model “Scientific” Model MEANS Tight Loose ENDS Copyright Julian Birkinshaw 2014
Planning Model • Clear objectives, clear incentives for achieving those objectives • Tight control from the top, carefullydesigned structures and processes Copyright Julian Birkinshaw 2014
Quest Model • Clear objectives, clear incentives for achieving those objectives • Enormous degrees of freedom in how objectives will be achieved Copyright Julian Birkinshaw 2014
Scientific Model • Broad purpose, not clear objectives; emphasis on intrinsic motivation • Well-understood methods for making progress Copyright Julian Birkinshaw 2014
The Scientific model in action: Arup “There are two ways of looking at how you earn a living: One is to view work is a necessary evil; the other is to make your work interesting and rewarding. We opt uncompromisingly for the second way. ” 1970 Key Speech by Ove Arup Page 22 Copyright Julian Birkinshaw 2014
Discovery Model • Broad and often vague goals; emphasis on intrinsic motivation • Many pathways to success, all equally valid • Often seen in entrepreneurial settings Serendipity (n): “The art of making happy discoveries” Copyright Julian Birkinshaw 2014
A common trajectory Loose “Quest” Model “Discovery” Model “Planning” Model “Scientific” Model MEANS Tight Loose ENDS Copyright Julian Birkinshaw 2014
A research agenda 1. Which management model(s) are most effective under which conditions? 2. How do management models and business models relate to one another? 3. How do companies change their management models? 4. What other management model dimensions might we identify? Copyright Julian Birkinshaw 2014
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