Unlocking the Hidden Value of Concepts: A Cognitive Approach to Business Model Innovation

We advance a theory of how business models can be innovated proactively in the absence of exogenous changes, through processes of generative cognition. We contribute to the cognitive perspective in strategy by analyzing business models as schemas that organize managerial understandings about the design of firms' value-creating activities and exchanges and by theorizing how they can be innovated through processes for proactive schema change. Drawing on cognitive psychology research on two major cognitive processes through which individuals change their schema to cope with novelty, analogical reasoning and conceptual combination, we theorize firm-level strategic processes for designing innovative business models. Copyright © 2015 Strategic Management Society.

[1]  Y. Doz,et al.  Embedding Strategic Agility A Leadership Agenda for Accelerating Business Model Renewal , 2010 .

[2]  Ramon Casadesus-Masanell,et al.  From Strategy to Business Models and onto Tactics , 2010 .

[3]  Reid Hastie,et al.  A Review from a High Place: The Field of Judgment and Decision Making as Revealed in Its Current Textbooks , 1991 .

[4]  Suresh Kotha,et al.  Continuous “Morphing”: Competing Through Dynamic Capabilities, Form, and Function , 2001 .

[5]  C. Frith.  Social cognition , 2008, Philosophical Transactions of the Royal Society B: Biological Sciences.

[6]  S. Winter,et al.  Replication as Strategy , 2001 .

[7]  F. Ted Tschang,et al.  Unbounding the Managerial Mind , 2013 .

[8]  Lee J. Zane,et al.  The Cognitive Perspective in Strategy: An Integrative Review , 2011 .

[9]  B. Looy,et al.  Servitization: Disentangling the Impact of Service Business Model Innovation on Manufacturing Firm Performance , 2013 .

[10]  Priya Seetharaman.  Infinite Vision: How Aravind Became the World's Greatest Business Case for Compassion, Suchitra Shenoy, Pavithra K. Mehta. Collins Business (2012), pp. 336, price: Rs. 499 , 2013 .

[11]  Raphael Amit,et al.  Business Model Design: An Activity System Perspective , 2010 .

[12]  H. J. Smith,et al.  The power of business models , 2005 .

[13]  James D. Thompson.  Organizations in Action , 1967 .

[14]  D. Teece.  Business Models, Business Strategy and Innovation , 2010 .

[15]  T. B. Ward.  Cognition, Creativity, and Entrepreneurship , 2004 .

[16]  Samuel S. Holloway,et al.  The Role of Business Model Innovation in the Emergence of Markets: A Missing Dimension of Entrepreneurial Strategy? , 2010 .

[17]  P. Barr,et al.  Cognitive change, strategic action, and organizational renewal , 1992 .

[18]  Joakim Björkdahl.  Technology cross-fertilization and the business model: The case of integrating ICTs in mechanical engineering products , 2009 .

[19]  E. Wisniewski.  Construal and Similarity in Conceptual Combination , 1996 .

[20]  K. Holyoak,et al.  Mental Leaps: Analogy in Creative Thought , 1994 .

[21]  Raphael Amit,et al.  Business Model Design and the Performance of Entrepreneurial Firms , 2007, Organ. Sci..

[22]  Y. Pigneur,et al.  E‐business model design, classification, and measurements , 2002 .

[23]  Daniel A. Levinthal,et al.  Looking Forward and Looking Backward: Cognitive and Experiential Search , 2000 .

[24]  Clayton M. Christensen,et al.  Explaining the attacker's advantage: Technological paradigms, organizational dynamics, and the value network , 1995 .

[25]  E. Hollander.  Attention, Attention! , 2000, CNS Spectrums.

[26]  Nandini Rajagopalan,et al.  TOWARD A THEORY OF STRATEGIC CHANGE: A MULTI-LENS PERSPECTIVE AND INTEGRATIVE FRAMEWORK , 1997 .

[27]  J. Walsh.  Managerial and Organizational Cognition: Notes from a Trip Down Memory Lane , 1995 .

[28]  Daniel A. Levinthal,et al.  Perspective - Neo-Carnegie: The Carnegie School's Past, Present, and Reconstructing for the Future , 2007, Organ. Sci..

[29]  Antoaneta P. Petkova,et al.  When Is a New Thing a Good Thing? Technological Change, Product Form Design, and Perceptions of Value for Product Innovations , 2007, Organ. Sci..

[30]  Howard Schultz,et al.  Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time , 1997 .

[31]  Christopher L. Tucci,et al.  Internet Business Models and Strategies: Text and Cases , 2002 .

[32]  C. Baden‐Fuller,et al.  Business models as models , 2010 .

[33]  Edward J. Wisniewski,et al.  Conceptual combination: Possibilities and esthetics. , 1997 .

[34]  H. Chesbrough,et al.  The Role of the Business Model in Capturing Value from Innovation: Evidence from Xerox Corporation's Technology Spin-Off Companies , 2002 .

[35]  R. Amit,et al.  The Business Model: Recent Developments and Future Research , 2011 .

[36]  Sarah Kaplan.  Research in Cognition and Strategy: Reflections on Two Decades of Progress and a Look to the Future , 2010 .

[37]  Rita Gunther McGrath.  Business Models: A Discovery Driven Approach , 2010 .

[38]  Nancy F. Koehn,et al.  Howard Schultz and Starbucks Coffee Company (TN) , 2001 .

[39]  Nicolaj Siggelkow.  Evolution toward Fit , 2002 .

[40]  Jun Du,et al.  The innovation value chain , 2006 .

[41]  Gregory L. Murphy,et al.  Comprehending Complex Concepts , 1988, Cogn. Sci..

[42]  Michael A. Cusumano,et al.  Services and the Business Models of Product Firms: An Empirical Analysis of the Software Industry , 2013, Manag. Sci..

[43]  Paul Timmers,et al.  Business Models for Electronic Markets , 1998, Electron. Mark..

[44]  Giovanni Gavetti,et al.  On the Origin of Strategy: Action and Cognition over Time , 2007, Organ. Sci..

[45]  Daniel A. Levinthal,et al.  Strategy making in novel and complex worlds: the power of analogy , 2005 .

[46]  Xavier Lecocq,et al.  Business Model Evolution: In Search of Dynamic Consistency , 2010 .

[47]  E. Wisniewski.  When concepts combine , 1997, Psychonomic bulletin & review.

[48]  H. Chesbrough.  Business Model Innovation: Opportunities and Barriers , 2010 .

[49]  Theresa Lauraeus,et al.  Evolution of banking service providers in Finland , 2012 .

[50]  Dedre Gentner,et al.  Relations, Objects, and the Composition of Analogies , 2006, Cogn. Sci..

[51]  Mark W. Johnson,et al.  Seizing the White Space: Business Model Innovation for Growth and Renewal , 2010 .

[52]  S. Grossberg.  The Attentive Brain , 1995 .

[53]  A. Bock,et al.  The Business Model in Practice and its Implications for Entrepreneurship Research , 2011 .

[54]  Jyotsna Vaid,et al.  Conceptual structures and processes in creative thought. , 1997 .

[55]  Rosemary Gravell,et al.  Conclusion: the state of the art , 1991 .

[56]  C. Markides.  Game-Changing Strategies: How to Create New Market Space in Established Industries by Breaking the Rules , 2008 .

[57]  M. Sosna,et al.  Business Model Innovation through Trial-and-Error Learning , 2010 .

[58]  R. Nisbett,et al.  Culture and Cognition , 2002 .

[59]  Ranjay Gulati,et al.  The Barista Principle: Starbucks and the Rise of Relational Capital , 2002 .

[60]  W. Ocasio,et al.  Rise and Fall - or Transformation?: The Evolution of Strategic Planning at the General Electric Company, 1940–2006 , 2008 .

[61]  J. Cornelissen,et al.  Imagining and Rationalizing Opportunities: Inductive Reasoning and the Creation and Justification of New Ventures , 2010 .

[62]  R. Amit,et al.  Value creation in E‐business , 2001 .

[63]  Andrew Hargadon,et al.  When Innovations Meet Institutions: Edison and the Design of the Electric Light , 2001 .

[64]  Joseph F. Porac,et al.  Cognitive Categorization and Subjective Rivalry Among Retailers in a Small City , 1994 .

[65]  Dedre Gentner,et al.  Structure-Mapping: A Theoretical Framework for Analogy , 1983, Cogn. Sci..

[66]  D. Gentner,et al.  The analogical mind : perspectives from cognitive science , 2001 .