The Design Logic of New Business Models: Unveiling Cognitive Foundations of Managerial Reasoning

Abstract

Despite the importance of managerial reasoning in designing business models to handle exogenous change, little is known about its cognitive foundations. We address this gap with a comparative analysis of how managers rethink business model configurations to provide value in the emerging collaborative consumption economy. As customer behaviors shift from owning to sharing possessions, they challenge firms' established business model logics. Using data from in-depth interviews with managers from 22 sharing ventures, we find six cognitive processes to influence reasoning in new business model design. Furthermore, we find that these processes fall into distinctive dimensions of dominant and emerging logics. Ultimately, they combine into a design logic that explains how managerial reasoning results in conceptually different value creation and value capture configurations. Overall, our findings provide insights for theorizing business model design, and they enhance understanding of the foundations of managerial cognition in innovation contexts.

How do Big Bang Disruptors look like? A Business Model perspective

“…The Business Model Canvas (Osterwalder and Pigneur, 2010) represents one of the main developments in Business Model Design, being widely adopted both by practitioners and academics (e.g., Chesbrough, 2010). In this perspective, recent literature also focused on the role of the manager behind the business model design process, highlighting the cognitive process at its foundations (Schneckenberg et al, 2018).…”

“…In this complex scenario, where different dimensions and perspectives have been considered (Rayna and Striukova, 2016;Massa et al, 2017;Foss and Saebi,2017;Ghezzi and Cavallo, 2018;Schneckenberg et al, 2018), this paper considers the business model as a conceptual tool to describe the firm (Osterwalder and Pigneur, 2010). This lead to the definition of the research question of this paper.…”

Conceptualising business model innovation: evidence from the managers’ advice network

“…Tikkanen et al (2005) and Cavalcante et al (2011) highlight the importance of cognition in the BMI process. Managers define appropriate strategies by relying on cognitive structures such as mental models, analogies and identity (Ott et al, 2017;Schneckenberg et al, 2018). Managerial cognition is recognised as a crucial element in interpreting external challenges and opportunities and, consequently, designing new organisational processes (Fjeldstad & Snow, 2018;Martins et al, 2015;Wang et al, 2017).…”

“…These authors agree with Martin (2009) that design thinking is fundamental in gaining competitive advantage and that the individuals in charge of defining the novel business model (i.e., the 'designers') play a pivotal role within the organisation. In recent studies, these individuals (who mainly occupy managerial roles) and their social relationships have emerged as the bases for organisational learning in the BMI process, since interpersonal relationships facilitate the acquisition and diffusion of knowledge used to prepare for BMI (Osiyevskyy & Dewald, 2015;Schneckenberg et al, 2018;Wang et al, 2017). However, these studies focus on managers' relationships with the external environment, while other authors emphasise the role of intra-organisational collaborative networks in knowledge management and innovative processes (Aalbers & Dolfsma, 2017;Nakauchi et al, 2017).…”

Overcoming hierarchy in business model innovation: an actor-oriented approach

“…Advice network relationships within organizations have been recognized as particularly important to promote innovation (Perry-Smith and Mannucci, 2017), because the exchange of advice between individuals enables the innovation process (Schneckenberg et al, 2019). For Rogan andMors (2014, p. 1864), "informal ties are the result of nonprescribed social interaction processes and have been found to be more critical than formal ties when managers need to go outside existing boundaries."…”