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SMEs and new ventures need business model sophistication

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Business models are a current hot topic, and their design has become a key
to performance. In fact, business model design is often associated with innovation.
Many firms, though, fail to realize the full potential of their current business model
simply because they are not aware of it. Nevertheless, Google succeeded in realizing
its business model’s full potential by offering its main service, Internet search,
completely for free while capturing value from secondary opportunities such as
Google AdWords. Especially for new ventures and SMEs, capturing value from secondary opportunities or business model sophistication is of critical importance toward increasing the pool of resources at hand and giving momentum to the firm’s development. But what are these opportunities, and where can they be found? Based on various examples including Google, Ryanair, the Super Girl Contest on Hunan TV, and Spreadshirt, this article develops a framework that introduces five business model
sophistication strategies: (1) uncover additional functions of your product, (2)
identify strategic benefits for third parties, (3) take advantage of economies of
scope, (4) utilize cross-selling opportunities, and (5) involve users and the crowd. All
five strategies place a strong emphasis on stakeholder commitment.
Original languageEnglish
JournalBusiness Horizons
Pages (from-to)285
Number of pages293
Publication statusPublished - 2015

    Research areas

  • business model sophistication, value capturing, SME strategy, new venture strategy, valueholder, social media

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