How Swiss start-ups deal with business model innovation

Abstract

The term business model innovation refers to the introduction of innovations that differ from state-of-the-art business models in the same field. Current research indicates that business model innovations are more resilient (e.g. to imitation) overall and more successful in the long term compared to traditional types of innovation (e.g. product innovations). Working on business model innovation, therefore, can provide valuable insights, particularly for start-ups looking to grow and scale up under conditions of extreme uncertainty. Business model innovation involves the innovation of two of four core elements of a business model: customer, value proposition, value chain and revenue mechanism. A business model can be described using these four elements in a sophisticated and comprehensive manner. Moreover, these elements help us to determine whether a business model innovation exists. However, do start-ups really use the advantages of business model innovation and to what extent? This research paper addresses this issue and examines the role business model innovation plays for start-ups as well as how it has been implemented. To gain these insights, we examine the business plans of 24 finalists of a Swiss innovation competition in 2021 in a multi-stage process. We systematically reviewed and analysed business plans individually using pre-defined innovation criteria for each of these four elements of a business model. The individual analysis allows a robust assessment to be able to make a comprehensible classification. On reviewing the results, we were surprised by how many of the analysed start-ups are pursuing business model innovations, and that they often innovate more than two elements of their business models. According to our findings, start-ups nowadays deal with business model innovation more often than they did in previous research studies. We can also show that business model innovations are often more complex than they were in the past.