Organizing for Creativity across Organizational Boundaries for
Business Actors in Emerging Markets:
The Case of etrans Ideation-based Business Model Design
Morten Rask & Anders Klitmøller
Aarhus School of Business, Aarhus University, Denmark
Over the past decades the negative impacts of transport on the environment have developed into a generally accepted discourse depicting a growing concern for our environment (Van Wee, 2007). Concomitant to this growing concern, industries are pushed to become more sustainable. With respect to the transport sector, current dominant measures to reduce the demand for car usage have concerned assessments of how to reduce car use rather than reducing the environmental impact per car (Gärling & Steg, 2007). As part of the growing awareness on sustainable development, changing the core technologies of cars, and the services surrounding them is reflected in the emerging electric vehicle market appears to hold promises for a more sustainable automobile usage, and a profitable market for key stakeholders.
We focus on the development in Denmark. Denmark has three main characteristics which are important when considering it as an industrial field of development for electric vehicles, namely: a relatively large production of wind energy, a burdensome taxation regime on privately owned cars, and Denmark may be characterised as a world leader in clean electricity generation, thus wind turbines provide more than 20% of the electricity produced (Andersen and Drejer 2008). However, compared to coal-fuelled power plants, production of electricity from wind turbines cannot be matched to the ebbs and flows of demand. Due to climatic conditions, a significant proportion of wind energy is produced at night, when demand is limited. As a consequence, Danish utility companies such as DONG are forced to sell their electricity at low prices or even to send it into the grid at no charge, since the demand on the European spot market for surplus electricity is very limited. Consequently, electric vehicles could provide a suitable neat solution – as ‘mobile storage devices’. As such key player on the Danish electrical market have an interest in pushing the development of the market; a development that has gained support within the Danish legislative arena. As such the Danish government may be enthusiastic about creating more sustainable car transport, as it seen, not only in congruence with the public discourse but also a way to support
Denmark’s leading role within the field of wind energy. As such a substantial economic incentive have been implemented through legislation in order to drive consumer behaviour in direction of electrical vehicles Hence, the Danish taxation regime on privately owned vehicles is among the most onerous in the world. Currently, there is to be a complete tax exemption for new electric vehicles (at least up until 2012) and in the 2008-1011 budget there is provision of DKK 35 million for research into a test scheme for electric vehicles. In that connection, the Danish Minister for Climate and Energy said “We need more electric vehicles on Danish roads […]. We are in the preliminary stages. Only few electric vehicles are on the market, but we have to get started in order to obtain practical experience” (Klima- og Energiministeriet, 2008). Other planned supportive policies include prioritised car parks in larger cities with free recharging facilities. University research funding focusing on the development of efficient charging systems and system export possibilities has also been proposed. The technology of batteries for electric vehicles is still in its infancy and is continuously improved; however, for electric vehicles to constitute a viable and realistic alternative to other means of transport, it is relevant to compare the capacity of the battery and the daily transportation need. Consequently, with respect to the Danish market, the current maximum driving range of electric vehicles does not constitute a substantial problem because 90% of all home to work commuting is less than 100 km (Mathews et al. 2009), probably due to the country’s limited size.
As such several factors that makes the emergent electrical market interesting for various organizations have been identified; a strong economic interest in investing in grid from the wind energy and electrical sector; a political interest in the creation of a legislative body that gives a strong economic incentive for car consumers to shift EV´s, and a technological development that, in combination with the geography, makes the relatively limited range of EV’s les off as challenge. These factors were main reasons that Falck Auto assistance decided to enter the etrans Design Collaboration thereby acknowledging the economic potential of the emergent market of electric vehicles in Denmark. Etrans, is a three year EU-funded project, which has the purpose of
‘[…]contributing to making EV’s an environmental and commercial success in Denmark.”(etrans, 2010) Etrans seeks this goal by collaborating with key stakeholders in the emergent market such as Falck, the large auto help supplier concerned with understanding the future customer base of the EV market.
In emerging markets where the industry architecture is at a nascent stage, each actor has a strategic interest in shaping the industry architecture favourable to their business model. Action asymmetries, i.e. who can do what and who cannot, and rules for interaction among industry actors will shape division of work, and with it render some capabilities more critical and thus valuable than others. The emergent Electric Vehicle (EV) market appears to potentially hold promise of not merely being able to alleviate environmental externalities, but also revolutionise the automobile industry as such. Therefore, shifting to more emission free technologies is an industrial change which marks a classic disruption or discontinuity in an industry (Christensen, 2001). One of the focal interests with respect to such disruptions is the questions of which market participants hold the largest probability of being able to define the business models of the future, or in other words which capabilities will frame the future market.
In continuation of this, the aim of this paper is to describe and analyse the creative ideation process of developing business models in emergent markets. In order to pursue this aim, the article is structured as follows; Firstly we seek define key industrial factors driving the field of electric vehicle development in Denmark in order understand market possibilities. Secondly we analyse the collaboration between etrans and Falck Auto assistance in order to understand the creative ideation process that guides business actor strategies in the emergent market of electrical vehicles. Thirdly, we seek to explore and discuss the possibilities and pitfalls in using creative design processes in business actor strategies focused on emergent markets thereby identifying interest areas for future research.
The business model design techniques “Ideation”, is not only about getting ideas but more importantly to select the right ideas. This is often a problem but can be solved by working with multi-disciplinary business model innovation task forces composed of people with mixed expertise: “The diversity will help ideas to emerge, to be discussed, improved and then selected for implementation” (Osterwalder, Pigneur & Clark, 2010).
The literature related to sustainable development in businesses have been focusing on phases where the firm often start with considering own production processes to reduce cost, risk and waste then re-designing products to be more environmental friendly and in the end redefining or creating new sustainable business models that drive and use these innovations (Lubin & Esty, 2010; Nidumolu,
Prahalad & Rangaswami, 2009). According to Lubin & Esty (2010) the sustainability winners should be found among firms that are able to match “innovative green product offerings and business models with strategic execution”. However, it is not necessary the case that the firm have the creative capacity to carry of theses needed changes on their own – collaboration with other organization may be needed.
In an emergent market the notion of creativity, defined as the ability to create novel and useful ideas plays an essential role as the shape and size of the market is not yet imaginable (Amabile, 1983). The creative capacity is needed in emergent markets where the customers desires are unknown but expected to be found in the near future and where these related emergent new value-systems implies radical changes, which aims at developing new technologies, products or business concepts, witch require radical changes (Möller & Svahn, 2003). These emergent network of future value production pursuing technology and business solutions that are markedly more effective than the existing ones and is “an effective way of overcoming the paucity of resources and simultaneously learning from each other” (Gabrielsson & Kirpalani, 2004). Like workforce diversity in multinational companies can have excellence impact on understanding consumer needs, conceptual thinking and designing for ensuring competitive advantages (Schueffel & Istria, 2005), diversity among collaborators in the inter-organizational network will be beneficial when developing ideas and future business models.
In other words, we find support in the literature to see Etrans’ inter-organizational collobarative ideation process as an ideal case for studying the meaning of needed diversity and collaboration when creating new business models is new markets.
The case study is a result of action research, and as such the reflections in this paper follow the knowledge as a part of the ideation process and reflecting upon the experiences gathered. This is in accordance with the central tenets of action researchers, such as Gummesson (2003), who defines action research as situations in which the researcher both acts as a change agent of a process and studies this process. In order for the action oriented researcher to both be able take part in, while at the same time be observant of the ideation process, several qualitative techniques where used; informal interview with partners, fields notes gathered during workshop, emails, reports and pictures. The data were coded due to taxonomies in order identify key insights in the data material
(Boyatzis, 1998), and as noted by Adler (1994) this process allows the more action oriented researcher a analytical distance to the empirical material crucial for qualitative research.
In order to understand how key players in the emergent market of Electric Vehicles (EVs), imagine the future market and which strategies to pursue, this article describes the organizational ideation process facilitated by the members of the etrans Design Collaboration by focusing on one particular partner; Falck Auto Assistance. This collaboration can be divided in to three interrelated phases:
Consumer study, consumer identification, consumer – company ideation process (etrans, 2010).
In this article we will focus the last phase, although a brief account of the first two are necessary. In the consumer study etrans collaborated with qualitative market research agency in order to gain an in depth understanding of both electrical vehicle and combustion engine consumers. As such 50 users where identified on the basis of parameters such as age, gender, geography, income, occupation, and vehicles. The users daily lives and their relationship to vehicles and transport in general was recorded using various qualitative data gathering techniques such as; observation, semi-structured interviewing, user-diaries, shadowing and priority games. The data material which included written text, video and audio recording, was coded using Atlasti and the analysis was presented at workshop including various partners, market specialist and anthropologists. The aim of the workshop was consumer identification, using the knowledge and perspectives of the organizational partners in order to identify areas in the materiel that might hold future interest for the partners. This was done by dividing the 30 participants into smaller groups, entailing at least an anthropologist, a representative from one of the business partners, a person the technical knowhow
CONSUMER STUDY A qualitative in depth servey of lead‐
users and non users of electric
CONSUMER IDENTIFICATION The developmentand extraction of
relevant insights from the user study
in collaboratrion with reresentatives
from all company partners, and
IDEATION PROCESS Ideation procees customized to
the opputinites and threats facing
of electrical vehicles, and a designer. The outcome of the workshop, which included the development of 7 different consumer types each representing different drivers for the consumption electric vehicles, and as such critical to the considerations in designing the emergent market of electrical vehicles. The consumer typologies formed the basis of the Falck Auto Assistance
consumer – company ideation process facilitated by the etrans Design Collaboration.
Falck Auto assistance offers subscriptions within area of road site auto assistance, and as the largest supplier of these services in Denmark their future market will be heavily impacted if the electrical vehicle where to be successful in Denmark, as some of the market defining features in Denmark seem to promise. In the following we seek to describe three important milestones in the process, and the results of the customer driven ideation processes that lead to a conceptualization of the future consumer of electrical vehicle customized to the understanding of Falck Auto Assistance.
The first face for the creating an understanding of the emerging market of interest to Falck Auto Assistance was the merger of Falck’s perception existing consumer typologies, with ones developed by the etrans Design Collaboration. This was done in order to challenge some of the common sense assumptions that Falck Auto Assistance had about their customer base, as well focus on those areas of the emerging market of electrical vehicles that had the most interest to the company due to its present position and core competencies. A report entitled Cars, Security and Subscription, was made of a qualitative data specialist, entailing an analysis that stated that Falck Auto Assistance was in the business of delivering consumers a sense of security in uncertain situation, and therefore had the competencies to deliver that in the emerging market of electrical vehicles. This perception formed the basis of the merger between and creation of seven consumer typologies. These was presented at meeting where it became apparent that immersion in to the consumer materiel for all interest parties involved was necessary in order to create consumer typologies that would challenge the collaborative partners understating of the emergent market of electrical vehicles which lead to the second phase.
Consumer typology immersion workshop. The basis of the ideation process concerning consumer typologies was a presentation made by the qualitative data expert containing the seven consumer voices developed by etrans Design Collaboration, and four typologies developed internally in Falck. The presentation contained a video of each type, where the consumers described themselves, their
relations to their car, and some of the barriers where they to shift to electrical vehicles. Using video as medium for customer driven reflections on the challenges involved in the emergent market seemed from a facilitation point view particular fruitful as it seemed to put the representatives from the company closer and more direct contact with their future customer base be removing the qualitative data analyst own interpretations of the material. After the presentation the team, which included two designers and an anthropologist from the etrans Design Collaboration, two market specialists and a strategy developer emerged in to various creative games in order to gain an in depth understanding of the future market of electrical vehicles.
Firstly a competitive landscape was mapped out in order to understand to understand the relationship between cost and perceived value from customers. This led to an understanding of Flack’s position within the market and how the organization differentiated itself from it competitors thereby leading to increased understanding by the actors present of the core competencies of the company. Secondly a presentation was made by Falck highlighting their current product in order to gain an in depth understanding of their current business model, and thirdly a consumer journey was mapped in order to identify various tuchpoints in which the consumer came in contact or became aware of the organizations product. This immersion in to the key business aspects led the third and final stage of the consumer typology immersion where the various consumer types was discusses and reflected on leading to three distinct consumer typologies, that reflected key consumers in Falck’s perception of the emergent market of electrical vehicles.
Left picture: Mapping of consumer touch point at workshop
Expanding and reflecting on existing future business model workshop. The three consumer typologies formed the basis of the next workshop where various in-house specialists where invited to ideation on the emergent market of electrical vehicle market. The participants ranged from management, salespersons to technical personal all with divergent and often conflicting views of their organization competencies and strategies. The participants were divided in to three groups, each asked to work on one of the typologies. Firstly extensive time were used to understand the emotions and desires from the consumers, by asking question such as; if we implemented this product how would the consumer feel? If developing this business model would this typology buy into it? As such the outcome of the first phase of the workshop served a dual-purpose. It allowed the Falck participants at the workshop to discuss and gain a deeper understanding of their consumers and how these would relate to the introduction of electrical vehicles, and the etrans Design Collaboration to develop their existent knowledge on challenges in the emergent market. Secondly the three teams discussed how to expand on existing touch points and create new ones in order for Falck Auto Assistance to obtain shares of the emergent market by building on existing core competencies but also ´stretching’ the capabilities of the organization in order to address the changing market of tomorrow. According the first two phases reflections and concrete suggestions where made on how Falck should position itself in the emergent of electric vehicles. The outcome of the third part of the workshop can be divided in to two complementary business model perspectives; expanding existing business models for short term competitive advantage and
changing business model for long term competitive advantage.
The short term competitive advantage by expanding existing business models should be understood as the business ideas that are created when working with challenges and possibilities of an emergent market which might lead to incremental expansion of existing business models. In the inter organizational collaboration with Falck Auto Assistance facilitated by etrans Design Collaboration the creative process of imagining the future market of electrical vehicles led incremental improvement of current products. That is Falck Auto Assistance use of consumer typologies from the emergent market led to several ready to market ideas that expanded their line of products. The creative design process also led to important reflections on how to change business model for long term competitive advantage on the electrical vehicle market, as it rose to three important questions among the participants; 1: Who are we as a business? 2: What should be done in the near future in order to monitor the emergent market of electrical vehicles? 3: How do we prepare the organization
to fit the constant changing environment of the vehicle market? The questions added value to the organization in the sense that by focusing on a specific emergent market of electrical vehicles it created reflection on larger organizational structures leading to a more agile and alert organization
The aim of this paper has been to describe and analyse the creative ideation process of developing business models in emergent markets. In relation to the research question we find the important issue to be addressed; how to design a successful interorganizational creative collaboration process that results in an improvement of the business model design.
Regarding the process design, that is the creation of a successful intraorganizational creative collaboration process, we find it important to configure teams where the participants have the right set of complementary competences, skills and competitive viewpoint. Such a team will expand the boundary of creativity that is important to make the ideation process work. In other words, the ideation setup consisting of people within the same context, with the same set of skill and with the same view point will stumble the process if not stop it.
When considering the design of the business model we find that interorganizational collaboration is needed to improve the business model, both in a short and long term perspective. In the short run the collaboration between the etrans Design Collaboration and Falck Auto Assistance lead to ready to market ideas that captured the low hanging fruits of incremental product improvement and enhanced customer interaction. The point being that the collaboration of an external organizational partner led to the reflection and identification of value that would not have been identified by people in the organizational context that is within Falck Auto Assistance. When focusing on emergent market the long term effects are two folded; that is questioning the corporate identity as a future survivor and simply to create new markets be introducing new products.
Reflecting on implication for future research we see three main areas; Firstly the expansion of the empirical base in order to identify other factors and issues that might be of importance to interorganizational creative collaboration. Secondly to identify specific research questions related to the context of creative ideation process, as the nature of the research will be a mix of observation, action and reflexive questioning. Lastly while this have been an explorative paper a more rigid theoretical framework is much needed in order to outline a generic model for organizing for creativity across organizational boundaries for business actors in emerging markets.
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