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Benoît Demil° & Xavier Lecocq°* °IAE – Lille *IESEG School of Management °*LEM (UMR CNRS 8179) Submitted to Universia Business Review The term BM has flourished in the managerial literature since the end of the 90’s, especially with the emergence of Internet era and its massive adoption for commerce (Ghaziani and Ventresca, 2005). In the managers’ discourses BM is generally used to evoke the idea of change in the form of: “We have to make our BM evolving” (see for instance Yip, 2004 or Johnson et al. 2008). Moreover, a BM is rarely found immediately. It requires progressive refinements to create internal consistency or to adapt to the environment. As Winter and Szulanski (2001: 731) argue “The formula or business model, far from being a quantum of information that is revealed in a flash, is typically a complex set of interdependent routines that is discovered, adjusted, and fine-tuned by “doing””. Some massive change in BM may even radically transform an industry. For instance, the apparition of a free press sector is sometimes described as a factor of traditional medias decline. Despite the interest of a dynamic view of BM, its use is paradoxically often static. A BM is indeed often describe as a ‘general blueprint’ of a business activity (Magretta, 2002) and helps to think more or less creatively to the basic question “How to make money in my industry?” (Afuah, 2004). In this view, a BM describes and synthesizes the way of creating value in a business. More precisely, it leads managers to conceptualize the different activities led by a company to generate value for customers and shareholders. For instance, the BM of low cost companies in the air transport is now well documented. These companies are using standardized resources and standardized types of planes, propose point to point liaisons, have a human resources management with low salaries and feeble unionization, make a massive use of Internet systems of reservation, and have contracts with secondary airports. These coherent elements have radically lowered the structure of costs of these companies. So, the static view of BM remains useful to insist on the consistency of the different elements and helps to communicate and to win adhesion (Osterwalder, 2004), a characteristic particularly important for entrepreneurs. In this article, we address the paradox between the need for consistency between the different components of a business model on one hand (static view) and the need to think the evolution of a business model on the other hand (dynamic view). To do so we build on a framework allowing both a consistency and a dynamic view of the business model: the RCOV Model (Lecocq et al., 2006). We provide a coherent vision of the dynamics of BM by taking into consideration the intertwined voluntary and emergent changes that affect the different components of a BM and that may affect its overall consistency. We illustrate our framework with the case of English Premier League football club Arsenal FC whose BM has evolved radically during the last ten years. Building on this brief illustrative case, we show that a BM is a fine tuning process due to the construction of strategic resources that further enable to generate offers and revenues. The case enables also to illustrate how emergent and voluntary changes are related each other. Some evolutions of the environment may lead to voluntary 1
The resources and competences are valued through the supply of products or services on markets. a lot of start-ups add services to their portfolio of products development. This dimension reflects the content of the transaction (Amit and Zott. These three components. we see the BM as the way an organization articulates dynamically three main components to generate revenues then profit. 1. regulators…). i. 2008). 2006). 2 . In other words. We label “dynamic consistency” the ability for a firm to build and maintain sustainable performance while changing its business model (i.actions from organizations. in the biotech industry. it avoids the limits of both the approaches of strategy in terms of sustainable competitive advantage (Industrial economics and Resource Based View) which suppose to defend and protect a given competitive advantage (i. the system of affiliation of many Internet websites has transformed traditional customers in quasiemployees by offering them a percentage of the sales they generate. they need to propose services to their customers. examining the component organization requires to study the value chain (Porter. to generate rapidly cash resources. Our conception of Business Model For us. 2001. 1985) and the value network. For instance American Airlines has internally developed the Sabre booking system for internal use before to consider it as a resource that should lead to the generation of revenues through an offer per se. rents. For instance. Indeed. organization (O) of the business within a value network or within the boundary of the firm (Amit and Zott.e. subsidies. no major changes in the business model) and the approaches in terms of unsustainable performance (hypercompetition) which entails almost chaotic and permanent changes in the components of BM due to permanent environmental pressure. It implies also to think about the value appropriation within the value network (Chesbrough and Rosenbloom. Their long term sources of revenues are the products but. Finally. Finally.e. assets handovers (Afuah. On the contrary. finding new but consistent processes leading to profit). For instance. the BM encompasses the choices of an organization to generate revenues in a broad sense: turnover but also royalties. Chesbrough and Rosenbloom. strategic choices may have unexpected emerging consequences on the BM. interests. competitors. Lecocq et al. More precisely. 2004. Such a capability enables to voluntary adapt to emerging changes in the environment but also to create virtuous circles following a strategic decision modifying a component of a firm’s BM. 2002). 2002) and the value proposition (V) for the products and services supplied. such a view of business models promotes a dynamic vision of strategy which is suitable for the current environment. Nowadays.000 people are working worldwide for Sabre Holdings Corporation and the company has a 2 billions dollars turnover selling and maintaining Sabre system to 200 airlines companies across the world. the complex web of relations that an organization create with external stakeholders (suppliers. The organization refers to the choice of operations that an organization insures and on the relations it establishes with other organizations. BM consists also in thinking about the customer value proposition a company delivers through its products and services themselves and how they will be marketed and about its profit formula (Johnson et al. 7.. 2001) and the idiosyncratic deployment of resources that each organization manages. encompassed in the RCOV model are resources and competences (RC) to value.e. customers. A refreshing consequence of such findings is that the sustainability of an organization may refer to its ability to anticipate the consequences (on other components) of changes in a given component of its BM..
ultimately. the cost structure is essentially driven by the resources and competences acquired and developed by the firm. In our view. 3 . and by the organization it deploys to lead to the various activities of its value chain and value network. The revenue side depends above all on the value proposition(s) made to various kinds of customers. These three basic components of a BM determine the structure and the volume of costs and revenues of a business and. Figure 1: The main components of the business model: The RCOV model (Adapted from Lecocq. Demil and Warnier. Stakeholders are not the same in the press industry when customers are paying for the information or when companies are paying for advertising or when the journal is freely distributed to readers. its profit and thus its sustainability (see Figure 1). Choosing how a product or service is paid also impacts the cash flow but also the image and reputation of the firm. 2006) Resources and Competences Value propositions Internal and external Organization Volume and structure of revenues Volume and structure of costs Margin The RCOV conception leads with parsimony to an approach where entrepreneurs have to consider jointly questions of organization with value offered and resources accumulated and combined. These elements correspond to the bundle of resources and the administrative system proposed by Penrose (1959). For instance choosing who is paying for a product or service means defining the stakeholders of the firm and their relative bargaining power. More particularly. “the services yielded by resources are a function of the way in which they are used … in combination with different types or amounts of other resources”. the BM concept should be apprehended through the lens of permanent interactions between the components of a BM and the repercussions of one change on the other components.Indeed. as underlines by Penrose (1959: 25).
partly out of control of the organization. But. the accumulation of new knowledge and new technological basis are the result of waves of acquisitions which have been partly opportunistic and not planned. For instance. We think necessary to go further by addressing the question of dynamics. By now. this resource has lost a part of its value for the customers of traditional media and especially the newspapers which have to rethink profoundly their BM. each of the constitutive elements of a BM can be changed voluntarily or be modified by emerging evolutions. an organization will be conduced to change its BM. For instance. 4 . some changes in the way an organization generates revenues do not alter radically its BM. In this situation. But emerging evolutions have not to be considered always negatively. a firm can outsource its supplies without changing the value delivered to customers. In the case of bad or decreasing performances. we can advance that BM of an organization is changing when this organization observes or triggers a substantial evolution in the structure and/or volume of its costs and/or revenues. independently from the resources it mobilizes or without modifying its organization. each constitutive element of the RCOV model can be changed or can change independently without changing the coherence of a BM. especially when the organization is young and the BM is not stabilized yet. Where do these changes coming from? Analytically. the valorisation of new kind of resources like the secondary airports and the externalization of several processes enable to introduce drastic changes in the traditional value proposition of the air transport sector. an organization may also observe some evolutions of its environment or the arrival of aggressive new entrants that may require a change in its BM. It can lower prices or delivered more value to customers with new services. For instance. These evolutions lead to increase or decrease the performance of a BM and its sustainability. opening up new opportunities and more generally creating virtuous or vicious circles. an organization may change all the elements together and eventually creates breakthrough in the overall sector. Sometimes. a crucial question is how and why BM evolves. Consequently. literature has focused logically on definitional or validity questions. In the example of the Hercules Powder Company developed by Penrose (1960). however. Introducing dynamics in Business Model: why and how a BM is changing? As evoked in the introduction. We provide some illustrations of this kind of voluntary and emerging changes in Table 1. These emerging evolutions may come from the environment but also from unanticipated effects of a voluntary decision or from the dynamics of the BM itself by generating spillover effects. It can acquire new resources or develop new competences without changing the two other constituents of its BM. These problems can be temporarily. Moreover. an entrepreneur has to find progressively a solution to make his activity profitable by changing different component of his BM. Based on our definition. due to the proliferation of Internet portals and the massive diffusion of free information.2.
Illustrations of voluntary and emerging changes of a BM Affected component Resources and Competences Emerging change (positive + and negative -) A company acquire start-ups The cost of a resource increase (-) which deepen its knowledge or the accumulation of new or recruit new profiles of customers create a large installed employees based of customers that can be further valued (+) A company decide to Customers or suppliers are outsource a part of its concentrating. Arsenal Internet website. Thus. We have only collected secondary data: Arsenal FC annual reports. Deloitte Reports on European Premier leagues and dozen of journal articles from sports or business journals.Table 1. leading to change activities to reduce costs in the power equilibrium within a value network (-) or productivity of the firm increases due to learning and scale economies (+) A company enrich its value A value proposition is devalued proposition with new by the offers of competitors due services added to its products to substitutes (-) or the brand of a company acquires an important reputation over time (+) Voluntary change Organization Value proposition 3. official press release from Arsenal. 5 . news for fans. An illustrative case: The Arsenal FC business model To illustrate our preceding discussion we study the recent history of the Arsenal FC 1. the football has become an important economic sector. This performance was obtained especially by building new resources to valorise. 1 The Arsenal FC case is a library case. like numerous clubs of the English premier league. Indeed. the choice to study a football club like Arsenal FC is justified by the huge modifications in its business model in the last 10 years. by benefiting from relations in its value system and by modifying the value delivered to its customers. particularly in England where a new logic of ‘football as business’ was brought to paroxysm by multiplying by five the revenues of the premier league between 1995 and 2005 when other big European leagues acknowledge an increase by a factor two or three. the group turnover has been multiplied by five and the profits generated were solid (Figure 2). Over this period.
Arsenal demonstrates its ability to generate and exploit new and old resources.Figure 2.902 12.97 40. This is an emerging evolution of the Resources and Competences component of the Arsenal Business Model.3 1. The club benefited also recently from the new Emirates Stadium (an investment of more than £ 400 million) inaugurated in July 2006 and replacing the old Highbury in which the club was installed since 1913. the existing transfer system was relaxed and liberated professional footballers from their peculiar status.308 14.8 2008 223 117.9 2003 2004 2005 2006 2007 200.463 60. the players constitute strategic resources which enable further to increase the retail revenues.152 8. To keep its status and attract many stars. the general competition for the best players induced a burst of staff costs over 10 years.11 26.726 Source: Annual reports of Arsenal FC On the Resources and Competences side.569 69. However. The reconverting Highbury reinforces strongly the property development business segment of Arsenal FC. a company may then voluntary generate new offers (or better value propositions) to its customers. a club like Arsenal was required to increase significantly its revenues to manage the burst of salaries.703 101. The club was not specific on this point. illustrating the fact that a resource may be valued differently according different value propositions (stadium then luxury apartments).478 33. Evolution of performances of Arsenal these last ten years 300 200 m£ 100 0 -100 group turnover staff costs profit / loss after tax 1999 48. Indeed. Spain. a document concerning the aftermath and causes of the Hillsborough disaster in 1989 (96 Liverpool fans died during a match). This latter point demonstrates than from an emerging change in the resources and competences component (new rules to obtain the “player resource”).6 2002 90. since 1995 and the European Bosman ruling.4 137. The combination of this change with the exploding TV rights in the big sports and broadcast markets (especially of UK. This new regulation and 6 .293 7.6 2000 61.012 82. emerging change may be followed by voluntary changes in other components of the business models to preserve or even increase revenues.272 -20. to maintain the stability of the field performances and to negotiate better sponsorships.011 8.56 4. The migration to Emirates enables to double largely the gate receipts by increasing capacity.2 2001 64. The final report was published in January 1990 and sought to establish the causes of the tragedy.651 61. Italy and Germany) resulted in very high salaries for players.965 89.2 24.816 25. the club uses also its partnership with the architects of the Emirates to conceive and coordinate the Highbury square project.9 138.889 66. In this case. recommending in particular no standing accommodations in stadium.8 156. This decision was first the consequence of the Taylor Report. Thus. It led to rules regarding the provision of safety at sporting events in future.
000 and each season a supplementary £25.000 to 38. the club grasped this opportunity to bet on the development of an entirely new resource.000. These changes enable the Arsenal FC to increase significantly the relative share of the gate resources and to depend less on the external contracts as the broadcasting revenues (Figure 3). Indeed. This luxury service added with privileged seats generate by their own nearly the same than the 50 000 other places. almost six times the initial contract).7 8. in respect of 7 .2 Source: Annual reports of Arsenal FC On the Organization side.2 13 15. the relative share of this source decreased with the advent of the increase of gate receipts.3 2006 44 55 22.8 10. This evolution favoured largely a club like Arsenal which obtains successes regularly thanks to its capacity to attract star players. So.1 2007 90. Evolution of sources of revenues (m £) 100 80 60 40 20 0 gate broadcasting com ercial m retail property developm ent 2002 23 44 16 5 1 2003 26 50 15 9 13 2004 33 60 14 7 42 2005 37.000 seated spectators in 19931994. the club benefited from the huge increase in television income following the creation of the Premier League in 1992.4 23. At this date. But despite an increasing level of these broadcasting rights (the overall TV receipts for the Premier League exceeded £1. Figure 3. This source of revenue is “derived from contracts which are currently centrally negotiated by the FAPL and. with a minimum term of three years.8 2008 94. generates regular loss at the end of the 90’s and constituted a threat to get left behind by its main rivals. the growth of gate receipts was not explained by a simple increase of the capacity.6 68 31. the club track displays 13 top division titles after 92 seasons in the top division.2 5. Despite a 50% part of these revenues were divided up equally between Premier League clubs. the satellite broadcaster BSkyB bought exclusive rights to the sport for nearly £200m to drive its own expansion through its satellite sports channel Sky Sports.4 48. the remaining 50% were based on the final League position and the TV appearances. leading to deepened inequalities between successful clubs and smaller ones.6 44 29 12 23. However.others reduced the capacity of Highbury from 60. This performance was also obtained by a better comfort with an increased average price of entry and by the creation of new value propositions like the ‘diamond club’. This situation blocks the expansion of revenues.7 billion for the 2007-2010 seasons. an ultra exclusive luxury suite proposed to 80 VIP whose membership costs £25.6 20. many changes have occurred at the value network level during the last ten years. First.
Indeed. travels to away games. due to its good performance track at the beginning of the 21 century.500 to £4. Indeed. on the outcome of the relevant contract negotiations” (annual report. lounges and restaurants. Sponsorship contracts encompass also Nike for the kit and Delaware North for catering. manages to attract important sponsors like O2 for the shirt sponsorship and then Emirates Airlines for £48m (eight years shirt sponsorship). Electronic Arts for electronic games. Arsenal have also agreements with football clubs such as BEC-Tero in Thailand (BEC Tero entertainment owns 14 retail outlets for Arsenal merchandise in 2008) or Hoang Hang Gia Lai in Vietnam which allow them to share commercial revenues these football clubs are generating from their links with Arsenal.700 premium seats going for around £2. the Premier League was valued more and more by sponsors.000 each per season. stadium tours and Arsenal museum entry tickets. apartments and penthouses for private individuals or companies and it reinforces the property business of the club. In addition. Thousands people every year take a tour of stadium and come through the museum.agreements with Thomas Cook to develop a range of travel services for Arsenal fans. However. This suggests that emerging change in the football players market may affect organization and thus costs structure of Arsenal. 2006). The club conceived also the new Emirates as an opportunity to discriminate radically the value propositions in the stadium and their prices.500 each. it transforms the previous stadium in studios. This exemplifies how a change in the value network can modify the value proposition. Then. Thanks to the closer relations between television and football since the 90’s. This strategy has boosted match day income to £3. Arsenal has first exploited its property resources after leaving Highbury for Emirates Stadium. 8 . For instance. the activity of the Group’s main competitors can determine trends for market rates for transfer and wages that the group may be required to follow in order to maintain the strength of its first team squad”. Building on its international status. backed by a range of bars. the business model is built to generate revenues outside the season. Another crucial kind of partnership in the value network refers to the sponsorship (commercial revenues). the team only plays at the stadium an average 28 days of the year. the club recognizes that the rates for transfers and wages may vary importantly with the pressure of competitors to acquire rare resources. in the 2006 annual report “the group operates in a highly competitive market in both domestic and European competition and retention of personnel cannot be guaranteed. At the value chain level.1m a game (an increase of 97% compared to the average receipt in Highbury Stadium). the naming rights deal with Emirates Airlines is worth £42m until 2021. On the side of Value proposition. it includes 160 Diamond club seats and 150 corporate boxes which go for between £75. Thus. by UEFA. chairman of Arsenal holdings plc. HillWood. There are also – among numerous commercial partnerships. The new stadium has been also the occasion to create restaurants and stores whose sales are increased by match attendances. But new sponsorship implies reciprocally a growth in the retail sales because of new shirts and new banners are available. This increase is explained both by the higher capacity of Emirates Stadium but also by the side revenues such as match day programmes and catering sales. alone. As noticed by M. the Supporters Service Center has been opened to sell memberships.000 and £150. New offers for fans and supporters (see below) have also induced the creation of new departments in the club (and thus new costs).European competition. New resources like the stadium enables also to contract with partner for the sponsorship of the name of the stadium. EDF energy for supplying energy for the stadium. there are 6. A club like Arsenal FC. a few months ago. the group does not have any direct influence. Thus.
Thanks to Emirates Stadium capacities Arsenal creates new value propositions like “Diamond Club”. 2009). music events. But. Indeed. stadium…). Highbury is transformed in luxury apartments. Arsenal FC has to exploit intensively these resources and competences through various offers to generate more revenues. New shirt sponsorship (O2 and Emirates Airlines) brings growth in the retail business. Arsenal seeks new sponsors. Creation of the Supporters Service Center.000 seated spectators In 1992. Organization Arsenal makes deals with football clubs in the world. pre-season tournaments).Moreover. restaurants. given the costs of strategic resources (players. Table 1. the Taylor Report recommends no more standing accommodations in stadiums and reduces the capacity of Highbury from 60. banquets. Highbury becomes a resource for property development. Arsenal launched Arsenal channel. The financial crisis in 2008 and 2009 affect the sale of the corporate boxes. contrary to other similar contracts in Manchester and Chelsea. official meetings. Value proposition Discussion Analysis of the Arsenal case 9 . the European Bosman case abolishes the existing transfer system and liberates professional footballers from their peculiar status. non season events are organized to keep revenue streams throughout the year (weddings. This demonstrates the dynamics between all the components of the business model but also the need for consistency between elements (Casadesus-Masanell and Ricart. music events. the creation of the Premier League leads to new stakes and partners for broadcasting. Competition for the best players induced a burst of staff costs over the last 10 years. Voluntary and emerging changes of Arsenal BM Affected component Resources and Competences Voluntary change In 2006 Emirates Stadium replaces Highbury. Setanta will receive all subscription revenues but Arsenal will retain all receipts from any sponsorship and advertising on the channel. Emerging change (positive or negative) In 1995.000 to 38. Thanks to a six year deal with the broadcaster Setanta. The club develops also a new TV offer for its fans base. In 1990. premium seats and Diamond club seats of the Emirate stadium. banquets. bars and shops. even if these offers are not related at a first glance to the football activity. pre-season tournaments). corporate boxes. official meetings. Arsenal launches its own TV offer. Creation of non-season events (weddings. Content of the channel will include delayed coverage of matches and behind the scene access to the club.
Such an evolution of business models is based on the development of new sources of revenues and the systematic exploitation of the main strategic resources of Arsenal: players and stadium. Moreover. a crucial point in a dynamic approach of business model is to look at the antecedents and the process behind such virtuous circles. In return. retail. on the contrary. This ability to make sequences of decisions that will generate virtuous circles for revenues and profit is also striking when looking at the new stadium project which has lead to new revenues in each activities of Arsenal FC: gate. Indeed.g. Several clubs in the Premier League seemed to have created such positive dynamics as evoked recently by a Premier League spokesman: “[The Premier League’s] levels of success are the product of a virtuous circle. But. behind Chelsea (£620m) and Manchester United (£605m) which have very similar evolutions in their business models. beyond the identification of such virtuous circles. results in the European championship league or in the championship of the premier league explain partly the exceptional profit generated some years (e. This evolving business model has also generated new threats for clubs as consequences of strategic choices to ensure growth. what is interesting is that during the last 10 years the evolution of the business model of a Premier League football club like Arsenal FC has consisted in trying to ensure the club sustainability more independently from the field performances. Value proposition). whereby high playing standards generate high levels of interest. and training ground improvements. it seems that the strength of its management has been to think systematically about the consequences of emerging changes on their business model. some English Premier League clubs nowadays display very high debt level. some revenues. Indeed. 10 . coaching. As far as debt is concerned. a main difference between Arsenal and these competitors is that Arsenal has real estate projects at Highbury Square and Queensland Road which will be paying off the debt. overall. which in turn drive commercial revenues which are then invested in football’s fundamentals – players. generates new sponsorship and then a better capacity to contract with star players.The data of our illustrative case suggests that the performance of the business model depends partially on the sportive results.” However. are directly related to such performances. increases gate revenues. Arsenal FC rank third in the English premier league with a £268m debt. Thus. property business. Organization. youth development. like a part of broadcasting. As evoked previously. For instance.g. Looking at Arsenal case. sponsorship. That is the case for instance when the choice of Emirates Airlines as a new sponsor both for the name of the stadium and for the shirts of the team is followed by other decisions like the creation and temporary shops and the massive promotion of new shirts to realize huge retailing sales. 2004) or. stadium facilities. But the club has voluntarily created the conditions to exploit these changes. 2009) between the different components of a business model (Resources and Competences. However. our data shows that the consequences of every strategic decision are taken into account to generate positive feedbacks between the elements of the business (see Figure 2). several important modifications were induced by emerging change in the environment (new legislations concerning stadiums or players enrolment for instance). 2005 or 2007). Arsenal FC case also demonstrates the numerous relations and eventually virtuous circles (Casadesus-Masanell and Ricart. these players generate eventually good performance on the field and thus increase broadcasting and retailing revenues. new stadium allows the implementation of new retail stores. This important property business also allows the club to limit its dependence on shareholders. why some bad field performances may affect financial results some years (e.
A multiplication by almost 5 of the turn over over 10 years . Moreover. Nike.Luxury apartments Attract new partners Build up new offers and enrich the supply Become sensitive to the real estate crisis Revenues: . O2 …) .Players. we have also to notice that as suggested by our framework.Football as a worldwide entertainment industry and global experience (retailing.Sponsors (Emirates Airlines.Less seasonal revenues Costs: . Reputation of top team .Large worldwide audience for sponsoring .Customer Relationship Management Conversion of resources for new propositions Evolution of organizational system Value Proposition: . For instance.Supporters Service Center Offers become new resources Competitive pressure by other top teams Resources and Competences: .Architects .Staff costs multiplied by 4 over 10 years . Without the Emirates stadium. attendance. Stadium. other leisure) .More diversified sources of revenues . the property business may also be affected by the dip in the UK housing market. RCOV model applied to Arsenal FC Bosman ruling / Competition for attracting stars/ Relaxation of the limitations concerning overseas players Safety regulations Increased monetary resources to acquire strategic resources Build up and improve competencies like CRM & Contractualizing BSkyB incursion in the premier league Organization: . IBM. Figure 2. the financial crisis in 2008 and 2009 may affect severely the sale of the corporate boxes.Around £88 m of cumulated profits over 10 years An increasing debt 11 . such threats would have less impacted Arsenal FC. premium seats and Diamond club seats of the Emirate stadium. and with the traditional seats in the former Highbury stadium. emerging threats for a business model may also follow some strategic decisions that were supposed to generate more revenues.Broadcasters (Setanta) .£400 m invested in the Emirates Stadium Margin: .Network of international schools of football and agreements with foreign clubs .However.
Adapting or changing while maintaining consistency appeal for dynamic consistency. 1985. Porter. 1978.g. Such a model appears to us as one of the best way to be able to overcome the paradox between analysis of consistency (static description) of a given business model and its necessary dynamic view for coherent change and consistency over time. as the term “model” supposes coherence between several elements of a system. the sustainability of an organization may refer to its ability to anticipate the systemic consequences of a given change in a given component of its BM. external jolts or internal drifts have generally systemic consequences on the business model as a whole. Such a view of business models promotes a dynamic vision of strategy avoiding drawbacks of both the approaches of strategy in terms of sustainable competitive advantage (e. generating potentially inconsistency and then sub-performance. 2008) or at the business model level (e. The dynamics of a BM may come from a change in one of its components. it insists on the systemic consequences on the business model of emerging change in the environment.g. finding new but consistent processes leading to profit). In RCOV model a good indicator of business model evolution (positive or negative. Such a capability enables to voluntary adapt to emerging evolutions of the environment but also to create virtuous circles following a strategic decision modifying a component of a firm’s BM.e. Industrial economics and Resource Based View) which suppose to protect a given competitive advantage (i. the representation of the business model of a firm appears particularly as a good tool for managers to think about the dynamics of their organization. Casadesus-Masanell and Ricart. We build on these authors to further suggest that. independently from the other ones. We believe the RCOV model is such a generic. authors have argued and proven the need for consistency at the corporate or business levels (e. whatever the organization. 12 .g. We label “dynamic consistency” this ability to overcome the trade-off between consistency of a business model and the need to change regularly in most of the industries. Lamberg et al. Indeed.Towards a dynamic consistency view of strategy Given the preceding arguments. 2009) and the positive impact of consistency on performance. Thus dynamic consistency allows a firm to build and maintain sustainable performance while changing its business model (i. this dynamic consistency view of strategy supposes concepts and tools for managers to monitor consistency and take sequences of decision to change profitably its business. no major changes in the business model) and the approaches in terms of unsustainable performance (e. emergent or voluntary) is a modification in the costs and/or revenues structure and volume. Miles and Snow.. We believe business model is a good candidate to do so. parsimonious and dynamic model. given the characteristics of business model evolution. This kind of tool may be useful for managers to think about the consequences of emergent changes and strategic decisions on the whole business model as the Arsenal management team has been able to do it during the last years.e. emerging consequences of strategic decisions on the current business model and its performance and/or on the emergent consequences of the BM dynamics.g. hypercompetition) which entails almost chaotic and permanent changes in the components of business models due to permanent environmental pressure. Such a systemic view supposes to benefit from a generic model which is in the meantime parsimonious and make clear the potential relations (and the feedback mechanisms) between the various components of a business model. Indeed. However. for more than thirty years. However.
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