Success Factors of Digital Business Models

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Understanding the predominant success factors of digital business models:

An exploratory study of the automotive industry
Thesis · November 2015

DOI: 10.13140/RG.2.2.34996.35205
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ESMT
MASTER’S
THESIS
Understanding the predominant

success factors of digital business
models:
An exploratory study of the automotive
industry
by Martin Walter
A thesis submitted in partial fulfillment of the requirements

for the degree of Master of Business Administration at
ESMT European School of Management and Technology, Berlin
Berlin, 2015
Acknowledgements
I would like to thank my dear love Franziska for the ongoing support and patience she had
with me, not only during the intensive Master Thesis project but also throughout the whole
MBA year.
I am also very thankful for the support by Professor Zhike Lei from ESMT, helping me to guide
this research project in the right direction.
I also want to thank Philipp Hukal, Researcher at Warwick Business School, for being a
sparring partner during the ideation and throughout the progress.
Without the gathered inputs and vast experiences I captured through interviews, this
research project would not have been so successful.
Therefore, my special thanks goes to the interviewees from:
Accenture
Bundesverband CarSharing e. V.
Daimler AG
Deloitte
Information Services Group Germany GmbH
Verband Deutscher Maschinen- und Anlagenbau e.V.
2
Table of contents
List of figures.............................................................................................5
Abstract ...................................................................................................6
1. Introduction .........................................................................................8
2. Theoretical grounding and literature review ................................................. 10
2.1. Digitization versus Digitalization – A Definition ........................................ 10
2.2. Decompiling the term “Business Model” ................................................ 11
2.2.1. Introduction into the theory of business models .................................. 11
2.2.2. Development of the term “Business Model” over time .......................... 12
2.2.3. Differentiation towards overlapping concepts .................................... 13
2.2.4. Architecture of business models .................................................... 14
2.2.5. Development of an own business model concept framework ................... 15

2.2.6. From a business model to digital business models ................................ 17
2.2.7. Differentiation towards other technology driven business concepts ........... 18
2.2.8. Architecture of digital business models ............................................ 19

2.2.9. Summary of the main characteristics of digital business models. .............. 22
2.2.10. Comparison of industrial vs. digital business models .......................... 23
2.3. Critical success factors within management research ................................. 24
2.4. Summary of literature review ............................................................. 25
3. Empirical approach and methodology ......................................................... 27

3.1. Introduction ................................................................................. 27
3.2. Hypothesis and research questions ....................................................... 27
3.3. Research design ............................................................................. 28
3.4. Identification of source of evidence and data gathering.............................. 30
3.5. Development of an interview strategy ................................................... 30
3.5.1. Interview & questionnaire design ................................................... 30
3.5.2. Participant selection .................................................................. 38
3.5.3. Interview strategy, structure & execution ......................................... 39
3.5.4. Approach & methodology to analyze data collection ............................ 40
4. Analysis of the research data ................................................................... 42

4.1. Research findings – Cluster: Architecture ............................................... 42
4.2. Research findings – Cluster: Technology Enabler....................................... 48
3
4.3. Research findings – Cluster: Routines .................................................... 50
4.4. Research findings – Cluster: Culture ..................................................... 52
4.5. Research findings – Cluster: Value Chain ................................................ 53
4.6. Research findings – Cluster: External Factors........................................... 56
5. Discussion and conclusion ....................................................................... 59

5.1. Definition of success factor for digital business models as recommendation for
managers ............................................................................................. 59
5.2. Limitations of the research and critical reflection on the process .................. 63
References .............................................................................................. 64
Appendices ............................................................................................. 68
4
List of figures
Figure 1: Overview of pattern and success factor of digital business models ..................7
Figure 2: Difference between Digitization and Digitalization in the Automotive Industry .. 10
Figure 3: Graphical representation of business model publications over time ............... 12
Figure 4: Patterns & Commonalities of business models ......................................... 15
Figure 5: Overview & Comparison of processes within business models ....................... 16
Figure 6: Three main patterns of business models................................................ 16
Figure 7: Overview of all player and components of business models ......................... 16
Figure 8: Graphical representation of the business model definition .......................... 17
Figure 9: Graphical representation of digital business model definition ...................... 23
Figure 10: Comparison Industrial Economy vs. Digital Economy ................................ 23
Figure 11: Comparison traditional automotive business model vs. mobility service provider
model .................................................................................................... 24
Figure 12: Overview of research questions ........................................................ 27
Figure 13: Predictor and dependent variable to evaluate research hypothesis .............. 29
Figure 14: Six sources of evidences and their applicability ..................................... 30
Figure 15: Categories for questionnaire build based on the digital business model framework
........................................................................................................... 31
Figure 16: Overview of questionnaire .............................................................. 32
Figure 17: Interviewee selection framework ...................................................... 38
Figure 18: Overview interviewee skillset types ................................................... 38
Figure 19: Overview of selected interviewees .................................................... 39
Figure 20: Scheme how captured data was stored................................................ 40
Figure 21: Categorization of identified patterns .................................................. 41
Figure 22: Overview of Success Factors ............................................................ 60
5
Abstract
“Digital Transformation” evolved from a fancy buzzword to a revolution of businesses and

whole industries. While it offers many chances, it is threatening the business models of
traditional companies at the same time. The field of business model research alone is a
rather new science practice. This thesis not only summarizes the state of research around
the term “Business Model” but also discusses the evolution towards a digital business model.
Characteristics and components of digital business models are in the focus of management
research but lacking an in-depth evaluation on what it makes them successful. Here this
thesis tries to contribute by identifying patterns that increase the probability of a successful
outcome. In the absence of quantitative data, 14 high profile senior executives from various
companies and organizations were interviewed. As a result, 52 pattern were identified out
of which 23 success factors for digital business models could get derived. Apart from the
theoretical evaluation, this thesis takes the automotive industry as an example, to explain
digital business models and what makes them successful in an applicable context.
The start of this research project was the hypothesis that successful digital business model
and their strategies have concurring patterns. Based on that, a research question was
formulated, asking what factors are there, that might determine the success of digital
business models. To lay out the theoretical grounding, necessary terms like “Digitalization”
and “Digitization” were defined, followed by a literature review around business models in
general. To better highlight key characteristics, the author created an own framework based
on the various definitions and publications of business models. This framework was
developed as a tool to a) guide through the thesis and b) to draw the evolution towards a
digital business model. After a summary of digital business models in management research,
this framework was altered to reflect the specifics of digital business models. Throughout
the literature review, examples of the automotive industry were used to illustrate captured
concepts.
The next part of this thesis describes the empirical approach, how the data set was created
and analyzed to derive the patterns. The research design concentrates on four main areas.
Firstly, it discusses which data gathering approach would be appropriate and why. Secondly,
a questionnaire was designed and an underlying interview strategy formulated. To better
structure, not only the data gathering process but also to support the consecutive analysis,
the whole survey and research was divided into clusters. These clusters resulted from the
created framework, which was developed based on the literature review. The evaluated
clusters are architecture, routines, culture, technology, value chain and external factors.
Thirdly, an interviewee selection framework was created, considering that experts from all
6
relevant areas are interviewed to ensure a 360 degree view on digital business models.
Fourthly, a technique was discussed, how the gathered data will be analyzed. Here, a three-
step approach was conducted. As a first step, patterns per cluster were identified. During
the second step, these patterns were categorized in either static, like an asset or capability
or behavioral, like a routine or ongoing process. The last step assessed these patterns on
their impact on the success of the outcome. Based on that, the 52 identified patterns were
further sub-categorized in 23 success factors that have a direct impact on the outcome of
digital business models and 29 supporting factors. The following figure shows an overview of
the research result respectively the identified patterns and success factors of digital business
models.
Figure 1: Overview of pattern and success factor of digital business models
Source: Own creation
The last part of this thesis discusses the implication of these factors for managers that
operating digital business models in the automotive industry. The thesis ends with reflecting
that research of success factors for digital business models is only at the beginning and gives
recommendations for further researches by highlighting the limitation of this thesis. As a
next step, a quantitative evaluation of single factors is recommended to assess and measure
their impact on the success.
7
1. Introduction
Since the introduction of the steam engine, the industrial world was not shaken up as it is
right now - and the big storm is yet to come. We are amidst a digital transformation that
will not only re-define whole industries but also reshape the competitive landscape.
Companies that lead their industry now might be condemned to insignificance soon while
new entrants rise, riding the wave of digital transformation. A study by IMD and Cisco
analyzed that all industries will affected at some point by a digital transformation – it is only
a matter of time (Bradley, et al. 2015). This digital transformation has and will have a much
bigger impact on any industry compared to the introduction of information technology during
the 1970s and it is running much faster than any other paradigm shift so far. The underlying
reason is that progression in information technology is at an exponentially growing pace
(Bradley, et al. 2015) and demands much faster innovation cycles than happened in the past.
The heavy industry and the automotive manufacturing companies in particular are
profoundly affected by this digital transformation and as a response putting tremendous
efforts in figuring out how their digital strategy should be shaped. The digital transformation
is not a trend anymore that is observed by these companies, it is of major concern of the C-
Level. Dr. Dieter Zetsche, CEO of Daimler, the German automotive giant, consecutively
announced that they are not a car manufacturer anymore but a "Connected Mobility Provider"
resulting in transforming their core into a digital business model. Joe Kaeser, CEO of 82bn
USD engineering heavyweight Siemens, even dramatized it more, “digitalization is the vital
question of Germany's industry”.
However, what makes a digital strategy or business model successful?

Researches on digital strategy or digital business models are rather rare. Studies around the
concept “Business Model” itself are a very young practice within management science, only
getting real traction since the year 2000 (DaSilva and Trkman 2013). This research area is so
recent that even around a clear definition of what a business model is, the disagreement
keeps scholars busy. With a focus on digital business models, research is just at the beginning
to value the outlook and to understand the mechanics. Here this thesis aspires to contribute
to the current state of research. Academic works and research projects assessing, why or
how digital business models can be successful, are non-existent or at least not findable for
the author. The research of “Information Systems” focusses either on digital strategy
(Bharadwaj, et al. 2013) in general or on the innovation of value creation within in services
(Lusch and Nambisan 2015). However, which factors need to be considered to ensure a
successful outcome, remain unclear. This thesis aims to close this gap by focusing on success
factors for digital business models and to lay the foundation for future research in this field.
8
The identification of these critical success factors can be the origin for a further quantitative
research around single factors. Rather than describing how digital business model work, this
thesis evaluates what is needed to make them successful. It starts with the hypothesis that
digital business models have concurrent patterns that lead to a successful outcome. This
thesis identified through an intensive research process 52 patterns, which, if implemented,
increase the success rate of digital endeavors. These patterns were derived through in-depth
interviews with 14 distinguished senior executives who are experts in their fields. Out of
the 52 identified patterns it was possible to define 23 factors that have a direct impact on
the success of digital business models.
Using the automotive industry, or nowadays-called “Mobility Industry”, as an example to
assess and identify what makes digital business models successful, helps in two ways. First,
it is an example everyone can relate to as it is affecting everyone’s life. Second, explaining
the “Digitalization” by using the example of something as physical as the car, makes it more
striking in the argumentation and presentation of insights.
This thesis is organized in the following manner. I start by defining the terms used and
differentiated them from similar terms that mistakenly got used in the practice. As a next
step, I proceed to review research on business models from a theoretical and practical
perspectives, paying particular attention to what are the main characteristics and
components of business models. Here I discovered where scholars concur with their
definitions and where not. As a next step I created an own framework describing business
models and their components based on the collective insight out of the literature review.
Then I used this framework to identify additional components that need to be added for
digital business model. Here I also summarized the elements of digital business models where
researchers concur. To set the ideal baseline for my empirical work, I took the developed
framework and illustrate how it needs to change in favor for digital business models.
Following that, I described why I defined my research questions and how I will continue to
answer them. This section was followed by the research and survey design as well as the
selection of participants. The core of my empirical work was focused on the identification
of patterns that would make digital business models successful. I clustered these findings
and evaluated them critically
I then discussed how to potentially integrate insights from these perspectives into a more
comprehensive model to help to build successful digital business models. I concluded with a
critical appraisal of my findings and research result and gave an outlook for further research.
9
2. Theoretical grounding and literature review
2.1. Digitization versus Digitalization – A Definition

As a starting point to outline the importance of digitalization in the industry, it is important
to distinguish digitalization from digitization – two terms being used interchangeably. English
dictionaries define the word “Digitization” as the process of converting analog data,
information and media into a digital form. But this definition is insufficient to describe one
of the major trends that is shaking up global businesses. This big change to products and
services goes well beyond the conversion of information in a digital format. (McDonald and
Rowsell-Jones 2012) The Business Dictionary describes “Digitalization” as “Integration of
digital technologies into everyday life by the digitization of everything that can be
digitized.” (Business Dictionary 2015) This definition makes a step in the right direction by
describing not only the conversion of information but the fact that we as a consumer are
augmented by digital technologies.
In the context of the automotive industry the two terms can be defined as:
Digitization is the process of changing from analog to digital form.
Digitalization is the use of digital technologies to change a business model and provide
new revenue and value-producing opportunities; it is the process of moving to a digital
business.
Source: Gartner IT Glossary
Figure 2: Difference between Digitization and Digitalization in the Automotive Industry
Source: Own creation based on text in chapter
Concluding we should acknowledge that digitization is always characterized by the

conversion of information while digitalization is augmented by services and functions.
10
2.2. Decompiling the term “Business Model”
2.2.1. Introduction into the theory of business models

Two of the most cited scholars on business models are Osterwalder and Pigneur with their
Handbook “Business Model Generation”, where they define a business model simply as “the
rationale of how an organization creates, delivers and captures value” (Osterwalder and
Pigneur 2010).
Al–Debei and Avison are defining a business model more from a component point of view.
They are arguing that an business model is “an abstract representation of an organization,
be it conceptual, textual, and/or graphical, of all core interrelated architectural, co-
operational, and financial arrangements designed and developed by an organization
presently and in the future, as well all core products and/or services the organization
offers, or will offer, based on these arrangements that are needed to achieve its strategic
goals and objectives“ (Al-Debei and Avison 2010).
Joan Magretta explains the Business Model Concept as telling a good story. A story that
explains how the components of a company work together and operate (Magretta 2002). The
key concept of Magretta revolves around the customer itself. Therefore, a business model
needs to be designed for one purpose: what does the customer value and how can the value
be delivered to them. “They are, at heart, stories—stories that explain how enterprises
work. A good business model answers Peter Drucker’s age-old questions: Who is the
customer? And what does the customer value? It also answers the fundamental questions
every manager must ask: How do we make money in this business? What is the underlying
economic logic that explains how we can deliver value to customers at an appropriate cost?”
(Magretta 2002)
In contrast to that, are the researcher Zott and Amit who are defining the business model
more from a activity point of view (Zott und Amit, Business Model Design: An Activity System
Perspective 2010). By defining what activities of the organization are, the convergence of
these interdependent activities creates the value for the firm and customer. They also
highlight these activities are not limited to the company’s internal perspective but also “as
a system of interdependent activities that transcends the focal firm and spans its
boundaries.” (Zott und Amit, Business Model Design: An Activity System Perspective 2010)
Other scholars already bring in a technology component to the business model concept. They
argue that a business model is a construct that mediate between economical domains such
as value, price or profit and a technological domain. (Chesbrough and Rosenbloom 2002)
Technological developments are identified as inputs that create economic value.
11
2.2.2. Development of the term “Business Model” over time
As researched by (DaSilva and Trkman 2013) the first mentioning of the words business model
was in an academic article in 1957 with the purpose to investigate the design of business
games in a training concept (DaSilva and Trkman 2013). Since the first mentioning the
research or usage of the term business model left unstudied for decades (DaSilva and Trkman
2013). With the New Economy movement during the dot-com era in the late 90s the term
“Business Model” gained huge in business journals especially in the context of explaining the
transformation from traditional to electronic businesses. (Burkhart, et al. 2011)
Figure 3: Graphical representation of business model publications over time
Number of Articles Using the Term "Business Model", 1990 - 2006

80000 800
Number of News References
Number of Academic Papers

70000 700
60000 600
50000 500
40000 400
30000 300
20000 200
10000 100
0 0
1990 1992 1994 1996 1998 2000 2002 2004 2006
No. Of News References No. Of Academic Paper
Source: Gartner Inc., 2007, “What ‘Business Model’ Means and Why It Matters
The analysis above shows how much the term “Business Model” especially the research of it
is connected to the evolution of internet-based companies. As the dot-com era and the rise
of internet-based companies such as Google, Ebay, Amazon, SalesForce.com, etc. evolved
the concept of business model got developed and started to receive acceptance by scholars
and practitioners. The most interesting fact in regards of the development is how closely
the term “Business Model” is connected with technology-based companies (DaSilva and
Trkman 2013) and therefore it highlights the research importance of evaluating the success
factors of digital business models.
12
2.2.3. Differentiation towards overlapping concepts
Often, overlapping concepts are used interchangeably for the term “business model”. To
avoid any confusion, the differences of those concepts are examined below.
Strategy: Michael Porter defines strategy as “how all the elements of what a company does
fit together” (Porter 2001). There are two main arguments how to distinguish “Strategy”
from “Business Model” First, strategy gives the vision and goal while a business model builds
upon of that (DaSilva and Trkman 2013) to operationalize. Second, in line with “every
organization has some business model” and “not every organization has a strategy”
(Casadesus-Masanell and Ricart 2010) highlights the time horizon that is reflected in both
terms. While a strategy is rather long-term a business model is a snapshot of what a company
is doing in present. (DaSilva and Trkman 2013)
Business Concept: The two terms “Business Concept” and “Business Model” are often used
in literature interchangeably without any distinguishing (DaSilva and Trkman 2013). A
business concept is more explaining what a company is while the business model tends to
explain how the company operates and creates value (DaSilva and Trkman 2013). It is
expected that the term “Business Model” will completely supersede the use of “Business
Concept” in any context that it will vanish from publications (DaSilva and Trkman 2013) in
the future.
Revenue Model: The revenue model describes how customers are charged and revenue is
generated (Osterwalder and Pigneur 2010). In all found definitions of the term “Business
Model”, the revenue model was mentioned as one of its major components.
Economic Model: Economic model is defined “as a mathematical description of both the
determinants of behavior and the jointly observed outcomes of this behavior at a given
point in time” (Cicchetti, Fisher and Smith 1973), (DaSilva and Trkman 2013). It is expected
that scholars and researchers used this term in the past before the rising popularity of the
term “Business Model” to describe the same (DaSilva and Trkman 2013).
Business Process Modeling: This term describes the process of designing including the
graphical presentation of business processes. The term is closely related to information
systems. In general it represents the routines within a business model and is therefore a
component of the business model (Balzert 1998)
13
Business Logic: The business logic is also a part of the business model and can be understood
as the wireframe holding together the different components of a business model and the
logic how they interact. (Teece 2010)
It is important to understand the difference between these concepts and a business model
to avoid a confusion. Most of these concepts can be collectively or partially contained within
a business model, nevertheless it is vital to understand the entirety of business models and
to evaluate what makes them successful.
2.2.4. Architecture of business models

This chapter does not only draw a framework including the most important patterns and
dimensions of business model definitions but also defines the characteristics of digital
business models and the process of data gathering to identify critical success factors.
In the market context it is always asked, what a good business model represents. Teece tries
to answer this question predominantly from an outcome based point of view. He states that
a good business model “yields value propositions that are compelling to customers, achieves
advantageous cost and risk structures, and enables significant value capture by the business
that generates and delivers products and services. ‘Designing’ a business correctly, and
figuring out, then implementing and then refining e commercially viable architectures for
revenues and for costs are critical to enterprise success” (Teece 2010).
Most concept definitions highlight that a business model is an architecture of interwoven
components and processes that have the purpose to create value conjointly. But in addition
to that the adaptiveness and ability to change these components in a dynamic way to be
responsive for changing market conditions in a quick manner is often highlighted by scholars
as an important part of business models. The researchers DaSilva and Trkman argue: “First,
they need to not only choose the right combination of but also the most efficient
transactions at a particular time. Second, they must be able to renew their distinctiveness
as competition threatens, through the constant development and nurturing of dynamic
capabilities. Third, they must be able to redefine their business model in a quick and
effective manner in accordance with the strategy and the contingencies presented along
the road. Thus, a business model does not by itself give strategists all the answers for how
to operate a business and generate a sustainable competitive advantage. Instead, it paints
a picture of the company and reveals how the various elements of the business work
together at a certain moment in time.” (DaSilva and Trkman 2013)
Another interesting dimension that is added to the business model concept is that value is
not only created by the combination and dynamic recombination of assets and capabilities
but also by a network of partners (Wirtz, Schilke und Ullrich 2010). Through the combined
14
effort of several companies and partners, value is created and passed on to their customers.
(Haaker, Faber and Bouwman 2006)
Finally, to capture all dimensions of the business model, the pattern of Burkhart, et al. needs
to be taken into account. With this compelling work, they were able to identify patterns
across the different business model definitions ( (Burkhart, et al. 2011):
- The concept of a business model is applicable to all kinds of different businesses
- It consists of static and dynamic components as an aggregation of the company’s
business logic
- The main focus lies on internal people but some concepts are extended to include
external people within the business logic
- Almost all publications considering external partners as well as resources for the
value creation
- All component driven business model definitions are concurring with the same four
categories: offering, market, internal and economic
- These components can be considered as interdependent units
Rather than writing out a compelling definition of what can be understood as a business
model on the basis of the analyzed concepts above, it is more important for this thesis to
draw an own framework pointing out the identified patterns and themes of business models
that have been compiled during the literature review. This framework will be used to guide
through the following chapters of this thesis. It needs to fulfill two main functions. In a first
step it will be used to identify and draw the unique characteristics of digital business models
and in a second step to serve as an overall guiding framework to structure the data gathering
and the subsequent analysis.
2.2.5. Development of an own business model concept framework

To develop an own applicable framework, the following perseverative attributes have been
identified within the publications and therefore need to be considered to draw a business
model concept framework. The attributes summarized in the figure below are used in almost
all concept definitions.
Figure 4: Patterns & Commonalities of business models
Source: Own creation as summary of chapter above
15
The core of all business model concepts revolves around the processes and routines of what
service or product to offer to whom, how it is created and delivered and of course how are
these products and services monetized. Unfortunately, sometimes the same names are used
for different routines by scholars as can be seen in the following figure. Nevertheless, the
logic of their interdependencies remains the same and constitutes the fundament of each
business model.
Figure 5: Overview & Comparison of processes within business models
Source: Own creation based on the definition by Osterwalder/Pigneur 2010; Otto/Bärenfänger 2015
While these processes represent the core of business model, three main patterns have been
defined that describe the characteristic behavior of business model.
Figure 6: Three main patterns of business models
Source: Own creation as a summary of chapter above
As a last step to build up the framework, all players respectively components have been
identified which were consentient used in the literature.
Figure 7: Overview of all player and components of business models
16
Combining these patterns and the recurring attributes that have been identified during the
literature review it was possible to draw a new framework that will help to identify the key
characteristics of digital business models but also to guide the empirical part later.
Figure 8: Graphical representation of the business model definition
2.2.6. From a business model to digital business models

Digital business models do not differ in their entirety to what was discussed in the previous
chapter. All previous identified characteristics, processes, components and their
independencies apply in the same manner for digital business models. Nevertheless while
analyzing digital business models certain unique pattern can be identified. Rather than giving
a universal accepted definition, it is more important for the further research aspect of this
thesis to understand how they work especially focusing on the following three questions:
- What is the digital part within the business model?
- How do digital business models create value?
- What are commonalities of different digital business models?
The origin of digital business models lies in the early 1990s driven by business process
modelling research and at that time the introduction of new technologies like EDI (Electronic
Data Interchange) (Veit, et al. 2014). EDI is the collective term for technologies that enable
systems and applications to interchange data across company infrastructure. Connecting the
systems of partners or suppliers in the value chain was the first step towards a digitization
17
of business models. The vertical integration of systems across different suppliers is therefore
the backbone of any digital business. Researchers describe a business model as digital if
changes of the digital technology have a fundamental impact on the business execution as
well as how value is appropriated (Veit, et al. 2014). Others suggest that a digital business
model “can thus be defined as a business model whose underlying business logic deliberately
acknowledges the characteristics of digitization and takes advantage of them, both in
interaction with customers and business partners, and in its internal operation” (Otto and
Bärenfänger 2015).
2.2.7. Differentiation towards other technology driven business concepts

As digital business models and their digital services and products are quite new concepts, a
certain confusion and mix up with other models prevails. As followed, some of these model
are explained to avoid this confusion.
eBusiness or Electronic Business: eBusiness is a collective term for digitized businesses or

their processes and it offers several sub-concepts such as eCommerce, eProcurement,
eGovernance, eCollaboration, etc. (Reynolds 2010) The main difference between eBusiness
and digital business model lies in the following. While through eBusiness approaches business
processes got digitized the business model and the value capturing remained the same and
just got supported through information technology. For digital business models on the other
side, technology is the distinguishing factor to completely change the business model in the
sense of value creation, delivery and capturing as well as creating completely new ones
within the same industry.
eCommerce or Electronic Commerce: While eCommerce also belongs as a sub-concept to

the family of eBusinesses the difference to digital business models should be highlighted
separately as eCommerce concepts are most often mistakenly labeled as digital business
models. While parts of an eCommerce model can concur with components of digital business
models, the core difference is that eCommerce companies use digital channels to interact
with their customers and to sell through them their services and goods (Fazlollahi 2002).
Software: Offering a mobile app or selling software is not a digital business model. The only
fact that the product itself is digital does not qualify the business model to be digital.
Internet based Companies: Internet based companies indeed operate in digital business
models. They got originated within the digital space, the internet, therefore the value
proposition, creation and capturing results from digital technologies (Lumpkin and Dess
18
2004). The important differentiation lies in the following: while all internet-based-
companies have digital business models not all digital business models are internet based.
2.2.8. Architecture of digital business models

To identify the specific characteristics of digital business I used the developed pattern
framework of business models from the previous chapter to guide through the analysis.
Many concepts of business models emphasize the fact that the market
environment, especially the customer itself, are the origin for business models
(Zott, Amit and Massa 2011). The same theme can also be observed when
evaluating researches on digital business models or digitalization. In almost all
of them the term “Customer Centricity” is frequently mentioned (Bharadwaj, et
al. 2013; Otto and Bärenfänger 2015; Bradley, et al. 2015; Brennen and Kreiss 2014). The
absolute and unconditional customer centricity is something all digital business model have
in common and is therefore one of the strongest characteristics. The evolution of information
technology in particular the capability to capture, process and analyze huge amounts of data
(Big Data) of the behavior, preference and sentiment of a customer is the biggest driver for
customer centricity (Fleisch, Weinberger and Wortmann 2014). Suddenly companies almost
know every little detail of their customers and therefore can shape their products and
offerings in personalized manner really catering to their needs (Weill and Woerner 2013).
Classical marketing methods like segmentation are broken down to segments of one
customer or at least only a few. Advancements in information technology especially in terms
of performance up to real-time decisioning systems and data analytics made this possible.
Another key area how digital business models

advanced from their analog predecessors are
visible when analyzing their value chain. The
proposition of the actual services or product
that is offered is always very personalized, localized and predicting future needs of the
customer. The interesting fact that can be observed is that product or service itself fade
from the spotlight and the overall experience gains tremendously on importance. Therefore,
Experience Design catering to the feelings and emotions of a customer are much more
important than standard features of a product such as speed, performance, weight, etc. The
overall experience drives the value proposition. For example, Apple does not offer a
smartphone; it offers an experience that happens to have a smartphone as a platform.
Apple’s smartphones buyers don’t care about the performance or hardware of the IPhone
but about the overall experience which is in the same manner driven from all components
19
of Apple ecosystem not only the phone, but iTunes and the support of a software developer
community from where Apple crowdsource millions of mobile applications done by
individuals. (Bergvall-Kåreborn and Howcroft 2013) In addition to the importance of creating
an experience, it is the ability of digital business models to innovate and create new offerings
and service fast paced. Most digital business models are a combination of interconnected
internal and external services framed usually by a platform (Yoo, et al. 2012). Hal Varian,
Chief Economist at Google, described this unique ability as “Combinatorial Innovation”
(Varian, Farrell and Shapiro 2004). Through the combination and reconfiguration of digital
artifacts and services, the possibility of creating unique and personalized digital business
models is limitless (Yoo, et al. 2012). This ability and unique characteristic contributes
tremendously to maximize the experience for the customer.
The most interesting and innovative part of

digital business models might lie in the value
creation. As described the physical product is
more and more vanishing from the interest of
customers and it is more important how an experience is perceived. Hence, most offerings
are very much service focused. This shift in customer importance from a physical good to
services was presented to a much broader audience in 2004 by Robert Lusch and Stephen
Vargo. Their theory around “Service-Dominant-Logic” describes in its core that the value of
services are much higher perceived than from goods and goods act more as an vehicle for
services (Lusch and Vargo 2004). Since then a whole research direction has been built around
discovering value creation from a service-dominant-logic perspective. Digital business
models are ideal types of examples of service-dominant-logic following businesses as they
concur with almost all foundational premises developed by Lusch and Vargo (Lusch and
Nambisan 2015). Out of the concepts and premises defined by Lusch and Vargo one has its
biggest importance for further course of this research thesis. They highlight that value is
always co-created in a service-dominant environment (Lusch and Vargo 2004). The concept
of co-creation is the core of how digital business model create value. In addition, all other
components are designed in a way to foster co-creation. The digital platform, usually a
technology platform, serves as the vehicle to make co-creation including multiple
stakeholders happen (Lusch and Nambisan 2015). The process of co-creation is not only
limited to business-partners or suppliers, the customer itself is playing a substantial role as
well. Due to the connection of different actors in the process of value creation, the value
chain is getting transformed from a linear sequence to a collaborative net of different actors
(Lusch and Nambisan 2015). This transformation is also supported by the iterative behavior
20
of the individual components. As the whole system is fueled almost in real-time with billions
of data points containing insights on the customer, service or product itself sourced from
sensor, devices and all the other data sources connected within digital business models the
value creation with in this network is constantly enhanced (Pagani 2013).
This constant change and recombination or reconfiguration of digital artifacts, service,
inputs/outputs leads to added value for and along the customer. For the purpose of this
thesis three characteristics of the value creation are important:
- Value is co-created with all actors in the value chain
- It is an iterative process that gets improved almost in real-time through data analytics
- It is rather a net of interacting resources and artifact than a sequential chain
Value capturing within digital business

models originated and evolved from
innovations of eBusiness and internet-based-
companies during the late 1990s and early
2000s (Reynolds 2010). Pay per use and freemium models as well as monetizing the data and
insights itself are common patterns within the value capturing of digital business models
(Fleisch, Weinberger and Wortmann 2014).
To make the above value process happen any

digital business model needs to have certain
underlying resources. Usually scholars use
the term “Capabilities” when talking about
the required resources. Organizational capabilities originated from the research on resource-
based view of companies that intended to identify sources of sustainable competitive
advantage within companies (Otto and Bärenfänger 2015). Both researchers, Otto and
Bärenfänger, did an intensive project to identify essential capabilities in favor for digital
business models. Not only by reviewing relevant literature intensively but also through
primary data collection in the form of expert interviews, both have been able to identify
these most needed capabilities to design and run digital business models. According to them
the product & service development need to based on modules for easy and quick
recombination respective innovation. The services need to have the ability to scale flexible
according to demand while optimizing cost and utilization of assets. The insights for that
should be fueled by a strong decision making systems that is based on business intelligence
platforms (Otto and Bärenfänger 2015). The organization needs to be flexible and aim to
build up ecosystems around their products. Within these owned ecosystems bargain power
21
needs to be established and multiple ways to capture value that are in line with the modular
product & service structure. (Otto and Bärenfänger 2015).
As highlighted in the previous sections, customer-centricity is one of the key

concepts of digital business models mainly because the advancements in
information technology helped tremendously to capture exponentially more
data points on the customer, its behavior and preferences. Hence, the value of
a digital business model perceived by the customer is not only the target but origin for new
or improved business models at the same time.
Scholars often refer to the architecture or logic of digital

platforms that holds all components together as a platform. This
platform is repeatedly defined as a technology platform.
Platform in this sense is explained as “a building block, providing
an essential function to a technological system—which acts as a foundation upon which
other firms can develop complementary products, technologies or services.” (Yoo, et al.
2012) The main purpose of these platforms is to connect all actors and capabilities and to
facilitate co-value creation (Keen and Williams 2013).
2.2.9. Summary of the main characteristics of digital business models.

Based on the theoretical grounding and literature analysis we can conclude: Digital
business models are:
- customer centric
- following a service dominant logic
- value driven which result from a co-creation from customer, suppliers and other
partner
- technology enabled usually through a platform
- modularized to ensure “Combinatorial Innovation”
- fueled by data insights and real-time analytics and decision making
- created by entrepreneurial minds who are capable to spot market trends
Considering the unique characteristics of digital business models and comparing it to the in
the previous chapter developed framework, this framework was altered and updated to
serve as a guide for the next steps within this thesis.
22
Figure 9: Graphical representation of digital business model definition
2.2.10. Comparison of industrial vs. digital business models

To understand what digital business model are, from an industry point of view, this chapter
aims to show the characteristics by comparing essential mechanisms of an traditional model
with a model from the digital economy.
Vincenzo Morabito compares in his book “Trends and Challenges in Digital Business
Innovation” essential features of businesses that are getting transformed through
digitalization (Morabito 2014).
Figure 10: Comparison Industrial Economy vs. Digital Economy
Source: “Trends and Challenges in Digital Business Innovation” (Morabito 2014)
23
Using this framework and applying it on the automotive industry helps to understand how
digital transformation changes the existent business model of an industry and explains what
digital business models from a feature point of view are. To do that the traditional business
model of automotive companies is compared to a car sharing services to make the distinction
more strikingly.
Figure 11: Comparison traditional automotive business model vs. mobility service provider model
Source: Own creation as an application of Morabito’s comparison on the automotive industry
2.3. Critical success factors within management research

The purpose of the undertaken research is to analyze, assess and identify factors that
determine and/or indicate the success of digital business models. In combination with the
unique characteristics of business model in general including their digital counterparts
derived during the previous chapters it will not only guide the identification process itself
but also help to structure the research approach accordingly.
The term “Success Factors” first was mentioned by the McKinsey & Company Partner Ronald
Daniel in 1961 (Rockart 1979). Following that John F. Rockart started to study critical factors
that determine the success of manger and organization – as a result the “Critical Success
Factor Method” (CSF-Method) was born (Boynton and Zmud 1984). Since then the CSF-Method
is used in two different ways. First, successful projects are examined to identify similarities
and patterns that made them successful. Second, these patterns are defined as factors and
24
refereed to steer other project or to set them up in a manner with high prospect of success
(Cooke-Davies 2002). Critical success factors can be organized not only on project or
organization level but also on an industry level itself (Gates 2010). For the purpose of this
thesis the project or organization level is relevant enough. The importance for this thesis
lies in the understanding that factors can be identified and isolated that increase if
considered the probability of achieving success. In management theory critical success
factors are usually used to ensure a thorough management planning and even to derive key
performance indicators (Shank, Boynton and Zmud 1985). The goal of this research rather
focus on the identification of patterns and their translation into critical success factors then
the evaluation of planning methods within digital business models. Hence, a rather high-
level acknowledgment of critical success factors as management research practice is
sufficient for the purpose of this thesis
2.4. Summary of literature review

The analysis of the current state of research in regards of business models and their
digitalization has shown that the majority of literature concur when it comes to components,
capabilities and architecture. Nevertheless it was important as a start for the empirical part
to create an own framework describing the construct digital business model. The interesting
part is that still a lot of publications see digital business models as business models were
processes and customer channels got digitized. That is shortsighted. The uniqueness of
digital business models results of a new kind of value creation that was made possible
through the evolution of information technology. The combination of trillions of data points
around a user, artificial intelligence, context and location aware systems creates such an
individualistic service experience for the user that is so far unmatched in human history.
Digital business models have proven that they are capable to create theses services. The key
difference is that in a traditional business model the service or product is very well defined
but in a digital business model only an environment is set. The service or product evolves
out of that creating an individualistic value proposition usually suitable for only customer.
The disappearance of variable unit cost makes it happen. For each customer an individual
experience is created, but not only for also along with them. Customers itself contribute to
the value creation process. This unique property of digital business models still needs to
further studied by academia.
Component and capabilities of digital business models are well researched and published
multiple times. Their interaction, how they create new routines within organizations and
how organizations need to change their behavior to make digital business models successful
25
remains to a large extent undiscovered. Here this thesis tries to contribute meaningful
insight to the state of digital business model research. By setting the focus on identifying
what makes digital business models successful this thesis aspires to uncover patterns that
can be transformed into reproducible success factors.
26
3. Empirical approach and methodology
3.1. Introduction
This chapter builds upon the literature review from the previous chapter. So far a common
understanding of the definition of “Business Models”, their characteristics and
“Digitalization” was build. Based on the literature review and the assessment a graphical
framework was developed to better guide through this thesis. Due to the rather short history
of digital business models a quantitative research on the success or components are
impossible as data sets do not exist or cannot be gathered. In the absence of quantitative
data around digital business models, this thesis aims to identify patterns or factors that make
digital business models successful. Single patterns or factors this thesis will identify can be
taken to conduct a quantitative research that will allow to evaluate the mechanics and
behavior of these individual factors.
3.2. Hypothesis and research questions

The hypothesis of this thesis is that digital business models have common patterns and
similarities that make them successful. Hence, all digital business model need to inherit
some or all of these patterns to be successful.
Success in this sense is defined that certain expectations over the outcome are met (Zawawi
and Aris 2014). Usually these expectations are around dimensions like revenue, number of
user or customer, profit, market penetration, etc.
Building upon this hypothesis three main research questions (RQ) are asked.
Figure 12: Overview of research questions
27
3.3. Research design
In general, the choice to be taken is between a deductive and an inductive research design
(Saunders, Lewis and Thornhill 2007). A deductive design is recommended when moving from
theory to quantitative data collection to prove or operationalize the theory in practice. It is
a highly structured design that rigorously follows scientific principles. (Saunders, Lewis and
Thornhill 2007) The inductive design emphasizes on the understanding of the meaning and
consequences of certain events. Based on the collection of qualitative data it prepares
building theories by identifying patterns and commonalities (Saunders, Lewis and Thornhill
2007).
Given the fact that digital business models are relatively new and lack theories as well as
the availability of data sets that can be considered for a deduction emphasizing research,
an inductive research design is preferred to answer the research questions.
Further, as it is assumed that there are certain patterns existent that might predict or ensure
the success of digital business model, the research design needs to help to identify patterns.
The most appropriate research design in this case would be then a relativist research design
(Easterby-Smith, Thorpe and Jackson 2008). “The relativist epistemology assumes that
there are regular patterns in human and organizational behavior.” (Easterby-Smith, Thorpe
and Jackson 2008).
To gather data to help identifying commonalities and patterns within this relativistic
research design we have mainly three choice of types of surveys (Easterby-Smith, Thorpe
and Jackson 2008):
 Factual Surveys – often associated with opinion polls this kind of survey is best used
when gathering structured data through postal questionnaires or structured
interviews
 Inferential Surveys – aim to identify and establish relationship between variables
and concepts. By defining dependent and predictor variables it helps to evaluate
which variables or factor factors predict a certain outcome. To do so cross-sectional-
surveys are preferred.
 Exploratory Surveys – are used in researches that are rather not hypothesis driven.
Usually large data set are gathered following a cluster analysis emphasizing on rather
identifying patterns than evaluating the impact of them.
The purpose of the defined research questions is to identify what patterns or factor might
have an impact or predict the outcome respectively success of digital business models.
Hence, an inferential survey is the most suitable design of the research to achieve the stated
research purpose. For this case, the dependent and predictor variables need to be defined.
28
A dependent variable is a “variable that changes in response to changes in other variables”
e.g. predictor variables (Saunders, Lewis and Thornhill 2007). In this case, the dependent
variable would expressed as the success of digital business models.
A predictor variable also described as independent variable is a “variable that causes
changes to a dependent variable or variables” (Saunders, Lewis and Thornhill 2007). In line
with the hypothesis, these predictor or independent variables would be the concurring
patterns and commonalities of digital business that this thesis is aiming to identify.
Figure 13: Predictor and dependent variable to evaluate research hypothesis
Source: Own creation based on Saunders, Lewis and Thornhill 2007
29
3.4. Identification of source of evidence and data gathering
In line with inferential design of this research to find common patterns evidence need to
be collected to prove or disprove the hypothesis that there are patterns that make digital
business models successful. In general, there are six sources of evidence that support a
hypothesis driven evaluation (Yin 2014). The table below describes the six sources of
evidence and test them on their applicability for this research purpose to identify which
source(s) of evidence should be considered to answer the research questions.
Figure 14: Six sources of evidences and their applicability
Source: Own creation based on Yin 2014
Based on this assessment the source of choice that is most applicable in finding evidence
to support the research hypothesis should be interviews with actors within the ecosystem
of digital business models. Scholars advise to use multiple sources of evidence (Yin 2014)
to further strengthen the data basis or questioning observations for a better research
evaluation. Hence, direct observation during the interview but also as a consumer of
digital business models will be considered as a secondary source of evidence.
3.5. Development of an interview strategy
3.5.1. Interview & questionnaire design

As a first step of the data gathering process through interviews a questionnaire had to be
developed that is tackling the research hypothesis from all angles and perspectives. To
achieve that the questionnaire build up had to be based on the finding of common
characteristics of digital business models during the literature review. However, not only
the completeness of the questionnaire need to be considered but also an interview strategy
30
that does not induce biased or influenced answers. Hence, the questions would need to be
asked in way that the answer of the interviewee is not affected (Yin 2014).
As type of interview, a semi-structured interview was chosen. This kind of type provides the
opportunity to emphasize on certain points during the interview to better match the
interview to the expertise of the interviewee (Saunders, Lewis and Thornhill 2007). While
the overall guidance is given by the questionnaire the interviewer still has the flexibility to
adjust the course of interview if unique experience are uncovered and the capturing of those
would be beneficial for the overall research approach.
To assure that all derived characteristics of digital business model were reflected in the
questionnaire categories have been defined, based on the components of the for this thesis
developed framework.
Figure 15: Categories for questionnaire build based on the digital business model framework
Based on the framework six main categories for question have been identified. During the
literature review, the particular characteristics of the value chain respectively the value
creation of digital business models have been identified. To gather specific data around the
value chain from the interviewee this needs to be reflected as a single set of questions. To
better understand the structure of digital business models categories of questions were
formed around the ARC framework (architecture, culture, routines) by Saloner, Shepard and
Podolny, 2005. It is quite obvious that digital business models are technology enabled.
Hence, some questions are raised discovering certain technological requirements. This
section will remain on a high-level. Only the technology part of digital business models would
justify several research projects. To limit the scope on this part only generic questions are
asked to frame what are key technology areas that need to be given for successful digital
business models. Each digital business model is not only influenced by their own internal
actions and components. To cover external factors that have an effect on the success of
31
digital business model, a set of questions around these externalities complete the
questionnaire. To ensure a high quality of responses and to keep the flow of interview
running, two types of supporting questions were formed to either help with the questions
flow (General Questions) or to verify the messages of already answered questions (Control
Questions).
Figure 16: Overview of questionnaire
Cluster of Question Number of Questions

General 3
Value Chain 6
Technology 2
Architecture 4
Culture 1
Routines 1
External Factors 6
Control Question 4
27
The different questions for each category were listed and the underlying intention was
described.
32
Cluster: General
Question Research Intention/Interview Strategy
What is a digital business During the literature review, it was discovered that there is no
model for you? universal definition for digital business models. This question is to
set a common ground that will be used for the following interview
question. As an introductory question, it is also used to gain a bit of
trust with the interview using the answer on this question to drive an
open discussion. During that, terms and definitions can be set to
ensure that interviewee and interviewer use the same language
during the course of the interview. This is the only instance were a
discussion is forced. The solely purpose is to set the stage for the
following questions. For the remaining questions a discussion will be
prevented by the interviewer to assure an unbiased and uninfluenced
opinion.
What are enablers for This question is very high level but is used to funnel certain aspects
digital business models? that can be taken up later. While enabler (technology, architecture,
people, processes, etc.) are asked in separate questions this one is
used to peel the onion and get closer to the single components step
by step.
What is limiting digital In line with the previous question, this one is tackling the same topic
business models? from a different angle and might reveal additional points by forcing
the interviewee to reflect on the same issue from an opposite
direction.
Cluster: Technology Enabler
What are technology It is assumed that technology is one of the key enablers to be
enablers? discussed for digital business models. As they are limited, the
intention is to clarify them first. As mentioned earlier, the
technology part will be kept on a high level only identifying major
requirements.
What are technology This question will be used optionally to follow up if answer to the
limitations? previous one is not satisfying. And again the strategy behind this one
is to force the interviewee reflecting on technology by reverting the
previous question.
33
Cluster: Architecture
What capabilities are People, resources and information are needed to develop digital
needed to design digital business models. They are giving the foundation of the architecture
business models? of digital business models. Going step by step along the lifecycle of
business model development process should identify the major
building blocks. It is assumed that different capabilities are needed
to design digital business models than to run them. Hence, for both
parts of the lifecycle of the digital business model the capability
question is asked separately.
What capabilities are Following up on the previous question the interviewee get asked if
needed to run digital the just stated capabilities to develop a digital business models are
business models? need to be changed to run them. This again helps the interviewee to
reflect on the different lifecycle stages.
Do you think digital If not already mentioned during the capability questions, the focus
business models are during this part of the interviewee is shifted to the organization
changing the organization behind the digital business model. As a follow-up question it will be
behind? asked to draw examples from the everyday business life to extract
unique examples on how and why the organization might need to
change
What talents are needed Following the same structure as identifying vital capabilities the
to run digital business interviewee is forced to reflect if different people and talents are
models? needed for development and run of digital business models.
Cluster: Culture
Is a certain culture and During the previous questions the interviewee was encouraged to
mindset necessary to elaborate on rather hard facts this question is intended to let the
support the development interviewee share their take on corporate culture elements that
and operation of digital might be beneficial or limiting the process of digital business models
business models?
Cluster: Routines
Do you think that internal The missing link between the architectural components are the
processes need to be processes. As a concluding question for this part of the interview, the
changed in favor to digital interviewee is asked to reflect if internal processes need to be
business models? If yes, altered to cater to the needs of the digital business model
which and why? development and operation cycle. It is assumed that some of the
processes were already mentioned during the previous questions.
Nevertheless, a summary of them will give a full picture of internal
prerequisites for digital business models.
34
Cluster: External Factors
What are the specifics for For some of the interviewees with no specific industry focus
your industry when it (researcher, cross-industry practitioners) this question will be
comes to digitalization? skipped. For others this question is intended to mainly identify if
motivation for developing digital business model are intrinsic or
extrinsic. By letting the interviewee elaborate on specifics of their
industry it cannot only be tested if to this point stated arguments
follow a logic but also tackles the whole object of research from a
more hands-on perspective and leaves the very structured Meta level
that was used during the questions before. While it is expected that
interviewees with a certain industry background will use practical
examples from their day to day life during the previous answers as
well, this question is intended to give the interviewee a chance to
really elaborate on why or why not digitalization is relevant for their
field of expertise. In addition, market dynamics are expected to be
captured that have an impact on the success of digital business
models. Depending on the stated answers and examples given, the
author will use this part of the interview to ask optional questions
depending on the circumstances. In the style of the “Five-Why”
technique that was formally developed by Sakichi Toyoda five "Whys"
will be asked to draw afterwards a thorough underlying cause and
effect map of the predominant industry dynamics.
How is digitalization Building up on the previous question and if not already mentioned
threatening your current the interviewer will guide the interviewee reflecting on the industry
business model? specifics from a different angle to complete the herein before
mentioned cause-and-effect map.
Cluster: Control Questions (I)
Have you designed or This question is used as a control question. Even if the interviewee
implemented a digital responds never having designed a digital business model, the
business model if yes, question will be rephrased to "What would be the top three to five
what are the lessons guiding principles you would consider while developing a digital
learnt? business model?" Either question then is used as a control question
for the previous made answers. The author expects a consistency and
repetition between lessons learnt/guiding principles stated and
previous answers given.
35
Cluster: Value Chain
How do you picture/define This question introduces the third part of the interview. While before
the value chain of digital characteristics, prerequisites and components of digital business
business models? models have been captured, now it will be evaluated if the value
chain differs from traditional business model. This remains the most
interesting but also most difficult part. If it could be investigated
that the value creation works differently, than these differences
could give the real hint, which factors need to be considered to make
digital business models successful. By letting the interviewee define
the value chain of digital business ,e is confronted with the challenge
if value is created in the same manner as with traditional business
models.
Is the value chain of Picking up from the previous question (if not already answered) the
digital business models interviewee is asked to identify and point out differences in the value
different from traditional chain. If needed the author will try to isolate the root by using the
business models? "Five Why” technique.
Do you see differences in Similar to the identification of specifics in the value chain now only
the value creation of the part of value creation of digital business models is analyzed. The
digital business models? literature always highlighted a co-creation of value as biggest
difference; hence, this will be one of the key questions of this
research.
How does the value If not already mentioned by the interviewee the author will again
creation differ from point the interviewee on possible difference in the value creation
traditional business between digital and traditional business models.
models?
Are digital business model In economics value creation is often linked to resilience, durability
more sustainable than and sustainability to assess if the created value is only a short term
traditional? effect or if it can be created on a longer term. By directly asking if
If yes, why? digital business models are more sustainable, the interviewee need
to reflect what makes business models sustainable in general and
reflect if these characteristics are given.
What makes digital The intention behind this question is to either pickup reasons
business model mentioned in the previous question or if a higher sustainability was
sustainable? denied the interviewee will be asked what could make digital
business models sustainable. With rephrasing this question it
expected to identify critical success factors as sustainability of a
business model is always an important of the overall success of
business models.
36
Cluster: External Questions
What location factors are With this question the last dimension of the evaluation is introduced.
needed to establish digital While the previous dimensions are mostly in control of the company
business models? who is trying to establish a digital business model it is expected that
some location factors need to be given to help companies to set
digital business model.
What location factors If not covered by the previous question, the identification of external
favor digital business is broken down in factors that are favoring and hindering digital
models? business model. The same strategy is used here as above when
question were reversed. The interviewee is forced to separate
factors that are helping and damaging digital business models.
What locations factor Following the logic above the question is reversed to let the
hinder digital business interviewee reflect on external factors one more time. If the answers
model? to both previous questions were sufficient and satisfying, this
question will be skipped.
Are there externalities As last question covering external effects the interviewee is asked to
which have a positive or name externalities that have an impact on digital business models.
negative effect? To further clarify what is meant by externalities, mega trends such
as global warming, demographic shift, pandemics, etc. are
highlighted to give the interviewee a better guidance.
Cluster: Control Questions (II)
Why are often startups This question is used as a control question. If the interviewee agrees
successful in developing that startups are more successful in designing and operating digital
and operating of digital business models, the interviewee needs to reflect on the reasons why
business models? they have more success. By letting the interviewee elaborate on
these reason they should need to be in line with the previous
answers. Therefore, the answer is a good control on the validity of
previous given requirements.
What is your most By letting the interviewee name a digital business model that they
innovative and thrilling find innovative and thrilling it can be tested if this model inherits the
digital business model? given criteria that make digital business models successful. It is
assumed that no one would name an unsuccessful digital business
model. If so, the author will carefully consider this during the
evaluation of the responses. This question serves as control
mechanism in two kinds. First, it validates if captured factors are
really relevant. If the name model is successful but based on
completely different factors than this needs to be reflected by the
author during the result evaluation. Second, by comparing all named
digital business models by all participants missing factors might be
drawn by the comparison of the different digital model and therefore
gibing a second source of input.
What are critical success The last question is not only used as control question but also to give
factor for digital business the interviewees the chance to summarize their insights. By asking
models? explicitly for success factors the combined result of all answer of this
question helps tremendously in validating the success factors that
will be derived a research goal from the overall evaluation.
37
3.5.2. Participant selection
The selection of suitable interview partners is one of the most important parts to ensure the
success of this research. The set of interviewees that have been chosen need to cover the
ecosystem of digital business model from all perspectives. Only when having interview
partners who can give collectively a 360 degree view on digital business models the research
work would be valuable (Saunders, Lewis and Thornhill 2007).
Figure 17: Interviewee selection framework

To select the most promising participants, a
framework was developed to guide through the
selection process. The framework includes two
essential dimensions. First, participants were
separated into industry specific and cross
industry experts. The goal of this thesis is to
identify critical success factor for digital
business model using the example of the
automotive industry. Therefore, automotive
experts were invited for interviews.
The second dimension that guided the selection of interview participants was a “Theory
versus Practice” focus. By ensuring a good mix of both, the research work can benefit from
a higher accuracy. It is assumed that theorists are considering success factor differently than
the people who are directly involved in designing or operating them.
Figure 18: Overview interviewee skillset types
In addition to the outlined framework a diverse selection of

people with different types of skills was assured. In general
people with four different sets of skills were chosen to
participate in the survey. By considering participants with
different types of skillsets, it was intended to further more
assure the right collection of interview partner to create a high
level of diversity within the group. The four types of skillsets
can be found in the figure on the left.
38
Overall 14 experts have been interviewed in-depth regarding their view on digital business
models, covering not only all quadrants in the framework but also having a diverse skill set
background.
Figure 19: Overview of selected interviewees
3.5.3. Interview strategy, structure & execution

This part of the thesis shall summarize how the interviews were conducted and how high
quality results were assured during the interview. As a first step all interviewees were invited
by email including a short summary of the research project followed by summary of topics
that will be asked. The questionnaire was purposely not shared with the participants upfront
(with one exception) to ensure answers were prepared in advance. The majority of the
interviews were done over phone. Each interview started with a short introduction followed
by a summary of how the interview will be executed and emphasizing that only the personal
opinion of the interviewee has relevance. All 14 interviews lasted on average 90 minutes,
four were done in English and 10 in German. Sometimes the freedom was taken to skip
questions. Excluding questions was only done due to two reason; in the case the answer was
already given or if the interviewee admitted that the question cannot be answered. All
questions were phrased as open questions forcing the participants to elaborate on the topics
(Saunders, Lewis and Thornhill 2007). Throughout the interview several control questions
were asked (see in previous chapter). The purpose of these control question was to verify
previous answers given. The control question were phrased very openly and had a repetitive
character. This was purposely done to force the interviewee to reflect and elaborate on
previous given answers (Bogner, Littig and Menz 2009). This tactic ensured that no
misunderstandings found their way into the research result and in many cases, it revealed
39
even more insights from the interviewee. As a second tactic to get to the core of issues or
to isolate interesting facts, Sakichi Toyoda’s 5 Why method was used, letting the interviewee
elaborate on a certain topic. The key points but also sometime whole sentences were noted
and stored in a Microsoft Excel table.
All interviews went professionally and resulted in an excellent database for the purpose of
this research topic. As backup, eight more interviews were scheduled for the case if the
previous ones have not resulted in a good outcome.
3.5.4. Approach & methodology to analyze data collection

In order to be able to analyze the data and findings, several steps were conducted in
preparation for the evaluation. As a first step all data was structured and combined in one
table as it can be seen in the following figure.
Figure 20: Scheme how captured data was stored

Responses
Cluster Question Interviewee 1 Interviewee 2 Interviewee 3 Interviewee 4 Interviewee 5 Interviewee n
Architecture Question 1 … response … … response … … response … … response … … response … … response …
Architecture Question 2 … response … … response … … response … … response … … response … … response …
Value Chain Question13 … response … … response … … response … … response … … response … … response …
… … … … … … … …
The structure above tremendously helped to do a pattern analysis as the following step. For
each question pattern were analyzed to find commonalities in the answers (Saunders, Lewis
and Thornhill 2007). Patterns in the sense of this research work are similarities that either
approach a solution, an asset, artifact or behavior that helps to ensure the success of digital
business models. The previous clustering of questions helped in conducting this pattern
analysis. A pattern for the purpose of this research is given in the case more than half of the
interviewees referred to a certain fact or insight. The majority of identified patterns
presented in the following chapter were usually mentioned by almost all survey participants.
As a next step, a framework (see next chapter) was developed to summarize these patterns.
(Saunders, Lewis and Thornhill 2007) As first parameter the cluster/category was used. Then
the findings were categorized in two ways. Either a finding was marked as astatic condition,
capability or asset that need to be in place to ensure the success of digital business models
or it was identified as a behavior or routine. The second category refers to something that
constantly needs taken care of while the first one is something that need to be set up rather
once.
To convey the messages and insights in the best manner two different styles were chosen.
Either an interesting insight was summarized and described or a direct quote was given. As
40
most of the interview were conducted in German, these answers had to be translated.
Sometimes single responses were included in the research result although they were not in
line with the majority. These responses were included as they help to reflect on universally
accepted concepts by contradicting them. After each cluster the patterns were summarized
and critically evaluated.
As a last step the identified patterns were categorized on the basis of their degree of impact
on the success digital business models. Again success in the context of this thesis is a result
that is in line with expectation. To be more tangible success is defined as value creating and
capturing, which could be measured in creating revenue, increasing the number of
customers, increasing their life time value or in regional scalability. These are only examples
that should highlight what is meant by success. The categorization that was used is pictured
in the following figure.
Figure 21: Categorization of identified patterns
Supporting factors are also heaving a high relevance in making digital business models
successful and shouldn’t be ignored. The only difference is that they if isolated evaluated
wouldn’t create value or success on their own and only in a combination with others.
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4. Analysis of the research data
As described in the previous chapter the gathered qualitative data was analyzed to present
it in structured way to support the answer of the research questions. The following
evaluation of findings is structured by cluster (Value Creation, Technology, Architecture,
Culture, Routines, External factors).
4.1. Research findings – Cluster: Architecture

Pattern D/S Illustrative Findings

D = direct impact Static Condition, Capability Behavior or
S = supporting factor
or Asset that needs to be introduced continuous routine
Digital Enterprise S The majority of survey participants The interviewees highlighted that the
mentioned a complete digital attitude towards digital business
enterprise (entire digitization of all models needs to be changed as well,
enterprise processes and resources) namely that internal services or
as one of the prerequisites to supplies should sourced as digital
establish digital business models. business models as well. “… if you
“…digital enablement works want to be successful in car sharing or
internally as well externally…” other digital mobility services, you
should first start with your own
company car policy. Employees should
get unlimited allowances for car
sharing services. Experiencing their
own product will help them to
improve and think more like a client.”
Lock-in D To sustain a competitive advantage The mindset that need to be

Architecture the interviewees mentioned that developed in the companies is that
creating an architecture that rather design business model that
embraces customer lock-in target a higher one-time monetization
mechanisms increases tremendously lock-in features should be favored
the success of digital business even if initial revenues need to be
models. “…any digital business model sacrificed for that. A locked-in
that increases stickiness while customer can be monetized multiple
ensuring easy entry and creating lock times which usually leads to much
in features resulting in high cost to higher customer lifetime values.
change digital services will be
sustainable…”
One interviewee mentioned that the
art lies in being open enough to
include partners in the value creation
but keeping the switching costs high.
The automotive industry has here
some advantages as one interview
stated “…coupling digital business
models with a physical object such as
a car, increases sustainability…”
Customer D Customer centricity is one of the In terms of behavior the mindset and
Centricity major themes of digital business skills need to be changed towards
models. All interviewees mentioned customer centricity and to have the
it multiple times during the course of “…ability to capture compelling user
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the interview. Very importantly, it stories, the ability to abstract what

was highlighted “…all organization are the real needs of the customer.”
departments need to get access to
the company’s clients, to learn from
them, to get information, as core,
CRM will get the most important
role…”.
While everyone talked about
customer centricity, one interviewee
got to the heart of what it is really
about, “if you want to be sustainable
in digital business models address a
fundamental and basic human need
such as Uber who move people from
A to B, Facebook who connects
people or Google who helps people
to find knowledge.”
Service Focus S All interviewees acknowledged the

service dominant logic of digital
business models but also highlighted
the challenge for automotive OEMs,
“…the problem for OEMs are that
they extremely product focused and
not service focused that makes it
challenging to think in services, to
recognize needs of customer that help
to design an experience and increase
the convenience.”
Open Innovation S Like the literature, the interviewees “… a workforce is needed that
acknowledged that open innovation constantly looks out for co-operation
principles need to be inherited during internally and externally and is not
value proposition and value creation. trying to invent the wheel by
For the automotive industry, it was themselves…”
highlighted that especially for the
integration of startup like companies
processes need to be established.
“…OEMs need to learn how to qualify

and integrate startups in their value
creation…”
New KPIs S In terms of reporting a novel

challenge
Was brought up, “…the KPIs of
companies need to be adjusted,
digital transformation cannot be
steered by financial KPIs…”.
Business case need to shift from

single revenue valuation to a more
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customer lifetime value driven

approach.
Experience D To achieve customer centricity and “… a way of thinking need to be

Design to shift from product to service the encouraged where employees think
design of an experience need to in absolutely from the perspective of
the spotlight. “Design-Thinking” as a their clients, they need a passion for
method was mentioned by almost all simple solutions. This reduction of
interviewees for the development of complexity is pivotal for digital
digital business models. Two skills business models but challenges the
are needed to excel here, first the precision focused thinking of car
ability to simplify and second how manufacturers.”
technology can realize that.
“…good understanding of the end
user, end user centricity, how to
satisfy the needs of the end user are
essential skills. And of course, how
to use technology to satisfy these
needs. The art is to identify how the
experience can be simplified for the
end user.”
Fusion of IT and S “Business and IT need to be merged; The workforce needs to embrace a
Business silo structures within companies are sharing culture and will be measured
not sustainable and harm the based on “…how good are you in
evolution of digital business reusing assets. To achieve that you
models…” need to setup an infrastructure where
you can easily share knowledge and
All survey participants recommended reuse assets. This only works if you
a elimination of silo structure bring IT and business departments
technology teams that are common in together.”
the automotive industry and
preferred to have these roles within
the business departments. They also
highlighted that this has a
tremendous impact on the talent
strategy as future employees of
digital business models need to
combine tech and business skills in
the same manner.
New Talent S Picking up the challenge from the Many interviewees mentioned that
previous point, automotive digital business models need talents
companies demand new set of skills, that are constantly curious and have
“…you can learn it but people like an inner drive to explore and try out
digital natives are preferred…” new things.
“… most important skill is “…they acknowledge that complex
integrative thinking, the ability to problems are not solved in
connect disconnected things, ability isolation…”
to recognize patterns…”
Agility S Agility was mentioned as the way to

approach problems but also how in
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general a working culture should be

maintained.
“…everyone in the value chain need
to understand the importance of what
is going on, strive to continuous
improvement and therefore need to
be capable to adapt to quickly
changing circumstances and
environments.”
Resilience S With a high degree of digitized

processes, the interviewees
acknowledged that digital business
models are getting more vulnerable
in terms of cyber security. Having a
resilient infrastructure creates
competitive advantage. In the light
of value co-creation and bundling of
internal and external services one of
participants highlights, “…it is not
only about data going out but also
about data coming in [partner &
supplier].”
Platform driven S Another pattern that can be derived A behavior that can be seen with
from the survey results is the companies running successful digital
platform approach. Rather coming up business models according to the
with single systems, creating a survey responses is a focus on
platform that enable easy platform ownership across internal
recombination of services to create and external resources rather than
new models seems to be a success build up a competence to create own
factor. platforms. “The platform can be build
up from components different
suppliers’ but it is important to own
the ecosystem.”
Multiplication of D “Never lose the direct contact to

customer your customer. It does not end after
touchpoints a successful sale. Digital business
models need to create constant
touchpoints with the customer”
The multiplication of customer touch

point serves in two ways. First, it
helps to generate and capture more
data that can be analyzed to achieve
more accurate insights on the
customer. Second, every customer
touchpoint is also an opportunity to
monetize and generate additional
revenue.
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Orchestration of S „Organization need to dissolve,

a liquid linear structures don’t serve the
workforce purpose anymore, meshed
collaboration evolves.”
Almost all survey participants
mentioned in a way that current work
and operating models need to get
transformed. Digital native talents
cannot be retained within
hierarchical and rigid organizations.
Part-time and flexible work models
evolve, digital talents seldom work
always onsite from an office. Due to
the digital enablement within the
organization and the trend towards a
digital enterprise, teams work
globally on a remote basis.
From silo to S “…if leadership is rejuvenated, „Digital business models are facing
networked teams employing young people helps to constantly fast-paced market
with no make change happen. People need to changes. To cope with that rapid
hierarchy be forced to try out new things, decision making processes are needed
infusion of young talent helps to across departments.”
break traditional structures. When The survey result concludes that even
starting with digital business models the best process design is sometimes
young talent needs to be infused, top still too slow. The interviewees
down and bottom up.” emphasized the principle of
subsidiarity. Employees need to be
empowered to make their own
decisions. “… the knowledge needed
to take a decision is not only held by
executives anymore. Executives don’t
have any advantage in knowledge
anymore, specific know-how is
changing constantly therefore it does
justify that only executives can take
decision anymore.”
Re-thinking the S The interviewees agree that not only

C-Suite the workforce need to change and
adapt, the same transformation needs
to happen on a C-Level.
“…non-tech manager and C-level
executives need to get tech savvy,
you can't run business anymore
without having some kind of tech
skills. Usually CIOs were not on an
executive board level. That is
changing, now you need a CIO, CTO
and CDO on the executive board level.
The highest executives of a company
need to be technology proficient in a
way that they know how to solve a
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business problem through one of or a

combination of the four main
technology areas, mobile, social,
analytics or cloud.”
While most of the survey participants highlighted corporate architectures and work styles
that can be predominantly found in startups, it remains open if such a rather loose structure
really still is appropriate as soon digital business models scale. One of the interviewees who
worked for a startup incubator for quite some time was the only who really questioned these
more dynamic organization structures. He highlighted that at some point companies need a
certain hierarchy to scale and more importantly to handle operations especially in
organization that are multinational and co-located. Another interesting point is the emphasis
on customer centricity and methods like design thinking. Following the literature around
digital business models, surprisingly it sometimes seems that putting the prospective
customer in the center of attention is something completely new and only was
professionalized during the advent of business model research. That point is arguable, the
needs of a customer were always in the center point of companies. However, the difference
to now and then, that should be put in the spotlight are the technical abilities that come
with digital business models. It is now possible to capture much more detailed data around
the needs and preferences of customers. Also the cycle of iterations is much faster and
information technology gives the opportunity not only store such a huge amount of data but
also to process and analyze them almost in real-time. Automotive companies have a huge
advantage in terms of customer data gathering in comparison to other industries. The car
will remain as the vehicle for all digital services of automotive companies and can be
equipped with all kind of sensors that can capture data around the user in an undone manner.
Vice versa the car can also serve as a recipient or device to deliver digital services to
customer that can be monetized. Paid streaming of multimedia to the infotainment system
are only the beginning.
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4.2. Research findings – Cluster: Technology Enabler

Broadband D Insufficient broadband connectivity

Infrastructure is currently limiting the development
and adoption of digital business
models. “… currently a lot of
services within the car cannot be
enabled as a real-time
communication between the cloud
and the car is not possible...”
A high speed internet connection is
therefore an essential asset that
needs to be given to ensure
customer connectivity
Data driven D All systems need to be setup in a It is important that all processes inherit
behavior manner that they not only hold all a constant scheme of collecting data. It
data but also intelligently analyze does not matter when, where and from
them and create subsets that are whom with in a digital business models
suitable for each function within a data was collected, “… everyone
company. All data need to be collects data, provides them and has
accessible from every person within access to them to improve their own
the company. work…”
All decision need to be data driven all
processes need to data supported and
the data needs be constantly
augmented and improved.
Connectedness S “…everything needs to be The daily routines of any actor within

connected...” the DBM needs to drive by the question
Similar to the data integration each on how to connect additional
system, attribute, process or components, services or systems. Only
physical object through sensors need through constantly connecting new
to be connected. To enable this a things, the basis for new data sources
scalable platform is need that that create insights can be achieved. In
facilitates these connections. addition, the recombination of
connected components can create new
services.
Smartphone D Humans cannot yet directly In designing processes within digital

Adoption connected to the ecosystem of business models constantly the
digital business models therefore the question need to be asked “…how can
integration of smartphones serves as the smartphone access utilized.”
the most important machine-to-
human interface. The smartphone as
the access to clients’ needs to be in
the focal point of digital business
models.
Scalability D As discovered digital business models During the design of technical

need to be quickly adaptable to components this requirement moves in
changing market conditions but also the spotlight of developers- Routinely
able to address a vast customer it has to be evaluated how the
base. To enable that a technology scalability can be improved.
48

that can be scaled seamlessly to the

exact needs is one of the major
technology enablers of digital
business models.
Digitization D Only if process and interface are “…all physically things should be
digitized digital business models are replaced by digital things or
possible. technology…” Also, it need to
constantly evaluated if and how
remaining analog processes can be
digitized, replaced or abandoned at
all.-
Revitalization of S Almost all interviewees mentioned

legacy IT the current legacy IT as a limitation
Infrastructure for the prosperous development of
digital business models. While often
new systems are set up in the
development of digital business
models the legacy IT needs to
upgraded to be more flexible and
fast, “…IT needs to serve high
velocity…”
Virtualization S Digital business models are often To further achieve a high degree of
created out of a re-combination of virtualization every time a new
different services and components technology is need in order to
rather than a redevelopment. To empower digital business models cloud
further foster this the technology services should be favored according to
behind needs to facilitate the the interviewees.
process of re-combination. To best
be able a virtualization of IT systems
and components such as cloud
computing was mentioned by the
interviewee.
Automation D The survey result show that Continuous drive to automate

automation through artificial processes and procedures is the next
intelligence and machine learning logical step after digitization of the
technologies are one of the processes. Not only during process
backbones within digital ecosystems. design, automation should be
These system are very close related considered but also a constant
to data driven pattern of digital monitoring of all processes to identify
business models. “More and better new automation potentials ensures the
data availability drives the success of digital business models
efficiency of automation according to the survey results.
exponentially”
Standardization S One of the interviewees pointed out

that an “universal language for
technology is needed”. Due to the
exponential growing number of new
technologies or digital components
companies need to strive for
49

continuous standardization to ensure

seamless interaction.
The biggest challenge for automotive companies is hidden in the marriage of two completely
different working worlds. On the one side we have the development cycle of a car. A long-
lasting process that takes years from an idea to the mass-produced product. This
development process is characterized by a very sequential and, not at all, flexible planning.
While information technology helps to support this process and gives a certain flexibility
through automation and especially virtualization of phases of the product development, it
is still a process that cannot be altered dynamically. On the other side we have digital
business models which development process is rather characterized by an iterative cycle
than a planned sequence. A dynamic process that seeks input in real-time and acts
accordingly. Almost all survey participants mentioned a “Fail-Fast” attitude, a method
where new things are tried out without rigorous testing and to rather learn from failures
with not much capital invested. This mindset is completely the opposite of what we require
from car manufacturers. Safety, quality and precision are factors that have to be maintained
at all cost. Having a technology capability that not only marries these two worlds but also is
able to individually serve to the needs of both is one of the key success factor for digital
business models.
4.3. Research findings – Cluster: Routines

Cluster: Routines

Iteration beats S This is one of the main patterns that

sequence was constantly raised by the
interviewees. The main shift in any
behavior or process need to be from
linear to iterative
Multispeed S Due to the nature of automotive While the business model for automotive
Organization production cycles different process companies will be digitized, the base
landscape with different speeds need product remains physical. Hence, the
to be introduced. Hereby it is organization needs to be able to develop
important to “… setup sync point and operate on different speed levels.
between the processes (car All processes like approval or
procurement need to be able to cater to
50
Cluster: Routines

development = slow; digital business different pace requirements. “…all

model development = fast).” processes are aligned to the
development process of a car. If digital
business models are offered these
processes need to change or faster have
to be established in parallel.”
Release D The interviewees stated that to be Next to an enabling infrastructure the

Management able to cope with rapid market mindset need to change in favor “…to a
changes product/service releases risk embracing testing approach.”
have to get live in much shorter
iterations. Not only the development
tools need to support these but the
processes itself have to be improved.
Seamless S „A communication and collaboration The survey results show how important
Communication system need to be set up that helps an open attitude towards transparency
& Collaboration to work internationally, is available and unselfish knowledge sharing is.
24 hour 7 days a week for ad-hoc “…everyone needs to have access to all
collaboration.” know-how instantaneously.”
Generation Y S Some f the interviewees highlighted

ready that current enterprise processes like
HR are nor catered to the needs of
talents from the generation Y (born
during 1977 and 1998). “… digital
natives are needed to design and run
digital business models, by definition
they belong to the generation Y. Due
to social media they are used to get
constant feedback. The have a desire
and demand for constant feedback.
Therefore employee evaluation and
performance feedbacks have to be
adjusted to this need.”
Rethinking Sales D The automotive expert interviewed Everyone no matter which function
stated that the sales processes of car should be enabled to sell. Due to the
manufacturers need to change in multi-touchpoints with the client and
favor for digital business models. the requirement to monetize the client
Right now sales is outsourced to in multiple ways to stay sustainable,
independent dealers, OEMs need to everyone need to be empowered to sell.
re-gain access to their end-customers
to gather knowledge and to create
follow up touchpoints.
The adjustment of processes in favor for digital business models goes hand in hand with the
demand for a new architecture highlighted above. While it is quite clear that all changes in
the architecture require a change in processes in the same manner. The interesting part
about routines and processes within digital business models is controversy between a lean
organization that tries to avoid processes at all cost vs. a strong tendency to introduce more
51
and more digitized processes that follow a strict order. Digital business models seek to
automate as much as possible, which require, that processes or routines need to be well
defined. Otherwise, an automation is not possible. Usually within companies, a high number
of defined processes is perceived as a decelerator of corporate performance. This is a
peculiar fact that might raise the question that within digital business models more processes
are defined but they are only working in favor to the success of the company as the human
component is erased in the equation.
4.4. Research findings – Cluster: Culture

Cluster: Culture

Innovation not D „Ideation is not a concentrated process,

Improvement R&D need to be carried out by the whole
workforce.”
Organizations need to encourage
intrapreneurship, innovation needs to be
rewarded, advocacy for innovation and
motivation has to be at the heart of
leadership.
“People need to embrace a –‘you are
never truly finished’ mindset.”
Endurance S Due to the iterative character of digital

business models “… the organization
needs to learn to endure lean periods.”
Fail fast D All participants of the survey emphasized

multiple times that digital business
models require a culture where failures
and draw-backs are tolerated and an
approach that tries to fail fast and learn
from it is encouraged.
Diversity S “Digital business model are diverse,

with very diverse customers so you
need setup a culture of diversity.”
New S A couple of interviewees correctly

Incentives pointed out that the culture of
companies running successful digital
business models need to inherit
incentives and perks that are
tailored to the needs of generation Y
talents/digital natives.
“These talents, you don’t get
through a high salary, the whole
corporate culture needs to change in
its core, flexibility towards when
and where to work should not only
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Cluster: Culture

exist on paper but be part of the

daily culture.”
The needed cultural changes are not necessarily in direct favor for the digital business
models itself but for the people behind. It was frequently argued by the interviewees the
innovation and development of digital business models are carried out by digital natives,
people who grew up with digital technologies and who are customized to patterns like co-
value creation, diverse collaboration and re-combinatorial innovation. The term “Digital
Natives” is interchangeably used with the term “Generation Y” due to the fact that digital
technology got only commoditized during last two decades. This young generation demands
for a very different corporate culture. Hence, the culture to have in place for companies
who want to be successful with digital business models is rather determined that they need
a Generation Y workforce than by the fact that their offerings are digital.
4.5. Research findings – Cluster: Value Chain


Service dominant D All participants confirmed the during

value creation the literature review defined service
dominant logic of digital business
models. They highlighted multiple time
that even in the automotive industry
the value creation is rather caused by
the service than by the car itself.
Value - Web D The value chain is “… different “Be collaborative but own the
instead of because more dynamic to an old- customer touchpoint.”
sequential Value fashioned concept like input,
– Chain throughput, output; instead of a chain
it is more a cycle, consisting of
interconnected chains, a web/network
of different shapes.”
Personalized D Due to the digital characteristics,

Value offerings can be highly personalized
Proposition based on the gathered data. The value
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creation of digital business models has

“… the ability to create incremental
value for producer and consume; e.g.
a publisher was not able to sell one
article only a whole magazine was able
to get sold, with digital technologies
you can slice and dice things up and
sell small articles.”
Value creation D During the literature review as one of To further foster the value co-
through bundling the characteristics, co-value creation creation a routine needs to be
was identified. This was confirmed constantly executed trying to
during the interviews by almost all crowdsource through consumers and
interviewees. partners.
“… a web of internal and external
services & capabilities…”
“… main difference: value is not
created unilaterally, it is co-value
creation, created by more than one
company or party…”
Value creation D Some of the interviewees stated that

through data through digital business models
science automotive companies have
completely new ways to create and
capture value. “The data itself that
are gathered within and outside of the
car can be the basis for a new business
model. Even the data solely can be
monetized.”
Brand Image D The participants acknowledged that

drives value not only the digital business model
capturing itself created value that can be
monetarized but also that brand image
has a high impact on the sustainability
of digital business models. “…high
brand image value achieve same
customer loyalty like ecosystem lock-
in features do within Apple [iOS] and
Google [Android] world.”
Multi - D Value capturing within digital business Many survey participants outlined
Monetization models is characterized by multiple that multi-monetization is nor not
monetization usually of micro only something that need to be
transactions. system enabled but need to be
“… size does not matter in digital reflected constantly in making
business model value chains. Even decision or creating new services.
small transaction but high volume of “…for car manufactures
transactions can ensure a sustainable monetization now doesn’t stop at
income. In traditional business models the sale of the car but the digital
the size of transactions matters but components [of the car] enable
within digital business models unit monetization possibilities for the
costs vanish and they are enabled for a future. Now the value chain spreads
54

high throughput of transaction which up in multiple chains how value can

creates tremendous value.” created and monetized. […]
Interviewees also highlighted that value is created by being
former neglected parts of the contextually relevant e.g. location
organization found their way back into based services…”
the spotlight, “strong customer service
that is not a outsourced can nowadays
generate more revenue than the sales
department.”
Convergence S Interestingly some of the interviewee

between supplier mentioned that a convergence
business model between the supplier business model
and end- and the own business model increases
product/service the success of it. “…digital business
create models are more sustainable if the
sustainable value product is monetarized through pay
per use as well as the needed suppliers
are charged pay per use.”
As expected, all survey respondents highlighted that the value creation of digital business
models follows a service dominant logic where the car is more and more downgraded as the
“Vehicle” through services are transported to the customer. The highest controversy among
the survey respondents could be seen in the answers if a digital business model is more
sustainable than traditional industry business models. Critics often mentioned that digital
business models can be copied rapidly and switching costs are much lower and therefore the
loyalty of customers decreases. The proponents on the other side emphasized that digital
business models are much better in sustaining a competitive advantage just due to the fact
that information are better captured and used to create the best service for the customer.
Another interesting fact that support the argument is that digital business models can be
scaled rapidly with a global reach at negligible unit costs. In relation to digital business
models in general this might be right but in the automotive industry in particular this
scalability is restricted. Digital business models in the automotive industry still need the car
serving as a platform for digital service. Hence, the spread of these services is limited to the
market penetration of the physical object.
In the regard of sustainable digital business models for automotive companies, the
innovation lies in the multiplication of customer touchpoints and the monetization of them.
As operating margins getting squeezed more and more and competition gets fierce through
new entrants like Tesla, Google and Apple new ways to monetize the customer should be in
55
the focal point of automotive companies. Here the opportunities are limitless. The main
trend in line with traditional business model of automotive companies will be the
monetization of the back seat of sold cars. Providing an infotainment offering is only the
start, augmented reality and location based services such as paid advertisement for
restaurant along the road.
4.6. Research findings – Cluster: External Factors


Public D All respondents highlighted that

Infrastructure digital business models are highly
Investments dependent on public infrastructure
such as broadband internet
connections. Sometime this even
decide about a competitive advantage
of a company, “… an automotive
supplier from north Germany is
forced to send their CAD data by mail
as DVD as they don’t even have access
to a DSL connection.”
Education S All participants also mentioned access

to high quality education to ensure
the right skillset within their
company.
Proximity to S Due to the character of co-value

partner creation within digital business
models the proximity to partners
helps tremendously according to the
interviewees.
Political S Political stability and regulations such

Stability / as net neutrality need to work in favor
Regulations for digital business models. As the
biggest deceleration of the
development of digital business
models the participants listed
protectionism by governments in favor
for analog business models.
Social/Public S Digital business models are

Consciousness transforming not only the way business
interact and operate but shaping the
society and environment around them.
Some of the interviewees mentioned
that the needs of the public and people
who are not even participant of the
digital business model should be
analyzed and considered as well. As
56

example car-sharing was mentioned.

Car sharing reduces the number of cars
in urban areas. This benefit should be
actively given back to the community
like reclaiming space occupied by
streets or parking lot in favor for
objects where the whole society can
benefit from it.
Successful digital business models not
only consider company and client but
all stakeholders.
Office S Many survey participants mentioned

location in the office location of companies as a
urban areas success factor for digital business
model. “Automotive suppliers and all
these ‘Hidden Champions‘ cannot
attract the needed talent solely to
the fact that they are usually not
located in an urban area. The needed
digital natives are preferring urban
areas and would rather sacrifice job
opportunities in favor for living in big
cities.”
Population D Many survey recipients mentioned the “… new generation will not accept
growth drives demographic shift and population business models or services that are not
digital growth as the externalities with digital…”
business biggest impact on digital business
models models. The rejuvenation of societies
such as India and China favor digital
business models. The interviewees
recommended to setup digital
business models there where you have
a positive impact on them or where
you solve problems that come hand in
hand with these megatrends.
Most of the statements articulated by the survey respondent do not have a specific relevance
for digital business models only. Most of them are impacting any kind of business or need to
be considered for non-digital business as well. The interesting point with respect to society
challenging points like exponential population growth or climate change is that digital
business models can be remedy for these issues. As an example, the projected demand for
mobility services in Asian mega cities could never be satisfied with traditional models.
Mumbai (Bombay) has already five times more inhabitants than Berlin on an area that is only
two third of Berlin’s. On the other side the number of registered cars per 1000 inhabitants
is more than double in Berlin compared to Mumbai. If the level of car ownership in Mumbai
57
would increase to a Western European level like Berlin literally, nothing would move
anymore, simply due to the fact that there is not enough physical space available to
accommodate so many cars. Digital business models for mobility services can help. Car
sharing and autonomous driving guided by a digital platform that anticipates traffic volume
will help to satisfy the mobility demand without a lockdown.
58
5. Discussion and conclusion
Successful managers need to understand the characteristics of digital business models. In
times were everything gets digitized, business and corporate strategy cannot be defined
without considering digital implications anymore. The demand for simple solutions, the shift
where experiences getting more important than the product, the market where even
prestigious incumbents like the automotive companies can be threatened by new entrants
(Uber, Tesla Motors, etc.), forces established companies to reorganize and to re-invent
themselves.
This research hypothesized that digital business models have common patterns and
similarities that make them successful. The research results manifest this hypothesis. The
first research question asked, what are patterns, successful digital business model have in
common. Through the intensive interview of fourteen diverse and senior experts in their
fields, 52 patterns were identified. The large amount of concurring answers of the
interviewees that underlie these patterns proves that the success of digital business models
is not arbitrary and can be determined and influenced by these patterns.
The second research question asked, if these patterns can be transformed into factors that
can be implemented in prior to ensure a success. Through the classification into factors that
have a direct impact or which are supporting, this was achieved. This classification also
answers the third research questions, what are other aspects that might have an influence
on the success of digital business models.
5.1. Definition of success factor for digital business models as

recommendation for managers
Based on the survey analysis it was possible to identify 52 patterns in order to make digital
business models successful. These patterns were categorized regarding the impact they have
on the success of digital business models. The impact was defined as either “Direct” or
“Supportive”. Based on that it was possible to extract 23 success factors and 29 supporting
factors (overview of factors and their numbering can be found in the following figure).
59
Figure 22: Overview of Success Factors
Source: Own creation based on survey results
For the architecture of digital business models, having the customer in the center (Factor 1)
of all activities is the most important part. Services need to be created as an experience
(Factor 2) around the customer. The architecture should be designed in a manner that makes
it difficult to change to a substitute product or service. Therefore, lock-in mechanisms
(Factor 3) need to be included in the business model design. To create the best experience,
multiple touch points with the customer (Factor 4) need to be defined. These touchpoints
serve in two ways. First, new or more information around the needs and preferences of a
customer can be gathered which then should influence the service design to create the best
experience for the customer. Second, each customer touchpoint is a chance for value
capturing. More touchpoints represent more chances to monetize the client base, which
would result potentially in higher revenue.
To be able to create an architecture and a business model around the customer, six
technology factors are needed. To create the best experience for the customer, a huge
amount of data has to be captured. Hence, a broadband internet connection (Factor 5) needs
to be given, not only on the company’s site but also on the customer’s end to connect with
them. All decisions around what and how to offer to customers need to be data-driven
60
(Factor 6). Traditional customer relationship management systems are not enough for that.
Good tools include all kinds of data points, like sensors that observe the customer behavior
and their environment, to create the best experience for the customer. Adopting
smartphone (Factor 7) technologies and channels is vital to enable multiple customer touch
points in a digital space. Customers usually always carry smartphones with them; hence,
multiple touchpoints are possible through them. The underlying technology platform that
facilitates communication with clients, data gathering and analysis as well as provision of
the services need to be in a shape, that is highly scalable (Factor 8) to quickly address market
changes and to be able to create a high reach. Everything needs to be digitized (Factor 9)
to be able for that platform to connect all relevant components and processes, To create
the best experience, a lot of interactions and processes need to run in parallel and in an
iterative manner. Successful digital business models try to automate (Factor 10) these
routines to be able to process as much as possible in parallel.
While the offered service needs to be flexible, the technology platform behind, needs to be
the same. Often new features and functionalities of the technical platform have to be
released in a rapid manner to cope with changing customer requirements. To do so, the
release management process (Factor 11) has to be redefined to be able to adjust product
and services quickly. The multiplication of customer touchpoints generates more
opportunities to monetize the customer. That has an impact on how sales capabilities need
to be organized within digital business models. Everyone, who has access to the client
through one of those touchpoints, should be enabled to sell as well (Factor 12). For example,
a user calls the customer support; the customer service agent should now be able, if
circumstances allow, to sell additional services to the customer.
In general, digital business models monetize services and use physical objects rather as a
vehicle to transport these services (Factor 13). To do so value is created through bundling
of internal and external services (Factor 16), the customer itself and a variety of partners
are included in this process. Successful digital business models create the best experience
for their customer by recombining the best from each “World”. Through a constant
recombination, a complete custom experience and personalized value proposition can be
created for the customer (Factor 15). Hence, digital business models do not follow any
sequential value chain, they rather create value in a web of partners and components (Factor
14). Constantly captured data around the customer is the main enabler to design
personalized services. However, this data itself can be a new service which can be monetized
(Factor 17). For example, through the in-car IT with all their sensor included, car
manufacturers know, when and where people desire breaks during trips on highways, an
information fast-food chains and gas stations provider would pay a high amount of money
61
for. Insurance companies, on the other hand, can create much more accurate products on
the basis of this data. These completely new ways, how to monetize the own assets is one
of the one of the key characteristics of digital business models. For some it is the
revolutionary part of this digital transformation. Suddenly a car manufacturer does not earn
money by just selling the car, but by monetizing a high number of different services offered
to customers or partners.
That is an phenomenon that can be observed within digital business models, companies shift
from single transaction to multi transactions to capture value. Successful digital business
models rather try to monetize the customer for its services through a high number of
transaction instead of one large one (Factor 19). To keep customers loyal beyond the lock-
in architectures, the survey respondents emphasized on how important brand image is for
digital business models (Factor 18). Digital business models with strong brands are able to
monetize the customer more often and can add a premium.
Looking at the culture of companies behind digital business models, the analysis identified
two patterns that have a direct impact on the success of digital business models. Firstly, a
culture of intrapreneurship needs to be established in order to innovate (Factor 20) and
create new services and products, rather than spending effort on improvements that might
only lead to marginal, incremental enhancements. Secondly, employees need to have the
chance doing mistakes without being punished. Only a “Fail-Fast” attitude (Factor 21) will
help the workforce innovate significantly.
Two external factors are directly impacting the success of digital business models. While
these cannot be managed authoritatively by the companies, they still should be considered
for the choice of office location or target market. As discussed, broadband internet
connection or cellphone coverage is vital for expansion and delivery of digital services.
Areas, where actively investments are funded to create this infrastructure, should be
preferred (Factor 22). For example, to connect rural areas in developing countries,
governments invested to establish at least a cell phone connection in these areas although
other infrastructure such as energy, TV, water, etc. might not be available yet. These areas
would be the perfect target market for digital services that address the daily needs of the
population there and can be accessed through phones. Next to messaging, money transfers
are popular digital services for these areas. Countries with a very young population, due to
high growth numbers, are ideal target markets (Factor 23) as the most of them are digital
natives that prefer digital services over analog offerings.
62
5.2. Limitations of the research and critical reflection on the process
Reflecting on the survey results and the subsequent pattern analysis and nomination of
success factor, three areas should be critically appraised.
As a first point, the interviews and the data gathering itself should be contemplated. While
a reasonable high number of interviews were conducted, some additional pattern of
successful digital business models might not have been discovered. Moreover, it might be
possible that some of the survey respondents are subjectively biased. All interviewees are
experts in their fields and have a strong exposure to digital business models and a digital
strategy in general. To enhance and improve the research result two things would be
beneficial. Firstly, a higher number of interviewees and a selection of interviewees who are
not from that field. The second part would help to compare answers of digital experts and
non-digital experts. It is expected that some of the factors would change and others might
be added. In addition, a two step research approach would be highly beneficial for the
research result. The first step would be the approach of this thesis. As a second step, the 52
identified patterns could be used to conduct a structured survey with predefined response
options. For example, a large number of people could rate each pattern on how big the
impact on the success is on a scale from one to ten.
Secondly, the classification into direct and supporting factor could be evaluated differently.
Already some of the factors might provoke disagreements in their classification if they are
supporting or directly impacting. The classification now might be also subjective due to the
author’s interpretation. An improvement here would be to define in detail success in regards
of digital business models and how this success can be impacted.
Thirdly, a better data basis would help tremendously to improve the research result. If for
each factor quantitative data would be available that show for example how the operating
result of a company was affected, then better recommendation could be derived.
However, as a first framing of factors that are affecting digital business models this research
achieved very sufficient results and can be used for management practices or as a basis for
future studies.
63
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Appendices
Transcripts:
The transcripts of the interviews are not included in this due to confidentiality reasons. For
two interviews audio recording are available. Upon request and with consent of the
interviewee these transcripts can be accessed.
Icons used in graphics:
All icons that were used in the figures are available under a free license.
The icons used are made by Freepik from www.flaticon.com.
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Understanding the predominant success factors of digital business models:

Thesis · November 2015

The user has requested enhancement of the downloaded file.

Understanding the predominant

A thesis submitted in partial fulfillment of the requirements

Therefore, my special thanks goes to the interviewees from:

2.2. Decompiling the term “Business Model” ................................................ 11

2.2.1. Introduction into the theory of business models .................................. 11

2.2.2. Development of the term “Business Model” over time .......................... 12

2.2.3. Differentiation towards overlapping concepts .................................... 13

2.2.4. Architecture of business models .................................................... 14

2.2.5. Development of an own business model concept framework ................... 15

2.2.7. Differentiation towards other technology driven business concepts ........... 18

2.2.8. Architecture of digital business models ............................................ 19

2.2.10. Comparison of industrial vs. digital business models .......................... 23

2.3. Critical success factors within management research ................................. 24

2.4. Summary of literature review ............................................................. 25

3. Empirical approach and methodology ......................................................... 27

3.2. Hypothesis and research questions ....................................................... 27

3.3. Research design ............................................................................. 28

3.4. Identification of source of evidence and data gathering.............................. 30

3.5. Development of an interview strategy ................................................... 30

3.5.1. Interview & questionnaire design ................................................... 30

3.5.2. Participant selection .................................................................. 38

3.5.3. Interview strategy, structure & execution ......................................... 39

3.5.4. Approach & methodology to analyze data collection ............................ 40

4. Analysis of the research data ................................................................... 42

4.2. Research findings – Cluster: Technology Enabler....................................... 48

4.4. Research findings – Cluster: Culture ..................................................... 52

4.5. Research findings – Cluster: Value Chain ................................................ 53

4.6. Research findings – Cluster: External Factors........................................... 56

5. Discussion and conclusion ....................................................................... 59

“Digital Transformation” evolved from a fancy buzzword to a revolution of businesses and

Figure 1: Overview of pattern and success factor of digital business models

Source: Own creation

However, what makes a digital strategy or business model successful?

2.1. Digitization versus Digitalization – A Definition

Digitization is the process of changing from analog to digital form.

Figure 2: Difference between Digitization and Digitalization in the Automotive Industry

Source: Own creation based on text in chapter

Concluding we should acknowledge that digitization is always characterized by the

2.2.1. Introduction into the theory of business models

Figure 3: Graphical representation of business model publications over time

Number of Articles Using the Term "Business Model", 1990 - 2006

Number of Academic Papers

No. Of News References No. Of Academic Paper

2.2.4. Architecture of business models

2.2.5. Development of an own business model concept framework

Figure 4: Patterns & Commonalities of business models

Source: Own creation as summary of chapter above

Figure 6: Three main patterns of business models

Source: Own creation as a summary of chapter above

Figure 7: Overview of all player and components of business models

Source: Own creation as a summary of chapter above

Figure 8: Graphical representation of the business model definition

Source: Own creation as a summary of chapter above

2.2.6. From a business model to digital business models

2.2.7. Differentiation towards other technology driven business concepts

eBusiness or Electronic Business: eBusiness is a collective term for digitized businesses or

eCommerce or Electronic Commerce: While eCommerce also belongs as a sub-concept to

2.2.8. Architecture of digital business models

Another key area how digital business models