Part V Developing a B.usiness Model
10.2 Business Models as New Combinations Between
10.2.1 Technology Aspects of Business Models
Technology has three aspects, as shown in Fig. 10.5. The protected knowledge of Section A, which is a target of intellectual property, receives the most attention from the research and development arms of companies and the government. However, for the technology of a BM, Section B, Protectable Knowledge, protected by compa-nies for their security, and Section C, Ideas or Knowledge, well known to the gen-eral public, carry significance.
Fig. 10.1 The size relationship between open innovation and BMs
10 The Way from Open Innovation to Business Model
A common case related to Section B is an instance in which a company whose corporate security is a method to produce Coca-Cola continuously develops various BMs beyond its sales of finished beverages. In addition, Elon Musk of Tesla Motors and SpaceX retain technologies as corporate secrets. They also manufacture various electric cars, including high-end automobiles; produce battery packs and various rockets; and create additional BMs based on core technology. This situation is also an example of Section B.
Above all, it is necessary to concentrate on Section C, in which technology is a target for the development of a BM and is the largest source. The escrow BM patent of PayPal, a key payment system in e-commerce, and the one-click patent of Amazon, which makes the company a global power in various e-commerce markets, are based on simple ideas rather than an original patent.
However, the most important technical aspect of a BM is, if the BM patent based on the technology of Section C additionally secures the technology of Section A or B, that the sustainability and the competitiveness of the BM can be significantly improved. In contrast, for the Section A technology patent, developing a BM based on a patent or combining a BM based on the technology of Section C can achieve technology commercialization with higher creativity and success.
10.2.2 Market Types of Business Models
There are three types of markets that become a target of a BM, as shown in Fig. 10.6:
a modern market, a potential market, and a social market. These three items should be given consideration when a new BM is created through a combination of technol-ogy and the market. In the case of the modern market, it is necessary to examine a market that exists in another space. For example, a common sports beverage market in Southeast Asia is seen as refined and exists as a modern market. In addition, the existing market of a different industry is important to consider for the development of a new BM. Examples are the car-sharing business market of Uber, with a BM that differs from that of the original taxi market system, and the new reservation service BM of Hotels.com or Booking.com, going beyond what is already available in the current hotel industry.
Fig. 10.2 The content relationship between open innovation and BMs
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The potential market, on the other hand, is not active now but is expected to sig-nificantly grow in the future. At present, space trips, personal intelligent robots, perfect autonomous vehicles, and personal medical system markets are potential markets that are expected to grow considerably later. The potential market is consid-ered with priority when a new BM is developed. However, this market takes a long time to develop, and its uncertainty is significant. Thus, a BM combined with a potential market needs a very long-term perspective given its extreme uncertainty.
In particular, a potential market corresponds to the failure of the conventional mar-ket, where the government intentionally becomes involved to develop the market as a future industry.
There are goods and services which are socially needed but are impossible com-pletely to find only through the market function. These items make up the social market, which is a major target of social enterprises. In many cases, the market becomes a public service target through the government. However, all social mar-kets represent a market that leads to the creation of market value at present or in the future, beyond simply creating social value. Most social fields, such as new and renewable energy, services for the socially disadvantaged, the local community, and social activities to eradicate poverty are targets of the social market. This social market becomes an infinite source of potential markets and current markets. As an example, the space development project of the American government becomes the source of the current space industry of the US social market, which supplies Burro batteries to Africa and which is slowly developing as a potential market (Backs 2013, p. 23).
Fig. 10.3 Disappearance of a BM in CI
Fig. 10.4 Quality relationship between open innovation and a BM
10 The Way from Open Innovation to Business Model
10.2.3 Quadrants of the Combination of Technology and the Market
The combination of technology and the market has a number of quadrants, as shown in Fig. 10.7. Section A has the largest number of targets for existing technology and existing markets. Following Section A are Section C, which is based on new tech-nology, and Section B, which is based on new markets. Lastly, Section D has the smallest portion based on new technology and the market.
That is, a BM is created with A > C or D > D. Thus, it is necessary to continue to pay close attention to the development of BMs through new combinations of the three types of markets or technologies and markets in existing technologies and even existing markets. In fact, in most cases, although many creative technologies are created, they are not combined with markets, which ultimately lead to the failure to develop a new BM.
10.3 Four Perspectives of Business Models from the Open