Innovation risk in digital business models: the German energy sector
Journal
The journal of business strategy
ISSN
0275-6668
ISSN-Digital
2052-1197
Type
journal article
Date Issued
2017
Author(s)
Dellermann, Dominik
;
Fliaster, Alexander
;
Kolloch, Michael
Research Team
IWI6
Abstract
Purpose:
Past research demonstrated that novel IT-based business models generate tremendous returns for innovators. However, the risks associated with these innovations remain under-explored. This paper addresses this critical gap analyzing risks and offering important insights particularly for practitioners.
Design/methodology/approach:
The authors adopted an exploratory multiple case study research design. It draws on 22 semi-structured interviews with managers from leading energy utilities as well as leading providers of virtual power plants technology within the German energy industry.
Findings:
The research reveals that main risks in new digital business models in the energy sector are associated with three forms of interdependence between innovation actors: the regulatory, the technological and the collaborative. To deal with these interdependencies, the authors propose an original multi-step risk management framework. This framework considers the outreach as a critical dimension for risk assessment and offers a new risk response matrix to draw individual and collective mitigation activities for specific types of risks.
Practical implications:
This paper offers a framework for the management of interdependence risks that are fundamental for business model innovations based on IT. Thus, it is applicable in companies both inside the energy sector and beyond.
Originality/value:
This paper analyses an important digital business model innovation that has not yet been explored in management literature – the virtual power plant (VPP). It is based on original and current empirical work and proposes a novel risk management framework for business organizations.
Past research demonstrated that novel IT-based business models generate tremendous returns for innovators. However, the risks associated with these innovations remain under-explored. This paper addresses this critical gap analyzing risks and offering important insights particularly for practitioners.
Design/methodology/approach:
The authors adopted an exploratory multiple case study research design. It draws on 22 semi-structured interviews with managers from leading energy utilities as well as leading providers of virtual power plants technology within the German energy industry.
Findings:
The research reveals that main risks in new digital business models in the energy sector are associated with three forms of interdependence between innovation actors: the regulatory, the technological and the collaborative. To deal with these interdependencies, the authors propose an original multi-step risk management framework. This framework considers the outreach as a critical dimension for risk assessment and offers a new risk response matrix to draw individual and collective mitigation activities for specific types of risks.
Practical implications:
This paper offers a framework for the management of interdependence risks that are fundamental for business model innovations based on IT. Thus, it is applicable in companies both inside the energy sector and beyond.
Originality/value:
This paper analyses an important digital business model innovation that has not yet been explored in management literature – the virtual power plant (VPP). It is based on original and current empirical work and proposes a novel risk management framework for business organizations.
Language
English
Keywords
business model innovation
digital innovation
ecosystems
energy industry
risk management
virtual power plants
HSG Classification
contribution to practical use / society
Publisher
Emerald Group Publ.
Publisher place
Bradford
Volume
38
Number
5
Eprints ID
250884