Business Model and Disruption in the Age of Smart-Connected-Products

This article discusses the impact of smart-connected-products on business models and how to apply the Osterwalder and Pigneur framework. It explores the opportunities and threats posed by these products and how to develop resources and capabilities to remain competitive. The article also provides a case study of Domino's Pizza and how it successfully adopted a disruptive business model.

Assessment 1

Table of Contents
1. Defining the Terms Business Model and Disruption.........................................................................2
2. Opportunities and Threats caused by Advances in Smart-Connected-Products.................................3
3. Applying Buisness Model Framework by Osterwalder and Pigneur (2010)......................................3
4. Business Model Perspectives.............................................................................................................6
5. Conclusion.........................................................................................................................................8
References.............................................................................................................................................9
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1. Defining the Terms Business Model and Disruption
Chesbrough, (2010) has advocated that the in the present disruptive age, the established
business models are under attack. It has been opined by (Gambardella & McGahan, 2010)
that the business models in the recent times have become less durable that they used to be.
The basic rules that were adopted by the business models to create and capture economic
value were fixed in place for years as the business organizations emphasized on executing the
same business models better than its competitors. However, in the recent times the business
models are experiencing rapid displacements and disruptions and in extreme cases, they are
facing outright destruction. This has been evident from some considerable examples of the
business models like the Bitcoin emphasized on bypassing the traditional banks and
clearinghouses with the blockchain technology, edX and Courseera threatened the business
schools with their massive open online courses, Tencent has outcompeted in the Internet
services through microtransactions and Uber sidestepped the license system that protects the
taxi cabs franchises in the cities across the globe (Habtay, 2012).
Thus, on the basis of the above examples, it can be said that a business organization that does
not adopt a disruptive focus are following a me too platform i.e. they emphasize on doing the
same things in the same ways for the same reason for a long time. They struggle with the
concept of change So, adopting a disruptive business model make the business organizations
capable of reengineering, optimizing and non-intermediating its products and services or the
market or a sector of the industry. Moreover, the business environment is experiencing rapid
technological advancements and feeling the heat of globalization (Osterwalder & Pigneur,
2010). These two aspects are making the business of all sizes face the emerging need for
adopting a disruptive business model. Another example that can be cited in the context of the
failure of the traditional business model and the ways disruptive business model lead the
business to success is through the example of Domino’s Pizza. Domino’s Pizza while
conducting its business through the traditional business model experienced all time low in its
share price and slipped down the ranking to occupy the last position in terms of consumer
preferences in the 2009 survey (Mcorpcx, 2018). Realizing the failure of its business model,
Domino’s Pizza integrated disruptive technological innovations to optimize all its business
aspects. This helped the business in rebuilding its image in the minds of the customers’ tastes
and preferences.
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2. Opportunities and Threats caused by Advances in Smart-Connected-
Products
The Smart-Connected-Products facilitate the business organizations with expanding
opportunities on one hand and on the other hand emphasizes on altering the industry structure
and the nature of competition. It also proves to be beneficial for the business organizations
with new functionality, enhanced reliability and higher product utilization and develop
capabilities that help the business in cutting across and going beyond the traditional product
boundaries (Christensen et al., 2009). So, business organizations like Domino’s Pizza are
facilitated with new competitive opportunities and threats through the Smart-Connected-
Products. Business organizations like Domino’s Pizza are facilitated with new strategic
choices through Smart-Connected-Products. It assists the firm in creating value and facilitates
new ways of managing the prodigious amount of new data and the ways in which the firm
can maintain their traditional relationship with the business partners since Smart-Connected-
Products helps in redefining the channels.
Thus, on the basis of the above aspects, it can be said that Smart-Connected-Producers
facilitates the business organizations like Domino’s Pizza with significant opportunities in the
form of competitive advantage through product differentiation, enhanced level of satisfaction
on the part of the customers, operational efficiency, gaining enhanced knowledge of how
customers actually use the products and achieving enhanced ability ion segmenting the
market, setting effective prices for capturing value and offering enhanced offerings to the
market segments (Porter & Heppelmann, 2015). In addition to the above opportunities,
Smart-Connected-Products also pose significant level of threats to the business organizations
like Domino’s Pizza. The smart-connected-products demands a complete business
reengineering together with high investments, difficulty in maintaining relationship with the
traditional business partners, demand highly skilled and experienced technical professionals
and it also leads to confusion on the part of the business organizations to secure, capture,
analyze and secure the collected data for achieving enhanced value of offerings.
3. Applying Buisness Model Framework by Osterwalder and Pigneur
(2010)
Pillar Elements of
Business Model
Descriptions
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Product Value Proposition Domino's Pizza has a wide range of
products to offer its customers. It
includes pizza, pasta, salads and other
dishes and desserts (Dominos, 2018).
Customer Segments Dominos’ Pizza offers its products to
customers from all age groups.
Customer
Interface
Channels Domino’s Pizza facilitates its
customers with a wide range of options
and channels through which they can
order their pizza. The channels include
online ordering, ordering through
Twitter, Voice ordering, easy order
button, delivering products through
high-tech and efficient pizza oven
delivery car, robots to deliver pizza,
drone delivery, Xbox ordering and
incar offering apps by entering into
partnership with Ford (Dominos,
2018).
Customer
relationships
Domino’s Pizza in order to enhance
customer relationship has entered into
partnership with third party partners to
reward its customers and also offers
real time customer reviews.
Infrastructure
Management
Key Resources Domino’s Pizza has been successful
digitalizing its pizza ordering and
delivery systems with the help of its
tech savvy employees, mobile
applications together with wide range
of ordering channels like voice
recognition, text messages and emojis.
Together with drone and robot
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deliveries (Dominos, 2018).
Key Activities The y activities of Domino’s Pizza
include listening to its customers,
utilizing the power of social influence
and recognizing the value of
transparency (Dominos, 2018). The
firm has also developed Pizza tracker
app for facilitating its customers with
new and enhanced experience on the
basis of their specific needs.
Key partners Domino’s Pizza has entered into
strategic partnership with business
partners MAURI anz, Australia
Schweppes, INGHAM, VISY,
KAGOME, LEPRINO FOODS, JBS,
PRIMO, TIBALDI, COMGROUP.
Domino’s Pizza also operates in for the
benefit of local communities through
Giving for Good program (Dominos,
2018).
Financial
Aspects
Revenue Streams Domino’s Pizza emphasizes on
collecting its revenue from selling its
products and services across 670
Domino's Pizza restaurants in Australia
and also enjoys revenue as franchising
fees.
Cost Structure Dominion’s Pizza in order to conduct
its business operations has to bear
certain specific costs that include the
labour costs, Food production costs,
occupancy costs, development of
infrastructure, costs involved in
adopting new technologies, salary to
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employees, costs involved in partnering
with third parties (Zott et al., 2011).
4. Business Model Perspectives
Business Model as Value Proposition
Value Propositions can be defined as the products and services that prove to be beneficial for
the business organizations in creating value for a specific customer segment. The value
proposition is created by solving the customer issue and satisfying their specific needs. The
value propositions also involve the innovative technology in delivering the products and
services (Zott & Amit, 2010). The value propositions in context to the business organizations
are capable of satisfying the needs of the customers either because the need was not
recognized or there were no similar offering and at time newness in technology also proves to
be beneficial in enhancing the value proposition.
In this context, it can be said that Domino’s Pizza in order to offer value proposition to its
customers emphasize on offering core products that include pizza, pasta, salads, deserts and
more. These products prove to be beneficial in satisfying the needs of the customers (Al-
Debei & Avison, 2010). Domino’s Pizza also emphasizes on offering added value services to
its customers that include Domino’s wedding, School lunches and also has developed an app
to facilitate its customers with the live status of their order through Smart Track my Pizza and
Domino’s Tracker.
Domino’s Pizza emphasize on facilitating its customers with enhanced shopping experience.
This is facilitated by providing an opportunity to the customers to place the order for their
pizza through Tweet to order pizza, voice ordering, easy order button, order pizza in zero
clicks, delivery robot, pizza oven delivery car, drone delivery, Xbox ordering and in car
delivery options. This enhances the experience of the customers (Gambardella & McGahan,
2010).
Domino’s Pizza also emphasize on communications and touch points and in this context they
have developed new pizza delivery boxes and offer rewards to its customers through third
party partnership and providing real time customers reviews in their store.
Business Model as resources and capabilities
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The importance resources for Domino’s Pizza include the following:
Financial resources
Domino’s Pizza has been successful in its business endeavour that has increased its price to
reach $160 in 2016 from a mere price of $6 per share in 2009 (Mcorpcx, 2018). Moreover,
with its disruptive business model Domino’s has been successful in emerging as the second
largest pizza company across the globe with a market capitalization of $10254.22 (Mcorpcx,
2018).
Physical resources
The brand has its presence across the globe and in Australia alone, the brand has 670
restaurants that enhances its customer reach (Dominos, 2018).
Technological resources
Domino’s has efficiently optimized all its business aspects and in recent times it is recognized
more as a tech firm than a pizza firm. Technology has been implemented in ordering and
delivery of orders like online ordering, ordering through tweet, order button, in car ordering,
Xbox ordering and delivery pizza through drone and robots.
Organizational
Domino’s has adopted a multilevel organizational structure and a people culture to promote
team working.
Human Resources
Domino’s Pizza in order to adopt disruptive business model has emphasized on hiring and
recruiting tech savvy employees.
Organizational Capabilities
It is important for the business organizations become capable of making an optimum
utilization of the available resources to gain competitive advantage. Domino’s Pizza in the
recent times has overcome its past and its traditional business model to adopt a disruptive
business model and has emerged as tech savvy company. This has been successful because of
the ability on the part of the company leaders to efficiently utilize the available resources to
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design innovative ways of facilitating customers with unique products and services to meet
their specific needs (Wirtz et al., 2016).
5. Conclusion
On the basis of the above analysis, it can be concluded that business organizations need to
adapt to the change and embrace technological advancements to remain competitive and
disruptive.
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References
Al-Debei, M. M., & Avison, D. (2010). Developing a unified framework of the business model
concept. European Journal of Information Systems, 19(3), 359-376.
Chesbrough, H. (2010). Business model innovation: opportunities and barriers. Long range
planning, 43(2-3), 354-363.
Christensen, C. M., Grossman, J. H., & Hwang, J. (2009). The innovator's prescription.
Soundview Executive Book Summaries.
Dominos. (2018). Business Partners - Domino's Pizza. [online] Available at:
https://www.dominos.com.au/inside-dominos/corporate/business-partners [Accessed 21
Apr. 2018].
Gambardella, A., & McGahan, A. M. (2010). Business-model innovation: General purpose
technologies and their implications for industry structure. Long range planning, 43(2-3),
262-271.
Habtay, S. R. (2012). A firm‐level analysis on the relative difference between technology‐driven
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Management, 21(3), 290-303.
Mcorpcx. (2018). Lessons from the Upper Crust: How Domino’s Pizza Disrupted the Delivery
Game and Became a Leader in Customer Delight. [online] Available at:
https://www.mcorpcx.com/articles/lessons-upper-crust-dominos-pizza-disrupted-delivery-
game-became-leader-customer-delight [Accessed 21 Apr. 2018].
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Porter, M. E., & Heppelmann, J. E. (2015). How smart, connected products are transforming
companies. Harvard Business Review, 93(10), 96-114.
Wirtz, B. W., Pistoia, A., Ullrich, S., & Göttel, V. (2016). Business models: Origin, development
and future research perspectives. Long Range Planning, 49(1), 36-54.
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Zott, C., & Amit, R. (2010). Business model design: an activity system perspective. Long range
planning, 43(2-3), 216-226.
Zott, C., Amit, R., & Massa, L. (2011). The business model: recent developments and future
research. Journal of management,
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