Innovation & Sustainable Business Development: Strava Business Model

This report analyzes Strava's business model through the lens of innovation and sustainable business development. It defines business models and disruption, then examines Strava's model, highlighting subscriptions, Metro, and Strava for Business. The report discusses smart connected products and their impact on Strava, identifying opportunities like new services and data resources, as well as threats such as increased costs and security risks. It applies the Business Generation Model Canvas to Strava, detailing customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure. Finally, it touches on the Value Proposition Business Model and the Business Processes Business Model, concluding that Strava's future looks promising under the smart connected products paradigm.

Innovation and Sustainable Business Development - Assignment 1
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Table of Contents
Business Models and Disruptions....................................................................................................3
Business Model of Strava................................................................................................................4
Smart Connected Products...............................................................................................................4
Opportunities and Threats Identified...............................................................................................4
Business Generation Model Canvas................................................................................................5
The Value Proposition Business Model..........................................................................................7
The Business Processes Business Model.........................................................................................7
References........................................................................................................................................8
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Business Models and Disruptions
As per Bocken, et. al., (2014), Business Models can be described as a set of various business
processes, functions, resources, outcomes, goals of the business to successfully accomplish the
set targets. Business models are also defined as the rationale that enables to develop for the
structure of an organization that aids in delivering, creating and capturing the values of the
business processes for the social, economic, legal and other contexts of the business. Business
models are a wide scale of the description of the formal and informal information core aspects
and regions of the business which includes aspects like business propagandas, processes, targets,
the consumer base, offerings of the business services and products, strategies, infrastructure etc.
The business models, therefore, are structured and cultured dimensions of the business policies
and strategies that foster business objectives and goals (Bocken, et. al., 2014).
In the literature and research of Christensen, et. al., (2016), Disruption can be termed as a
modern or contemporary development in the current business models and business environment
in the global economy. The disruption innovation is a development or advancements in the field
of business administration that leads towards creating a new market and value network for the
products, services and the organization. It leads to the formation of newly identified markets and
yields greater returns on the investments. This market thereof innovation disturbs the existing
market and the value network of the products and services and therefore displaces the market
leaders, products, and alliances of the existing nature. Market Disruption is of diverse natures
and not all the market innovations tend to be disruptive. The bases of revolution brought in the
innovation and products or services advancements account for the disruption level caused by the
products or services. These innovations are often curated and developed by outsiders or new
entrants in the market rather than the current market leaders and business suppliers in the market
(Christensen, et. al., 2016).
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Business Model of Strava
The Business Model of Strava is based upon three basic but very smart business moves that have
incorporated since the establishment of the business and its activities. The model structured on
elements such as Subscriptions, Metro and Strava for Business. The subscription includes paying
a certain amount to access Strava Premium which allows tracking the whereabouts in unknown
and unidentified areas (Strava, 2018). The elements of Metro enables the organization to charge
form the transport authorities like the Transport for London to access the data collected and
analyse the routes and pedestrian safety measures. Another element of the business model of
Strava is Strava for business which partners with various organizations to develop challenges for
the riders.
(Source: Strava, 2018)
Smart Connected Products
Strava is a social fitness application which provides with various features such as tracking and
monitoring the running and cycling schedules, sharing and connecting with other athletes online
and exploring and competing with significant other users of the application (Porter &
Heppelmann, 2014). Smart Connected Products are the innovations made in a product to depict
greater connectivity of the products or the services with the external environment of the product.
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Opportunities and Threats Identified
The application of smart connected products at Strava’s existing business model will provide
with an oomph factor to the services provided by the Strava. The opportunities can be identified
as the development of new products and services. The social fitness application with the
integration of smart connected products is provided with the opportunity to develop new services
such as tracking of the cyclers and runners in the unknown and outskirt areas of the paths and
routes (Porter & Heppelmann, 2015). The opportunity can also be identified as the incorporation
of the new technology stack, which will enable the software of the applications to monitor the
internal environment and resolve the problems encountered internally.
Another opportunity that can be identified is the identification of own performance of the
software which was not possible previously due to limited internal accesses to the developer and
the software layers. In the existing business model for Strava, Smart Connected Products will
also depict the opportunity of generation of new data resources. It establishes for identifying new
and modified data resources within the product (Porter & Heppelmann, 2015). As Strava
provides a feature to compete and socialise within the application, the generation of new data
resources can be identified. The traditional sources of data are discarded by the products itself
which have resulted in lower costing for data collection and manipulation or interpretation.
The technology of smart connected products, however, provides with various threats that may be
termed as adding of functionality that adds up the charges for consumers. The added features
such as tracking in remote areas, competing and challenging that are provided by Strava in the
existing business model with the application of smart connected products will increase the costs
for the consumers. As some section of the consumers observe no clear value proposition and
results in diminishing returns (Porter & Heppelmann, 2014). Another threat that can be identified
is increased security and privacy risk, the incorporation of smart connected products leads to
greater accumulation and collection of user data which often leads to the threat of security for the
privacy and data leak. The development of smart connected products also leads to failure in
incorporating new competitive threats as the new entrants in the industry provide with offerings
products with smart and connected capabilities with connectivity and embedded software or
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greater performance-based business models that lead to reshaping and restructuring of the
industry and the competition.
Business Generation Model Canvas
According to Osterwalder and Pigneur (2010), the Business Generation Model Canvas provides
with nine building blocks to formulate and incorporate the business models according to the
smart connected products. The model includes a block of Customer Segments (CS) that
identifies the consumer segment of the organization, for Strava the identified consumer segment
is athletes and sport influenced personalities and individuals. The second block demonstrates the
Value Proposition (VP) which identifies the services developed by the Strava to serve and offer
for the consumers (Chesbrough, 2010). The Value Proposition for Strava includes the
development of fitness tracking and monitoring application with greater implication and
outcomes. The third block provides with Channels (CH) of distribution and delivery of the
products or services form the manufacturers end to the consumer end. Under the Canvas Model
of Osterwalder and Pigneur, the channels of distribution for Strava are virtual with the
application information and internet technology the services are provided to the consumers. The
fourth block for the model is Customer Relationship (CR), which for Strava is managed and
retained by the application of electronic Consumer Relations and Constructive Feedback
Optimization (De Jong & van Dijk, 2015). The fifth block manages for Revenue Streams (RS),
which classifies the plan and strategies to develop effluent progressive business strategies. At
Strava the business strategies include the application of Strava Premium, Strava for Business and
Metro as business model elements to foster Revenue Streams (Osterwalder and Pigneur, 2010).
The sixth block for Canvas Model depicts Key Resources (KR), defines the resources required to
furnish the business goals. At Strava the key resources required are the smart connected products
tools, techniques, technical know how to implement the technological development, finances to
support for long terms and heavy investments required, human resources with high technical
knowledge and enhanced interpretation of the technical aspects (Dudin, et. al., 2015). The
seventh block of the model is Key Activities (KA), which includes development in technology,
discovering the increased scope of operation and features that are entailed in the existing
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versions of the application emphasises on the competitors and the peer developmental activities
undertaken by the competitors.
The eight-block stands for Key Partnership (KP), the business models describe the activities
undertaken by the key partners in the business model and the activities that are to be performed
by them. For Strava the partners such as the Virgin Active Epic Battle, Weav Run, and the
Expresso develop challenges within the application for the users to accomplish the challenges
and compete with each other in order to score greater rewards (Chesbrough, 2010). The last
block in the Canvas Model stands for Cost Structure (CS), the business of Strava encompasses
various economies of scales due to the increased popularity of the application in the identified
and potential consumer base. The cost structure entails various variable and fixed costs such as
the technical costs, the cost of technical expertise, internet technology costing, software
development etc.
(Source: Osterwalder and Pigneur, 2010)
The Value Proposition Business Model
The Value Proposition Business Model focuses on products and services provided by the
organization. The value proposition focuses towards the value created by specific products and
services to the consumers (Zott, et. al., 2011). The value propositions can be termed and define
as the innovative technology to deliver better products and services.
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The Business Processes Business Model
The business process model defines for system engineering a discipline from engineering filed
(Zott, et. al., 2011). This focuses on interpreting the various business processes as different
functions of the project and establishes a greater link between the various business processes.
The future of Strava business under the scope of Smart Connected Products is witnessed to be
growing and developing. The scope of its business operations under the business model
generated by the guidelines of Osterwalder and Pigneur is assured to be diversified and
amplified.
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References
 Bocken, N. M., Short, S. W., Rana, P., & Evans, S. (2014). A literature and practice
review to develop sustainable business model archetypes. Journal of cleaner
production, 65, 42-56.
 Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long
Range Planning, 43(2–3), 354-363.
 Christensen, C. M., Raynor, M. E., & McDonald, R. (2016). What is disruptive
Innovation. The Encyclopedia of Human-Computer Interaction, 2.
 De Jong, M., & van Dijk, M. (2015). Disrupting beliefs: A new approach to business-
model innovation. McKinsey Quarterly.
 Dudin, M., Kucuri, G., Fedorova, I., Dzusova, S., & Namitulina, A. (2015). The
innovative business model canvas in the system of effective budgeting.
 Osterwalder, A., & Pigneur, Y. (2010). Business Model Generation. New Jersey: Wiley.
 Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are
transforming competition. Harvard Business Review, 92(11), 64-88.
 Porter, M. E., & Heppelmann, J. E. (2015). How smart, connected products are
transforming companies. Harvard Business Review, 93(10), 96-16.
 Strava, 2018. About Us. [Online]. Strava. Avaiable at: https://www.strava.com/about.
[Accessed on: 17.04.2018].
 Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and
future research. Journal of Management : JOM, 37(4), 1019-1042.
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