12 Business Models Flashcards
What characterizes general-purpose technologies (GPTs) in licensing-based business models?
GPTs are broadly applicable foundational innovations that can be employed in many downstream applications. They allow upstream innovators to license their technology to various downstream specialists, enabling the creation of diverse products without the innovator needing all downstream capabilities.
How do general-purpose technologies help technology innovators capture more value?
By developing a technology with broad applicability, innovators can license it to multiple downstream partners. This reduces dependency on any single partner, increases bargaining power, and allows the innovator to capture more of the value created by the technology.
What is the main difference between traditional product-focused approaches and the GPT-based business model?
In traditional product-focused models, firms fully commercialize their technology directly for end-users. In GPT-based models, firms focus on developing and licensing general-purpose innovations to multiple downstream specialists who then tailor the technology to specific market segments.
How does the GPT-based model affect industry structure?
The GPT-based model can reshape industry structure by fostering more vibrant markets for intellectual property, enabling smaller upstream innovators to influence large downstream industries. Over time, these platforms can lead to new forms of collaboration, competition, and value creation networks.
Why are GPT developers less reliant on co-specialized downstream assets?
Because GPTs are valuable in many contexts, the innovator is not tied to a single specialized partner. They can license the technology to different firms serving distinct customer segments, thus reducing dependence on any particular complementary asset.
What strategic challenges do companies face when licensing general-purpose technologies?
Companies must convince potential licensees of the technology’s applicability, manage intellectual property rights, ensure adequate returns on licensing deals, and address the complexity of coordinating multiple downstream partners, all while anticipating the technology’s diverse potential uses.
How do GPT-based business models influence the pace and direction of R&D investments?
GPT-based models encourage upstream innovators to invest in more foundational, abstract scientific discoveries. Because these discoveries can lead to versatile technologies, R&D is not limited by one product’s requirements, allowing upstream firms to shape entire ecosystems rather than single products.
What role does business-model innovation play in navigating markets for technology?
Business-model innovation in this context involves pioneering new licensing and partnering arrangements, establishing governance mechanisms for IP, setting rules for revenue-sharing, and developing new complementary market-infrastructure services (e.g., intermediaries or standard-setting consortia).
Why might general-purpose technology developers invest in bridging strategies with user communities?
Engaging user communities (e.g., pilot tests with multiple downstream users) helps developers identify common functionalities and modularize certain features. This allows them to create standardized templates alongside custom solutions, optimizing the fit between broad capability and specific market needs.
What implications does the GPT-based approach have for long-term sector evolution?
GPT-based approaches can bring about unpredictable yet inevitable structural transformations. They may introduce new industry architectures, spawn previously non-existent markets for IP trading, and shift competitive boundaries, ultimately encouraging ongoing adaptation and new innovation forms within the sector.
