The ‘Pyramid model’ helps to tune your organization and business models to take advantage of technological innovations
Monetization of technological innovation necessitates adjustments to the organization, business model(s), and even ecosystems. How to make money with the innovation or how it contributes to profit generation must be clear. If innovation activity has been business need-driven, you might already have an idea of that. If innovation has been technology-driven i.e., you have developed or tested new technology to understand what could be done, you need to form an understanding of how to monetize it in your case.
Strategy advisor & Researcher,
Regardless of the driver of innovation, the prerequisite for successful monetization is an alignment of a business strategy and business model(s). When strategy and business model choices are done, it’s time to look at the ‘set of organizational capabilities’ needed to run the business and to meet the strategic objectives. For example, in a case of product innovation, you might need new or adjusted capabilities to commercialize and manufacture it, and to ensure that the customer gains the expected value. At the same time, you and your business partners need to be able to capture enough value that motivates to continue doing business.
The ‘Pyramid model’ is a framework to support this – often quite complex task to realize business benefits from different types of innovation (be it a product, process, organization, or business model innovation) and to monetary value of it. With the ‘Pyramid model’ the organization and its business model(s), where competitive advantage is potentially created, are broken down to a set of organizational capabilities and further into interconnected capability elements.
Depending on the type of innovation, it changes one or more of the capability elements. The ‘Pyramid model’ helps to identify required adjustments to interdependent capability elements to achieve targeted capability with expected outcomes, but also interconnected capabilities to gain business benefits on business model level and to ultimately monetize the innovation.
The ‘Pyramid model’ is expected to be of significant value to the practitioners when directing innovation efforts and designing value configuration, and organizations and ecosystems around it. For researchers it provides a novel framework for research serving the practice.
Hirvonen, Mikko H. (2022). Pyramid model – Conceptualizing an organizational capability to design IT investments. Proceedings of the 15th IADIS International Conference Information Systems. Virtual Conference 12-14 March 2022.