What Is Stopping Norwegian Firms from Innovating Their Business Models?
In a study on Norwegian companies, Krysta Alexa Singh and Associate Prof. Tina Saebi discuss the barriers that are holding back managers to re-invent their business model.
Companies that continuously search for opportunities to innovate and redesign their business model are found to achieve higher growth rates and return to market share. The need for innovative business models is especially relevant with regard to strengthening the competitiveness of Norwegian companies. With the onset of the “Fourth Industrial Revolution” (as it is referred to by some economists), we can expect an acceleration in global competition paired with increased digitalization and shifting consumer trends that will contribute to the need for new business models that take advantage of these ongoing developments.
Notably, many of the top 100 world’s most innovative companies are not known for their massive R&D spending or technological leadership (Saebi, 2016). What differentiates these companies from less innovative ones is their ability to incorporate innovative thinking into their business model design. Results from the recent Norwegian Innovation Index survey indicate that companies that are able to (1) deliver high-quality goods and services, (2) innovate on a regular basis, and (3) launch innovations that trigger active emotions are perceived as more attractive by customers, which, in turn, enhances customer loyalty towards the company (Andreassen, Lervik-Olsen & Kurtmollaiev, 2017a). However, “in a number of international rankings of nations’ innovativeness, Norway lags far behind its neighbouring countries Sweden, Denmark and Finland” (Andreassen et al., 2017b). More specifically, a recent survey among Norwegian companies showed that only a small percentage of companies had innovated their business model in the past five years (Saebi & Singh, 2015). This raises the question of why, despite acknowledging the importance and necessity of engaging in innovation, many firms struggle to do so.