The value of system dynamics' diagrams for business model innovation

Abstract

PurposeSystem dynamics (SD) is emerging as a powerful approach to understand, analyse, simulate and predict complex and dynamic business processes. In particular, it is true in the process of business model innovation (BMI) and not only as a computational approach. Due to the visual and diagrammatic tools employed by SD, innovation managers overcome humans' mental limitations and improve knowledge management in the BMI. This paper discloses the value of SD's visual tools, i.e. causal loop diagrams and stock and flow diagrams, to contribute to the “Knowldege Visualization” research line, and promote the application of SD as a powerful approach to support decisions in BMI.Design/methodology/approachGiven the explorative nature and the “how” question driving the research, the methodology involved is a single, holistic case study. In particular, the case is about a business model (BM) diversification, in which an information and communication technology service provider has added to its existing business model a new BM based on a digital multi-sided platform, for passengers transportation.FindingsThe diagrammatic tools of SD, that is causal loop diagrams and stock and flow diagrams, allowed entrepreneurs to overcome the complexity of the business parameters concurring in the design of the BM.Originality/valueThe value of this research is in the exploratory approach and in the originality of the perspective by which SD is analysed: the visual knowledge perspective.