Developing and manipulating business models applying system dynamics approach

Abstract

PurposeConsidering the significant necessity of organization's conformity with environmental changes and also the importance of predicting the result of managerial decisions, this research has been accomplished with the purpose of designing a dynamic business model. In today's ever changing business environment, the simulation of different decision making scenarios is obligatory for managers in order to create the possibility of studying the effects of decision results on business model (BM) components, interrelation of component and total benefits in an organization. Therefore, the purpose of this paper is to take advantage of the dynamic system approach as an operational, quantitative and flexible approach for business model simulation.Design/methodology/approachBased on this purpose, related literature was thoroughly reviewed and proportionate with the level of study and research approach, Business Model Ontology (BMO) was chosen. The model designed using the system dynamics approach and its structure was evaluated via expert judgment. In the next step, some scenarios were developed and executed to confirm the behavior of the model and also to evaluate the importance of applying the dynamic approach in business model simulation.FindingsThese results show that decision making for a BM change leads to complexities and dynamic behavior of business components and also other actor reactions which are usually nonlinear and complex. In this regard this paper suggests dynamic simulation utilization to predict and analyze the results.Originality/valueThe system dynamic approach has precedents in business studies; however, this research makes this approach operational in BM design and analysis.