Developing alternative business models for smart infrastructure: a UK case study

Abstract

There is a need to identify as wide a range as possible of sources of value arising from a given infrastructure development when creating infrastructure business models. The need for novel, more effective business models is being driven by the UK government’s very considerable programme of infrastructure investment, coupled with a reduction in the supply of public capital over recent years and a corresponding increase in the demand for private project finance. To support both public and private infrastructure investment, new business models are required that can internalise the positive externalities associated with public goods. Based on an exploration of the application of soft systems methodology to business model creation, this paper proposes a generic six-step methodology for identifying a wide range of potentially value-generating opportunities and proves its efficacy by applying it to a case study of Tyseley Energy Park in Birmingham, UK. The findings from the methodology, which treats a newly constructed, refurbished or upgraded infrastructure system as a ‘business’, can then be used to broker the necessary collaboration with all relevant stakeholders – those who have a stake in the business – to refine the business models and ensure that they are resilient in the face of contextual change.