Value creation and value capture alignment in the shift to open business models

This study argues that the shift to open business models relies on aligning value-creation and value-capture activities through interactive processes that involve both provider and customer. Yet, little is known about how such processes unfold. To address these research gaps, this study examines how provider-customer relationships unfold by examining innovation processes for outcome-based services (OBSs). Data from two successful and four failed OBS relationships within the manufacturing and process industry delineates three phases in the shift to open business models – defining value potential, designing value delivery, and delivering value improvements. The success or failure of each phase stems from the alignment between value-creation and value-capture activities specific to that phase, rather than a focus on value creation in one phase and value capture in another. Stated more precisely, the process model shows that the provider and the customer engaged in OBS relationships interplay between: 1) revising the value-creation logic and assessing the value-capture potential, 2) formulating value-creation processes and constructing value-capture mechanisms, and 3) enhancing value-creation activities and regulating value capture. This OBS process model contributes to the literature stream on open business models and servitization by showing that both providers and customers need to be actively involved in managing the dynamic interdependencies and ensure alignment between value-creation and value-capturing activities in the shift to open business models and OBS.