The PDMA Handbook of Innovation and New Product Development, 4th Edition

CHAPTER TWENTY-FIVE NEW PRODUCT DEVELOPMENT BY EXTENDING THE BUSINESS MODEL

Christer Karlsson and Thomas Frandsen

25.1 Introduction

New product development can take several alternative or complementary strategic directions. The company can improve and develop existing products, develop a new product generation or new product platform, or perhaps create something entirely new – a technological breakthrough. However, along with technological development, it is vital to consider the application, customer, and market dimensions and what the company does for the customer or user. The company may go further and not only offer the product and/or service but also participate in part of the customer’s process where its product and/or service is used within the customer’s domain. The company may run part of the customer’s operation in which it is an expert, and which is not the customer’s key business. These are ways in which the company may extend its business model, defined, and described in terms of a concept that entails three consecutive parts: value proposition, value creation, and value capture (Osterwalder and Pigneur 2010).

This chapter describes and develops the business model extension strategy, including first services and product performance, and eventually solutions for the customer. This strategy is more than business model development of the products and processes; extending ...