Managing risks in business model innovation processes

Companies today, in some industries more than others, invest more capital and resources just to stay competitive, develop more diverse solutions, and increasingly start thinking more radically when considering their business models. However, despite the understanding that business model (BM) innovation is a risky enterprise, many companies are still choosing not to apply any risk management in the BM innovation process. The objective of this paper is to develop a better understanding of how risks are handled in the practice of BM innovation. An analysis of the BM innovation experiences of two industrial companies shows that both companies are experiencing high levels of uncertainty and complexity during their innovation processes and are, consequently, struggling to find new processes for handling the risks involved. Based on the two companies’ experiences, various testable propositions are put forward, which link success and failure to the way companies appreciate and handle the risks involved in BM innovation