SECOND CYCLE, 30 CREDITS
,
STOCKHOLM SWEDEN 2020
Innovations in the business model
- Leapfrogging competitors in the
Swedish rental housing market
ANNA ZAKIPOUR MAHMOUDI
ARSHAM ATIGHECHI
KTH ROYAL INSTITUTE OF TECHNOLOGY
,
STOCKHOLM SWEDEN 2020
Innovations in the business model
- Leapfrogging competitors in the
Swedish rental housing market
ANNA ZAKIPOUR MAHMOUDI
ARSHAM ATIGHECHI
KTH ROYAL INSTITUTE OF TECHNOLOGY
COMPETITORS IN THE
S
WEDISH
R
ENTAL
H
OUSING
M
ARKET
Anna Zakipour
KTH Royal Institute of Technology
Arsham Atighechi KTH Royal Institute of Technology
Master of Science Thesis TRITA-ITM-EX k KTH Industrial Engineering and Management
A dilemma that has plagued the rental housing market (RHM) in Sweden is the lack of innovation and companies’ ability to disrupt the market. For start-ups with scarce resources, this becomes further problematic as they become limited in how they can approach disruption. In this study, the possibilities of reaching disruption, or further improving innovation within the Business Model (BM), is studied through the BM Canvas framework. Furthermore, action research was utilized, together with a case study, to create a realistic BM. A qualitative research approach was used with 17 interviews conducted amongst users of already existing platforms in the Rental Housing Swap Market (RHSM), namely the, landlords, politicians and academics within the field. This resulted in two subsequent themes being identified: building incentives for key partners to scale quicker and that a low resource approach requires a highly creative solution. These two themes indicate that if resources are available, innovating the BM through all the BM blocks creates better opportunities for an improved platform. Additionally, while both start-ups and incumbent firms can turn to BM innovation for disruption, the success rate is vastly different for the two. The stage of where a start-up is will determine the difficulty of BM innovation. However, if resources are unavailable, which is the case for some start-ups, it is seemingly better to turn to radical innovation through the use of key infrastructure partnerships – allowing new paradigms to emerge as a result. The results from this study implicate that there are possible gaps within BM innovation that should be studied further. More specifically, how the BM blocks should be prioritized and the differences between the prioritization among different industries.
Ett dilemma som har besvärat den svenska hyresmarknaden är bristen på innovation och förmågan för företag att inträda den redan etablerade marknaden, vilket blir en förhöjd svårighet för nystartade bolag vid ett tidigt skede där det finns väldigt sköra resurser. Denna studie undersöker möjligheterna för en lansering som kan störa marknaden med hjälp av innovation av affärsmodellen där ramverket BM Canvas har använts. Forskningen har bedrivits med hjälp av aktionsforskning och ett tillvägagångssätt av en kvalitativ studie där 17 intervjuer utförts med användare på existerande plattformar i bytesmarknaden, hyresvärdar, politiker och akademiker. Resultatet indikerade framställningen av två teman: att bygga incitament för partnerskap med nyckelaktörer för att skala upp snabbt samt att ett kreativt tillvägagångssätt är nödvändigt om det finns låga resurser i bolaget. Studien illustrerar att en ömsesidig anpassning av alla bropelare i affärsmodellen är nödvändiga för att uppnå bästa möjligheter för en förbättrad plattform. Trots att både nystartade bolag och etablerade företag kan vända sig till BM innovation för disruption så varierar deras framgång mellan de två olika typerna av företag. Om det däremot inte finns tillräckligt med resurser, vilket är en sannolik position för ett nystartat bolag, skapar man bättre möjligheter för radikala innovationer genom användningen av innovation inom infrastrukturen av affärsmodellen som skapar nya paradigm att uppstå som resultat. Resultaten av denna studie visar på att det finns potentiella förbättringsområden inom ämnet av BM innovation som bör studeras vidare i framtiden. Mer specifikt, om hur de olika BM blocken bör prioriteras och hur denna prioritering varierar mellan olika industrier.
1 Introduction 1 1.1 Background . . . 1 1.2 Problem Formulation . . . 2 1.3 Purpose . . . 2 1.4 Research Questions . . . 2 1.5 Delimitations . . . 3
2 Current state of the Rental Housing Market 4 2.1 Tenants of the RHSM . . . 6
2.2 Service Providers in the RHSM . . . 6
3 Literature Review 8 3.1 Digital Platforms Services and Building User Volume . . . 8
3.2 Technological Paradigms in the RHSM . . . 11
3.3 Business Model Innovation . . . 13
3.4 Business Model Canvas . . . 14
3.4.1 Infrastructure . . . 15
3.4.2 Offering . . . 16
3.4.3 Customer . . . 17
3.4.4 Finances . . . 19
3.5 Discussion of Literature . . . 20
3.6 Summary of the Literature Review . . . 20
4 Methodology 22 4.1 Research Design . . . 22 4.2 Research Approach . . . 22 4.2.1 Action Research . . . 23 4.3 Data collection . . . 24 4.3.1 Sampling . . . 25
5 Results 31 5.1 BM Canvas of the Comparative Company . . . 31 5.2 The Case of Cribly . . . 33
6 Discussion and analysis of results 39
6.1 Building Incentives for Key Partners to Scale Quicker . . . 40 6.2 A Low Resource Approach Requires a Highly Creative Solution . . . 42 6.3 Key Takeaways . . . 44
7 Conclusions 45
1 Graph showing the number of changes of apartments made by each respective age group in
the year of 2019. . . 4
2 Simplified Multi-Sided Platform . . . 8
3 Matrix of Price and Quality . . . 10
4 The nine segments of a BM Canvas . . . 15
5 Illustration of the abductive research approach . . . 23
6 Examples of the wire-frames . . . 25
1 Data from projected annual need and completed constructions in Sweden . . . 5
2 Different active companies within the industry- Spring 2020 . . . 7
3 Table of interviewed stakeholders with their respective reference ID . . . 26
4 Simplified BM Components for the comparative company . . . 32
5 List of contextual facets in which addressed new result categorised by the BM blocks . . . 34
6 Simplified BM Components for the case company . . . 36
7 Pricing Model Cribly . . . 38
To start with we want to mention that the reasoning for the two different, but similar, front pages is due to the authors have participated in two different degree programs. One being information and communication technology, and the other being mechanical engineering. However the thesis was done in the school of industrial engineering and management at KTH.
Throughout the journey of completing this thesis, multiple people have provided insights, comments and general feedback which has led to the improvement of this thesis. First and foremost we would like to thank our supervisor, Niklas Arvidsson. His comments have been nothing short of genius, and provided fundamental direction when we were lost or stuck. Without the insight provided by Niklas, this thesis would have been very difficult to complete.
1
Introduction
1.1 BackgroundOver the past decades, multiple start-ups with a disruptive innovation has emerged throughout the ICT industry. Companies, such as AirBnB, have utilized new technology based on old concepts and are known as a company with a disruptive innovation (Christensen et al., 2015; Guttentag, 2015). The technology that has been utilized is known as a Multi Sided Platform (MSP). MSPs, much like old market places, act as a tool for multiple parties to interact with each other. The key concept in these platforms is the ability to pair end-users with each other which, in turn, requires a high volume of end-users (Caillaud & Jullien, 2003; Evans, 2003; Hagiu & Wright, 2015).
Sweden, as a country, is known to be in the forefront of innovation where successful companies have emerged from different industries, such as Spotify, IKEA and Volvo (Swedish-Institute, 2018). However, the success rate is identified to be lower in industries were there are incumbent firms occupying the industry with a monopoly. In that case, companies will find themselves with their backs against the wall and companies in their early stages will have a more difficult time to enter and, eventually, disrupt the established market (Tidd & Bessant, 2018).
Innovation can come in many different forms, traditionally, the focus of innovation has been on product or process innovation. Some authors, on the other hand, argue that innovation can come by innovating the BM. To do so, a product or service should surround itself with the correct corresponding BM s in order to take the product to the next stage (Amit & Zott, 2012). Achieving the correct BM, is not straightforward and may require long and extensive testing. However, by evolving a BM in an authentic environment and test it on a customer segment, companies will be able to more effortlessly develop a new BM and create new thinking’s that lead to innovation (Chesbrough & Rosenbloom, 2002). Some companies will find it more difficult than others to turn to BM innovation, specifically start-ups who may not already have an established BM (Chesbrough & Rosenbloom, 2002).
One industry, that is plagued by low innovation, is the Rental Housing Market (RHM) in Sweden. In the RHM, Bostadsförmedlingen, a municipality owned agency, assists tenants with finding residencies (Bostads-förmedlingen, 2020). Through this agency, Swedish citizens can also opt in to a queuing system and after a certain amount of time in the queue, a potential place of residence will be offered (Bostadsförmedlingen, 2019). However, Sweden has seen an increasing number of citizens entering the rental housing queue while there has been a lack of construction of new apartments to meet the housing demand and, as a result, the queue times have been increasing annually (Bostadsförmedlingen, 2019; SCB, 2019). Furthermore, the market is heavily regulated and incumbent firms have had a firm grip on the market and its residents (Lind, 2017).
an MSP which utilizes the law to allow their end-users to exchange leases amongst each other. Compared to other existing platforms, this firm has achieved the highest number of users. A reasoning to their successful history can be the fundamental factor of having a large user-base which lead to end-users more easily finding a potential match (Caillaud & Jullien, 2003).
For companies that are looking to enter, or are entering this, or any other established market, one key factor to gain competitive advantage can be to utilize BM innovation. One of the early start-ups companies that are looking to enter this market is the studies case company, Cribly. Cribly is looking to make an impact on the current market through BM Innovation. The BM can be defined as an overall structure used by companies and organisations to describe how the business or organisation works (Teece, 2010; Chesbrough & Rosenbloom, 2002). An early digital start-up that utilizes an MSP would naturally want to focus on BM innovation, namely on factors that increase the attraction of users (Amit & Zott, 2012). However, while the theory on BMs are plentiful their main focus is on traditional BMs and literature on digital BMs are lacking, especially towards MSPs and even more so for digital start-up companies.
1.2 Problem Formulation
The current state of the Swedish RHM is problematic due to resources within the community not being utilized properly. Issues such as empty apartments being unavailable for the public, people being unable to move freely and painlessly between apartments during a short time frame and finally, the market being dominated by large actors and incumbent firms. Furthermore, the process of building new housing, from applying for permission to starting construction of new apartments, is a long and tedious process which means that new apartments are unable to solve the lack of immediate housing. There are opportunities for innovation but emerging companies are having difficulties entering and disrupting the market due to the heavy regulations set by governmental entities. Moreover, the RHSM is in a similar market with large actors consisting of MSPs which creates the breach where BM innovation can be utilised to create different types of disruption. For instance, an MSP can focus on different areas of the BM to build a high user-base. However, for start-ups in their early stages, choosing a suitable BM is an already difficult task, let alone investing resources into discovering potential new BMs. Additionally the current literature for BM innovation is limited, especially for digital start-ups looking to penetrate an established market.
1.3 Purpose
The main purpose is to study potential solutions to the issues within the RHM. For instance, to increase the efficiency in the RHM and, as a result, simplifying the process of finding new apartments for tenants. The secondary purpose is to investigate the possibilities of market disruption within the Swedish RHM and to test the BM framework in this empirical setting.
1.4 Research Questions
1. Can business model innovation explain how a heavily regulated industry with a dominant actor can be disrupted, if so, how?
2. How can start-ups in the Swedish rental housing swap market utilize business model innovation in order to disrupt the industry?
1.5 Delimitations
2
Current state of the Rental Housing Market
This section will cover the current state of the rental housing market in Sweden and the companies that are active therewithin in order to provide further background for the reader.
Over the years, Sweden has been affected by issues regarding the availability of housing within the RHM. Queue systems have seen an increasing amount of applicants each year, especially in Stockholm, which has led to an all-time high queue time in 2019 (Bostadsförmedlingen, 2019; Boplatssyd, 2019; Boplats, 2019; SCB, 2019).
The two leading factors that are contributing to the current state of the market are; the amount of new housing being constructed and changes in existing housing stock (Boverket, 2014). One estimation showed that 1.5 million people changed their living location under 2019, and is based on changes of addresses in the civil registration (SCB, 2020). This means that any type of change in the registry, even if it is between two houses owned by the same person, will still count as an addition to the number of times someone has moved. Figure 1, presented in the following page, shows the age groups as to when moving is the most common and illustrates that age groups 20-24 and 25-29 moves more frequently compared to older age groups.
Figure 1: Graph showing the number of changes of apartments made by each respective age group in the year of 2019.
Table 1:Data from projected annual need and completed constructions in Sweden (SCB, 2020a; Boverket, 2019)
Projected annual need New accommodation 64 100 2017 2018 2019 48 227 54 876 56 100
Moreover, Statistiska Centralbyrån (SCB) claims that the number of inhabitants in larger cities are steadily growing, while the number of apartments that are being constructed hit an all time low in 2019 (SCB, 2019). This has directly affected the living standards in the bigger cities. Residents are unable to find temporary residencies in a reasonable time frame. As not all residents are looking to invest in permanent housing or do simply not have the financial support to do so, renting becomes the only option. Even though the rental apartments are in high demand, some of them are still standing vacant which also impacts the economy negatively as the vacant apartments becomes a loss of resources (Wilhelmsson et al., 2011).
According to Boverket, the bigger cities; Stockholm, Malmö and Gothenburg have been affected more by the projections presented in Table 1 (Boverket, 2019). In the long term, Boverket estimates that there needs to be an increase of 75% in the amount of construction for the bigger cities (Boverket, 2019). However, this is not a short term solution. In order to solve this issue in the short term, the current housing arrangements need to be better utilized. While Sweden does have a large amount of housing available, it is not correctly utilized and fundamental changes as to how it is utilized could provide a short term solution. (Boverket, 2014) This leads to the question; why are the current resources not utilized properly? One potential reason is that the industry of rental housing is heavily regulated (Fritzon, 2020). General topics regarding leasing of apartments and other premises are mainly controlled by the rental legislation (in Swedish: Hyreslagen). The legislation covers a variety of areas, such as topics regarding leasing of apartments and other premises. Another legislation that affects the RHM is the legislation regarding rent control (in Swedish: Hyresreglering), which regulates the amount of rent a landlord is, legally, allowed to ask for (Riksdagen, 2019a).
As mentioned in section 1.5 this study will focus on the market for swapping leases. One legislation that covers this more in detail is often referred to as the swapping law (in Swedish: Byteslagen). In short, the ruling allows for swaps of leases to occur if certain conditions are fulfilled (Riksdagen, 2019a). However, due to requirements set by landlords on their tenants, some landlords may indirectly intervene when a swap is about to occur by, for example, by ignoring the request of making a swap. As a result, it leads to stretched waiting periods which contributes to lock-in effects (Anderson, 2009).
2.1 Tenants of the RHSM
In a report provided by Cribly, different reasons as to why people want to swap apartments with each other can be identified (Cribly, 2019). These can be divided into the following four categories functional, social, emotional, pains and gains. In short the result of the pains and gains, or the opportunities and the obstacles, of the RHSM in order to facilitate a swap are presented below with the pains presented first.
• Struggles with the landlord. The landlord, is not always keen on allowing each individual tenant to leave their apartment and bring in another unknown or not proven tenant.
• Users getting cold feet after establishing contact and planning a swap with another end-user. Some users cancel the swap in the last stages of the process due to a change of heart regarding the other apartment.
• Some concerns cover the issue of time while using these services. Some users experience that a lot of time is invested into this type service.
• Not every user is entirely truthful in their ads, and may present falsification which leads other end-users astray in their apartment hunt.
• Each user has varying criteria for making a swap. It is not always certain that one end-users apartment fulfils all the criteria of another end-user and vice versa. This leads to issues when establishing first contact amongst end-users.
• Financial limitations adds to the problems of the RHSM. Services within the RHSM are expensive, which puts financial strain on the end-users.
The gains were presented as a result if a swap was facilitated which was conducted from users that had a positive experience from a swap:
• The process was executed smoothly and both end-users fulfil each others criteria. • The accommodation exceeds the ad during a viewing of the apartment.
• User receives compliments for their accommodation. • When the new resident is located in a more preferred area.
2.2 Service Providers in the RHSM
Table 2 shows five companies that are currently active within the industry of the RHSM (Lägenhetsbyte, 2020; Lossa, 2020; BytBostad, 2020; Hyres&Bytes, 2020).
Table 2: Different active companies within the industry- Spring 2020
2020). The subscription based model offers their users to pay a monthly payment in order to use their service, and some of the companies provide different prices for each month. For example, by staying subscribed for multiple months at a time, the user can pay a lower monthly price (Lägenhetsbyte, 2018). This means that if the end-user is on the site for longer periods at a time the company will have a guaranteed revenue. One start-up company, named Cribly, is looking to disrupt the RHSM with the vision of improving the situation of the RHM in Sweden (Cribly, 2019). The company is looking to use innovation strategies and BMs as a tool to better understand the method of entering an established market. Their vision is to increase people’s freedom of choice within the rental housing-sector and as a result, mobilize it. Cribly was founded by three students at KTH and joined the KTH Innovation pre-incubator program in 2020 with the goal to launch in the third quarter (KTH-Innovation, 2020). The authors of this study are two of the co-founders and this relationship and its impact on the study will be further discussed in section 4. Cribly’s main value proposition stems from their platform, where they want to find ways of incentives swaps for lease holders and real estate owners through automation and reduction of risk for everyone involved (Venturecup, 2020). The benefits can be broken into two areas of platform functionality and company network effects. The main goal of the service is to minimize the time a user spends on the platform until a swap is facilitated. Secondly, there have been discussions regarding the different goals of network effects for Cribly as their growth can be used to create a structure for incentives based around swaps.
3
Literature Review
This section presents literature regarding digital platforms and related components to a technical platform, which is required in order to understand how a platform achieves success. This leads to the other theories presented, namely the technological trajectories and paradigms. The RHSM is an industry that has not been prone to new innovation, and in order to understand the fundamental reasoning as to why that is, and how companies can break free from these paradigms, the chosen theories provide essential information. This is followed by state of the art literature on BM Innovation and finally the given theoretical framework, BM Canvas. These two were chosen together, as the BM Canvas is needed to describe a BM completely and then how to approach the different segments through innovation.
3.1 Digital Platforms Services and Building User Volume
Digital platforms has had a large impact on society, where many different industries has been affected by the rapid development and trends of digital platforms. Platforms can now be found in multiple different industries, in many different scales and sizes. Furthermore, with the increasing development of intricacy for platform architectures, scholars and authors need to investigate the concept of digital platforms further by adding to the body of knowledge in different types of practical environments. (de Reuver et al., 2018) In this study the definition of a digital platform follows the definition proposed by Tiwana et al. (2010), who claim that a digital platform is a software that serves as a pipeline between other software, to allow communication and different functions through the platform. (Tiwana et al., 2010)
As seen in section 2, the RHSM is an established market, where clear actors are currently dominating the market. Christensen & Rosenbloom (1995) mean that a prevalent strategy when entering an established market, is to enter the market from an aggressive position. This can imply using high financial methods or other forms of intensive resources (Christensen & Rosenbloom, 1995). Through this solution it can be concluded that the main goal for companies within this industry is to build a digital marketplace, an MSP, where actors can communicate their intentions and effectively match end-users with each other.
The fundamental definition of MSPs require at the very least, two parties exchanging business on the platform, which has been illustrated in Figure 2. The platform acts as a mediator between the involved parties, where the different user groups can directly communicate with each other. Additionally, MSPs can connect more user groups together, in order to build a network of users, which all have the ability to directly interact with each other (Brouwer et al., 2015).
It should be highlighted that apartment providers can decline a suggested tenant if it does not fulfil their criteria. However regulations are mostly in the tenants favour which all tenants in the user groups do not necessarily know. The role of the apartment provider, regulations and governmental entities and their relationship to components in Figure 2 are further discussed in section 2, Current State.
The RHSM follows a specific trend as to how the service providers generate the fundamental value for their customers. This refers to the service within the industry, that allows the end-users to advertise their apartment to other end-users which, by definition, is an MSP. MSPs have been available in many forms, whether it is in a non-digital form of marketplaces where people interact and trade goods, or digital platforms where MSPs can provide a matchmaking service for users looking to, for instance, meet new people (Evans, 2003). Out of the competitors presented in Table 2, every service provided comes in the form of a digital platform that relies on an MSP with a large user-base to make business. (Lägenhetsbyte, 2020; Lossa, 2020; BytBostad, 2020; Hyres&Bytes, 2020)
Once there are multiple MSPs operating in the same industry and providing similar services as other platforms a multi-sided market (MSM) has been established where each platform now competes with other platforms in order to attract the largest user-base (Evans, 2003). When an MSM has been established, each platform will require different business strategies in order to beat the competition. One of the commonly used methods of dealing with the competition is using a different pricing model, i.e changing certain aspects of the BM (Evans, 2003). However, while the base service provided by each platform may be the same, the exclusivity of certain services come into play (Caillaud & Jullien, 2003; Evans, 2003).
In order for an MSP to be functional, the user volume is a fundamental issue that needs to be considered early on, where a large amount of user-base needs to be accumulated (Caillaud & Jullien, 2003; Evans, 2003; Hagiu & Wright, 2015). The strategy on how to tackle it varies from a case to case basis. If a company, that is looking to penetrate an already established market is backed by large amounts of resources, the main strategy is to enter the market aggressively (Christensen & Rosenbloom, 1995). By heavily investing in marketing, the company can quickly gain traction and achieve a high volume of users. Proper marketing is required for companies and without the financing to invest into marketing, companies risk having their product or services go unnoticed. This is especially the case for start-ups, which may not have any resources to use as a leverage point (Shih, 2016).
quality of a product and how the pricing can potentially affect the acceptance of potential adopters. Each quadrant uses a different strategy. (Kotler & Armstrong, 2010)
Figure 3: Matrix of Price and Quality
Depending on a companies decision of positioning within the matrix, further strategic action can be considered. There is not a clear need to attract a certain user group in order to disrupt the market and as such the relationship of the user group and pricing is not a deciding factor. However, if the company wants to include attractive apartments and have a growth strategy of a luxury brand, a premium strategy gives a higher level of quality and aspiration (Keller, 2017). In the bigger cities, there are multiple different user groups that can be of priority, in these cases, the pricing strategy can be used to attract a specific user group (Marinescu et al., 2010). For example, the pricing can be a flat fee for all users and those with highly attractive apartment pay a lower fee and vice versa. Kotler & Armstrong (2010) argues that the following strategies are the most commonly used strategies when looking into a new pricing model for a new product or service and is of importance to understand the companies future or current choice of revenue stream. (Kotler & Armstrong, 2010)
• Market-skimming pricing • Market-penetration pricing
Out of the two pricing models, one is more relevant for this study, which is the market-penetration pricing. This type of pricing model utilizes a low initial price on the product or service. This allows the market to accept the product offering of a company more easily. By doing so, a company will be able to build a user volume and, potentially, achieve a larger chunk of the market share. Traditionally, this type of pricing model builds on the fact that companies have the ability to provide a larger volume of production, effectively mass producing a product and as such reducing the overall costs. This type of pricing strategy is more effective in markets where the price of a product is more important since each competitor provides a similar product. (Kotler & Armstrong, 2010)
start-up cost and low additional variable costs for each user the BM should be adapted to this. Needless to say, since a high number of users is a key success factor. Furthermore, Wilson (2006) means that the revenue is not required to always come from the sales of products, instead the companies have the ability to turn to ad revenue to cover their costs (Wilson, 2006). By providing a free product, in the sense of a freemium BM, companies can utilize ads within their product to build ad revenue. As with the market-penetrating pricing model, the goal of choosing freemium BM can be to quickly achieve a large user-base and to retain those who use the product. This is a commonly used strategy not only when it comes to a freemium BM, but also in the case where companies choose to provide a trial version or a free version for users to try, with the purpose of them changing to the full paying version (Bawa & Shoemaker, 2004; Kumar, 2014; Wilson, 2006; Cheng & Tang, 2010; Lee & Tan, 2013; Faugère & Tayi, 2007).
If a company chooses the strategy of a freemium BM, the described pricing model above would be a combination of freemium and premium, giving access to a free base product to all users. The key concept of the freemium BM is supplying the users with a number of functions that are crucial to the application so that the standalone freemium application is functional. However, thee rest of the functionality can only be accessed through a payment wall (Kumar, 2014). This type of BM is not commonly seen within the RHSM, however, one company has successfully been using a freemium BM where the users can use all functionality for free, but with an ad based revenue stream and therefore, the company can not argue to utilize a premium model in conjunction with the freemium (Lossa, 2020).
The diversification of users in such a BM can be of value to study and the study done by Wilson (2006) showed an estimation of the diversification of users in a freemium and premium BM (Wilson, 2006). The estimation concluded that the majority of the user-base in a freemium application will consists of non-paying customers, at least in the case of advertisement based products or services. Roughly 95% of the users will be non-paying customers that are simply using the application for free. However, the other 5% of the user-base should then provide a large portion of the revenue stream (Wilson, 2006). Other authors further argue that once a large user-base is achieved the next step will be to increase the number of premium users and reduce the number of freemium users (Wagner et al., 2013). In order to do so, companies need to understand the value of each provided function and/or feature of their product/service (Kumar, 2014).
3.2 Technological Paradigms in the RHSM
process and product innovation because of time-slow processes for time-sensitive problems. As a result, turning to the RHSM becomes the only option (Unruh, 2000).
This leads to the clear technological paradigm within the RHSM, as defined by Dosi (1982). The definition of technological paradigm is that a set of procedures and an general outlook exist as well as specific knowledge related to the solution Dosi (1982). In the RHSM, the paradigm stems from the issue that there is a need to move, which is difficult when you are in the possession of a first hand contract. As a result, the only available option is then to exchange contracts with other tenants. The technical solution to this issue has been the usage of MSPs while other technological solutions have been lacking. Newer companies that emerge within the RHSM chose to turn to the usage of an MSP to solve the issue. Furthermore, there are external factors, such as no changes in regulation which further diminishes new technological alternatives. These factors have given birth to the established paradigm that consists of MSPs as described in section 2.
The established market is stuck in a technological trajectory, where the incremental development follows that of MSPs within this area (Dosi, 1982; Nelson, 1993). While MSPs have been heavily favoured within the RHSM, it should be highlighted, that MSPs are not a result of the existing trajectory within the RHSM, but instead has roots within old marketplaces where trading goods was common (Evans, 2003). The technological trajectory in the RHSM is a result of the evolution of innovation within the market. Historically, the swapping of apartments was done through the usage of ads within newspapers, where your accommodation could be described for others to view. This later evolved to the first apartment swapping site. The following companies that turned to this industry all chose incremental innovation of their service, rather then radical innovation which could further develop the MSP platforms in the market (Liebowitz & Margolis, 1995). While technological trajectory leads to incremental development, or continuous change, as explained by Dosi (1982), the end result is not necessarily always the best outcome. The negative outcomes of technological trajectories are potential lock-in effects and innovation that is derived from solutions that do not look at the full picture of the problem (Dosi, 1982). As such, the solution to this problem has been through the usage of MSPs. On that note, the RHSM is stuck in a technological trajectory that has lead to a possible solution that is not optimal. This, effectively, locks out other, potentially superior and disruptive innovations or solutions (Unruh, 2000).
Continuous change is the driving force for a technological paradigm. In order to break free from this trajectory a discontinuous change is required. Such as changes within regulatory, academic and economical variables combined with difficulties that are still looking to be solved in the existing trajectory (Dosi, 1982). This is further discussed by Arthur (1989) who asserts that once the development of a technology reaches a certain stage, i.e a dominant technology, other technologies will have a harder time entering the market (Arthur, 1989).
The government states, in their investigation regarding the RHM and RHSM, that there is a clear need for more regulations as long as there is a lack of residencies in Sweden. They further claim that these issues will be more prominent in the coming years, as there is a clear demand for more residencies, especially amongst rental housing (Regerinskansliet, 2017). On the other hand, experts within the area claim that the market is too regulated, which further creates a lack of structure within the industry (Nyquist, 2020; Grahn-Hinnfors, 2020). This leads to the issue of how innovation is approached in the RHM and RHSM. When new innovation is presented, it is more often than not brushed aside as it does not follow tradition within the industry (Axelsson, 2020). This aligns with the theory diffusion of innovations as presented by (Rogers, 2010) that stakeholders in the industry are laggards (Rogers, 2010). It is, however, important to note, that Rogers theory of diffusion of innovation does not have its origins within the ICT sector and was created for studying product innovation and not digital software. It does not have the characteristics as seen in the ICT sector or RHSM. Therefore, Rogers model does not include aspects related to MSPs but instead see each user as a single actor that are more or less independent from each other. However, in the case of an MSP actors are not independent, and are dependant on each other to be able to successfully use the platform.
3.3 Business Model Innovation
Since innovation is not as accepted in this industry in the form of product or process innovation, a suitable alternative could, potentially, be BM innovation. Additionally BM Innovation is argued to be a less expensive alternative to traditional innovation which is beneficial for an early startup (Amit & Zott, 2012). Traditional innovation tends to focus on product and process innovation, which is commonly seen amongst more established firms (Christensen & Overdorf, 2000). However, if a company is looking to disrupt a market, turning to BM Innovation can be a lengthy process and can take a long time due to the required amount of testing that is required (Chesbrough, 2010; Christensen et al., 2015). Nevertheless, innovative BMs are a key factor for a company looking to disrupt a market (Christensen et al., 2015).
For already established firms, the process of experimenting with new BMs can be costly. It is however not as costly as product or process innovation, as the change of BM requires multiple departments working together (Chesbrough, 2010). An incumbent firm is already generating revenue through an already proven BM. Chesbrough (2010) argues that this is the reason that incumbent firms may sway away from attempting to experiment with BMs. BMs are such an integral part of a business, and if the BM is already successful, stakeholders may be vary from attempting to experiment with it, as it could lead to a loss of revenue (Chesbrough, 2010).
Historically, an incumbent firm does not change or experiment much with a BM until a disruptive competitor emerges that may have already tested a new BM (Christensen et al., 2015). This is further echoed by Doz & Kosonen (2010) who claim that even though some companies are very successful for a long time, their success could suddenly start deteriorating. If the business continues using the same BM for a long period of time without adapting to change, the business will be affected negatively (Doz & Kosonen, 2010).
Experimenting with a BM in the form of BM Innovation is claimed to be a less expensive alternative compared to traditional innovation, in the form of product and process innovation. This implies, that for companies with lower resources available, or a start-up that is about to enter the market, turning to BM innovation may yield positive results. Furthermore, mimicking a BM together with a product or process is much more difficult than simply mimicking a product. (Amit & Zott, 2012)
For a young company with low resources BM Innovation and where to begin can be a difficult task. For established firms, Chesbrough (2010) argues that a favoured alternative BM can only be derived by trying it out on a paying customer segment. By using a mapping tool, such as a BM Canvas, which is described in the following section, an alternative BM can be presented and then easily applied to the customer segment. The key factor here, is to apply the experimental BM in such an authentic environment as possible. Such as using the new BM on paying customers instead of an original BM. However, this may be troublesome for some companies compared to others. More specifically Chesbrough (2010) claims that the size of the companies is a determining factor. (Chesbrough, 2010)
Incumbent firms need to apply the BM to a paying customer segment in order to gain the highest level of success from the BM innovation. While start-ups may lack paying customer segments, it is still important to try emulating a paying customer base to the start-ups best ability. The closer a company comes to reality during experimenting, the better the alternative BM will evolve. Even results such as failed BMs should be used in future iterations, as this can be seen as an iterative process. (Chesbrough, 2010)
Within the RHSM, there has been a lack of observed successful BM Innovation. There are large similarities amongst the competitors, where the main difference can be seen within the value proposition. However, some companies have chosen to innovate within certain aspects of the BM. Section 3.4 breaks down the BM into multiple different building blocks. Blocks such as the revenue stream, cost structure and customer relationships are where the observed BM Innovation has been seen. For instance, LOSSA uses a freemium revenue stream by integrating ad usage into their service. Whereas Lägenhetsbyte allows users to test their product for a number of days before a user starts paying for their service. (Lägenhetsbyte, 2020; Lossa, 2020).
3.4 Business Model Canvas
Figure 4: The nine segments of a BM Canvas
In previous work of BM Canvas the segments have been grouped into four different sections depending on the overall theme of the block. The same connotation has been applied in this study, with the following blocks; infrastructure which includes Key Partners, Key Resources and Key Activities. Offering which includes the value proposition. Customers which includes Customer Segments, Customer Relationships and Channels. Finally, Finance which includes Revenue Streams and Cost Structure. (Osterwalder & Pigneur, 2010)
3.4.1 Infrastructure
The following section presents Key Partners, Key Resources and Key Activities. Key Partners
This segment covers different partnerships between different parties that are required for the fundamental business to be able to run. This implies that if you remove one of these key partnerships, the company will not be able to generate revenue, or the revenue stream may take a hit. (Osterwalder & Pigneur, 2010) For digital companies examples of partnership can include outsourcing for software maintenance that is seen as an essential resource for the business to move forward. By not developing and maintaining the software in-house the company can reduce risks and other uncertainties as well as focusing resources on other areas (Osterwalder & Pigneur, 2010). In the RHSM this could for example be governmental entities that create the possibility for swapping as well as landlords and property owners that accept or decline a swap as seen in section 2.
Key Resources
One clear example of key resources in the RHSM is the required employees and their competence within IT due to the digital nature of the services provided. If these resources are acquired through outsourcing, this would instead be a key partnership.
Key Activities
The key activities are those activities that are fundamental for the BM in any way, shape or form and can be divided further into activities within the following categories:
• Production
• Problem Solving
• Platform/network
Manufacturing companies tend to work closer with key activities related to production whereas consultancy firms work closer with problem solving. The final category, platform/network, is the more digital category where companies provide some type of platform or network related service, where the key activities will include developing and maintaining their platform. As the current services in the RHSM are MSPs they will relate more to the platform/network category (Osterwalder & Pigneur, 2010).
3.4.2 Offering
The offering section is concluded with the value proposition of the BM canvas. Value Proposition
Value Proposition implies the perceived value of a product, or service, for the customer. This can be both direct and indirect value. This means that value can come from multiple sources, for instance, a sense of feeling with a purchase can be considered as value (Thomke & Von Hippel, 2002). Even innovation within internal processes can add end value by improving flow within the company (Osterwalder & Pigneur, 2010; Hansen & Birkinshaw, 2007).
Previous studies around value proposition highlight alternative methods of creating value. One common alternative when providing a service or product similar to something that already exists, is to provide the same service or product but to a lower price, which then creates more value for the customer (Kotler & Armstrong, 2010; Osterwalder & Pigneur, 2010).
3.4.3 Customer
Customer segments, Customer Relationships and Channels are included in the Customer block and are presented in this section.
Customer Segments
Each customer segment varies between different companies and organisations. However, regardless of what company and what industry, the customer segment is the target group or groups that a company focuses on to create value for. It is up to the company to break down which segments that are important and where the highest value could potentially be generated (Osterwalder & Pigneur, 2010).
A company may not be limited to focusing on only one customer segment. Each segment can be broken down further by using four different types of segmentation (Psychiographic, Demographic, Behavioral, Geographic) (Kotler & Armstrong, 2010). Furthermore, different markets must also use varying segmentation techniques. For instance, the MSP is a niche case where there could be multiple customer segments, which the platform is looking to connect end-users with each other (Osterwalder & Pigneur, 2010).
The demographic customer segment may be considered the most popular and focuses on varying types of traits of the population (Kotler & Armstrong, 2010). These are typically the following:
• The age of the target group • Gender specific focus • Varying family traits
• Income, education and occupation • Religion, race and nationality
The next customer segment, the psychiographic segment, breaks down the segment into specific personality traits, division within a specific social class or the target groups overall lifestyle (Kotler & Armstrong, 2010). Psychiographic segmentation and demographic segmentation are very closely related (Lin, 2002). It could even be considered a subdivision of the demographic class. For instance, income, education, occupation and family traits can define your social class. Furthermore, within a specific demographic group their psychiographic traits may differ completely. When looking into marketing segmentation, companies need to be aware of the psychiographic traits of a specific demography (Kotler & Armstrong, 2010).
The penultimate customer segmentation, behavioral customer segment, focuses on the behaviour of the specific segment. For instance, the behaviour and feelings that are activated amongst customers when they use the specific product or service. (Kotler & Armstrong, 2010)
and psychiographic segmentation, for instance, specific areas may have certain class division (Kotler & Armstrong, 2010).
Within the RHSM, the main customer segments consist of a demographic customer segmentation where the age and income of the customer is of relevancy. In order to acquire a first-hand contract customers need to be at least 18 years of age (Riksdagen, 2019b). Additionally, landlords do vet their customers, this includes their income. Someone with a stable income is of lower risk for the landlords and, as such, will be more attractive. Finally, the geographic segmentation is also relevant, as a better location of customers’ apartments increases how attractive they are for other end-users.
Customer Relationships
Customer relationship is the next area of the BM canvas that is included in the Customer block. The commonly mentioned factors that decide relationships between customers and businesses are Customer acquisitionand Customer retention (Winer, 2001; Buttle & Maklan, 2019; Osterwalder & Pigneur, 2010; Kotler & Armstrong, 2010).
The choice of strategy and focus within customer relationship varies greatly depending on the market. For instance, already established markets tend to be more profitable to focus on retaining the customer base that a company has acquired. This is due to the fact that the amount of competitors are higher in established markets as compared to new markets. Since there are no or few competitors in new markets, it is more profitable to attempt to acquire a larger market share. Customers will have no choice but to turn to the few companies that are available (Kotler & Armstrong, 2010; Osterwalder & Pigneur, 2010).
The customer relationship and the followed strategies are different within the RHSM. A handful of the platforms focus on both customer acquisition and customer retention. However the platforms that use subscription models as their revenue stream could, arguably, have a strategy for customer retention since it increases the revenue. Naturally, a successful platform would increase the mobility and the users could swap thanks to the platform which, in turn, implies a low customer retention. This is due to users finding swaps and not needing to use the service any further.
Channels
Channels can be seen as the pipeline between a company’s customers and their product offering. The types of channels can be further divided into the following, Communication, Distribution and Sales.
Within the RHSM, the main channels used are personal computers and mobile services to access the platform digitally. Additionally, marketing channels that are used in the RHSM include LinkedIn, Instagram, Facebook, Twitter or blog-posts as well as traditional marketing services which are included under this category.
3.4.4 Finances
In this block the revenue streams and the cost structure is presented. Revenue Streams
The revenue stream is an integral part of every BM. It covers how a company generates revenue and how much revenue that can be produced using the current model. There are a variety of methods on how to generate revenue, such as: using a subscription model where the users of the service or product pay a fee on a reoccurring basis. Another method of generating revenue is the usage of advertisement, where costs can be covered with the usage of ads.(Osterwalder & Pigneur, 2010)
The revenue streams observed within the RHSM are presented in section 2. These are freemium with the usage of ads and a paid subscription based model with recurrent fees. These models and their respective prices can also be seen in Table 2.
Cost Structure
The cost structure of a BM describes two main different types of approaches towards expenses, although, there are cases where a BM can divert from the two cost structures. A business chooses to follow one type of cost structure, dependant on what type of value they are providing their customers. These two are value-drivencost structure or cost-driven cost structure. (Osterwalder & Pigneur, 2010)
In a value-driven cost structure, the expenses are not prioritised and are not considered to be the driving force of a business. Instead focus is shifted towards the goods offering. In these cases, a business can have higher costs, but as a result ask for a higher price from the customers. These customers are willing to pay the premium price for the product, which means that the costs can be higher.(Osterwalder & Pigneur, 2010) In a cost-driven cost structure, the goal is to have as low expenses as possible to maximize the profits. This can be done through a large variety of different methods such as outsourcing and automation. (Osterwalder & Pigneur, 2010)
3.5 Discussion of Literature
The study has followed an abductive research approach (see more under section 4 Methodology) which implies that some theories and literature were altered and adjusted based on the empirical data. Naturally, this has led to sections being added after and at the same time as the data collection. Therefor these parts of the literature can be shedded light on.
The theory and literature covered in section 3, consists of digital platforms and building user volume, paradigms and BM Innovation followed by the BM canvas. The BM canvas has held an integral part, which was used as the theoretical framework and analytical model to better understand and categorize the empirical data, as well as analyzing the different companies BMs and, thereby, be able to answer the research questions. Analyzing every aspect of the BM Canvas has been outside the scope of the study and only four segments are referred to in order to not delve into all details of the BM Canvas. These segments have been presented in this section as; infrastructure, finance, offering and customers. These subgroups were used as themes when discussing and analysing the results. Furthermore, the empirical data did not align or guide the study towards any specific BM, but instead, more towards different approaches that can be utilized.
As the data collection with the stakeholders begun, the results indicated that one of the main reasons for the users to go to the bigger platform was not due to some lacking functionality. The result implied that the users needed a large user-base for the service which led to adding a section about building user volume at a later stage. With this focus, the main point of interest for the theory, became theory regarding catching customers. In combination with the fundamental requirements of the MSP, where a large user-base is needed, the theory about MSPs become very fitting to the study.
3.6 Summary of the Literature Review
In this study, digital platforms are covered as MSPs which require multiple parties, as well as a large user-base in order to function. When multiple MSPs are active within the same industry, an MSM is achieved. In order to have a competitive edge within an MSM, companies can turn to varying pricing models to alter their BM. By altering the pricing strategy, a company can manage to improve their customer acquisition, and in turn, increase the user-base volume on their platform. The pricing strategies, discussed in this thesis are the following; Market-skimming pricing and Market-penetration pricing.
Specifically, the market-penetration pricing serves a better purpose when looking to build a user-base. The strategy focuses on a low initial price to attract customers. The choice of strategy is, however, directly affected by the company costs, and the BM needs to take this into consideration, for instance, higher cost start-ups may not be able to turn to market-penetration pricing. For those that can, alternatives such as freemium is an option, where the users can utilize a free version of a product and purchase further functionality.
4
Methodology
This section will present the methodology that have been used for data collection and analysis in order to fulfill the purpose of the study. The section is divided into subsections where firstly the research design is presented, followed by the research approach and the section on data collection.
4.1 Research Design
As the study puts digital start-ups in focus Cribly became a good option, due to the fact that it is a young company that has yet to finalize and launch their product (see more in section 2). The research design used a combination of two different approaches, firstly, an action research design was used, due to the complexity of the issue at hand. As this topic has not been thoroughly studied previously, in combination with the existence of a fundamental societal issue within the industry, action research became a good choice. Additionally, action research approaches real world examples in new ways and does not only address theory (Siggelkow, 2007). Secondly, an exploratory case study was used, mainly due to the lack of research within the field. This leads to the results given not being the only possible outcomes and answers to the research questions (Jupp, 2006). The primary source of data, consisted of interviews with stakeholders within or related to the RHM, as well as an early stage start-up. The interviews have mainly been conducted with users of the comparative company. This was done, mainly, to understand what they value in the platform which then, contributed to the BM Innovation and action research (this will be discussed further in the section about data collection and analysis). The results section of the case company was divided into three different iterations, where each iteration represented a testing phase of the BM. In each iteration, users were included and questions were asked regarding the different components and changes. Each iteration was concluded when interviews no longer yielded any new information that could change the direction of the BM. As it had reached saturation a new iteration could start which followed the same process. For the comparative company, the results were presented in the form of their BM.
4.2 Research Approach
In order to answer the research question, the concept of a BM and its components were used to understand user behavior and how to attract users. This is something which is crucial for an early start-up and MSPs entering an established market (Chesbrough & Rosenbloom, 2002). A qualitative research approach and case study approach is used to offer a better understanding and to give insights into reality. In this thesis, the key points of interest are the BM challenge of a start-up in its early stages in the rental housing market in Sweden (Yin, 2011). The goal was to shed light on the limitations of generalization of case studies and that the strength lies in the ability to develop practical and concrete context that has been empirically collected (Flyvbjerg, 2006).
Figure 5, where both the theories and empirical observations can impact the conclusions made. This type of approach is also known as Systematic combining by Dubois & Gadde (2002), who claim that this type of approach shines when it comes to producing new theory when working with case studies (Dubois & Gadde, 2002). It is further argued, that due to the issues with case study research, such as difficulties of generalization, the abductive research approach helps combat this issue by better understanding both theory, and the empirical data (Dubois & Gadde, 2002; Blomkvist & Halling, 2015).
As mentioned before, the case company Cribly is looking to build a high user-base by using a suitable BM. As the company is a young start-up within the RHSM the criteria mentioned in section 4.1 is fulfilled and is therefore a good option for utilising action research. The company is argued to be suitable to research for many reasons, but these are some key takeaways why the case will build rigorous value. Firstly, the company is active within the rental housing market and has a goal to change structural faults observed in the market. Secondly, it is a start-up company that is in its early stages about to design and launch their product in an established market. Finally, it is an MSP platform with the main issue of how to properly build a user-base for its platform. This will be attempted to be generalized in order to help other digital start-ups that want to enter an established market.
4.2.1 Action Research
Action research, participatory research or participatory action research are all names that refer to a specific type of research approach. While there is not one commonly accepted name for this type of research the fundamental definition is the same.
The basic concept of action research is slightly unorthodox as compared to traditional research approaches. The focus when using an action research approach is for the authors, or someone who is of interest for the study, to participate in some form, in order to gather results or data. In this study, the authors participated in Criblys day-to-day work. (Coghlan & Brydon-Miller, 2014)
Generally, action research studies tend to focus on problems that are commonly seen in society or an organization, by actively participating and combining the results produced together with theory (Stringer, 2013; Coghlan & Brydon-Miller, 2014). The reason why researchers turn to action research may vary, however, one of those may be that current theoretical advances may not be capable of providing a solution to the problem observed. The results provided through action research may not always have the possibility to be generalized, instead the focus is within one specific area (Stringer, 2013).
Within the case company, the authors were involved in different aspects. Mainly being active within areas such as product design, rapid prototyping, front-end development and during business development that included BM experimentation. However, their main involvement was in the development and testing of the platform. In total, roughly 480 hours went into the development of the platform and 80 hours went into the testing of the platform. The testing of the platform served as part of the data collection for this study. The development of the platform occurred together with the team at the case company, where the authors together with the team, built wire-frames as a testing platform. Some examples as how these were designed can be seen in Figure 6, these wireframes were designed in the prototype tool Figma together with UX-designers at the case company.
Furthermore, the usage of action research lead to an increase of validity during the data collection process. The prototype’s main focus was on the user experience and the functionalities there-within. By having a clear prototype, the users within the industry would better understand the importance of the value proposition, which in turn improves the data received regarding the value proposition and other aspects of the BM Canvas. As the authors were involved with the development of the case company in many different ways, the data collection for the case company was plentiful. This was a direct effect of the utilization of action research. By constantly being involved in the study, the authors experienced every aspect of the data, and not only asking questions that had been predetermined during the study. This means that the comparative company may have had a lacking data collection, compared to the case company. However, using action research in this sense, adds a methodological issue related to the authors bias and how to stay objective. However, the data collected through this action research methodology have been thoroughly presented in this thesis and analyzed in detail in order to keep objectivity as the main priority. This can be seen in the iterations where there has been uncertainties of certain elements in the BM, but they were still presented as is.
4.3 Data collection
Figure 6: Examples of the wire-frames
Finally, additional data was obtained directly through the case company. This data included data from the current state of the market, data such as different market share values, other data regarding business strategy and their view on the BM. This data came from multiple different meetings and an interview with the CTO of Cribly, in which the authors participated and observed. Furthermore, the case company has had additional data collected regarding the market by a third party, which included a report regarding competitors and the usage of services within the RHSM.
Table 3 shows the reference ID used to refer to each stakeholder, as well as their occupation. While each interview was held in Swedish each quote presented was translated from Swedish to English, in order to make the results more presentable.
4.3.1 Sampling
Table 3: Table of interviewed stakeholders with their respective reference ID
Reference ID \Description Length (mm:ss) Note CTO Cribly Chief Technology Officer
-Collected observations from a time-period of February-June Expert 1 Professor and research within real estate 59:58 + 40:31 Two separate interviews Expert 2 Researcher within real estate 60:26
Politician 1 Works within politics with questions regarding real estate 114:19 Politician 2 Works within politics together with a government owned landlord 38:06 Start-up 1 Young start-up that has entered a market with one larger actor present 24:32 Landlord 1 Landlord within the RHM 57:39 Landlord 2 Landlord within the RHM 48:16 User 1 User of existing platforms in the RHSM 45:12 User 2 User of existing platforms in the RHSM 42:01
User 3 User of existing platforms in the RHSM 94:32 Occurred as physical meeting User 4 User of existing platforms in the RHSM 25:29
User 5 User of existing platforms in the RHSM 19:03 User 6 User of existing platforms in the RHSM 29:14 User 7 User of existing platforms in the RHSM 31:47 User 8 User of existing platforms in the RHSM 28:30 User 9 User of existing platforms in the RHSM 23:45
are no set guidelines, or requirements for qualitative research when it comes to sampling. It is up to the researcher to decide on who to study and under what pretext (Bengtsson, 2016).
For this study, a variant of the purposive sampling strategy has been used. Each stakeholder within the sampling pool was selected based on their presumed knowledge within their respective field. The academics within the field of real estate were interviewed in order to receive a better underlying understanding of how the RHM and RHSM was built up. This was done to further improve the understanding of who the big actors are and what kind of fundamental issues and limitations that were currently active within the RHSM. Furthermore, an unbiased opinion regarding the state of affairs of current landlords within the RHSM was also crucial to understand how BMs and strategies could be designed. The academics, or experts, where both active in a similar field, however, one had been active within the field for a much longer time compared to the other. However, we do not believe this affected the data, as there were similarities in the results retrieved from these interviews.
The politicians were sampled in order to gain insight concerning lawmakers and regulations within the RHSM. This category of stakeholder came as an adaptation based on the results from the interviews with the experts. The politicians worked in similar positions, however, one worked as a politician in a governmental agency, whereas the other politician worked for a partly owned landlord. The results generated from these were also vastly similar, and therefore, it was deemed that the differences in work place did not affect the results.
Based on the results generated from this category, no other start-up company was included, as the results from this stakeholder did not add much to the results. This could potentially, have been coincidental, and this particular stakeholder could not provide any new data for the study.
Finally the largest sampled groups, users of existing RHSM platforms, which was of importance because they provide integral data regarding the BM and BM Innovation. As this sampled group could give suggestions and further understanding that could contribute to BM Innovation. The concluded data gained from the interviews provided a more valid BM Canvas and increased the studies validity when answering the research questions. These users and how to contact them were retrieved from employees at the case company, Cribly. All users where users of already existing RHSM platforms, such as the comparative company or other platforms presented in Table 2. However, these users had all been active on the platforms for varying lengths of time whereas the shortest being only 3 months and others being active for at least 6 months. The length of which a user was active on the platform was of importance for the study since the time-period could give more opinions or insights, for instance, concerning the attractiveness of an apartment. It should be acknowledged that, if these users are coincidentally included in the study, some of the statements in the results could have been overestimated.
For this study, one group that was lacking, that could have potentially added to the results, were other competing actors on the RHSM. For instance, the companies presented in Table 2 could have been included in this study. However, the building blocks from the BM was completed using other sources such as, different web pages and the active user-bases in the RHSM. While this may have provided less detail in certain areas of the BM, the overall result would stay largely the same and the authors do not believe it would cause any major differences due to saturation of the data.
4.3.2 Validation of the Study
The data collected in this study has been iteratively analyzed throughout the study. In order to limit subjectively, the data was triangulated with data from other sources such as data from other interviewees, internal data from the case company and observations gathered during the action research (Yin, 2014, 2012; Denzin, 2012). These sources also included secondary data such as articles, presented in section 3, which was collected via online databases such as Google scholar and KTH Primo. By using triangulation as a method of internal validity, the study becomes more rigorous and the results become more reliable (Gibbert et al., 2008).
those companies that are already established within the industry, but are not using BM Innovation to further improve their business.
As for the collected data the interviews had a large diversity because of the sampling process following purposive sampling (Maxwell, 2008). Such diversity in interviews has given a holistic view to understand the BM for the case company as well as other companies in the RHSM. For instance, the interviews from the other stakeholders in the RHSM improved the understanding of the existing network, while the users gave insight about features and the BM Canvas.
The reliability and validity of each source of data has been measured with different considerations. Within the category experts, the data provided was considered more rigorous due to the experience they have gathered from working within the field and their contributions to the body of knowledge following the approach of purposive sampling (Maxwell, 2008).
Furthermore, each interview was recorded and transcribed. To reach higher reliability the qualitative data was coded and structured following topic coding. This generally involves finding general themes, where data from each subject is stored under a corresponding theme. In order to categorize what data had been gathered and stated by whom, descriptive coding was used, where the reference ID was utilized. The themes for the topic coding was decided by reviewing the empirical data gathered and finding reoccurring themes that could be used as an umbrella term for multiple statements. These were the following: Infrastructure, Customer, Offering, Finance. (Richards, 2014)
As the research questions has been of broad nature the possibility of studying a companies success of implementing the resulting BM Innovation changes during the study’s time frame has not been possible. The period in which the company was observed was simply not long enough to validate the end result. Additionally, it could be argued that the research questions would require a large amount of data points in order to reach maximum saturation. However, in this study, which has used an abductive approach, the goal was to test the hypothesis; whether the BM Innovation could, potentially, be used in order to disrupt a market and tested iteratively. Therefor, the data that has been collected has mainly consisted of users within the market, as they have been the main driving factor in whether a market can be disrupted or not. By combining this with the action research approach, the empirical data has reached saturation.
The abductive research approach offered flexibility for the theoretical sampling. Because of the iterative process the theoretical relevance has been high and saturation has been achieved in terms of including a holistic viewpoint with the most important dimensions. The milestones for achieving theoretical saturation in this study was when additional data did not yield any new and essential information. (Glaser, 1978)
4.3.3 The Effects of COVID-19
