%0 Journal Article %J Technology Innovation Management Review %D 2014 %T Designing Business Models for the Internet of Things %A Mika Westerlund %A Seppo Leminen %A Mervi Rajahonka %K business model %K design tool %K ecosystem %K Internet of Things %K IOT %K value %K value design %X This article investigates challenges pertaining to business model design in the emerging context of the Internet of Things (IOT). The evolution of business perspectives to the IOT is driven by two underlying trends: i) the change of focus from viewing the IOT primarily as a technology platform to viewing it as a business ecosystem; and ii) the shift from focusing on the business model of a firm to designing ecosystem business models. An ecosystem business model is a business model composed of value pillars anchored in ecosystems and focuses on both the firm's method of creating and capturing value as well as any part of the ecosystem's method of creating and capturing value. The article highlights three major challenges of designing ecosystem business models for the IOT, including the diversity of objects, the immaturity of innovation, and the unstructured ecosystems. Diversity refers to the difficulty of designing business models for the IOT due to a multitude of different types of connected objects combined with only modest standardization of interfaces. Immaturity suggests that quintessential IOT technologies and innovations are not yet products and services but a "mess that runs deep". The unstructured ecosystems mean that it is too early to tell who the participants will be and which roles they will have in the evolving ecosystems. The study argues that managers can overcome these challenges by using a business model design tool that takes into account the ecosystemic nature of the IOT. The study concludes by proposing the grounds for a new design tool for ecosystem business models and suggesting that "value design" might be a more appropriate term when talking about business models in ecosystems. %B Technology Innovation Management Review %I Talent First Network %C Ottawa %V 4 %P 5-14 %8 07/2014 %G eng %U http://timreview.ca/article/807 %N 7 %1 Carleton University Mika Westerlund, D.Sc. (Econ) is an Assistant Professor at Carleton University’s Sprott School of Business in Ottawa, Canada. He previously held positions as a Postdoctoral Scholar in the Haas School of Business at the University of California Berkeley and in the School of Economics at Aalto University. Mika earned his doctoral degree in Marketing from the Helsinki School of Economics. His doctoral research focused on software firms’ business models and his current research interests include open and user innovation, business strategy, and management models in high-tech and service-intensive industries. %2 Laurea University of Applied Sciences Seppo Leminen holds positions as Principal Lecturer at the Laurea University of Applied Sciences and Adjunct Professor in the School of Business at Aalto University in Finland. He holds a doctoral degree in Marketing from the Hanken School of Economics and a licentiate degree in Information Technology from the Helsinki University of Technology (now the School of Electrical Engineering at Aalto University). His doctoral research focused on perceived differences and gaps in buyer-seller relationships in the telecommunication industry. His research and consulting interests include living labs, open innovation, value co-creation and capture with users, neuromarketing, relationships, services, and business models in marketing as well as management models in high-tech and service-intensive industries. %3 Aalto University Mervi Rajahonka, D. Sc. (Econ) is a Researcher at Aalto University's School of Business in Helsinki, Finland. She also holds a Master’s degree in Technology from the Helsinki University of Technology and a Master’s degree in Law from Helsinki University. Mervi earned her doctoral degree in Logistics from the Department of Information and Service Economy at the Aalto University. Her research interests include supply chain management, business models, modularity, processes, and service innovations. Her research has been published in a number of journals in the areas of logistics, services, and operations management. %R http://doi.org/10.22215/timreview/807