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Managing the Transition to a Dual Business Model: Tradeoff, Paradox, and Routinized Practices
Building on an in-depth study of a manufacturing company’s shift from a product to a product-service business model, Visnjic et al. (2021)…
Building on an in-depth study of a manufacturing company’s shift from a product to a product-service business model, Visnjic et al. (2021) explore how single-focus companies transition to a dual orientation. Conceptually, there is a distinction between companies with the inherent duality (e.g., born dual) and companies that gradually transition to a dual business model. The second group of companies needs to learn how to deal with the emerging tensions and develop routinized practices to enable a successful transition to a dual business model.
Although companies generally use highly sophisticated practices to manage a dual orientation, those that transition to one successfully start with less sophisticated practices. Early on, the use of simple tradeoff practices, which maintain the product and service logics, helps single-focus companies explore the emergent tensions that their transition to a dual orientation causes. Conversely, adopting more sophisticated practices at this early stage overwhelms them. At a later stage, these companies’ growing understanding of the tensions allows them to experiment with more comprehensive paradox practices that transcend the product and service logics. Conversely, maintaining simple practices at this stage prevents them from gaining the solution experience required to complete the transition. The evolutionary process culminates in sophisticated routinized practices that institutionalize recurrent tensions’ solution, while allowing for further experimentation to deal with new tensions. The different practices’ appropriate sequence and pacing during the evolutionary process facilitate companies’ transition to a dual orientation.
Visnjic, I., Jovanovic, M., & Raisch, S. (2021). Managing the Transition to a Dual Business Model: Tradeoff, Paradox, and Routinized Practices. Organization Science. doi: https://doi.org/10.1287/orsc.2021.1519