Ecosystem thinking – business model evolution in hospitality field
Interest for academic research in Hospitality Field has grown in the past years. Globally changing business environment is challenging Hospitality Field businesses, lately several scholars have reflected on changes COVID-19 has introduced to the field (Kim et al.,2021; Zeng et al., 2020; Sharma et al., 2021). Pandemic has brought upon a new kind of limitations to business operations, survival mode has challenged customer centricity which has been in the center of value creation research on Hospitality field – new innovations have occurred. This has changed also business model innovation practices, policies encouraging the development of new ways of thinking have emerged (Breier et al., 2021; Gursoy & Chi, 2021; Seetramahan, 2020). Hospitality Field research is lacking full understanding of the potential of ecosystem thinking. Especially managerial implications are of interest as businesses are restructuring their business models due to changes in the business environment.
Experience economy operators have modified in agile manner business models in order to accommodate needs of customers. In Finland most radical negative impact on revenue of Hospitality field businesses was recorded in 2020, yet in 2021 (January to November) still a loss of 37% in revenue was recorded in accommodation business and 17% in restaurant business compared to similar timing in 2019 (Statistics Finland, 2022). This radical change in the business environment has forced companies to face a totally new disruption which is far more complicated and bears even longer lasting and more radical effects than the previous major crisis in 2008, the financial crisis (NoHo, 2021). This has brought upon understanding of the value and strength of co-operation initiatives in business.
Understanding beyond the company’s traditional organization boundaries increases the value that can be offered to customers and the suppliers. Business actions need to be thought of differently than before COVID-19, these new elements provide opportunities for stimulating new business models that concentrate on collaboration and sharing in collective actions. Business models improve the management of the business logic of the firm (Osterwalder et al., 2005; Shafer et al., 2005), but the importance of business ecosystems in value creation is not widely fully utilized within the Hospitality Field.
According to Moore (1993) central to business ecosystem thinking is to establish operational relationships in the future mindset. The aim of this paper is to introduce prospects and possibilities of Hospitality Field business ecosystems by introducing an ecosystem management action plan aimed to help company executives in the future as radical changes in business environment are likely to take place. Value of ecosystem actors needs to be seen from wider perspective – flexibility in business models is closely tied to several outer forces, such as regional rules, regulations and instability in the world economics due to hazards such as war conflicts.
Empirical research in this paper is based on data collected from interviews and a workshop organized with Hospitality Field company executives in Finland. Findings demonstrate that business ecosystem advantage is focused on problem-solving and value creation, flexible and evolving co-operation between ecosystem actors is of importance. Still some years ago ecosystems were thought to be relevant for only a few industries and regions, in the last two years dominant ecosystem players have been recognized. In the wake of the COVID-19 crisis also digital interactions are an important step-change in both business-to-business and business-to-customer activities as today consumers are looking for more end-to-end journeys across products and services. At the same time organizations are looking to rapidly reinvent their value proposition for the “next normal”. Strategic focus is needed and choosing the approach that best fits the organization is important. This enables unlocking the full potential of a business ecosystem strategy. Success of early ecosystem plays proved role that ecosystem strategies could generate real value, motivating new startups and incumbents to follow (Dietz et al.,2020)
Main author: Heidi Vähänikkilä
Co-author: Miia-Maija Vakkuri
Paper was presented in 3UAS Conference in 2022.
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