Technology and Innovation, Vol. 19, pp. 537-552, 2017 ISSN 1949-8241 • E-ISSN 1949-825X Printed in the USA. All rights reserved. http://dx.doi.org/10.21300/19.2.2017.537 Copyright © 2017 National Academy of Inventors. www.technologyandinnovation.org

TRANSFORMATIVE BUSINESS STUDIES: TECHNOLOGY TRANSFER IN THE SOCIAL SCIENCES

Magnus Gustafsson and Anastasia Tsvetkova

Åbo Akademi University, Turku, Finland

In order to successfully transfer research results of business studies to practical application, there is a need to produce knowledge that has practical relevance and is transferrable to new contexts. This, naturally, creates requirements for the research process and methodology. In this paper, the methodology for conducting transformative business studies is presented, which is based on a combination of the design science research paradigm, participative research, and controversy mapping inspired by actor-network theory. The combination of these research methodologies and paradigms forms a methodological basis for producing transferrable research results that concern larger organizational and social change. It allows approaching ill-defined research problems through design thinking and systematically validating and verifying research results with practitioners in order to ensure the applicability of results in practice. To illustrate the methodology, we utilize an example of a method for designing business ecosystems that was developed in a collaboration between Åbo Akademi University and the research-based con- sultancy PBI Research Institute. This method was created during a series of projects devoted to the biogas-for-traffic business and concerned the development of enabling business ecosystems for innovations. Due to the way the knowledge was recorded, it was possible to transfer this knowledge to new contexts, such as logistics and energy business.

Key words: Actionable knowledge; Controversy mapping; Design science research; Transfor- mative business studies; Technology transfer

INTRODUCTION such as those concerning organizational and social University technology transfer can be described change, face challenges in undergoing the same process. Simply put, not all research results can be as an organizational activity that transfers research patented and easily replicated in different industrial results, in the form of innovations or other knowl- applications. Nevertheless, the significance of the dif- edge, for the benefit of society. Most commonly, it is fusion of academic thought grows as society addresses accomplished through licensing intellectual prop- complex industrial and social challenges. This is the erty to commercial actors that are able to utilize the case for research results and solutions developed results in practical applications (1). This is a rather in academia that tackle a number of sustainability well-established process for the transfer of concrete challenges, for example, within energy and logistics technologies, but research results that are broader, domains. The main question we ask in this paper

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Accepted: July 3, 2017. Address correspondence to Magnus Gustafsson, Åbo Akademi University, Faculty of Science and Engineering, Laboratory of Industrial Management, Piispankatu 8, 20500, Turku, Finland. E-mail: [email protected]

537 538 GUSTAFSSON & TSVETKOVA is how business research should be organized and utilize an example of a method for designing business conducted so that it leads to a meaningful change ecosystems that was developed in a series of projects. of behaviors. This is a crucial question since not The biogas-for-traffic business was the context for any research will suffice. We thereby stipulate that these projects, and the main practical aim was to the success of technology (and knowledge) transfer design a business ecosystem that would enable the directly depends on the quality of the research results utilization of biogas as fuel in public and commercial produced and the research process used. transportation in a focal country. The theoretical aim Research, in general, is about producing new of this study was, in turn, to develop a method for knowledge. New knowledge means knowledge that designing enabling business ecosystems that could be did not exist before. But, for research results to lead applied in other similar problematic contexts, such to technology transfer, the results also need to have as introducing cleaner technologies in the some- a practical utility, and they must in some way benefit what rigid and institutionalized energy and logistics society (or a member of society). If the result lacks industries. practical meaning, then it cannot be transferred, and In the next sections, we describe the methodology it has limited practical benefit. Thus, for a successful for performing transformative business studies, which technology transfer, there is a need to ensure that is based on design science research, participative research results are relevant and valid and, at the research, and actor-network theory, followed by the same time, replicable in new contexts. example of how it was applied in the biogas-for-traffic We argue that the research results that are trans- case and which concrete research tools were used. ferrable need to be produced within a pragmatic or We further discuss the transferability of research actionable research paradigm, which we refer to as results produced in the exemplary research case and transformative business studies. In this paper, we conclude by outlining implications for researchers define transformative business studies as research and practitioners. within business and social studies that is induced by real-life challenges and leads to changes in business METHODOLOGY FOR TRANSFORMATIVE practices and larger social change besides producing BUSINESS STUDIES general theoretical knowledge on the phenomena in Design Science Research question. We further stipulate that certain research modes are more conducive for performing such Producing transferrable research results requires studies. In particular, design-oriented research, such a research process with transferability as its objective. as design science research in organizational studies Research, in general, can be classified in two different (2–5), intentionally produces results that can solve modes, reductionist analysis and purely descriptive. real-life problems rather than generate only explana- The former is found primarily in the natural sciences, tory or descriptive knowledge. Participative research which take “nature apart to discern and understand methods (6–11), on the other hand, facilitate ensuring its fundamental units” (25), while the latter is com- the relevance and validity of produced knowledge. mon for sciences describing social and cultural Finally, stabilizing the actors supporting or opposing phenomena, such as humanities. There is, however, a solution, inspired by actor-network theory (12–16), the third mode of research, which is not always is a crucial part of successful technology transfer. perceived as ‘pure science’ due to its applied nature— The combination of these research methodologies design science research (2,20,25,26). Design science and paradigms, we believe, forms a strong method- research (DSR) is the underlying paradigm in such ological basis for producing transferrable research disciplines as engineering, medicine, and computer results that concern larger organizational and social science because its aim is to create knowledge that is change, and, therefore, are particularly suitable for prescriptive and that leads to action with improved performing transformative business studies. results. While DSR is a natural research mode for the To illustrate the research process that we propose aforementioned sciences, the research results that for successful transformative business studies, we can foster greater sustainability improvements often TRANSFORMATIVE BUSINESS STUDIES 539

e : Comparison of the ree Modes of Research Science Hanities Design

Purpose Understand phenomena by Describe, understand, and Produce the systems that do uncovering causalities, critically reflect on the not exist yet, i.e., change the patterns, and forces that human experience of existing situations into desired underlie these phenomena phenomena ones

View of Representational: Constructivist and Pragmatic: knowledge • our knowledge represents narrative: • knowledge is in service the world as it is • all the knowledge arises of action • nature of thinking is from what actors think and • nature of thinking is descriptive and analytic say about the world normative and synthetic • nature of thinking is critical and reflexive

Character of Reductive analysis Descriptive Prescriptive (actionable) knowledge

Examples of Natural science Humanities Design and engineering based scientific (physics, mathematics, biology) (history, hermeneutics, upon diagnosis domains literature) (engineering, medicine, architecture, computer science)

Focus of theory Discovery of general causal Key question is whether a Does an integrated set of development relationships among variables certain (category of) design propositions work in a (expressed in hypothetical human experience(s) in an certain ill-defined situation? statements): Is the hypothesis organizational setting is The design and development of valid? Conclusions stay within “good,” “fair,” etc. new artifact tends to move the boundaries of the analysis outside boundaries of initial definition of the situation

Metaphor Life understood retrospectively Life as it can be

Adapted from (20); based on (3). require more than only engineering. A certain degree is in fact an event, a process: the process namely of of process, organization, and social engineering is its verifying itself, its verification” (32). Knowledge of necessary in order to ensure the improvement works this sort is able to support and motivate practitioners’ in practice and can be implemented by organiza- actions in order to achieve the desired goal. tions. Organizational and social sciences, however, This is in contrast to purely explanatory knowl- are far less familiar with design science although edge, which is able to answer the question ‘how to’ attempts to adopt this mode of research have been only by establishing general cause and effect rules or made (2,26,20). laws and extrapolating into the future. The difference DSR, as opposed to explanatory and descriptive between the three main modes of research and the modes of research, uses target systems and design knowledge produced within them is demonstrated propositions when defining the initial situation in Table 1. and urges people towards thinking how the system DSR is relevant for addressing research problems could be made to work (3). The main outcomes of where the underlying laws are not discoverable, too such research include the design proposition, i.e., complex to be reduced into a limited number of the desired outcome, and the knowledge of how to variables, or are even irrelevant (e.g., due to their achieve it (3) that can be transferrable to other similar high degree of conditionality). Sustainability chal- contexts. The truth of such knowledge can be assessed lenges, being an example of social challenges that in pragmatic sense; that is, as James puts it, “its verity require transformative business studies, fall under 540 GUSTAFSSON & TSVETKOVA this definition due to their complexity. Academia is that require transformative business studies responsible for producing research results that are are prone to institutional rigidity, uncertainty, not only of a descriptive and explanatory character organizational inertia, and lack of cooperation. but are also, and importantly, applicable, ‘actionable’ Thus, the change of attitudes and ways of work- knowledge that can put humanity on a path to sus- ing can be better achieved when the research is tainable development. done in cooperation with the key actors rather than through handing over the research results Participative Research to the practitioners for implementation after The second cornerstone of the methodology for the study is over. transformative business studies is the participative The involvement of practitioners can be achieved action research (PAR) mode, which can ensure the through employing both consultants and researchers relevance and applicability of research results and in the study as demonstrated in Figure 1. The role of thereby their ability to transform society. There are a the researcher in this process is to understand each number of methodologies associated with PAR, such of the problems inside the context (48) and, together as action research and clinical research. In this paper, with the consultant, generate actionable knowledge. we specifically focus on clinical research (8,38,40–45) The role of the consultant is to ensure the benefit of as the methodology for performing PAR (which we the client and those stakeholders deemed relevant refer to as PAR or clinical research or clinical inquiry for achieving a sustainable outcome. The researchers interchangeably) due to its focus on extant involve- and the consultants set the stage for problem solving ment of organizations as active research participants. (11) as the context evolves and new problems emerge. It builds on the idea of engaging in research activities This enables the practitioners to explore and act upon that are based on the needs of organizations and the the emerging knowledge, thus generating actionable co-creation of solutions in collaboration with said data (38). organizations. It allows not only the accessing of The collaboration between researchers and consul- sensitive contexts but also ensures the commitment of tants gives researchers access to rich data while giving the research participants to co-create valid knowledge clients access to new knowledge that is developed (9,39). The validity and, what is equally important, the and applied with the aim of improving the client’s relevance and actionability of the produced knowl- situation. The iterative process of research and appli- edge are ensured by studying social systems “as they cation, at the same time, allows for abstraction of react to experimental manipulation” (46). research results so that the knowledge can be applied The sufficient involvement of relevant practi- in other contexts to realize the benefit to society and tioners, we believe, is necessary due to the following the relevant stakeholders. Though practitioners have reasons: knowledge of the incumbent context, the role of the consultants and the researchers becomes central • Complex and ill-defined research problems: as new knowledge emerges and the project moves, When the target of the research is not clear, according to plan, into unknown territory. there is not only the question of how to solve The researchers here draw upon more general and the problem but also that of what the problem fundamental sources to bring insight to the emerging is, and the dialogue with practitioners helps knowledge landscape. This requires self-awareness obtain a multitude of angles on the problematic and reflection on the part of the researcher (7). The context. process is driven by a need for relevance in terms of • Need for change: When the purpose of the actionability, which makes the knowledge valid in a study is to trigger change in an industrial orga- pragmatic sense (32). Through participatory research nization, the involvement of the actors who are methodology, i.e., clinical inquiry, the researchers, to carry out or will be affected by the change is consultants, and practitioners create knowledge that necessary in order to ensure its success. is both actionable and generalizable. The validity • Institutionalization: Problematic contexts and relevance of this knowledge is measured in its TRANSFORMATIVE BUSINESS STUDIES 541

Activities Otcoe

Literatre stdies Identiying proeatic contet and potentia sotions Disseinated theoretica Pishing Veriying theoretica indings with acadeic conity knowedge

Participation in Pre-design o Identiication o Inpt to proe Researchers roe Ipeentation proects as sect sotion chaenges sotion atter eperts

Diagnosis o Norative Transerrae Knowedge prodction Envisioning otcoe proes odes knowedge Interace

Ipeentation Sotion Initia design Soving chaenges pan deveopent Sotion to cientssocia proes Coaoration Constants roe Constants with the cients Otaining inoration veriying rests with the cient

re Organization of a transformative business study and the role of researchers and consultants. actionability. The fact that the solution works is proof structure of elements that influence and form the in itself, and the more it works, the truer it is. problem at hand. One tool for understanding the actor-network in any particular context is to identify Actor-network Theory and Controversy Mapping and map the controversies and the combination of The development of the design proposition for programs and anti-programs forming the contro- a complex research problem can be equally depen- versies (14). The purpose of controversy mapping dent on economic, social, technical, physical, and is to identify the arguments supporting and oppos- political features, among other factors. To design a ing a system or a solution. Controversy mapping solution, none of these critical issues can be left out helps us understand how the opposing arguments because doing so might undermine the resilience (anti-program) and who holds them can be co-opted, of the solution as such. The design proposition is countered, or eliminated and how the supporting chosen based on the type of theory that is best appli- arguments (program) and who holds them can be cable to the model. In case no applicable theory is strengthened. The front line of controversy demon- available, the problem is approached inductively, strates whether the program or anti-program is focusing on why the theories do not solve the prob- prevailing and how the alignment of forces changes lem. Moreover, it is difficult to prescribe the success over time. As the issues are tackled iteratively, the of developing a solution based upon one set of fac- controversy front line between the program (p) and tors. At the point of transfer, the knowledge is part anti-program (ap) will shift (see Figure 2). In order of a complex socio-technical actor-network, which to achieve a functioning solution, the researchers and together forms the solution (12,35–37). consultants need to be able to enroll enough argu- To fully understand the (social) requirements of ments (p) on their side, strengthen these arguments, the solution, one needs to understand the complex and weaken and co-opt the opposing arguments (ap). 542 GUSTAFSSON & TSVETKOVA

associations etween actors

controversy front ine

sstittion of actors e changing actor e shiing actor network coalitions in network coalitions in favour of the programme the antiprogramme

re Exemplary controversy mapping diagram.

Controversy mapping is one tool that, as we pro- sustainable investments and projects. Sustainability pose, can be used for addressing the actor-network can be broadly understood as meeting the needs of related to a solution developed within transformative our generation without compromising the ability of business studies. It is deeply intertwined with the future generations to meet their needs (19). other two cornerstones of the methodology we pro- In this format, research and consulting is done pose in this paper because it aims at helping reach a hand in hand. Whereas the consultants can be good and “implementable” design proposition while considered results-oriented general practitioners, rooting it with the practitioners who are to imple- researchers participated in consulting projects as ment, affect, or be affected by the solution. subject matter experts. As consulting projects are led by consultants, it is the project manager who chooses EXEMPLARY ECOSYSTEM DESIGN RESEARCH which researcher to engage in the project. Researchers PROJECT and consultants also engage in a continuous dialogue, The method for designing business ecosystems, with researchers querying the consultants as to how used as an example of transferrable knowledge in this a certain phenomenon looks in practice and consul- paper, was developed within a series of projects that, tants, for example, asking researchers to elaborate we argue, were carried out as transformative business on a persistent phenomenon they have observed. studies. The projects were organized as a collabora- Consultants also apply the concepts previously devel- tion between academia (Åbo Akademi University) oped with the outcome fed back to research. Thus, (17) and a research-based consultancy (PBI Research the collaboration between researchers and consul- Institute) (18). tants is continuous and iterative in the PBI-ÅAU PBI Research Institute (PBI) is a research-based arrangement. management consulting company that collaborates The common feature of the projects that we use as with Åbo Akademi University (ÅAU) to develop an example in this paper was the interest in business new knowledge, which is then applied in practice. ecosystems in which the respective actors operate or PBI focuses on industrial investments and projects could operate. Besides solving actor-specific prob- especially in the transportation and energy sec- lems and producing respective research results, tors. PBI strives to adopt, transform, create, and the main scientific outcome of the projects was the implement new knowledge on how management method for designing business ecosystems. We argue practices may be improved in order to enable more that the research mode and methodologies utilized TRANSFORMATIVE BUSINESS STUDIES 543 during the research projects allowed us to develop are commercially available. Biogas is used to a large and transfer research results for practical use despite extent in Sweden, especially for public transport, the complexity and uncertainty associated with the waste handling, and in passenger cars. However, design of business ecosystems. While part of the biogas was not used in transportation in Finland, research results were case- and context-specific, the which is Sweden’s neighbor. Therefore, the goal of method and mindset for developing business ecosys- the project was to establish biogas for transportation tems were formulated on a more generic level so that in a municipality in Finland and then expand it to the method could be applied in multiple contexts. As other parts of the country. The research studied the will be demonstrated, the method was later applied challenges of green technologies with local economic in other industrial contexts. It is important to note benefits and their adoption in Finland. In doing so, that the application of the research results in practice the project team worked together with multiple actors in other cases, i.e., the technology transfer, did not in the ecosystem (see Table 2). stop the research process; the method for designing Throughout the process, the consultants tried to business ecosystems was further developed, and new solve the problems with adopting biogas as traffic aspects of the problem, as well as the solution, were fuel, while the researchers in the team were, at the discovered. same time, making observations about what kinds of Specifically, the series of projects related to the challenges the combined project team (researchers usage of biogas in transport (20–24). Biogas is meth- and consultants) was facing. ane that arises from anaerobic digestion of biomasses such as sewage sludge, manure, household waste, THE APPLICATION OF METHODOLOGY FOR or crops. Biogas can be produced as a by-product TRANSFORMATIVE BUSINESS STUDIES IN of the sewage treatment process. Biogas is a locally THE EXEMPLARY PROJECT produced renewable fuel that reduces local imports While no particular research question was ini- of fuel and refines local waste into transport fuel. tially identified, the biogas-for-traffic project started The technologies for using biogas in transportation with a general question: Why don’t green, potentially

e : Ecosystem Actors Involved in the Exemplary Ecosystem Design Project Roe in the ecosyste Ecosyste actors Biogas production and • Biogas producers distribution • Biogas and natural gas distributors • Other fuel distributing

Biomass supply • Farmers and their representatives • Waste management companies (including wastewater treatment)

Biogas consumption • Fuel users (transportation, delivery, waste management companies)

Equipment supply and • Suppliers of gas-driven vehicles maintenance • Equipment and facility suppliers (biogas treatment, distribution) • Engineering companies

Policy-making • Various departments of focal municipality authorities (environmental, transport, waste management), which represented the citizens • Relevant state-level governmental and non-governmental authorities

Financing • Funding and investment organizations

Research and • Research organizations (research in farming, transportation, etc.) benchmarking • Companies and municipalities that consume biogas in Sweden (for benchmarking and experience sharing purposes) 544 GUSTAFSSON & TSVETKOVA sustainable technologies such as biogas production problem or deduced from theory but can only be from waste and by-products of different industries get informed by problem specification and theory. Thus, traction in the market, and, particularly, in the Finn- theories in this case serve as instruments to explore ish transportation sector? The specific interest was in the problematic context and devise means to change understanding how an enabling business ecosystem it (32). could be formed. The choice was between studying The incorporation of DSR into the research meth- existing ecosystems retrospectively and inducing odology for transformative business studies was the how they were created or participating in actually first step for ensuring that the knowledge produced creating them. The main reason for choosing DSR at ÅAU is actionable at PBI and for its customers. over historic, explanatory, or descriptive research To achieve the relevance of the study, the bio- was the need for producing prescriptive, actionable gas-for-traffic projects relied on a clinical inquiry. knowledge, i.e., knowledge on how to tackle problems For this, both researchers from ÅAU and consultants generated from the process of tackling the problems from PBI were involved in the project. In certain and recording both successes and failures. More- cases, the same people acted both as researchers and over, existing retrospective studies on the successful consultants, but the roles and responsibilities differed development of industrial eco-parks shed light on accordingly. Importantly, the consultants’ role was to the success stories but were deeply rooted in local maintain an ongoing dialogue with the practitioners contexts (27–30). In practice, most of these eco-parks in order to diagnose the research problem and ensure appeared spontaneously (27,31), and thus the moti- the practical relevance of the produced solutions to vations and fine details of their development could this problem. be missed or simply forgotten when the descriptive Following the process presented earlier in Figure research about their organizational evolution was 1, the responsibility of researchers was to provide undertaken. theoretical insights while diagnosing the problem In the focal case, initially no concrete problem, and developing solutions together with the consul- such as lack of political will or lack of technological tants, thereby acting as subject matter experts. In innovation, could be pinpointed as a reason for strug- the focal case, their role was to bring the existing gles with developing a biogas-for-traffic solution in body of knowledge about business ecosystems and the country. The answer for the question could not biogas-for-traffic business into the research process. be found from prior studies because the question The consultants, on the other hand, were responsible was yet unknown. The problem needed to be found for developing the working solution that would solve ‘on-site’, which justified the need for the researchers the clients’ problems related to using biogas as traf- to be part of the team of consultants developing a new fic fuel. For that, consultants built a direct interface ecosystem in order to identify pitfalls and hindrances with the clients through actively involving them in as they occurred in real time. the project meetings, interviews, and workshops. Another reason for choosing the DSR approach This was necessary both for obtaining the first-hand was its emphasis on a creative leap between knowl- information about the challenges and possibilities in edge that is generated in exploratory and explanatory the biogas-for-traffic business and ensuring that the science and a design proposition (2). The develop- produced knowledge is useful for solving the clients’ ment of a design proposition is not based on the problems. causality discovered in ‘pure’ science (A causes B; The interface between the research and consul- therefore, do A if you want to reach B) but rather is tancy was the actual knowledge production achieved based on pragmatic ‘reasonableness’ of a solution (C through joint project participation. While the con- is the problematic context, and D is a design proposal sultants verified the actionability and usefulness of based on the vision of an ideal target outcome O; if the produced knowledge with the practitioners, the D overcomes problem C and leads to O, then it is researchers’ responsibility was to verify the academic a good solution). A proper solution to a complex merits of this knowledge, i.e., its originality and ability and ill-defined problem cannot be induced from a to be applied in other contexts. This allowed them to TRANSFORMATIVE BUSINESS STUDIES 545 achieve both actionability and transferability of the stabilize the context and control the anti-programs produced knowledge. that might have hindered the solution. Stabilizing To provide an example of how the knowledge here means making sure that there are no uncon- produced had both practical and theoretical merits, trolled issues that may introduce uncertainties that during the research within the biogas-for-traffic case, could make the entire solution collapse. it appeared that the scope of local delivery trucks In the biogas-for-traffic case, it meant, for exam- needed to be redefined. Local delivery trucks are ple, engaging farmers in order to be able to ensure usually bought primarily as a unit, not a lifecycle reliable raw material supply for biogas production solution, since diesel is a homogenous, abundantly (p). Although initially waste management companies available product, and there are many competing were considered as the main biomass suppliers (p), service centers. A biogas-driven truck would be analysis showed this raw material flow would not be dependent on a single supplier with uncertain ser- sufficient to scale up (ap). This was a problem. For the vice support. To address this issue, it was decided that solution to be economically sustainable, it had to be biogas delivery trucks would be offered including scalable (ap). Therefore, an additional source of raw lifecycle service support and fuel. Customers would material had to be found that could meet anticipated pay a certain price per kilometer and would not be demand. Such raw materials can be grown (p), but exposed to fluctuations in the fuel price. This was doing so would displace cash crops, thus driving up possible because biogas production and price was costs to unsustainable levels (ap). The solution to not strongly influenced by fluctuations in the oil this was found by growing biogas-appropriate crops price. The offer was limited to customers who signed simultaneously (p) with the traditional cash crops up for leasing large enough fleets of biogas-driven (p). While these new crops would not have normally trucks for a long enough time. It was also allowed been considered valuable, they would bring revenues to organize pooling among customers to aggregate in this case (p) and could be grown without reduc- demand. Ensuring a large-enough fleet, in turn, was ing cash crop acreage (p), thereby reducing the cost a prerequisite for the truck provider to invest in the pressure on farmers. This action would also improve local service center. In this example, the generated the soil composition and thus support the main cash context-specific knowledge included the under- crop (p). standing that, in Finland, a total package including As parts of the solution became actionable, they the vehicles, their servicing, and fuel would be most were ‘blackboxed’ as plausible actors. Figure 3 shows attractive for involving various truck operators in the blackboxed sub-systems, or modules, of the bio- the biogas-for-traffic ecosystem. More generalized gas-for-traffic case. For example, module 3 ‘Biogas knowledge, which could be transferred to new con- for truck operators’ can be separated from module texts, included the solution mindset, which aims at 4 ‘Biogas for car users’ because the two modules are tackling potential customers’ uncertainty related to functionally different. Trucks are high capital expen- the introduction of new technology to the market. ditures (CAPEX), consume large amounts of fuel, Finally, controversy mapping was used as a tool for and are purchased based on a business-investment stabilizing the actor-network related to the business calculation. Module 2 differs from trucks in the sense ecosystem in focus. Since the problem of enabling that the municipality has a very strong say since the biogas-for-traffic business was complex, ill-defined, investment is based on municipal tendering of bus and multi-variate, one strength (p) could easily be services. Plausibility does not mean this was the best countered by a weakness (ap) in another dimension. or ultimate solution, only that it was good enough For the solution to function, it had to be viable, and under the circumstances in this context. At the same it had to work economically, environmentally, and time, those actors that were unresolved were taken socially; otherwise, it would face opposition wherever apart in order to address the parts of the problem it fell short. This meant the boundaries of the solution and thereby strengthen the program and enroll new were not static. As new knowledge and problems actors to counter the anti-program. emerged, new arguments were needed in order to 546 GUSTAFSSON & TSVETKOVA

5. Biomass from farming to biogas 2. Biogas for public transportation iogas Bus City Animal manre operators farm

digestate Crop Biogas producer iogas Vehicle Truck users farm and distributor dealers green iomass digestate 3. Biogas for truck operators sdge Wastewater City iogas Leasing treatment parks Car users company 1. Sewage sludge to biogas 4. Biogas for car users

re Blackboxed subsystems (modules) in the target ecosystem.

One example of taking a problem apart and black- research process. The actual end-point of the research boxing its elements was the question of what kind is reached when all the key parts of the system have of pricing mechanism would be suitable for biogas been stabilized to the point that the practitioners sales. To facilitate the investment in biogas produc- are able to proceed by taking action according to tion and distribution infrastructure, the pricing logic the knowledge generated (11,38,39). Therefore, the was of crucial importance. Low prices would be good outcome of transformative business studies is both to lure customers (p) but would make scaling up knowledge and actual change that can be generalized and getting financing for the investment more diffi- from the specific case (7,38). cult (ap). The solution was to divide customers into different categories. Big customers that committed TRANSFERABILITY OF RESEARCH RESULTS early to the biogas-for-traffic ecosystem would get The biogas-for-traffic projects resulted in specific long-term contracts with fixed (inflation indexed) recommendations as to how the municipality, in col- prices. This was motivated since the customers were laboration with the key stakeholders, should proceed. taking a CAPEX risk (ap) by committing to technol- This result is context-specific and thus cannot be eas- ogy that was more expensive (ap) and with unclear ily replicated. The projects also resulted in a generic second-hand value (ap). It was possible since biogas production was not exposed to variations in the oil academic model for how complex business ecosys- price (p). For small customers, the price would be tems could be mapped and redesigned alongside the allowed to vary more in line with oil prices (petrol practical, context-specific knowledge. It consists of and diesel), which would provide a healthy margin the following sequence of specific steps: (p). Table 3 shows the characteristics of subsystem 3: 1. Structure the business ecosystem according to the current business logic of each actor, the risks and functional modules (Figure 3) uncertainties related to joining the biogas-for-traffic 2. Establish collaboration between the modules ecosystem, and the change in business model needed with incentivizing mechanisms for each specific actor. The integrator, in this case the 3. Enable scaling of the ecosystem through rep- biogas producer and distributor, is a special actor that lication based on modularity integrates all the other actors into the ecosystem. 4. Integrate the functional modules with the help Thus, actionable knowledge is not generated of boundary-spanning business models that only as the ultimate outcome. It is constantly pro- build on the incentives in the adjacent modules duced (and sometimes overturned) throughout the TRANSFORMATIVE BUSINESS STUDIES 547

e : Characteristics of Subsystem 3 Biogas for Public Transportation Actor Crrent siness ogic Risks and ncertainties reated Change in the siness ode to oining ecosyste Truck • Fuel is a significant • Investment into gas-driven • Gas-driven trucks are not operators operational cost trucks is larger than into sold in the focal municipality • Green image is important diesel trucks due to the absence of fuel • Drive locally but can transfer • Uncertainty about biogas • Possible: charging more for vehicles to other cities where technology: maintenance the ‘green service’ they operate costs and reliability • Uncertainty about fuel: price and availability of biogas • Second-hand risk of owning gas trucks • Limitations of operating buses to the locations where gas is available

Truck • Gas-driven trucks are not • Investment in gas truck • Sales of trucks together with dealers sold in the focal municipality maintenance infrastructure is maintenance agreement, due to the absence of fuel feasible only if large number of leasing option, and long-term trucks is served, i.e., is sold in fuel guarantee from the the first place biogas distributor

Integrator • Investment into distribution • Long-term contracts for biogas infrastructure will not be supply at fixed price

recouped if high enough • Low-emission (CO2 and NOx), consumption volumes are locally produced fuel compared not ensured to diesel

Considering a business ecosystem to be a system from farming’ and ‘biomass from waste management.’ in general, it can be seen as a set of interconnected Each module had a specific business logic, includ- functional modules that together produce a system ing value-creation logic and benefit sharing among output and certain value to the end-user or society. participants (step 2), which made it distinct from Depending on how well they are connected and fit another. For instance, while biomass obtained from through interfaces, and what kind of elements fulfill farming would be of good quality but would cost (step the functions, the output is produced in a more or 2), the biomass from waste management would have less efficient manner. Companies, and other mar- a negative price (step 2). Thus, the approach towards ket actors, by employing their business models and incentivizing respective actors to become biomass technologies, fulfill the functions. The structure of suppliers in the biogas-for-traffic ecosystem would current business ecosystems can be analyzed, and differ. a new, improved structure can be proposed based The development of incentivizing mechanisms on the analysis of inefficiencies and missing inter- is the next step that aims at attracting the critical faces among functional modules. Most often, the actors in the business ecosystem. These mecha- boundaries of the modules change, i.e., new actors are nisms are designed (step 2) based on the logic of introduced, others are removed, and new interfaces each functional module (step 1). The research done among the companies are needed. in the biogas-for-traffic case allowed not only the In the biogas-for-traffic case, such modules development of context-specific mechanisms but included, for example, a number of biogas con- also the formulation of more generalized and thereby sumption modules (step 1): ‘biogas for public transferrable principles of enrolling actors in busi- transportation,’ ‘biogas for delivery business,’ and ness ecosystems. The example of providing a lifecycle ‘biogas for individual users.’ A number of biomass solution instead of just a technological product to supply modules were also identified (step 1): ‘biomass customers in the face of uncertainty (discussed in 548 GUSTAFSSON & TSVETKOVA section 4) is one such mechanism. The development Case 1 Unmanned ships: Unmanned ships could sig- of an alliance of critical actors who can fairly share nificantly lower freight costs and emissions as well as the benefits of the total ecosystem working more reduce accidents since sea freight is an accident-prone efficiently is another example of an incentivizing industry. However, the incumbent business models mechanism (step 2), one which was later applied in in sea freight do not enable a profitable investment in a short sea shipping ecosystem development project unmanned ships. To achieve that goal, the business (see case 3 below). ecosystem was redesigned through redefining the Due to modular design (step 1), it is possi- business models for key stakeholders and by coor- ble to replicate the business ecosystems. In the dinating the strategies of how the new earning logic biogas-for-traffic case, for example, it proved to be of the ecosystem could be implemented. necessary to extend the biogas-for-traffic business Case 2 Flexible power generation: The increase in to other cities in Finland so that a reliable and con- wind and solar power has changed the earning logic venient fueling network could be formed. For this, of energy systems, putting a premium on cost-effi- the cooperation models between the biogas com- cient flexibility instead of high-efficiency continuous pany, biomass suppliers, and biogas consumers (step load (40). However, the incumbent business models, 2) could be conceptually copied (step 3) in those and investment models in power generation in par- locations with the necessary adjustments (step 1), ticular, made an investment into flexible technology i.e., replicated. This is possible due to the form in unprofitable. The business ecosystem and the invest- which actionable knowledge produced within DSR ment model was therefore redesigned. Specifically, is recorded. The solution is described together with a new division of roles in the investment structure the problems that it solves and the mechanisms that was established, which enabled a better allocation of make this solution work for these specific problems. risks and rewards and a more efficient employment Then, in new contexts, it is possible to identify which of capital. The solution enables the introduction of problems actually need to be solved and, thus, which technology that reduces system emissions. The need incentivizing mechanisms need to be applied in order for state subsidies is also reduced since such a division to align the incentives of the stakeholders. of value creation and capturing is established that all The final step is the development of a bound- the key actors required for a functioning solution get a ary-spanning business model that is based on the share of the improved performance on a system level. results of the previous steps. This is especially relevant for companies that attempt to become ‘ecosystem Case 3 Short sea shipping: Short sea shipping is today integrators,’ i.e., the ones that integrate the whole highly inefficient in terms of current market condi- business ecosystem and, through various incen- tion capacity utilization. The utilization rate of vessels tivizing mechanisms, change the business models is 35% to 40% due to long stays in port (40% of the of other actors (step 4). It is not always clear who total time) and sailing empty (20% to 25% of the would become such an integrator, and, in subsequent total time). This results in low profitability and high projects, it was often the case that a consortium of freight costs. By redefining the division of roles and interested actors would form a strong player capable responsibilities in operative logistics planning and in of altering the ways of working and the value-creation the planning of infrastructure investments, a more structure of a whole business ecosystem. productive ecosystem with a higher, more effective utilization of the capital employed can be attained This method for designing business ecosystems (the actual launch is taking place as of writing). Emis- has been and is being used successfully in a number of sions also sank partly because of the higher utilization consulting projects. It has proven especially suitable rate but also because the new division of roles and in two types of situations: enabling a new technology responsibilities enabled business models based on to enter the market and changing the earning logic more efficient technologies and operations (49,50). of an industry so that it becomes more productive (partly by adopting new technologies). The continued application of the research method- ology for transformative business studies described TRANSFORMATIVE BUSINESS STUDIES 549 in this paper, which is based on DSR, participative any business ecosystem, it was difficult to formulate research, and actor-network theory, benefits the com- clear and universally applicable rules. Instead, the panies to which it is applied. It also contributes to knowledge was documented as actionable rules of research by facilitating continued research on the thumb, which included not only the solution but subject and further refinement of the model. The also the identified problems that led to this solution. collaboration between researchers and consultants The transformative business study undertaken by is central here. The more the consultants apply the the researchers needed to be based on DSR, partic- method, the more they will be able to point to weak- ipatory research, and actor-network-theory. Since nesses and possible improvements. the solution did not exist beforehand, we relied on The key element is the focus on and creation of DSR to outline the goal to be achieved. Participatory actionable knowledge. Redesigning an ecosystem research allowed better access to most sensitive chal- does not mean publishing a report that only outlines lenges that would otherwise be undiscoverable. This how to carry out the change. The method includes is because organizations are primarily interested in the actual change by producing context-specific having their problems solved and operations and actionable knowledge since it is only when actually competitive posture improved. They are not inter- applying the recommendations, and the variations ested in producing some general knowledge that of the recommendations and so on, that you can say relates to some abstract problem. This means you what knowledge triggered action. This means pro- get better access if you approach them with problem ducing knowledge that compels the key stakeholders solvers (consultants), but you get better results if you in a business ecosystem to act in a way that brings include problem identifiers in the team (researchers). about the new way of working, essentially changing This is the way it works in medicine, and a similar the behaviors in the marketplace. The knowledge logic can be applied in the social sciences as well. compels these key stakeholders to act in a certain way The reliance on actor-network theory, in turn, was much like the axioms laid out by Suh et al. (51) com- necessary for rooting the solution deeply within the pel designers and managers to design products in a specific context and understanding the more tacit certain way because not doing so would be irrational. interdependencies among different factors affecting The fact that the case described is closely con- the logic of a business ecosystem. Figure 4 illustrates nected with innovation is not a coincidence. PBI, in the iterative steps of the process. The dotted lines collaboration with ÅAU, has previously created meth- indicate situations where you revert back because ods for managing trust in B2B relations and methods the solution does not hold. for pricing services based on their value added, to It is indeed more challenging to attempt to explore name a few (44,45). In both cases, the research pro- such wide research topics as design of business eco- cess developed according to the above steps so that systems, especially sustainable ecosystems. Choosing the symptoms were studied, the problem identified, such a research goal, in turn, leads to research results and, subsequently, a solution that was turned into a that are difficult to formulate, present, and transfer service was produced (in these two cases, a web-based for practical use. However, the social significance service with analysis support). of such results tends to be greater, which makes the journey worth the effort. Close collaboration between CONCLUSION research and practice as well as conceptualization We developed a method for designing business and application means we simultaneously transform ecosystems that addresses complex and uncertain the idea of how things work and what to do about it. phenomena. The challenge was to create and for- By employing the transformative business research mulate the knowledge in such a manner that it is methodology presented in this paper, we believe it is possible to transfer it to business application, i.e., possible to conduct complex social and organizational make it a tool for solving similar challenges in the research that can be systematically transferred to real- future. Given the complexity, uncertainty, and depen- life applications for society’s benefit. As stated in the dence on the context when designing or transforming beginning, transformative business studies focus on 550 GUSTAFSSON & TSVETKOVA

Design Soving Ipeentation proposition chaenges

What are the drawbacks Are the key actors Participative of the solution? How to ready to commit to Research What is the problem? solve them? implementing the solution?

How should the solution What could be the What are steps for be updated based on Design Science solution to the original implementing the new knowledge of the Research problem? solution? context?

Actor-Network: How are phenomena Is the solution more How to ensure Controversy related to the problem stable? commitment of key Mapping and potential solution actors? connected?

re e epistemological steps of Transformative Business Studies. the real-life challenges in society and finding out how to be discovered. For research financiers, it offers a they could be solved. Not all problems are related to better return on the money invested. business practices, but business studies should try Since the method focuses on actual problems, it to identify the ones that can be solved through new does not exclude any school of thought beforehand. business practices. This can be done by striving to We believe firmly that just as there are problems that solve the problems and identify what solves them and are best solved through theories from medicine, tech- what does not. Based on this, one contributes to the nology, or business studies, there are also those that greater good of society by distilling that knowledge can be solved with the help of theories found in the and making the knowledge transferable. humanities. We propose that further research needs We recommend this methodology for researchers, to focus on applying the methodology for transfor- practitioners, and financiers. For researchers, basing mative business studies in other contexts and further the research on an existing practical problem can elaborating on methods related to it. be rewarding both from a substance and a financial point of view. It also enhances theory development, ACKNOWLEDGMENTS as theory, in this case, is defined by the problem it We wish to cordially acknowledge the financial solves or contributes to solving. The solution is in the support provided by DIMECC (Digital, Internet, problem. For practitioners, transformative business Materials & Engineering Co-Creation) within the studies bring a fresh perspective to daily problems REBUS (Towards Relational Business Practices) pro- and allow them to interact with researchers com- gram, Project 2 Logistics Networks, and Tekes (the mitted to solving the problem by means that can be Finnish Funding Agency for Innovation) within the found in extant theoretical knowledge or that are yet RECO (Redesigning Ecosystems) project. TRANSFORMATIVE BUSINESS STUDIES 551

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