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Using the scenario planning method in a systematic way to develop a new business model and reduce future uncertainty within the construction industry

Kamers, Rick (2018) Using the scenario planning method in a systematic way to develop a new business model and reduce future uncertainty within the construction industry.

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Abstract:Several large industries have been disrupted and revolutionized by multiple disruptive forces which have fundamentally changed how value is created and captured. Many of the large traditional organizations that had to deal with these forces are under remarkable pressure. However, the construction industry, one of the largest and most influential industries in the global economy has not changed that much over the last years. Even though, the results of this study indicate that a new era for main contractors in the construction industry is approaching. The expectation is that several disruptive forces will have a big impact on business models and existing structures in the construction industry. However, there is insufficient knowledge on the future business environment of the construction industry. Therefore, this thesis addresses the following research question: “How can a large construction company in the Dutch housing market design a new business model to create and capture value in 2030 by using scenario planning”? In this regard, it is necessary to monitor change and proactively explore the future. Therefore, the scenario planning method is found as a suitable method in this thesis. This method allows to compensate for two common errors in decision making, overprediction and underprediction of change. Another important conclusion is that the reinvention, creation and innovation business models is regarded as necessary to survive and thrive in a business environment where the rules change quickly. It was also found that the business model concept is among the most cited and prominent topics in modern literature, but it is less discussed and researched in construction. There is a growing consensus among academics that the business model concept is associated with securing and expanding competitive advantage However, literature that combines business models and scenario planning with a focus on construction did not exist. Four scenarios are built for the 2030 Dutch construction industry to provide a strategically relevant industry structure forecast. A literature review and twelve semi-structured interviews with industry experts provide an overview of the (future) construction industry structure and revealed several factors (trends and developments), which could potentially influence the future business environment. Concerning the (future) industry structure, the interviewees indicated that the power of buyers and suppliers is hindering the profitability and this power is expected to rise in the future. It was found that the construction industry structure is characterized by a highly fragmented value chain, the market is highly competitive with low margins. Moreover, the interviewees expected new entrants with new innovative types of business models, which have the potential to shift value in the construction value chain. For the identification of two scenario dimensions a quantitative analysis is performed, in which the respondents indicated the potential impact and uncertainty of occurrence of each of the driving factors. The data is based on 71 respondents from a large main contractor. The scenario dimensions are: ‘development of the cyclical sensitivity’ and ‘the development of the technological environment’. For each scenario dimension two extreme values, positive and negative, are defined, resulting in the identification of four unique scenarios. This is confirmed by the constructed scenarios, which illustrated that the current business models of main contractors in construction will not be sufficient to create and capture value in the future. Based on the results from the interviews, one scenario is chosen as most likely to occur in the future and a new business model is proposed. However, all scenarios are likely to influence all interlocking elements of the current business model; a transformational change is necessary. Consequently, main contractors in the construction value chain need to prepare strategically to thrive in the face of anticipated disruption in the future.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/75782
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