Business Model Innovation in the Construction Industry: Emerging Business Model Archetypes from Bathpod Modularization

Abstract

Modularization and standardization have been recognized as an effective way to achieve mass customization and improve efficiency in the house-building industry. The construction industry has witnessed the entry of several bathpod manufacturers using new, digitally enabled business models to alter the traditionally incremental nature of off-site construction. These new players in the market are embracing higher levels of complexity with offerings that deliver value in terms of accelerated speed of construction, simplified design features, and certified quality, often becoming the means of connecting different stakeholders in the construction supply chain. The innovation that bathpod manufacturers are bringing to the construction industry is interesting to examine with a view to their business model. This paper informs and proposes theory by analyzing bathpod companies’ business models from two perspectives: (1) the internal fit between business model components within the company, and (2) and the interactions between the bathpod companies and the external environment (partners and customers). This paper uses a qualitative research approach that incorporates a review of relevant literature, a market scan, and interviews with industry experts. The Business Model Canvas, which includes nine key elements, is employed to identify the interdependencies of bathpod companies that have successfully implemented varying levels of modularization and standardization. This enables the discussion of the archetype business model elements that enabled the theorizing of the archetypes. The paper presents six business model archetypes for bathpod manufacturers, e.g., project-driven production, integrated project service delivery, and modular enthusiast. These archetypes represent viable options for off-site manufacturing and production approaches in construction projects and present emerging business model innovations leading to their current state. In conclusion, this paper highlights the potential for business model innovation in the construction industry through the adoption of modularization and the development of a deeper understanding of customer value. By identifying key interdependent elements of a successful business model and exemplar cases of bathpod business models, we have provided a foundation for future research and practical application in the industry. This paper provides several practical contributions to the literature on construction business models. By applying the business model concept to the bathpod manufacturing industry, it enables a comprehensive analysis of value creation, delivery, and capture within bathpod companies. The study introduces six distinct business model archetypes: project-driven production, integrated project service delivery, design and make, one-stop shop, modular enthusiast, and bathpod component catalogues. Furthermore, the proposed spectrum serves as more than a tool for practitioners to analyze and evaluate their business models; it also offers practical insights for navigating the spectrum, e.g., transitioning from project-oriented to product-oriented paradigms. Moreover, the research underscores the significance of fine-tuning business model elements and understanding their dynamic interdependencies within a product-oriented context. This highlights the delicate balance between allocating company resources and meeting customer requirements. In a broader context, the developed set of six business model archetypes is anticipated to be adaptable and scalable across various off-site manufacturing sectors.