Research for business model innovation

Depending on the nature of change that you wish to initiate, different forms of data collection and research will be required to support your actions. Whether it is conducting staff surveys, audience surveys, visitor observations or understanding organisational process and workflows – collecting relevant data is a critical aspect of leading change. This guide provides a recommended methodology to help you evaluate and plan for digital business model innovation.

Visitors inside a war museum
Image courtesy of Imperial War Museum ©

Research for business model innovation

1. What research might I need?

When collecting data and information to support a change in your business model, it can be difficult to see the wood for the trees. There are often so many factors to consider that it can be easy to focus on the information that is close to hand, or familiar, and lose sight of important trends or insights. Crucially, we also need to be able to look at the information to hand and evaluate what might happen next and how best to respond.

To help reduce the risk of being too close-focused, it can be useful to step back and look at the different types of environmental factors that will impact your organisation and prioritise your research accordingly. Lynch (2021) in his overview of strategic management, encourages organisations to consider their strategic environment including the:

  • macro-external environment
  • micro-internal environment
  • internal environment.

Fortunately, not every factor needs to be researched to support your business model innovation; only those that are most important. You can then use this information to project into the future to help focus your research.

In this resource, our expert Michael Turnpenny, Head of Museum Development Yorkshire, discusses where to target your research to help you anticipate the changes you may need to make to your business model to incorporate digital innovation.

2. How to identify key areas for research

No heritage organisation exists in isolation and it will always be influenced by its environment as well as its own internal systems, approaches and people. Identifying important areas for research can be challenging as you may be overloaded by information without recommendations on what is relevant, or you may lack the time, people or money to be able to invest in detailed research. When this happens, you can use foresight methodologies to help your organisation turn research into action and think critically before taking strategic decisions.

Although it is impossible to predict the future, you can use your knowledge of current events and trends to interpret their consequences for your organisation. Through this process, your organisation can identify likely changes that will impact your work. This approach to projecting out or forwards allows your organisation to think about different future scenarios and helps guide research or strategic business decisions.

Taking stock

There are three steps and five questions that your organisation can go through to assess the current environment:

  • Perceiving
    • What seems to be happening?
    • What lies behind these trends?
  • Prospecting
    • What might happen in the future?
  • Probing
    • What might we need to do? (What are the options?)
  • Strategy
    • What will we do and how will we do it?

Perceiving

Your organisation will have a lot of information about the key environmental factors that impact your work. These could be macro-external environmental elements identified through a PESTEL analysis or changes more locally. The latter could include changing visitor numbers at your site, changes to key organisations that you rely on such as a collections database supplier or a variance in bookings from a reliable corporate customer. Internally, you might see changes in volunteer numbers, workforce satisfaction surveys or energy consumption.

The significance of these trends is likely to be unique to your organisation. Once you have identified key trends, your managers, key volunteers and trustees should review and refine this list of factors to focus on those that could have the greatest impact on your work. At this point, it is also worth exploring whether there are underlying trends that connect these factors that tell a wider story. For example, declining profit margins (internal) during a period in which interest rates are rising (external) tell a wider story about economic trends.

Prospecting

As your organisation will be aware of key facts about its current situation and has identified a number of potential trends or societal changes, it is possible to use these to create scenarios.

These scenarios answer ‘what happens if …?’ and are based on reality as they are an extrapolation of current trends. A useful approach is to select a point in the future and describe how a future version of the trends you have identified will impact your organisation. As these are scenarios, describe a few different versions to test the impact of the factors and also to tease out key assumptions or areas of uncertainty.  Depending on the scenarios, your organisation may now be able to identify key avenues for research or experimentation.

Probing

Now that your organisation has developed an idea about both what is happening now and what may happen in the short to medium-term, it is possible to identify responses that mitigate threats or take advantage of opportunities. This stage in forecasting moves from the abstract to the concrete as it answers the question ‘what might we need to do?’

Many heritage organisations can be quick to move to a decision and response position, but this is also a time where more innovation can occur. In some instances, you may want to undertake one or more of the following:

  • in-depth research into a key threat or opportunity
  • theoretical or small-scale prototypes
  • pilot initiatives or projects
  • consult and test with audiences or customers.

The outcome of this probing activity is that your organisation will be able to understand, justify and legitimise its next course of action.

Strategy

Following the completion of a probing exercise, your heritage organisation will have used forecasting approaches to identify and understand the implications of current and future trends.  It will have also identified and assessed a number of potential responses.  This now places the heritage organisation in a position to take action.  Whilst this might be additional research to plan for business model innovation, it might also be the implementation of new initiatives and schemes.

Further reading

Lynch, R. (2021) Strategic Management. 9th ed, SAGE Publications

Conway, M. (2014) An Overview to Foresight Methodologies. [Internet]. Visit ResearchGate to download.

3. Case Study – York Museums Trust

In 2021-22, York Museums Trust undertook a programme of data-driven experimentation and action research to inform business model innovation.  This case study explores some of the research that was undertaken.

In your own words could you describe what your organisation is and does?  

York Museums Trust’s vision is ‘to work together with audiences and communities to inspire, to share and to care for cultural heritage.’

To achieve this we share collections, gardens, buildings, art and stories for learning, enjoyment, and wellbeing.  Rooted in York and Yorkshire, we look outwards nationally and globally.  As a charity, our income enables the Trust to care for heritage and to benefit all.

Supported by the City of York Council, York Museums Trust is responsible for York Art Gallery, York Castle Museum, Yorkshire Museum and Gardens, and York St Mary’s.

How long has it been running, and where are you based?  

York Museums Trust was formed on 1st August 2002, as an independent charitable trust to manage the museums and gallery service previously run by City of York Council.  We are based in the City of York in North Yorkshire.

Who would you say are your main audiences and what are the key things you feel your organisation represents or delivers for its audience?  

York has housed museums since 1821 when the Yorkshire Museum was founded.  Audiences vary across the sites managed by York Museums Trust and include a mixture of local communities, day trip and overnight visitors.  Historically, York Art Gallery’s largest visitor segments included ‘Commuterland Culturebuffs,’ ‘Dormitory Dependables’ and ‘Trips and Treats.’  This audience mix was something that we were keen to both deepen and widen to deliver greater social and economic returns

Why do you think that your organisation is important?  

All the collections managed by York Museums Trust are designated by Arts Council England as being of national significance.  These collections include archaeology, biology, geology, and numismatics at the Yorkshire Museums; fine art at the York Art Gallery; and social history, costumes, textiles, and military history at the Castle Museum.  York Art Gallery is also home of the Centre of Ceramic Art specialising in British studio ceramics.

Outstanding exhibitions include Anglo-Saxon and Viking metalwork, Romanesque sculpture, fossil marine reptiles, and paintings by Parmigianino, Bellotto, Hogarth and Nash, while Kirkgate, the famous reconstructed Victorian street that forms the core of the Castle Museum, is a milestone in the history of museums.

What research did York Museums Trust undertake to help plan for digital business model innovation? 

York Museums Trust regularly conducts desk-based reviews of the environment in which we work and have access to a large volume of admissions data and visitor segmentation information.

Our analysis of this information in 2020, indicated that the economy and social trends were highly turbulent.  Although pre-pandemic visitor numbers were robust and increasing, they were below the targets anticipated prior to the redevelopment of York Art Gallery.  The visitor segmentation data also demonstrated that under-represented audiences were less likely to visit York Art Gallery than the Yorkshire Museum or York Castle Museum.  This was of concern to us as we want York Art Gallery to be enjoyed by as many people as possible.

Three children sitting on a sofa inside a museum
Visitors to York Art Gallery.

Given this context, our managerial and leadership teams identified scenarios where visitor numbers did not return to pre-pandemic levels and where the financial barriers to visiting York Art Gallery further reduced the range of audiences. There was a danger that, were these scenarios to be realised, they would have an impact on admissions income and that a reduced audience reach would not be well received by key stakeholders and funders.

Due to the strict admissions requirements implemented by York Art Gallery to be ‘Covid secure,’ this provided us with an opportunity to evaluate a number of prototype admissions models. This was made easier due to the digital admissions infrastructure adopted to comply with Track and Trace requirements and provided us with data to evidence the impact of these prototypes.  

How did you (or do you) address this issue in practice?

As we had identified a plausible, negative ‘what might happen’ scenario, we wanted to evaluate a small number of options of how to respond. We decided to test these through using time-limited prototypes.  In order to evaluate the prototypes, we set a small number of objectives around visitor numbers, visitor profile, cost (to visitor) and income. The trial consisted of three different admission models that were used sequentially over the period of a year:

  • Free entry model with visitors asked to make a donation.
  • ‘Pay as You Feel’.
  • Free entry to permanent collections and charged entry to temporary exhibitions.

During this period, the team monitored visitor numbers, profile, satisfaction, gross yield, yield per visitor, retail spend per head and retail profit. Throughout the period of the ‘probing’ activity, the team used real-time data to revise assumptions and forecast.

The evaluation of the prototypes provided managers, leaders and trustees with evidence upon which to take decisions for financial year 2022-23. The team were also able to identify that the real-world experience of evaluating the prototypes gave them information that had not been available through modelling alone.  Significantly, whilst visitor numbers were much higher than anticipated under some of the models, income levels did not always follow the same trends.

The data also showed greater differences in visitor profile and propensity to donate than anticipated. This real-world information allowed York Museums Trust to take informed decisions about how to proceed with admissions models and pricing in 2022-23. The prototypes also informed the development of the digital infrastructure that manages admissions and the associated management information systems.

What tips would you offer another organisation similar to yours?

Experimentation carries risk – be clear with communications. Although using foresight methodologies was useful for York Art Gallery as part of business model innovation, we recognise that the Covid-19 pandemic provided (hopefully) a unique opportunity to experiment with admissions, ticketing, and pricing. Experimentation was not without risk, and we needed clear messaging for the teams who work with visitors. This was especially the case for our experiments on admissions as some repeat visitors experienced three different approaches to admissions!

Be aware that your teams may not be familiar with foresight methodologies, pilot projects, prototypes, or experimentation. Testing and prototyping are common in many industries but less so in heritage and cultural organisations. It was a fantastic way for us to test our ideas out before committing to change. This was unusual for many of the people we work with, and we had to prepare them for a period of change and uncertainty. It was also healthy to be able to explain that we were testing our ideas out before committing to substantial change. This helped reduce scepticism and challenge as everybody knew it was an experiment.

Experiments are controlled! There is a temptation to change many variables at once, but it can become hard to keep track of the impact of every factor. We chose to test three different approaches and it took time to create and evaluate each model.  If we had tried to include more variables, we would have needed more time and the evaluation would have become more complex.

The decisions we took because of our business model innovation are right for York Art Gallery, but they may not be the answer for your organisation. We learned through experimentation that some of our assumptions were not completely correct. As we deal with diverse types of heritage, in a range of locations with unique combinations of visitors and users, your solution may need to be different!

Keep using data and information to take decisions. Although we used the probing phase or foresight methodologies to agree our strategy, we are continuing to refine our approach using management data.  Information and data about visitor numbers, satisfaction and yield are still being used to inform detailed pricing decisions, programming, marketing, and messaging about donations.

4. Using ‘Foresight’ to focus your research

Once your organisation has identified the key internal or external factors or trends that might affect how you do business, you can use the table below as a prompt to help you to:

  • determine what further research might be needed
  • record the prototype or pilot activity that you undertake
  • document the decisions you make about your business model innovation.

You can also download a Word template (206kb).

Environmental factors (What is happening? What lies behind these trends?)
 

 

Description of scenario A (What might happen in the future?)
 

 

 

 

 

Description of scenario B (What might happen in the future?)
 

 

 

 

 

Description of scenario C (What might happen in the future?)
 

 

 

 

 

Scenario selected for research  
To respond to the scenario, we could… (What might we need to do?)
☐Research  

 

 

 

 

☐Prototype  

 

 

 

 

☐Pilot  

 

 

 

 

☐Consult and test with audiences/customers  

 

 

 

 

As a result of our research, we will:
 

 

 

 

 



More help here


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Selecting a business model to support digital implementation

Business models from the cultural heritage sector are presented here in the format of the business model canvas. Each demonstrates different forms of business model and may act as a template or guide for introducing digital to your own organisation.

 
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Using the digital business model canvas to prioritise what to change

In this resource you will explore the use of the digital business model canvas to help prioritise where your organisation may benefit most from digital change. The digital business model canvas offers a focussed approach to visualising what digital innovation in your organisation might look like.

 

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Business model Future Innovation Research Trends
Published: 2022
Resource type: Articles


Creative Commons Licence Except where noted and excluding company and organisation logos this work is shared under a Creative Commons Attribution 4.0 (CC BY 4.0) Licence

Please attribute as: "Research for business model innovation (2022) by Michael Turnpenny supported by The Heritage Fund, licensed under CC BY 4.0




 
 


More help here



Digital Heritage Hub is managed by Arts Marketing Association (AMA) in partnership with The Heritage Digital Consortium and The University of Leeds. It has received Department for Digital, Culture, Media and Sport (DCMS) and National Lottery funding, distributed by The Heritage Fund as part of their Digital Skills for Heritage initiative. Digital Heritage Hub is free and answers small to medium sized heritage organisations most pressing and frequently asked digital questions.

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