Mapping Activity Systems for Business Model Innovation
Activity System Mapping for Business Model Innovation — a visual and collaborative process
Porter's (1996) idea of activity systems provides a strong foundation for a collaborative and visual approach to Business Model Innovation. The mapping includes the following process:
- Identify and categorize core and ancillary activities that underpin the organization's strategic positioning
- Recognize the cross-functional nature of activities, acknowledging contributions from diverse operational areas
- Establish and delineate interconnections between related activities
- Analyze and articulate strategic trade-offs inherent in activity selection
- Evaluate system coherence, identifying areas of strong alignment and potential discord
- Explore opportunities to enhance synergies and strengthen connections within the activity system
- Assess the system's resilience against competitive imitation, considering factors such as social complexity and path dependency
- Propose and evaluate potential new activities that could augment the overall system value
- Implement a systematic review process to refine and adapt the activity system in response to evolving industry dynamics and ecosystem changes
Example: Trader Joe's
Figure I below shows an example of the outcome based on a mapping exercise that captured and evaluated Trader Joe's Business Model.
Figure I: Example of Activity System Mapping for Business Model Innovation
Source of Figure I: Primus, D.J. from course 'Crafting & Executing Strategy', Spring 2023
Reading the map
Each connecting line in the map indicates that two or more activities jointly move one of the four strategic-fit factors that determine competitive advantage: Volume, WTP (willingness-to-pay), Cost, and Inimitability. An upward arrow (↑) indicates the connected activities reinforce each other to raise that factor; a downward arrow (↓) indicates they reinforce each other to lower it. For example, tight inventory layout and disciplined in-store operations connect to lower cost (C↓), while highly interactive in-store sampling and feeding connect to raise willingness-to-pay (WTP↑). Reading the map this way — tracing which activities move which factors, and how many connections converge on a single activity — is how a mapping exercise surfaces both the sources of strategic fit and the areas where the system could be strengthened or is vulnerable to imitation.
© Innovation Matters 2022
Porter, M. E. "What is strategy?" 1996. HBR: 74–78.