3D printing: a laboratory for business model research
What should established companies do when an innovative – and potentially disruptive – new technology appears on the scene? Vlerick Business School and Sirris collaborated to develop a framework linking technology and business models. When applied to the subject of 3D printers, their model led to a number of surprising insights.
3D printing: more than just hype?
3D printing is a manufacturing process in which a digital design is converted into a tangible object. Using a special printer, the object is built up out of successive layers of printed material. This process is capable of producing incredibly complex structures, some of which are nearly impossible to create using traditional methods. 3D printers are not limited to printing in various types of plastics and metals, but can also print in wood, glass, ceramics, etc. Soon, they will even be able to print using living cells.
3D printing has received so much media attention in recent years that it’s easy to forget that the technology has actually been around since the 1980s. It was initially used primarily for prototyping and for producing small quantities of parts, but over time, 3D printing has increasingly found use in larger-scale industrial applications, as well. It has been particularly successful in industries that require a high degree of customisation, such as the automotive, aerospace and electronics industries, as well as medical technology. In 1993, the Belgian company Materialise was the first to try to tap into the consumer market. The first attempt to print with living cells, known as 3D bioprinting, took place years later, in 2001. This explains why the technique’s technological maturity differs so widely across the different areas of application. 3D bioprinting is still at the very beginning of the Gartner Hype Cycle, whereas more established types of 3D printing are already being used to mass-produce complex engine components.
On behalf of a leading industry client, Vlerick Business School and Belgian technological research centre Sirris teamed up to investigate the opportunities offered by 3D printing and how best to take advantage of them. “The conceptual framework and the different business models were developed by the Vlerick team, which was led by Prof. Walter Van Dyck,” said Benjamin Denayer, Senior Business Developer of Additive Manufacturing at Sirris. “We provided the technological expertise: what exactly is involved in the 3D printing process, and how does it differ from other traditional and alternative manufacturing techniques? Who are the major industry players? Who’s using whose technology? These are all questions we can answer.”
Four business models
The team examined three specific areas of application: medicine, engineering and the consumer market. For each of these applications, they not only evaluated the maturity level of the technology itself, but also the maturity of the market – after all, not every innovation is ripe for commercialisation. The team concluded by mapping out the different business ecosystems, the business models used and their evolution over time.
Materialise is an excellent example of a company whose business model has evolved over the years. Founded in 1990 as a spin-off of the University of Leuven, Materialise was one of the first companies in Europe to offer rapid prototyping services. In its earliest years, Materialise offered specialised solutions for the medical and engineering sectors and for the consumer market. Over time, this business model evolved into a platform through which software was made available for other companies to use in developing their own 3D printing solutions. Nowadays, Materialise combines both of these business models. They continue to deliver solutions – both products and services – directly to customers. For the engineering market, Materialise offers top-notch 3D printing services, while for the consumer market there is i.Materialise, an online service that enables customers to print their own designs and to purchase objects designed by others. Perhaps the most exciting of Materialise’s solutions are those in the field of medicine, ranging from perfectly engineered replacement hip joints and prosthetics to detailed models of organs and body parts on which surgeons can practice complex surgical techniques before operating. Through its other main business model, Materialise also continues to market its software platform.
“These two business models are not the only options for companies working in the field of 3D printing,” notes Walter Van Dyck. “Organovo, a California-based company, takes a different approach. Unlike Materialise, they don’t offer complete solutions for end users, but instead they’ve invested in the development of a specific type of 3D printing technology: bioprinting, or printing with living cells. Organovo’s business ecosystem consists of companies such as Johnson & Johnson, P&G and L’Oréal. Together with Organovo, they are developing these technologies for their own use. Johnson & Johnson, for example, is working with Organovo to develop 3D-printed liver tissue for use in pharmaceutical testing. P&G and L’Oréal want to test their cosmetics on bioprinted skin tissue. These tests will yield more accurate results than cell cultures or animal trials.”
A fourth business model focuses more on fundamental research, in which businesses work closely with universities and research institutes to develop technologies for a wide variety of applications.
No two paths are alike
Somewhat surprisingly, the team found that the four business models are not equally common. The type of business model that dominates is largely dependent upon the area of application of the technology. Furthermore, as the technology and the market evolve over time, so do the dominant business models. “This was clearly the case for all of the companies that we examined,” confirmed Mathias Boënne, doctoral research associate at Vlerick and member of the research team.
“Not only was the dominant business model different for each specific field of application, but the path each company took in its growth from one model to the next also differed from field to field. It was particularly surprising to note how companies with comparable business models, active in the same industry and working on similar applications, tended to evolve in nearly identical ways. You’d expect them to want to differentiate themselves from their competitors, but that wasn’t the case at all.” The team’s explanation? “It’s all about imitation. Companies have a tendency to copy one another, particularly if the strategy that’s being copied proved to be highly successful in the past.”
“We focused our analysis on the field of 3D printing, but the framework we used lends itself well to other technologies,” explains Denayer. “Whether they’re a start-up or an established company, businesses that want to innovate will have to decide for themselves which business model to pursue. Will they focus on fundamental research into new technologies and applications? Or will they offer solutions that are ultimately brought onto the market by other companies, like Organovo does? Or perhaps they would prefer to provide concrete solutions for end users, or develop a platform from which others can build their own solutions, as Materialise does?”
To conclude: “Our advice to businesses is this: scan and monitor the market to stay on top of new developments. It’s only logical that you’ll want to identify your options when a radical new technology emerges on the market. It might be that the result of your analysis is that the new technology isn’t relevant for your business, that it doesn’t offer you any opportunities for innovation. And that’s fine. But it’s important to make a conscious decision.”