Business model portfolio expansion through structural separation – Adding a new digital business model

The notion of managing multiple business models as a portfolio of different business models has captured the attention of both scholars and practitioners, reflecting a growing interest in how firms can pursue and manage different business objectives and drive growth. While previous research has explored how to manage existing business model portfolios, few studies have examined the processes involved in the creation of such portfolios. Drawing on a digital transformation initiative within a large manufacturing firm, this study offers an in-depth account of a business model portfolio expansion process as an incumbent B2B-firm add a new digital business model. By analyzing the incremental decoupling of the emerging business model from the existing, this study proposes a framework for business model expansion as a gradual, staged process of separation. It identifies three key mechanisms inherent in this: the gradual decoupling of the emerging business logic and its co-evolution with the structural separation of the organizations, the rapid sequencing of the stages in the process, and the critical role of external triggers. Overall, the study contributes to the literature on business model portfolios, while also advancing understanding of business model expansion and structural separation. • A gradual structural separation enables business model addition. • A co-evolving additional, digital logic supports portfolio expansion. • A rapid iteration between stages reduces conflicts and enables managerial initiatives. • External triggers are key for accelerating business model portfolio extension. • Outlines a stepwise decoupling process for managing the balance between an emerging business model and an existing portfolio.