Living lab business model: towards a sustainable innovation ecosystem

Public living labs, as multi-stakeholder ecosystems, play a principal role in delivering “public value” by leveraging (open) innovation processes. However, a significant number of public living labs are not sustainable, in effect, they fail to create a viable innovation ecosystem. The problem is that presence of a holistic business model which effectively coordinates the efforts of all heterogenous stakeholders in the ecosystem and focuses on value creation at “ecosystem level” is missing. Drawing on field studies of three public living lab innovation ecosystems in the Netherlands, we could develop a holistic and multi-perspective business model in which “ecosystem” is considered as the reference point; including all heterogenous stakeholders, their interdependent activities and the links between them (BM structure). As such, we could introduce “collaborative portfolio management” combined with “challenge-based cocreation” as a method for effective coordination of heterogenous actors in the ecosystem. We also identified that “lock-in” (due to dependencies and interdependencies), which is created by this method, can facilitate not only the process of value creation at ecosystem level, but also value capturing for all involved stakeholders.