One of the objectives in the FOBIA project has been to increase our understanding of business models applied by forestry service contractors and find ways to stimulate innovation within this sector. A business model describes how businesses produce, market and deliver goods or services to their customers, and business model innovation is thus the introduction of new ways to organize and govern the company’s business activities.

A good product or service is important, but for reaching a high profitability previous studies have shown that it may be even more important how things are done. In other words, two companies offering the same service or product may have very different results depending on their business model. Within the FOBIA project, several studies have been done in order to map and analyze the business models currently applied by forestry service contractors, and to describe the development needs and hinders that contractors experience today.

One of these studies was recently presented by Patrik Hollsten, master’s student at the Swedish University of Agricultural Sciences (SLU), who in his thesis project investigated how Swedish forestry service contractors work with business model innovation. The results of his study showed that contractors focus their work on different parts of the business model depending on if their main strategy is to increase the company’s profitability, achieve business growth, or if they are in a start-up phase.

Patrik Hollsten

Contractors who were aiming for growth were often had the ambition to strengthen the company’s power to negotiate with customers, and to diversify their risk. The growth was often achieved through recruitment of additional customers, or by exchanging their primary customer to one that could offer better contracts. Another way was also to add new services to their portfolio. This also caused changes in machine and staff resources.

The businesses whose strategy primarily was to increase their profitability put a lot of focus on efficiency in their internal processes. For example, one important measure was to improve governance processes and make sure that the customer was billed for all activities that were covered by the contract agreement. Another common way to achieve higher efficiency was to invest in new forest machines, and also the staff’s work conditions were seen important for achieving a high profitability.

Among the start-up firms the focus was on the establishment of good customer relationships. To start a new business also means that most parts of the business models must be built from scratch and thereafter refined over time. Thus, this group of contractors acted differently than the other two groups which to larger extent could focus their innovation activities on specific business model components.

The main results from Hollsten’s study are also included in a report that synthesizes the work conducted in the FOBIA work package “Business models”. According to Thomas Kronholm, the coordinator of the work package and author of the report, it describes how business model innovation can be implemented, and stimulated, in the forestry service sector by elucidating the contractors’ motivators, how they perceive the roles and responsibilities for innovation, and what kind of tools that can be used for business model design and experimentation.

Thomas Kronholm

The report also highlights that it is important to improve contractors’ abilities to innovate their business by offering forums that facilitate exchange of knowledge and ideas between them, and also to provide opportunities for contractors to increase their business skills through education. An example of such an education effort is the FOBIA Boost Site ( A major problem for contractors in all countries studied have been the availability of skilled personnel. To solve this important issue, several actors and industry stakeholders will need to collaborate in order to increase the attractiveness of the business. With such an effort, there should be good opportunities to develop prosperous businesses models also in the forestry service sector.

Read the project report here: Potential and approaches to stimulate design and adopt new business models in the forestry service business