Changing Business Strategically 21/22 - Concise Summary of Lectures and Videos
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Course
Changing Business Strategically (BMSM09)
Institution
Erasmus Universiteit Rotterdam (EUR)
Summary of all my content module lecture notes, combined with notes taken from the informative videos. Please note that this summary NOT includes academic articles and skills module lectures.
Session 1: Changing competitive landscape and incumbents
Lecture and video
New technologies and business models change the competitive landscape in an industry by
redefining how customer value is created. Companies need to adapt to changing value
perceptions in order to remain competitive.
Sustaining technologies: technologies that do not require a new business model to be utilized
commercially. New products developed using these technologies can be delivered to customers
using existing business models.
Disruptive technologies: new technologies that require a new business model to be utilized
properly. Disruptive technologies have caused many successful companies to collapse.
Managers fail to adapt to disruptive technologies due to inertia, which means resistance to
change / the tendency to do nothing or remain unchanged. There are three sources for inertia:
• Strategic frame rigidity
o Strategic frames are the mind-sets that shape how managers see the business
world and how they believe customer value should be created.
▪ What business are we in?
▪ How do we create value?
▪ Who are our competitors?
▪ Which customers are crucial?
• Routine rigidity
o Organizational routines are established procedures to carry out organizational
tasks, or the way things work in an organization.
o Routines are useful because they enable efficient operations. However, they are
hard to change.
• Resource rigidity
o Resource rigidity means the inability of established organizations to change the
resources in which they invest. Incumbents tend to invest in resources that have
been useful to develop a competitive advantage in the past. However, they
hesitate to invest in new resources that have become important as a result of
new technologies and business models. There are three reasons for this:
▪ Failure to realize the importance of new resources.
▪ Fear of losing current customers.
▪ Constraints placed by investors and capital markets.
• For example, stocks of incumbents lose value when they invest
in new technologies.
,Organizations can overcome inertia by reducing its negative impact on adapting to changing
business environments:
• First, companies need to separate the operations focusing on the new technology from
the main operations of the company.
o This will allow the new business unit to develop its own routines according to
the realities of the new technology.
• Second, companies need to incorporate input from outside to operations focusing on
the new technology.
o This will reduce the negative effect of rigid strategic frames and organization
routines on decisions regarding how to commercialize the new technologies.
There are three specific ways of implementing these suggestions:
• A new business unit with decision-making authority focusing on new technology
that works separately from the rest of the organization can shield the new operation
from outdated routines and ways of thinking.
• Open innovation, which means involving outside parties and innovation processes,
allows getting input for innovation processes from outside of the organization. This is
often more efficient and enables faster time-to-market. It enables new product and
business model ideas, new technological solutions, new commercialization capabilities,
and it improves competitiveness.
• Strategic alliances with other organizations to develop new products based on the new
technology with fresh perspectives about how to commercialize the technology.
, Session 2: Business model innovation
Lecture and video
A business model is the architecture of how a firm creates and captures value by offering
customers a solution to get a job done. A job here means an important customer need or
problem that needs a solution.
Viewing and sharing pictures, traveling from A to B or watching a movie on a screen are
examples of customer jobs to be done. Many companies strive to offer the best solutions. New
solutions are offered through new business models, either by:
• Leveraging new technologies.
• Utilizing existing technologies in creative ways.
The four components of a business model include:
• Customer value proposition
• Key processes
• Profit formula
• Key resources
A new business model makes sense to either seize an opportunity or to respond to
competitors who acted on such opportunities.
When companies transform their business models to seize new opportunities, two questions
are important:
• What is the reason for business model transformation?
• Which components will be transformed?
For example, a new business model can bring a new value proposition. A new offering to the
customer that goes beyond current solutions in at least one meaningful dimension for doing
the customer “job:”
• Price: Cheaper solution (low-cost airlines)
• Utility: Greater satisfaction (greater selection of movies songs etc.)
• Convenience: Easier access (home delivery or digital solutions)
A new business model can also enhance competitiveness by bringing a new profit formula,
which can influence:
• Revenue items
• Cost items
• The logic for making profits
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