Hello, how are you doing? Rita McGrath, a professor and consultant at the University of Columbia, says strategy is currently stuck in companies as many strategies of great corporations are still nowadays centered on concepts of renowned scholars and consultants such as Michael Porter, Gary Hamel or C.K. Prahalad, who base their methods and tools on the mainstream idea of accomplishing a sustainable or permanent advantage. McGrath goes on and says that the concept of sustainable or permanent competitive advantage is no longer relevant and that it is inoperative in a volatile, uncertain and global world, as the one we are living in because the speed in which businesses are created, develop, and die, calls for flexible and agile strategies which enable immediate learning and quick adjustments in light of market changes. McGrath calls this agile and flexible change of quick learnings a “transitory” competitive advantage, that is, companies must be ready at all times to make immediate adjustments in their business model to face the new challenges McGrath says that today, in order to win in volatile and uncertain environments, executives must learn to exploit short-term opportunities quickly and with decisiveness and she goes on to say that “one of the main causes of the lack of vision of executives is the way in which companies have historically separated strategy and innovation as two different disciplines because, today, this competitive process has gained so much speed with the emergence of Internet, the fall of protectionist barriers, And technological advances makes the competition come from practically everywhere, so we have seen in the last years how these disciplines, which historically were approached in an isolated way, that is, innovation and entrepreneurship independently, are now being used as a strategy. Organizational change and innovation are becoming more and more connected to develop a competitive advantage in companies and, consequently, new markets, methodologies, and tools are being developed to allow us to see all the elements, including resources, in a holistic, integral fashion to analyze a business model, and not as independent factors like strategy, innovation, and organization. Stanford University, through Steve Blank, Eric Ries, and Alex Osterwalder including the School of Design of the same university, developed what today is known as the Agile or Lean Startup methodology, which which is easy to understand through visual elements and tools in order to develop a new business model whose popularity made big companies and entrepreneurs to apply the method all over the world. Using this methodology based on the observation and discovery of the customer, which is made up of the well-known nine blocks, allows us to experiment and adjust continually until the perfect formula is found, be this a product, a service, or a business model, which adapts and understands market needs This new visual framework is based on three strategic elements: Fail fast, fail cheap, and learn fast. We understand failure as experimenting For the first time failure is regarded as a way , of experimentation and iteration, and it is understood as “intelligent failure” and it is used to ease learning and comprehension of customers’ needs. In this new framework, recognizing opportunities becomes an ability that can be systematically developed. and this is why we are in this class, to teach you this money-making system and this is how we come to the definition of business model as the hypothetical description of how a business or project creates, delivers, communicates and captures value, that is, how it makes money. Clayton Christensen, father of disruptive innovation, establishes that a business model must have four elements. We have already seen them with Harvard professors. One: it must contain a value proposition. Two, it must have a profit formula. Three, it needs key resources. And four, key processes. Very similar to what Mark Johnson said, the process of allocating resources is probably the most important way to influence what is being done in an organization. and, also, who does it. Resources are key. In the business world, knowing how to design a leading edge business model becomes becomes the cornerstone for survival, scalability, and profitability of a company. We saw in our previous course that Mark Johnson, from Harvard University, mentioned that a good business model must be oriented to finding “white spaces”, understood as a spectrum of potential activities not defined or addressed by the current commercial model of the company. In other words, an innovative business model seeks opportunities that exist outside its core and, as Mark Johnson said, beyond its adjacencies and which require a different form of exploitation. What we mean is that white spaces are really a subjective value to a company, a value that can be developed into a new business model outside its core or line of business. It describes activities which are far from the common ways of work of a company, and it presents unique and puzzling challenges for that specific company. The epicenter of a business model is its value proposition. It is of the utmost importance that value is understood as the alignment of individual values, both of the founders as well as of the company’s employees, with the values of the company itself. That is to say, a company’s employees sometimes fail to understand that part. We believe that value is only the economic side and it has a lot to do with the founders and the company itself. Value can be understood in three dimensions: One, how we create value, this is innovation. Two, how we capture value, which is how we make money. And three, how we communicate value both inside and outside the company. The main attraction of this course is to teach tools that generate paths to develop better value propositions with alternatives that respond to the new local and regional contexts in the ways of doing business. New business models outline paths, and these paths become patterns, that when they mix or add up allow to create new paths, and thus, new patterns and, consequently, new business models. For a better understanding, reference, and research of these business model patterns, several authors have “baptized” them, which help the ecosystem of business and entrepreneurship to mentally understand and connect them. We will see these patterns and concepts later on at the end of this course. As I was saying, in this course we will look at several business models which will allow the participants, not only to handle the language of business models and entrepreneurship, but also to become good observers and detect successful business models which can be examples to create or improve their own. Additionally, students will improve two major skills: abstraction and intuition through visual thinking tools.
