Odyssey 3.

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(Re)Invent Your Business Model

Assignment 3: Post-Course Essay

How has the Course changed the way you think about strategy and innovation?

Silvia Ghosh
Student ID: 86648

CEMS Masters in International Management

 Odyssey 3.14 (Re)Invent ‘Your’ Business Model: An Eye-Opener
The (Re)Invent Your Business Model course has profoundly shaped my outlook on business model innovation, deepening my understanding of
interconnected concepts crucial for shaping unique organizations. This journey triggered a paradigm shift in my perception of innovation,
emphasizing its ongoing nature rather than a one-time event. This essay explores insights I’ve gained, focusing on the intricacies of business
model innovation, including the value proposition, profit equation, and value architecture. The 14 Directions Approach and real-world case
studies have expanded my understanding of ideation and innovation processes. The exploration highlights the systematic approach needed for
continuous idea generation, dispelling the notion that innovation is an innate talent and emphasizing its accessibility to anyone with
determination.

My Experiences: Previous Exposure to Innovation

The transformative journey of reshaping my perspectives on strategy and innovation through the 3.14 approach, not only fuels my eagerness to
explore its implementation in the realm of sustainability during my imminent work experiences but also motivates me to contribute towards
achieving the SDGs highlighted in COP28. My fascination for sustainable solutions started during my undergraduate studies when I encountered
Ferdin Sylvester, the visionary founder of Ecobel. His innovative 'Therminator' successfully addressed the problem of recycling thermocol. This
particularly sparked my interest in sustainable innovation. While documenting his story for TEDxBITBangalore, the gap between this
groundbreaking invention and its large-scale implementation was revealed. To understand the challenges faced by innovative solutions, I pursued
an internship at FluxGen Sustainable Technologies, a recipient of Nasscom's Deep Tech Emerge 50 Award in the Sustainability sector in 2023.
The company pioneered the integration of AI and IoT in developing AquaGen, a product aimed at reducing industrial freshwater consumption
through water recycling and early leakage detection in water-intensive industries. As a business intern, I collaborated with CEO Ganesh Shankar
to devise market expansion strategies, engaging with international clients and pitching the product, revealing insights into the hurdles faced in
fostering widespread innovation adoption.

However, acknowledging the necessity for broader insights across various industries, I engaged in an internship at Reddbox, a startup specializing
in Insurtech for real estate and home maintenance. This experience exposed me to various facets of the Insurtech industry, where I closely
observed the CEO, Moy Karmakar's journey in building the company. At this internship, I was engaged in diverse activities, such as presenting
innovative solutions to Venture Capitalists and representing Reddbox at the Insurtech Insights Conference. Unfortunately, Reddbox fell short of
Moy's expectations, leading to an eventual merger and dissolution due to funding constraints. This experience underscored the importance of
diversifying revenue sources, a concept explored in-depth by the Guest Speaker, Come Vercken. The realization that exploring partnerships with
firms holding complementary assets, such as those in the automobile insurance industry. For instance, Cuvva, became evident and could have
potentially saved Reddbox from the merger. Although I thought I understood the dynamics of successful businesses based on my internship
experiences, the strategies explored in the (Re)Invent Your Business Model course illuminated nuanced aspects, refining my understanding of
what it truly takes to build and sustain a business from the ground up.

My Learnings: Nothing short of an Eye-Opener

Innovation, extending beyond technology, encompasses process, managerial, and product evolution, driving transformative change in
organizations. The 3.14 framework serves as a guiding compass, steering businesses to reinvent models with a strategic focus on alignment,
innovation, and adaptability (Teece, 2010). Recognizing the intricate business ecosystem, strategic considerations become paramount, allowing
organizations to position themselves strategically by assessing dynamics among customers, competitors, suppliers, and complementors.
Identifying complementors aligned with a company's offerings not only transforms value architecture and proposition but also fosters
collaboration and innovation, emphasizing the crucial role of synergy. This significantly reshaped my understanding of strategic concepts. As an
aspiring entrepreneur, navigating the complex maze of business model innovation requires understanding interconnected components (Prause,
2015). Unravelling complexities surrounding value proposition, profit equation, and value architecture became imperative, empowering me to
construct a resilient business model inspired by the 14 Directions Approach and real-world case studies featuring Michelin, Honda, and the iconic
clash between Netflix and Blockbuster (Davis & Higgins, 2013). This journey prompts a reflective reassessment of my interpretation of strategy
within the realm of business models (Taran, 2016).

Delivering Value: Value Proposition

At the core of any business model is a nuanced value proposition, addressing the fundamental "Who?" and "What?" of the business's audience.
Developing a compelling value proposition requires a deep understanding of client needs, and skillfully tailoring products or services to meet
these demands. My journey of enlightenment highlighted the importance of considering diverse stakeholder values when formulating a value
proposition. The intricate interplay between price and perceived value, revealing various strategies and influencing differentiation zones,
expanded my comprehension. It became clear that entities in the low differentiation zone need a strategic approach to maintain a compelling
value proposition amid cost reductions. Innovations like car-sharing services, explored in the course, intrigued me, showcasing a shift from
ownership to value-driven mobility (Prause, 2015). The "7 Directions for the Value Proposition" provide practical insights, encompassing client
cost reduction, free offerings, streamlined services, non-client targeting, enhanced functionality, exploration of new segments or industries, and
consideration of third-party or multi-sided business models, along with adjusting the revenue stream for a holistic strategy ensuring resilience in
the dynamic business landscape.

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Illuminating the Essence of Value Architecture and Value Curve
The foundation of a robust business model lies in the intricate web of value architecture. This construct, symbolized by the value chain, elevated
my understanding by orchestrating essential components crucial for delivering inherent product or service value. Unfolding as a sequence of
activities mirroring inputs, processes, and outputs, the value chain goes beyond the organization's cost structure while remaining distinct from it.
The "7 Directions for the Value Architecture" acts as a strategic guide, enabling me to equip myself to direct organizations in adopting new
technologies, modifying the value chain, and optimizing resources through strategic partnerships and competition. Honda's adoption of a
resource-based view exemplified the necessity of mastery of resources and competencies for me and showcased the dynamic nature of
organizational capabilities (Bryson et al., 2007). Additionally, I realised that dissecting the value proposition involves a meticulous analysis of
several attributes using a value curve. Disruptive value propositions concentrate on targeted value drivers, emphasizing high value while
significantly reducing or eliminating others.

Navigating the Financial Landscape: Linking Profit Equation and Value Architecture
At the core of the business model is the intricate interplay of the profit equation—balancing revenue, costs, and capital employed. This financial
triad not only forms the bedrock of profitability but also evaluates the environmental and social implications of business models. The paradigm
shift towards sustainability (López-Nicolás, 2021) is exemplified by standout ideas in Group Project presentations, such as RenewBlend's
sustainable packaging, seamlessly integrating environmental considerations into the profit equation. Serving as the financial nexus connecting the
value proposition and value architecture, the profit equation unravels the translation of proposition value into revenue. Beyond EBIT, the ROCE
becomes pivotal for a comprehensive understanding of true profitability. Contrasting financial dynamics between BlaBlaCar (Lakhani et al.,
2017) and Zip Car (Sundararajan, 2013) highlight the importance of diverse revenue streams, with JCDecaux's bus stops integrating maintenance
services showcasing the revenue potential of third-party involvement. This mirrors the multi-sided platform model employed by companies like
Amazon, Uber, Airbnb, and BlaBlaCar, characterized by the network effect, asset-light strategy, and varied pricing opportunities. Evolving
business models, exemplified by PSS akin to SaaS, find resonance in Spotify's model, emphasizing collaborative consumption, durability,
extended lifespan, and recyclability. The Michelin case explores a transformative model for trucks and buses, transitioning from suppliers to
customers with hassle-free contracts featuring variable costs and no upfront investment, introducing differentiation and a solution-focused
approach (Gupta et al., 2022). Michelin's tire ownership increases capital employed, aligning with the trend of product-service systems,
emphasizing total costs, sustainability, and continuous innovation through Maintenance-Free Service (MFS). The synergy of Value Architecture
and Profit Equation underscores the positive impact of tire monitoring, emissions reduction, cost-effectiveness, and service accessibility—a
comprehensive approach integrating sustainability and efficiency in tire management.

Innovative Practices Spanning Various Industries

Innovation proves paramount, even in traditionally functional industries, as seen in Cemex's Blue Ocean Strategy, which injects emotion into
sectors like cement production by providing basic materials to communities and facilitating micro-financing for payments (Singh, 2014).
Elevating innovation in business models by involving a balance of functionality and emotion in products, and combining different customer
segments for a unique value proposition, is a valuable lesson poised for implementation in my entrepreneurial venture. These instances, gleaned
from the case studies, vividly illustrate the breadth of my learning throughout the course. The McKinsey 7S framework (Channon & Caldart,
2015), considering both hard and soft elements, is crucial for comprehensive changes needed for disruptive innovation, unfolding in three phases:
ideation, experimentation, and scaling up. Employing a range of tools, including idea boxes and competitions, as introduced in the course, my
exploration is directed by categorization models like profit impact versus ease of implementation. Understanding the challenges of foreseeing
industry revolutions is vital, illustrated by the obsolescence of Blockbuster through the Netflix vs. Blockbuster case. Exploitation and exploration,
as demonstrated by Mojo Ride's data leverage and the Toyota-Mobility 54 partnership, highlight the strategic blend for innovation. The
development of innovators involves key behaviours: commitment to questioning, observational skills, a propensity for experimentation, active
networking, and an interconnected approach, exemplified by Toyota's "five whys" method (Fritze, 2016), and Grameen Bank's backward high
jump (Morduch, 1999).

Transformative Insights: The Paradigm Shift

From the inception of the course, exploring the doughnut economy profoundly reshaped my understanding of sustainable development. The
examination of macroeconomics and microeconomics' impact on businesses and growth led me to a crucial 'Aha!' moment. Odyssey 3.14
introduces a unique approach to the business model, distinguishing itself from the conventional canvas (Lehmann-Ortega et al., 2022), with a
holistic view of innovation. What set this course apart from my past experiences and other strategy courses was the foundational approach.
Initiating discussions by simplifying the definition of what a business model is, as descriptions of how companies generate profits, ensured a
shared understanding. Further, delving into key elements of business models, such as the value proposition, value architecture, and profit
equation, all serve as crucial metrics for evaluating business performance. Distinguishing between strategy and business models, the former
involves challenging existing business models in response to external factors and considering necessary adjustments. The Group Project,
particularly focusing on discovering a new business model, played a crucial role in highlighting the significance of Diversity of Thought. Our
diverse perspectives brought forth incredible ideas, addressing encountered challenges, and brainstorming solutions in exploring revenue sources
and estimating potential earnings. Previously, I only recognised radical innovation, but understanding process innovation as a fundamental form
of innovation was itself a radical breakthrough for me.

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Reference List:

● Bryson, J.M., Ackermann, F. and Eden, C., 2007. Putting the resource‐based view of strategy and
distinctive competencies to work in public organizations. Public Administration Review, 67(4), pp.702-717.
● Channon, D.F. and Caldart, A.A., 2015. McKinsey 7S model. Wiley Encyclopedia of Management, pp.1-1.
● Davis, T. and Higgins, J., 2013. A blockbuster failure: how an outdated business model destroyed a giant.
● Fritze, C., 2016., The Toyota Production System. The Key Elements and the Role of Kaizen within the
System.
● Gupta, Sunil, and Christian Godwin. "Michelin: Building a Digital Service Platform." Harvard Business
School Case 520-061, March 2020. (Revised January 2022)
● Lehmann-Ortega L., Musikas H., and Schoettl J.-M., (Re)invent your business model: With the Odyssée
3.14 method. Dunod, 2022.
● Lakhani, Karim R., Arun Sundararajan, Emilie Billaud, and Caroline Caltagirone. "BlaBlaCar: The Road
Ahead..." Harvard Business School Case 617-050, February 2017.
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● Sundararajan, A., 2013. From Zipcar to the sharing economy. Harvard Business Review, 1(1), pp.1-2.
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