MODULE ONE

Strategy and Innovation

Dr Surja Datta
Senior Lecturer, Oxford Brookes University
Co-Editor, International Journal of Technology Management and Sustainable Development
Your Journey
Through the
Programme
MODULE ONE LEARNING AND
ACTION OUTCOMES
Knowledge
I understand what innovation is and how to Mindset and Skills
use the Sustainable Business Model
Canvas to innovate.
I am aware of techniques for developing
I am able to describe the key elements
of our business model.
Action
strategy and identifying opportunities. I am motivated to seek new ways of
doing things in the business. I have started defining the core value
proposition of our business.
I have started to use at least one of
the module tools (VRIO, Porter's 5
Forces/Competitive Strategy
framework, Business Model Canvas,
Ansoff matrix) to understand key
areas of our business.
THE FOCUS FOR THIS MODULE

SECTION 1: TAKING A STRATEGIC VIEW OF YOUR BUSINESS

SECTION 2: INNOVATION AND DIFFERENTIATION

SECTION 3: YOUR VALUE PROPOSITION AND BUSINESS MODEL

A Challenging Business Climate!

• The global economy will remain uncertain

• Energy crisis – roller coaster ride in the short-term
• Net Zero and digital transformation
• Sustainability – creating a responsible business - UN Sustainable Development Goals (SDGs)
• Supply chain disruption
• Inflationary pressures and sticky interest rates
• Great Resignation – labour shortages
SECTION ONE
Taking a Strategic View
of Your Business
Introducing Strategy ?
?
Internal strengths and weaknesses 3. Exploratory
? Business
(the future possibilities you think
may be there but need further
In strategy we think carefully about: investigation)
?
• why we are in business – our purpose 2. Growth Areas
(the areas that are there for
you if you work to go after them)

• who our customers are and what they ?

get from us – our value proposition

• what our values are 1. Core Business

(what you are already doing
really well – not so well?)
• where we see our organisation going in ?
the future.
VRIO Strategy Framework
• VRIO framework is the tool used
to analyse a firm’s internal
resources and capabilities to find
out if they can be a source of
sustained competitive advantage.

• VRIO is an acronym for a four-

question framework focusing on
value, rarity, imitability, and
organization.

• To really be able to convert these

resources into a competitive edge,
businesses must achieve ALL four
elements of VRIO model.
VRIO in Action – questions to consider
GROUP DISCUSSION
1. What do you consistently do better than your rivals?
(i.e. your business’s core capabilities/strengths)

KEY TAKEAWAY ON STRATEGY

- Businesses need processes to regularly review external opportunities.
- If you don’t – what will you add, what needs to change?
Strategic Options
How can we compare opportunities 1 3
and the associated risks?

The Ansoff Matrix shown here helps us map

possible areas of growth for our organisation – it
helps structure our thinking and plan for the risks
involved in new opportunities.
To use the matrix, we ask two questions:
2 4
• Is this opportunity aimed at a market which is new
(to us) or at our existing market?
• Does a new product/service need to be
developed, or will our existing offer work?

• In other words, business model innovation

Original source: ‘Strategies for Diversification’ (Harvard Business Review, September–October 1957
SECTION TWO
Innovation and
Differentiation
 Innovation
• Innovation in existing firms can both increase their efficiency (reducing costs of production) and
improve the goods and services they offer, thus increasing demand.
Both can improve margins and productivity.

• The UK Government defines innovation as: the successful exploitation of new ideas.

• Innovation may involve an organisation’s:

1. products and services
2. processes (e.g. exploiting new technologies)
3. position in the market
4. business model (e.g. new sources of income, better integrated supply chain)
or….. put more simply!
• Innovation – a fancy word for problem-solving – or asking the
question; is there a better way of doing something in your
business?

• Innovation in business is all about enabling your customers to

buy – repeatedly, into the future, and to refer others [customer-
centric perspective]

• Responsible innovation more important than ever for

the customer – implementation at the market solves
or alleviates an environmental or a social problem
Innovation is…

• Imperative for competitive advantage

• A contact sport in which collaboration is essential….. open

innovation (e.g., co-conception; open source)

“….business leaders are often clueless – this keeps them

open-minded, asking the naïve questions and being curious!”

Sahar Hashemi, OBE (business leader best known as the co-founder of

Coffee Republic & Buy Women Built)
 Innovation Should Make You Distinctive (and Hard-to-Copy)
• Design Innovation is about generating ideas that are humanly desirable, technologically
feasible, and financially viable - with its focus on understanding customer-needs - is
increasingly used at the front-end of innovation in businesses.

• Intellectual Property (IP) refers to creations of the mind – 4 types of relevance here –
patents, copyrights, trademarks and trade secrets – these can protect your
advantage.

• Research and Development (R&D) is defined as any activity that leads to the
innovation of new products, processes, or services or improvements to those that
already exist. Businesses are looking for solutions, but they aren’t sure how or if they
will be successful. Inevitably there is risk involved because uncertainties exist around
what is being developed.
Further Intellectual Property Office resources on the VLE
Capabilities for Innovation
“No matter which innovation strategy, all successful companies depended on
a common set of critical innovation capabilities.”

1.The ability to gain insights into customer needs and to understand the potential
relevance of emerging technologies at the ideation stage.

2.To engage actively with customers to prove the validity of concepts during
product [or service] development.

3.To work with pilot users to roll out products/ services carefully during
commercialisation.
Developing Competitive Strategies – how
do you compete?
Lower Cost Differentiation

Overall Low-Cost Broad Differentiation

A Broad Cross-
Leadership Strategy Strategy
Section of Buyers
(Cost Leadership) (Differentiation)

Hybrid
Strategy
A Narrow Buyer Focused Low-Cost Focused Differentiation
Segment or Strategy Strategy
Market Niche
(Niche cost-leadership) (Niche Differentiation)

Porter, 1985
Differentiating a Product
Rachel’s Organic Yoghurt was founded in a
farm in Wales. When it landed in
supermarkets in the late 90s it was clad
almost completely in black – a daring
decision, defying convention.
Rachel’s Organic Yoghurt Takeaways

• Yoghurt meant more to customers than simply a dessert or a snack. It was fulfilling
other needs around healthy and natural lifestyle choices (a reflection of how
those customers saw themselves)

• The company’s values were based on its founder’s passion for sustainable,
organic, close-to-nature, dairy produce, something customers couldn’t easily
believe about established yoghurt manufacturers like Muller or Nestle.

• Satisfying needs: People don’t just buy products to satisfy functional needs,
they also buy ‘meaning’ where their needs (emotion, identity, purpose) are
satisfied through experience. (We’ll explore this in our breakout activity)
Differentiating a Service

Accor Hospitality Group asked itself four

key questions about F1:

• Which of the factors that our industry

takes for granted should be eliminated?
• Which factors should be reduced well
below the industry’s standard?
• Which factors should be raised well
above the industry’s standard?
• Which factors should be created that the
industry has never offered?

Source: https://hbr.org/2004/07/value-innovation-the-strategic-logic-of-high-growth
SECTION THREE
Your Value
Proposition and
Business Model
What is a business model?
• ‘[…] at heart stories, stories that explain how enterprises work;
• who is the customer?;
• what does the customer value?;
• how can we make money in this business?;
→ what is the underlying economic logic that explains how we can
deliver value to customers at an appropriate cost?’

(Ovans, 2015; Harvard Business Review)

Thinking about Value (for the Customer)
Instead of Products and Services.
Two organisations competing to meet similar customer needs, but with very different
business models. For example, Echelon can take advantage of economies of scale and fill
every class.

Image Sources: Echelon exercise bike https://www.entrepreneur.com/slideshow/348298

Pure Gym façade, courtesy of https://www.zephyr-creative.com/portfolio/puregym-4/
 The Sustainable Business Model Canvas will
help you design an effective business model

We will now
explain the
different
elements of the
model

A helpful video is also given on the VLE - Video Presentation Business Module Canvas Worked Example
See also www.strategyzer.com/
https://www.case-ka.eu/wp/wp-content/uploads/2017/05/SustainableBusinessModelCanvas_highresolution.jpg
The Customer Side
Customer Relationships Customer Segments
What type of relationship does each of our Customer For whom are we creating value?
Segments expect us to establish and maintain with Who are our most important customers?
them?
Which ones have we established?
How are they integrated with the rest of our business
model?
How costly are they?

Channels
Through which channels do our Customer Segments
want to be reached?
How are we reaching them now?
How are our channels integrated?
Which ones work best?
Which ones are most cost-effective?
How are we integrating them with customer routines?

https://www.case-ka.eu/wp/wp-content/uploads/2017/05/SustainableBusinessModelCanvas_highresolution.jpg
Value Propositions
Value Propositions
What value do we deliver to
the customer?
Which one of our customer’s
problems are we helping to
solve?
What bundle of products and
services are we offering to
each Customer Segment?
Which customer needs are we
satisfying?

https://www.case-ka.eu/wp/wp-content/uploads/2017/05/SustainableBusinessModelCanvas_highresolution.jpg
Unpacking Value Propositions
 Partners, Activities & Resources
Key Partners Key Activities
Who are our Key Partners? What Key Activities do our Value
Who are our key suppliers? Propositions require?
Which key resources are we Our Distribution Channels?
acquiring from partners? Customer Relationships?
Which Key Activities do Revenue Streams?
Partners perform?

Key Resources
Physical, financial, intellectual and human.
Can be owned or leased or acquitted from
key partners.

https://www.case-ka.eu/wp/wp-content/uploads/2017/05/SustainableBusinessModelCanvas_highresolution.jpg
 Costs & Revenue

Cost Structure Revenue Streams

What are the most important costs inherent in our business model? For what value are our customers really willing to pay?
Which Key Resources are the most expensive? For what do they currently pay? How would they prefer to pay?
Which Key Activities are the most expensive? How much does each Revenue Stream contribute to overall revenues?

https://www.case-ka.eu/wp/wp-content/uploads/2017/05/SustainableBusinessModelCanvas_highresolution.jpg
MODULE SUMMARY

Section 1
Taking a strategic view of your business
(VRIO Framework; Ansoff Matrix)

Section 2
Innovation and differentiation - standing out (Porter’s 3 competitive
strategies)

Section 3
Your value proposition and business model
(Value Proposition Canvas + Business Model Canvas)
 Growth Action Planning Workbook

• The GAP Workbook uses a module-by-module approach to

recording your notes as you go through the programme, helping
you identify priorities and turn your ambitions into reality through
simple action planning.
• This is your principal GAP tool, and we ask you to start using it
from the very first module. Make filling in your GAP Workbook a
regular habit during the programme to ensure you capture your
valuable learning and reflection in a format that is easy to return
to and develop as you go along.

To use the workbook, follow these simple steps:

a. Do this now – Download the template and save it in a handy
place so you can easily return to it after every module
b. After each module – Each time you complete a module, open
your GAP Workbook, click on the module link in the contents page
to go to the relevant module questions and fill in your answers and
notes. Then save your document.
c. Throughout the programme – Use your GAP Workbook as a
reminder of your priorities when talking to colleagues about ideas
from the programme, and to reflect on challenges and strategies you
may want to discuss in your mentoring sessions.