Lecture 1 – Theoretical Models in Strategy
General Introduction: Focus on entrepreneurial strategies and business models,
Ø Exploring how SB owner develop strategies using the entrepreneurial strategy
compass (Gans et al., 2018).
Ø Examine core components & purposes of BMs & their links to firm performance
(Morris et al., 2006).
3 definitions of strategy
1) Determination of long-term goals and courses of action.
2) Broad formula for how a business is going to compete, what its goals should
be, and what policies are needed to carry out those goals.
3) Fit between a business’ resources and its environment.
2 issues (for high-tech entrepreneurs):
1) Timing: exploring à commercialization (when?)
2) Strategy: how to commercialize? (Gans et al., 2018)
Learning objectives
• To define ‘strategy’ and to explain the diversity of theoretical perspectives/schools
of thought on strategy
• To explain challenges for entrepreneurs and the differences between four types of
entrepreneurial strategies
• To define the concept of ‘business models’, to explain their basic components and
different types of business models
1
,Art. 1.1 – Gans et al. (2018). Strategy for Startups
“Entrepreneurial strategy compass” = framework to choose among 4 potential go-
to-market strategies. First based on 2 dimensions
(1) Attitude innovation / (2) Attitude incumbents
Each combination results in 4 total strategies:
(1) Intellectual Property Strategy
- Create value within existing marketplace Dolby is global setter for
- Entrepreneur focuses on R&D & innovation sound technology; licenses
- While collaborating with incumbent to technology to others.
commercialize (customer base, distribution
networks & experience)
(2) Architectural (often platform business)
- Entrepreneur creates & controls (keep Airbnb & Uber built platform,
control) new value chain creating new VC by facilitating
- Facilitate own interaction with customers interactions while maintaining
control
(3) Value Chain
- Fit into / leverage existing value chain Startup collaborates with
- Focus on niche market to become the best supermarket chain. SB
there focuses on customer
experience, while supermarket
provides infrastructure
(4) Disruption
- Compete directly: highly independent, create Netflix disrupted video rental
new products / services / BMs industry, replacing Blockbuster
- Be flexible & fast to take advantage of for more convenient solution
overlooked market gaps
- Risky; compete against incumbents with
resources, brand, customer base (however, if
successful significant market share)
Once you know your strategy, there are 4 domains on which actions are needed:
1) Customers: identify customers & needs
2) Technology: identify technologies needed
3) Identity, culture & capabilities: ‘narrative’ towards stakeholders + what
internal / external image?
4) Competitors: identify competitors
2
, Art. 1.2 – Morris et al. (2006) Is the Business Model a Useful Strategic Concept?
Definition of business model (BM): “architecture for firm for creating & delivering
value to customer in order to generate profitable & sustainable revenue streams”
à 3 domains of a BM (also look at KPIs!):
1) Strategic: Who are the stakeholders? What is the value proposition? How does
it differentiate itself from competitors?
2) Operational: What internal processes, resources & systems are used to deliver
value?
3) Economic: How does firm generate revenue and be profitable?
Lecture adjusts figure with arrows in two directions instead of hierarchy
Figure 1 Morris et al. (2006) Lecture 1
5 practical purposes of BMs
1) Provide logical & consistent approach to the business
2) Identify innovation opportunities with unique combinations
3) Demonstrate economic viability to attract investors
4) Guide ongoing operations & decisions
5) Adapt to changing (external) conditions over time (long-term competitiveness)
“BM = framework à strategic decisions à firm performance”
3
General Introduction: Focus on entrepreneurial strategies and business models,
Ø Exploring how SB owner develop strategies using the entrepreneurial strategy
compass (Gans et al., 2018).
Ø Examine core components & purposes of BMs & their links to firm performance
(Morris et al., 2006).
3 definitions of strategy
1) Determination of long-term goals and courses of action.
2) Broad formula for how a business is going to compete, what its goals should
be, and what policies are needed to carry out those goals.
3) Fit between a business’ resources and its environment.
2 issues (for high-tech entrepreneurs):
1) Timing: exploring à commercialization (when?)
2) Strategy: how to commercialize? (Gans et al., 2018)
Learning objectives
• To define ‘strategy’ and to explain the diversity of theoretical perspectives/schools
of thought on strategy
• To explain challenges for entrepreneurs and the differences between four types of
entrepreneurial strategies
• To define the concept of ‘business models’, to explain their basic components and
different types of business models
1
,Art. 1.1 – Gans et al. (2018). Strategy for Startups
“Entrepreneurial strategy compass” = framework to choose among 4 potential go-
to-market strategies. First based on 2 dimensions
(1) Attitude innovation / (2) Attitude incumbents
Each combination results in 4 total strategies:
(1) Intellectual Property Strategy
- Create value within existing marketplace Dolby is global setter for
- Entrepreneur focuses on R&D & innovation sound technology; licenses
- While collaborating with incumbent to technology to others.
commercialize (customer base, distribution
networks & experience)
(2) Architectural (often platform business)
- Entrepreneur creates & controls (keep Airbnb & Uber built platform,
control) new value chain creating new VC by facilitating
- Facilitate own interaction with customers interactions while maintaining
control
(3) Value Chain
- Fit into / leverage existing value chain Startup collaborates with
- Focus on niche market to become the best supermarket chain. SB
there focuses on customer
experience, while supermarket
provides infrastructure
(4) Disruption
- Compete directly: highly independent, create Netflix disrupted video rental
new products / services / BMs industry, replacing Blockbuster
- Be flexible & fast to take advantage of for more convenient solution
overlooked market gaps
- Risky; compete against incumbents with
resources, brand, customer base (however, if
successful significant market share)
Once you know your strategy, there are 4 domains on which actions are needed:
1) Customers: identify customers & needs
2) Technology: identify technologies needed
3) Identity, culture & capabilities: ‘narrative’ towards stakeholders + what
internal / external image?
4) Competitors: identify competitors
2
, Art. 1.2 – Morris et al. (2006) Is the Business Model a Useful Strategic Concept?
Definition of business model (BM): “architecture for firm for creating & delivering
value to customer in order to generate profitable & sustainable revenue streams”
à 3 domains of a BM (also look at KPIs!):
1) Strategic: Who are the stakeholders? What is the value proposition? How does
it differentiate itself from competitors?
2) Operational: What internal processes, resources & systems are used to deliver
value?
3) Economic: How does firm generate revenue and be profitable?
Lecture adjusts figure with arrows in two directions instead of hierarchy
Figure 1 Morris et al. (2006) Lecture 1
5 practical purposes of BMs
1) Provide logical & consistent approach to the business
2) Identify innovation opportunities with unique combinations
3) Demonstrate economic viability to attract investors
4) Guide ongoing operations & decisions
5) Adapt to changing (external) conditions over time (long-term competitiveness)
“BM = framework à strategic decisions à firm performance”
3
