 So, as we started in the beginning of this discussion that there are lot of changes happening and how to cope up with change is is a scary process to begin with from these description like the life cycle of the complete advantage and the systematic way of harnessing the transient complete advantage. We can see a science behind the process, we can look at there is a more predictable process. If we adopt, we can tap something which is difficult to predict. There are so many case studies and we are going to discuss about the case studies where the strategy for transient advantage are very well harnessed by some of the players. This we see that Walmart is known for the retail and now Walmart is coming up with the health care and even their even they have launched the phone cards. Vodafone has launched M-Pesa in Africa for the electronic transfer. Vodafone otherwise is known as not known as a banking organization and Walmart is not known as a health care organization. They have entered into the field because they have realized of fact that complete advantage and transient competitive advantage is no bound by industry, but we need to identify the arena where we would like to play. There is another set of example of the cognizant and ITC. We know that Indian companies are fast losing out on the labor arbitrage. That labor arbitrage is coming down, the salaries are going up and as a result of that either they have to move up in the sophistication of their project or they will be out of business because just simply labor arbitrage is not going to give them the complete advantage. How one organizations has dealt with that is an example we are going to look at. This example is of the cognizant and cognizant is started initiative called job of the future. What simply they are doing is that they have formed the teams about some industries. These teams very systematically study the industry. Look at the trains, identify the probable changes in the years to come and its impact on the process and systems of the existing organizations. And after this thorough understanding about the industry they go to the business organizations in those industry with these studies saying that your industry is going to look like this and not going to remain same and will be differently operating and these are the way it will be operate it will be operating are you ready for that. And if you are not ready for that we are will be happy to partner with this. This is an amazing initiative and as a result of that they are able to build the competency across many industries and have won so many projects in different industries. This is one example of the identifying the things not being varied with few processes which they are exporting. Another example is ITC the full form of the ITC is the Indian tobacco company. First they drop the name of the full form and then they use the term ITC as the proper noun not as an acronym. And they realize that going on that the tobacco business is not going to remain the same people are becoming more conscious and this business by nature is hurting people the health of the it is adversely affecting the health of the people. They use their existing distribution capabilities and they looked at the agro business as a natural outcome as a natural progression of their business. And agro business at two levels at the retail at the level of retail wherein they were offering many products and catering to the segments within the FMCG which were underserved like packaged food. At the same time they started the another networking the name of each of all where they were helping they were working with the farmers to identify the market dynamics, the environment, the climatic conditions and so many other things and kind of partnering with the farmers in the in their agriculture. So, these two examples suggest that setting the broader theme and let people experiment around that is one of the ways of harnessing the transient advantage. There is another set of examples there is one company which is not technically very very sophisticated, but has has to offer something very interesting to learn. This organization is of the bramble in the Australia they are into the agribusiness. And when they looked at what their clients are struggling with and where they can create value they identified their clients which were the stores the retail stores for them unloading and unpacking the material from a from the big containers and transferring those into the smaller containers and the smallest self was something which was very time consuming and they thought that if something can be handled around that that will be a great benefit to them. Bramble did a simple innovation they looked at the store capacity they looked at the store dimensions of their retail partners and they did that packaging of that size in the on the farms itself. So, the retail partners had to just transfer their stuff directly to the store and the store containers. It was a simple innovation, but they made very deep in roads with the large number of retail stores and that help them to establish their initial position. What it says is that we need to focus on the experiences and solutions to the problems if we have to harness the transient advantage. There are examples of the organizations which are based on building the community. So, for example, there is a software company in Qt which is not providing the finished software, but it is providing the services and enough opportunity for people to do the tinkering and do the innovation on the organization platform itself. Another example is that the trade by advisor which provides the place for people to interact and the community itself became self sustainable and the supporting feature. So, building a strong network also is a very important feature of adding to the transient advantage. Now, we see Airbnb is also not only providing the information about the places for a stay, but they are focusing on building the Airbnb community. And one of the features of Airbnb community is that if you go and stay with the Airbnb owners, they not only provide you the place which is generally very economical, particularly for the large groups of the travelers, they also provide the basic information about the sightseeing, about the convenient ways of traveling, about the places where they must go, about the places which may be of the different choice for the different category of the travelers. Now, these are something which is difficult to harness from the websites until person visits that place and Airbnb is providing that service to their partners free of cost. So, in that way Airbnb is moving beyond just provider or aggregator of this space to a player which is giving which is helping the travelers to get the best experience of their journeys and travels. So, this is one way based on certain principles when organizations build a strong network, they are able to generate value which is beyond the transactional nature and that gives them the transient advantage. There are ways of disengaging with the business also in a smarter way. So, for example, Netflix in a very quick way, they moved out of the video CD businesses and rental businesses and moved to the in-demand businesses. There are studies suggesting that Netflix could have done it little in a more phased manner because like organizations are not able to shift from one way of this doing business to another way of doing business. All the customers also do not adopt change in a with a similar speed. So, the smart players those who are operating on the transient advantage do not disengage with the less valuating service or products very quickly. They do it in a phased manner so that they can keep harnessing the advantage till the time it is available and at the same time they keep building the capability to generate business to generate value in different and novel ways and that help them to transition from one form of business to the other from business. So, organizations need to learn the healthy disengagement and another time tested way is not easy, but it is found to be the core of any organization which has not only survived a thrive in the transient advantage phase are like examples of 3M and DEPRO. 3M is a very off-coded example where we know that they have a simple norm to get the one-third of their revenue and profit from the product developed in last five years. So, developing product is not the product project in itself. Developing product in processes is a way of doing business. We see that many organizations get some jackpot, they launch a product and it becomes very successful. Very rarely it happens that they launch very few product and one of them become jackpots. Generally, organizations have to keep trying things and keep developing things out of that something become more beneficial. So, it is not one product becoming hot innovation or one innovation becoming highly valuating. Organizations have to operate on the funnel of the innovation where innovation takes place at the various levels at the product level, at the process level, at the business models level and lot of conversations about the innovation happening, lot of initiatives are taken out of that few initiatives become jackpot and they become very successful. That is how it works for an organization to be innovative in the real sense. So, systematic early innovation, iteration and learning has no substitute. An organization which is aiming at harnessing the transient advantage has to have a not innovation as initiative, but innovation as a system. There is there has to be a process for iteration and constant learning from those iterations. An organization like Vipro has a hierarchy not only for the marketing and the product, but they have hierarchy for the ideation as well. There is a chief ideation officer and there are some ideation committees at different levels which are the forums where people can submit their ideas about the innovative businesses and products and the scanning happens at the different levels and the most promising ideas in fact, get the support of the organization to be started. There are lot of spin-offs of these projects. Many new companies have started and we there is no it is not surprising that if we look at in terms of the diaspora how many business leaders have come out of Vipro out of many software organizations. Vipro stands out in that which has provided a large number of CEO to the industry comparing to any other peers in the IT industry in India. So, innovation is not a matter of the project, but it is a matter of culture and the process that requires a certain types of leadership which help in building the innovation process which in turn results in the innovative product and services. So, here I would like to give a different type of innovation and how it gives a greater profitability and productivity. Innovation can happen at different levels and it has differential impact on the profitability and the time requirement is different in the different innovation. For example, there are disruptive innovations about new product tailoring and development of the new product application innovation product innovation. The innovation can be in the process innovation can be on the marketing business model or more structural innovations. So, innovation is not only about developing a product, but also involves process, marketing, business models. What this model suggests and what the study of the Moore suggests which was published in the HBR in 2004 that the profitability, the investment is generally more in developing new products whereas, the profitability gain is much higher in the process and marketing innovation. If you look at the retail e-commerce revolution in India it is less of about the offering new product and more about the process. It can be in many other industries where it is not the product per se, but the delivery model or the process or the marketing innovation create the highest value. So, from lab to market to ecosystem means in 60s and 70s major defining things the focus was more on the technological innovation. The technologist were doing the innovation and was at the technological level. In 80s and 90s the level became at the marketing level and today it has become the board level and that is where lot of innovations happen because it is not only about the new product, but also about the new business model. And when we combine it and this is like a 10 year old or 15 year old study if we see today it is actually again technology combined with marketing and board room which is redefining the innovation space and the change space in the world. This is one another important concept which we need to discuss in today's class is value innovation. Value innovation is one another way of looking at the systematic way of bringing about the change process. Value innovation is based on a logic that innovation should not be focused on an internal strategy and resources it should be focused on the customers experience. And if we look at any product customer experience is contributed and customer value is created through different factors. We need to look at what are the factors really valuable for the customer. And if we do innovation on that the overall strategic innovation and the change becomes very powerful. This point will be explained by three examples Kim and Mubarni they popularize this concept and they call it blue ocean strategy and value innovation. And their book is translated more than 40 languages in the world and more than 3.5 million copies are sold till now. So, they give these three these examples on how organizations can engage into the value innovation which can become the driver for them a successful change. This one example is of a cosmetic industry. If we look at the body shop and if we look at the established cosmetic industry player will will see that their price packaging high technology cosmetic science glamour image natural ingredient and representation of the healthy living they give different level of value that these two players give different level of value to these factors. So, established cosmetic industry player and the leaders were giving more relative value to price lot of value to packaging lot of value to the high tech cosmetic science and almost very small very less attention to the natural ingredients. When this industry was going through this process body shop did not give they give less attention to price packaging cosmetic and the glamour image and then they give most attention to the natural ingredient. And that fits very well with the customers value. It fit very well with what customer value and as a result of that body shop became very successful and they were able to give serious competition to this to the established players. Another example is of the budget airline. When we look at the customer who travel through different airlines for them the factors are low fare luxury primary airport high quality meals and ancillary service. Most of the traditional airlines were focusing on the luxury primary airport high quality meals. Whereas, budget airlines just focused on the low fares and some ancillary services and they give very less attention and investment to luxury primary airport and high quality meals. Some of them in fact stopped providing meals and later on they started giving meals for some additional cost. But as a result of that a new market is being created in the process. And now we know that the number of the travelers through the airways have increased a lot in India and because the price of the air travel held on a significant. Of course, governments in the economy like in India government also plays played its role in making the air travel affordable. But we nonetheless discount what budget airlines have done in terms of the value creation for them. Another example which Coman move on give is about the formula one hotels. These are the hotels which were mainly there on the highways and the trailer driver and truck drivers were their main customers. Restaurant, architecture, reception lobby, room size, furniture and accessories, comfort of bed, cleanliness, whiteness and price. These were factors identified to be relevant for the value for the customers. What the formula one hotel did? If their customers are the trailer drivers or the truck drivers, do they expect great swimming pool in the hotel or they will they go for a very sophisticated restaurant where they can get a large number of dishes? Certainly not. For them most important things are comfort of bed, cleanliness, whiteness and the convenience of the of getting some quick meals when late night they arrived to the hotel. So, the formula one hotel followed this logic. They reduced the cost on restaurant. They provided a very basic kind of restaurant which would provide sandwiches and some simpler stuff. In fact, they install the sandwich vending machine. They could sell sir the coffee or tea or the sandwiches. They gave less attention to the architecture, reception lobby. They gave same at some attention to the room size and the furniture and they focused most on the comfortable bed and cleanliness. As a result of that customers found it very valuable and organization created value for the customers and for themselves. So, this is one way one another way of systematically approaching the value innovation. In the organizations people can look at what are the what are the factors which create value for the customers. We need to study those factors and the different value curves have to be drawn in comparison to my organization how my competitors are giving those giving those values. When we draw the comparative value curve we can identify where the value innovation can be done and those value innovations can be incorporated systematically and value can be created for the customers which in turn result value being created for the organization. Out of this whole process identifying the factors making the changes convincing the top management for these changes etcetera. What are what do you think is the first most difficult step in identifying in this whole process identifying the factors. Actually the customer inside is the most valuable thing. Why it is so? Yeah because many time customers themselves cannot articulate what they need what they expect. It requires a deep intimate understanding of the customer on the part of the market here to identify the real valuable factors. And once the valuable factors are identified and once it is identified where we are going to focus upon we can redraw the value curve. Redrawing the value curve means reducing something those factors that could be reduced well below the industry standard those things can be reduced. Something can be eliminated the factors which should be eliminated that industry has taken for granted or not valuable anymore. Then we need to also create the factors that that should be created that industry has never offered. And raising the factors that could be raised well above the industry standard identify value create value and capture value that is the essence of the Kimms and Kimms and Mobon's framework of the value innovation. Based on these logics the blue ocean strategy and red ocean strategy logic is bit. I hope you must have studied that in your strategic managing, strategic management, strategic marketing case. The basis of the blue ocean and red ocean strategy is the process of redrawing the value curve. So, I will end this example I will end this session with one example of a retail bank which started in a market which already had more than 95 percent coverage of the banking population. That market is the US market and the bank is the commerce bank. Commerce bank is started in USA in many states of the USA when there was more than 95 percent population which was the banked population which already had the bank account. Now, you can imagine how conventionally difficult it is to start a bank which already has so very so wide-spread bank population. They looked at the value innovation and identified that the timing and the personal interaction are the most important factors they are going to focus on. So, they decided that the banking hours will be longest in whichever market they will operate. So, the banking hours in most of the branches were from 8 a.m to 8 p.m because they identified that as one of the most important factors customer value. They need to have bank when they have time. Generally, most of the banks would be operating where customers do not have time they are busy with their professional lines. So, this is factor number one having a time duration which is longest in the wherever market whichever market they are operating. And the second thing was the human service the service with smile. When you have these thing as a factors of the value creation naturally you may not get the most talented people available in the market. So, they have identified some of the very innovative ways of attracting people to join the commerce bank. One of the interesting ways is that they have given the invitation cards to their employees to be given to anyone through whom they get the exceptional service. So, if you are a commerce bank employee if you get an exceptional service in the restaurant and if you are carrying the card that invitation card you can get give this invitation card to the person who has provided you the exemplary service which we would have invitation to consider to join commerce bank. So, this is one of the ways they have extended their pool talent pool. Secondly, if you have people who are willing to those who have the natural tendency to serve smiling ways of providing service and willingness to serve the longest hours possible they may not be the most qualified people. They may not be the academically most talented people available in the market. So, they were ok with that. To cope up with to this challenge they have made their products easiest in terms of explanation. They make a simple cards to be given to their employees and with those simple cards they were able to explain even the so called complex products to their customers. If after the class you check the website of the commerce bank the commerce bank website also is very very simple and very simple to navigate. It does not throws the information about what all these banks offers. It simply ask what are you looking at and accordingly it helps the customers to navigate. So, the talent the people who have natural tendency to serving serving with the smile for the longer hours they may not be the academically most talented people, but they were helped by a simple processes and the product descriptions. And in wherever the commerce bank operates they give the worst return. They give the worst rate for the for the deposits. They give worst rate for the loans by a policy, but commerce bank is a success story it is not a failure story. So, this is another example where they focused on what is being valued by the customer. And they just focused on that. You must have studied a generic strategy in the strategic management course in the generic strategy is cost leadership differentiation and niche. No player can operate on all the three things. It is very difficult almost impossible to operate as a cost leader who has a great differentiation, who can also serve the niche. I cannot think about company other than Google which has to a great extent been successful in pursuing all the three types of strategy. For most of the companies they have to trade off. Where to trade off? Where to make changes? That is what we looked at in the today's session. In the today's session we looked at change is inevitable. We looked at technology, technological factors, societal factors, demographic factors are constantly redefining the business space and the organizations. It has a innovative, inevitable impact on the business models and the work preferences of the employees. So, the change that change is inevitable, but there are two concepts which we looked at today can be very helpful to lead the change process more systematically. One is looking at the competitive advantage and the life cycle of the competitive advantage. We looked at the concept of transient competitive advantage. No competitive advantage is permanent. So, how to sail through the transient competitive advantage? We looked at some of the features and how to assess whether we are ready for the transient competitive advantage or not. And towards the end we looked at the value innovation is another systematic way. And based on the examples of formula one hotel, body shop and the low budget airlines we can make the idea about the value innovation. So, a change management process is focused on the customers. First it is focused on the external customers and to enable that change we need to focus on the internal customers. One very important factor which is redefining the business field and it is going to redefine in a more and more strong way is need for sustainable development. There is a growing inequality in terms of the economic, natural environment and meaninglessness and these things are also redefining the business model. So, as we looked at how technology and the focus on the customer value is redefining the business model and that is the first lesson about the change management. In the next session we look at how the sustainability principles the need for sustainable development is redefining the business models.