Business classes and degrees traditionally rely on theories developed for a products-based economy and are built in discrete units of accounting, marketing, finance, and so on. Meanwhile, the economy has drastically changed.
“We’re in a time of profound economic change. And in fact we believe that the economic change today is as big as the economic change a century ago with the rise of giant monopolies in oil, electricity, steel, and banking,” said Marshall Van Alstyne, Questrom professor of management, chair of information systems at Boston University, and recent recipient of the Thinkers50 Digital Thinking Award.
Innovative business courses and programs are tackling this new economic landscape head on. Faculty leading the way in developing new business models and frameworks are teaching the leaders of today and tomorrow how to apply fresh business lenses, find new solutions by asking new questions, and build the fundamentally different leadership skills today’s marketplace demands.
Take a deep dive into two perspectives of our changing economy—experience and platform—and learn how you can leverage the lenses and tools today’s business professionals need to build and lead thriving organizations.
Leading in the Experience Economy
In the experience economy, or service economy, value isn’t created solely by physical products, but co-created through experiences. By leveraging rapidly evolving technologies, companies are able to understand consumers better than ever and connect and interact across an increasing range of channels.
“You’ve got to be able to move out of your comfort zone and instead of feeling the world through a product lens, view the world through an experience lens. The reality is that 80% of the global economy or certainly in developed countries now is in the service sector. It’s on non-rigid things. It’s on hotels and restaurants. It’s healthcare, it’s finance, it’s education, it’s government,” said David Solnet, associate professor of service management and leader of the Online Master of Leadership in Service Innovation at the University of Queensland Business School.
“There’s a difference in leading and managing organizations that are selling intangible things or an experience that people are purchasing over a period of time. It’s saying, okay, instead of seeing my business as a tech business trying to generate revenues, I’m going to be thinking about every single touch point and how that impacts our customers’ likelihood of coming back to our site next time.”
This shift in mindset is the foundation of the graduate degree in Leadership in Service Innovation that Solnet helped build from scratch. The program challenges traditional thinking and equips business professionals with the skills to integrate that new thinking across their organizations.
“You can’t become a leader in an organization which is trying to drive excellence in customer experience without also having excellence and the ability to change and evolve as needed to keep up with or ahead of your competitors and your customers,” Solnet said.
“These great ideas have to infiltrate across the entire organization. So then we’re thinking of customers not only externally, but internally as well. There are many failures in the attempt to transform because they’re not actually taking it deeply enough into the organization’s DNA.”
Learn more about The University of Queensland’s Master’s Degree in Leadership: Service Innovation.
Converting Products to Platforms
In a platform business like Uber and Apple, a company’s chief assets aren’t physical goods, but information and interactions connected through two-sided markets. At Apple, for example, app developers and app users form two sides that both create value; at Uber, it’s drivers and riders, and so on. As each side of the market grows, value is amplified.
“All of these platforms are due to what’s called “network effects,” where users attract users. A social network is more and more valuable as more people join, or it’s the Amazon marketplace where you get more buyers attracting more merchants and more merchants attracting more buyers. Third parties are incurring those costs so you can scale at arbitrarily fast speeds. It’s a fundamentally different business model if you do not even incur the marginal cost of production,” Van Alstyne said.
Van Alstyne authored a book on this subject and is the instructor for Boston University’s Platform Strategy for Business course, part of the Digital Leadership MicroMasters program, that explores what these fundamentally different business models look like and the tools needed to design, launch, monetize, and compete in a networked platform market.
.“Because platforms require new approaches to strategy, they also demand new leadership styles. The skills it takes to tightly control internal resources just don’t apply to the job of nurturing external ecosystems,” Van Alstyne said.
This idea of nurturing external ecosystems is the core of the concept that Van Alstyne was recognized for by Thinkers50: the inverted firm.
“So normally if you teach in business school finance or accounting, information technology, operations management, marketing, all of those tend to manage the value creating processes of the firm. The things done by employees. [In platforms, however,] you cannot scale network effects inside the firm as easily as outside the firm. The implication is that value creating activities move from inside to outside, so rather than the value connectivity being done by employees, value-creating activities are increasingly done by users outside the firm. And you have to manage external value creation differently,” Van Alstyne said.
Learn to Confidently Lead Businesses Into the Future
Today’s business world is no longer business as usual. Explore courses and programs that develop the perspectives and skills you need to lead organizations into the future.
23 Sep 2020