Strategy, Change, and Analytics

(1.5 Credits)

It’s no secret that technology is revolutionizing the financial services industry, and the disruptive possibilities seem endless. But with possibility and disruption comes risk, and risk brings various impediments to change that make capitalizing on new disruptive possibilities a non-trivial strategic problem. Large and established incumbents in financial services often face severe tradeoffs in incorporating new technological possibilities into their standard routines and operating businesses. One need only look at the recent missteps of Goldman in implementing their new Marcus initiative to admit that even well-capitalized and prestigious incumbents often find navigating new business possibilities tricky. The difficulties that established incumbents face in adapting to the new technological landscape have opened up opportunities for savvy entrepreneurs to create new businesses that are more agile and more focused, upending old business models with alternative and disruptive models that change the rules of the game. But the failure rate of start-ups in any industry is high, and some experts say it is even higher in the fintech space. Being small, technologically savvy, and nimble is no guarantee of success. Entrepreneurs face impediments and tradeoffs of their own. This course is about understanding the dynamics of industry disruption and the technological competition and substitution that it often entails, both in a general sense as well as focused on fintech. The course has several goals: 1. Explore the general landscape of fintech. 2. Review the concept of “competitive advantage” and apply it as a benchmark strategic objective when evaluating opportunities and threats in the fintech space. 3. Develop a systematic understanding of the general dynamics of industry competition and disruption and how to manage these dual pressures simultaneously. 4. Enact and expand our accumulated understanding of 1-3 above by discussing two cases together in class. 5. Sharpen our sensitivity to the individual, social, and organizational impediments to transformation and change. We’ll ground our analysis and discussions in what has become known as the “value-based view” of strategy. The value-based view provides a “lingua franca” for strategic management, a common set of concepts that can be used to understand a wide range of situations involving business value creation and capture. The value-based view provides a precise definition of what it means to have a competitive advantage in one or both of these. It also provides a very clear framework for understanding disruptive technological substitution.