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The Digital economy's next Top e-Business Model

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  • 1. O MIIR e-Business and Business Models Ian Miles Ian.Miles@mbs.ac.ukBusiness Models in the Digital Economy May 2012
  • 2. O MIIR THE DIGITAL ECONOMY’ Ian Miles Ian.Miles@mbs.ac.ukBusiness Models in the Digital Economy May 2012
  • 3. O MIIR Overview The Digital Economy Business Model Thinking Models and Heuristics The Challenge of e-Business The Digital Economy RevisitedBusiness Models in the Digital Economy May 2012
  • 4. Manchester Digital Economies Informatics O MIIR 1960s… 1980s… 1990s… 2000s 20xx Mainframes PCs Internet Mobile Ubiquity Back-Office and Front Office and Web 2.0, P2P, Industrial Process New Services ubiquitous services Control e-Business Professional Users, Consumer and High Expertise Workplace Prosumer, Everyday Digital Digital Natives IT industries, Forebears High-tech, large organisations Digital Immigrants Inspired by Marc Weiser et al; see I Miles (2005) “Be Here Now” INFO Vol. 7 No. 2, pp49-71Business Models in the Digital Economy May 2012
  • 5. O MIIR The Business Model Boom 700 600 500 400 300 200 100 0 1980 1985 1990 1995 2000 2005 2010 Uses of “Business Model” in title of documents captured in “Publish or Perish” (accessed 14 May, 2012) – “e-business” in contrast explodes off the map by 2000, having kicked off in 1996. Harzing, A.W. (2007) Publish or Perish, available from http://www.harzing.com/pop.htmBusiness Models in the Digital Economy May 2012
  • 6. The Dot Com Bubble brought business O MIIR Mentions of business model thinking to the fore models take off in 1995 to 2000, accelerating in later years, (like share prices) then steady growth (while Dark Line: Index of leading shares collapse). technology shares Rapid growth of hopes Grey Line: Index of Large cap and hypes about companies internet businesses; Major levels of investment – which was highly speculative, based on hopes of technology-based future returns from new business models Talk about New Business Models – prompted upsurge of debate about Business ModelsBusiness Models in the Digital EconomyHigher 2012 of Economics, June 2011 May School
  • 7. O MIIR Though the bubble burst… One estimate that as many as 50% of the dot com firms started up in the bubble were still active in 2004 (most of the other half were thus “dot bombs”). Many major success stories were established then: Subsequent great financial excitement about newcomers: e-Business has steadily recovered from the bubble There will probably be many other bubbles – though note Facebook IPO debacle. There are also concerns as to security and resilience.Business Models in the Digital Economy May 2012
  • 8. Business Model O MIIR A cognitive representation, a set of hypotheses about parameters and relationships. But then, whose representation? Nature of model may vary: For businesses (and other organisations) – communication and sensemaking device, aligning views – and production process can be vital. Codification in written form less important than mutual learning and guidance – not a Business Plan to persuade investors. But, like a Plan, will typically be modified by cruel reality. For observers (and academics) – a tool for comparison, combining benchmarking and strategy? for studying change? Other? (Law, IP, etc.) Commentators vary in the number and definitions of key elements proposed. See essays in Long-Range Planning June 2010 and Wirtz 2011.Business Models in the Digital Economy May 2012
  • 9. O MIIR “Business Model Generation” http://www.businessmodelgeneration.com/ Alexander Osterwalder WHO? HOW? WHAT? http://digitalenterprise.org/models/models.html WHICH? WHERE? WHY?Business Models in the Digital Economy May 2012
  • 10. O MIIR Business Model Thinking 1 Capabilities and Resources Back Office /Stage Business Front Office / Stage Activities Costs Profits Goods and services Revenue Channels Customers UsersBusiness Models in the Digital Economy May 2012
  • 11. O MIIR Business Model Thinking 2 What are (potential) competitors doing and planning? Value Chains Business Partners How are these Capabilities and Resources Back Office /Stage designed and produced? Business Front Office / Stage Activities Costs Profits Goods and services Revenue Customer Channels Relationships: Communications How are these Customers (Marketing) delivered? Users Research and Intelligence Relationships among How (far) are these elements organised and managed? Users/ CustomersBusiness Models in the Digital Economy May 2012
  • 12. O MIIR Business Model Elements What are (potential) competitors doing and planning? VALUEChains Value CHAIN STRUCTURE RESOURCES VALUE Business Partners AND NETWORK CAPABILITIES How are these Capabilities and Resources Back Office /Stage NETWORK designed and COST POSITION produced? Business VALUE Costs Activities Profits STRUCTURE / Stage Front Office PROPOSITION ECONOMIC Goods and services Revenue Customer Channels FORMULA Relationships: REVENUECommunications CHANNELS, How are these Customers MARKET MODEL (Marketing) delivered? Users Research and Intelligence FULFILMENT REACH Digital TARGET How (far) are these elements Relationships among Communities MARKETS Users/ Customers organised and managed?Business Models in the Digital Economy May 2012
  • 13. O MIIR e-Business Model Elements What are (potential) competitors doing and planning? Informatised processes, VALUEChains Virtual organisations and Value CHAIN in design, production, new intermediaries STRUCTURE RESOURCES etc. Adapted to VALUE Business Partners accommodate e- AND business opportunities NETWORK CAPABILITIES How are these Capabilities and Resources Back Office /Stage NETWORK designed and COST POSITION produced? Business VALUE Costs Activities Profits STRUCTURE / Stage Front Office PROPOSITION New e-services; new e-services ECONOMIC Goods and services Revenue Customer Channels associated with acquisition, FORMULA Relationships: delivery and use of “traditional” REVENUEnew m-payments and e- and Communications CHANNELS, How are these Customers goods and services MARKET intermediaries MODEL (Marketing) delivered? Users Research and Intelligence FULFILMENT REACH Digital TARGET Data capture about users, usage How (far) are these elements e-Links to (andRelationships among among) Communities MARKETS Users/ Customers patterns, contexts: new organised and managed? Consumers and End-Users relationships and services (andBusiness Models in the Digital Economy May 2012 data for 3rd parties...)
  • 14. Manchester Informatics Timmers on “internet business” O MIIR Paul Timmers, 1998, Business Models for Electronic Markets p7 redrawn by Wirtz, 2011, p35 Trends? Superior to many accounts that just focus on revenue models – but horizontal axisBusiness Models in the Digital Economy May 2012 is limiting (except for innovation researchers?)
  • 15. e-Business Models and O MIIR Business Models Digital natives and immigrants… (how) are business models developed, adapted, managed? The models may be different, but are the elements or building blocks are essentially the same? Much recent discussion of Business Models (and disruptive innovators – following Christensen) focuses on cases of relatively conventional businesses, perhaps with some e- features. Does this reflect the fear that many e-business models were froth on the bubble, not really sustainable approaches once finance was tight? Are there important new elements, more than nuance? Is it sufficient to analyse individual models, or do we need a more systemic approach?Business Models in the Digital Economy May 2012
  • 16. O MIIR THE GLOBAL DIGITAL ECONOMY’ End of Presentation Ian Miles Ian.Miles@mbs.ac.ukBusiness Models in the Digital Economy May 2012