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Be Like the Internet
 

Be Like the Internet

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Filled in for Lane Becker at the Berlin Web2.0 Expo and presented some of the research findings from a book I'm working on. Also, some frameworks for looking at innovative business model ...

Filled in for Lane Becker at the Berlin Web2.0 Expo and presented some of the research findings from a book I'm working on. Also, some frameworks for looking at innovative business model opportunitites.

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    Be Like the Internet Be Like the Internet Presentation Transcript

    • Be Like the Internet: Collaborative, Disruptive, Networked Scott Hirsch, Management Innovation Group (scott@mig5.com) Web2.0 Expo - November 5, 2007 Scott Hirsch, MIG scott@mig5.com
    • MIG is a strategy consultancy … here are some companies we’ve helped: Scott Hirsch, MIG scott@mig5.com
    • Scott Hirsch, MIG scott@mig5.com
    • Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Changes the Way You Think About Your Company By changing the way you think about your … • development process • products/services • strategy • business model • management decisions • personal skills and leadership style “We need to stop confusing web2.0 with AJAX, yellow fades, and social networks … it’s a whole new way of thinking about business.” --SixApart Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators Are Always Re-framing The advertising model is something that we've looked at. Can I see an immediate application for the Wii, no. However, one of the things that we are smart enough to say is quot;never say never.quot; But it is clear that the Mii consumers love to create their Miis. They would like more and more options to decorate their Miis. We're going to address part of that with a channel called quot;Check Me Out,quot; where you'll be able to post your Miis and create Miis of historical or popular figures and compare and vote on them. This is a recognition of a deep-seated need by consumers to drive a lot of personalization with these Mii characters and we're looking to help bring that to life in a way that makes sense. Reggie Fils-Aime COO, Nintendo What word defines the Wii? Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators Are Always Re-framing A conversation in early 2002 - from The Search by John Battelle Scott Hirsch, MIG scott@mig5.com
    • How? By organizing the worldʼs information and making it accessible and useful Or? By providing advertisers with the opportunity to deliver measurable, cost-effective online advertising that is relevant to the information displayed on any given page Scott Hirsch, MIG scott@mig5.com
    • Find the Frame Product Culture Products Process Process > Rapid prototyping > For consumers - search that > Fast execution > Willingness to change the works and snazzy new apps Open innovation - one day paradigm > For advertisers - access to per week for research > Commitment to serving motivated customers Darwinian prioritization advertisers and consumers > For content owners - free > “Do no evil” money Scott Hirsch, MIG scott@mig5.com
    • What Weʼre Going to Do 9:30 - 9:45 Introduction and Start-Ups 9:45 - 10:15 Learn About Each Other 10:15 - 10:45 Bottom-Up Innovation 10:45 - 11:00 Break 11:00 - 11:45 Web2.0 Strategy and Business Models 11:45 - 12:00 Leadership in a Web2.0 World 12:00 - 12:15 Learning from Failure Experiences 12:15 - 12:30 Putting It Into Practice Scott Hirsch, MIG scott@mig5.com
    • The Demise of the Internally Focused System: Silicon Valley Before 2000 • If I discover it, I will find a market for it. • If I launch it first, I will own it. • I can build the most important technology pieces myself. • If I fail, I will move on to something else. • If I am successful, the best people will want to work for me. Web2.0 Shifts • Good Ideas are widely distributed today … there is no monopoly on useful knowledge. • Innovation doesn’t happen within a single firm anymore. • Failure is an opportunity to learn and change. • Not all the smart people in the world work for us. Scott Hirsch, MIG scott@mig5.com
    • Trends and Discontinuities in Silicon Valley - How Web2.0 Changed the Way We Think About Strategy About Business Customers as Partners New Revenue Streams • Customers lead the • Google Adsense makes conversation business out of hobby • Customers as developers • Open platforms broaden on open platforms potential audiences Emergent Business Models Greatly Reduced Costs • Value first … business • Global talent pools model second • (Almost) anyone can start • Experimentation over set a company strategies • VCs become less • Openness is king (ir)relevant Scott Hirsch, MIG scott@mig5.com
    • Some Provocative Points of View - This Sets Up Our First Activity • You don’t own your ideas • You don’t want to own the infrastructure • You certainly don’t own your customers “Intellectual property is a vestige of dumb markets” Scott Hirsch, MIG scott@mig5.com
    • Learning About (and from) Each Other In the spirit of this being a global conference … that is focused on web2.0 … Let’s model some collaborative problem solving via social networking Instructions 1. Take a moment to think about a challenge you are facing today, it might be about … a) an innovation challenge b) a new product idea c) a sticky issue you are facing with a client 2. Make sure the problem is something you feel comfortable sharing with the group. If not, think of something else. 3. Write a short description of your issue … try your best to keep it under three sentences. Scott Hirsch, MIG scott@mig5.com
    • Who Hates Networking? Scott Hirsch, MIG scott@mig5.com
    • Be Like the Internet: Collaborative, Disruptive, Networked Bottom-Up Innovation Scott Hirsch, Management Innovation Group Web2.0 Expo - November 5, 2007 Scott Hirsch, MIG scott@mig5.com
    • Bottom-Up Innovation: A Personal Guide to Disrupting the World Demystifying the Issue: Methodology: - Too much high-level analysis and - Open inquiry with web2.0 “armchair quarterbacking” innovators - Not enough personal stories from - Pull characteristics and qualities real innovators of innovators - Too much emphasis on products, - Ask for referrals for more not enough on process interviews Proposal: - A “how-to” guide for innovation as told by web2.0 entrepreneurs and other market disruptors - Analysis and practical guidance for people at any level or type of organization - Focus on analytic frameworks, as well as softer skills of leadership and facilitation Scott Hirsch, MIG scott@mig5.com
    • Generally, what I’ve heard: Web2.0 Innovators are … and create cultures that ... embrace Collaborative transparency Persuasive embrace many points of view are accepting Passionate of failure have fluid concept Humble of “ownership” Facilitative don’t over-plan Flexible their strategy value inspiration Persistent don’t over- and production (but not defensive) commit to solutions Scott Hirsch, MIG scott@mig5.com
    • Generally, what I heard: Web2.0 Innovators are … and create cultures that … to manage …. embrace many Flexible points of view Uncertainty have fluid concept Persuasive Openness of idea ownership Leadership embrace Collaborative Management transparency Hiring share success & Strategy Humble accept failure Competition value inspiration Marketing Passionate and production Biz Development Product Development are open to many Facilitative viewpoints/options Persistent Commit to direction, (but not defensive) not solutions Scott Hirsch, MIG scott@mig5.com
    • How Web2.0 Innovators Look at the World Strategy - Disruptive • Look at their business as a poker game, rather than a chess game • Aim to be the most open, rather than the first mover • Look for directional alignment, rather than the “right” answer Business Models - Networked • Focus on solving universal customer problems, rather than technology solutions • Favor experimentation over rationalization • Focus on building platforms, rather than owning customers Management - Collaborative • View opportunity cost as the scarce resource, rather than people and time. • View themselves as facilitators, rather than managers • Constantly seek to reframe challenges, rather than validate old points of view. Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators’ View of Strategy Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators’ View of Strategy Poker Chess • Pay to play … small ante • Plan several moves required to join ahead • Pay for new information • No new information each round needed • You discover what you’ve • You know what you’ve got and can only guess at got and what your other players opponent has • Business case is useless, • Decisions can be made you look at options with a business case Web2.0 Innovators look at their business like a poker game, not a chess game Adapted from Henry Chesborough, UC-Berkeley Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators’ View of Strategy High external awareness Open Closed platform platform Low external awareness Web2.0 Innovators aim to be the most open, rather than the first mover. Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators’ View of Business Models Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators’ View of Business Models “We knew that our focus was on collaboration -- not wikis -- and Joe had been talking about the long-tail of applications, so we started taking a broader view of the business … Google wouldn’t have acquired us if it weren’t for that shift in mindset.” -- Ken Norton Web2.0 Innovators focus on solving universal problems, rather than technology solutions. Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators’ View of Business Models “Only time will tell whether Google has succeeded in building an evolutionary advantage. But consider: Since it's founding, it has repeatedly morphed its business model. Google 1.0 was a search engine that crawled the Web but generated little revenue; which led to Google 2.0, a company that sold its search capacity to AOL/Netscape, Yahoo and other major portals; which gave way to Google 3.0, an Internet contrarian that rejected banner ads and instead sold simple text ads linked to search results; which spawned Google 4.0, an increasingly global entity that found a way to insert relevant ads into any and all Web content, dramatically enlarging the online ad business; which mutated into Google 5.0, an innovation factory that produces a torrent of new Web-based services, including Gmail, Google Desktop, and Google Base. More than likely, 6.0 is around the corner.” - Gary Hamel, Wall Street Journal “Management A la Google” 04/26/06 Web2.0 Innovators favor experimentation over rationalization. Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators’ View of Management Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators’ View of Management Top-Down Management Bottom-Up Management Example: Yahoo! PBmemo Example: Google 80/20 rule Scarce Resources: Scarce Resources: • People (engineers) • Servers, opportunity to test • Time and money • Opportunity cost Bottlenecks: Bottlenecks: • Getting management support • Getting peer support • Big “P” Politics • Little “p” politics Decision Models: Decision Models: • Pre-Rationalization process • Darwinian “natural selection” • Business cases • Strategic options Fear of false positives Fear of false negatives Web2.0 Innovators believe opportunity cost is the scarce resource, not people, time, or money. Scott Hirsch, MIG scott@mig5.com
    • Web2.0 Innovators’ View of Management Traditional Rationalized View Web2.0 and the Beta View Management Decides Management Facilitates Triage, Generate, Senior experiment, Nurture, Leadership critique, Promote, Gathers / Adopt Fund prioritize, Reward -> group, Generate ideas abahdon, Ideas filter & sort Tyranny of the business case Narrowing through experimentation provides better data and more criteria than a business case. Web2.0 Innovators view themselves as facilitators rather than managers, and encourage smart divergence over quick convergence. Scott Hirsch, MIG scott@mig5.com
    • How Web2.0 Innovators Look at the World s k or Strategy - Disruptive w et • Look at their business as a poker game, rather than a chess n al ci game so • Aim to be the most open, rather than the first mover d n“right” answer ,a • Look for directional alignment, rather than the de fa w Business Models - Networked llo problems, rather than ye • Focus on solving universal customer X, technology solutions JA rationalization • Favor experimentation A n over • Focus on buildingha t platforms, rather than owning customers e or m ut Management - Collaborative bo • View opportunity cost as the scarce resource, rather than s a and time. i people .0 b2 View themselves as facilitators, rather than managers • e • Constantly seek to reframe challenges, rather than validate W old points of view. Scott Hirsch, MIG scott@mig5.com
    • BREAK Scott Hirsch, MIG scott@mig5.com
    • Be Like the Internet: Collaborative, Disruptive, Networked Uncovering Strategies and Business Models Scott Hirsch, Management Innovation Group Web2.0 Expo - November 5, 2007 Scott Hirsch, MIG scott@mig5.com
    • What is a business model? Scott Hirsch, MIG scott@mig5.com
    • Guess the company? Scott Hirsch, MIG scott@mig5.com
    • Can anyone think of a web2.0 version of this? Dangerʼs Sidekick Scott Hirsch, MIG scott@mig5.com
    • Generic Business Models Which are Web2.0? • Per item and “all you can eat” • Razors and blades • Free trial, followed by subscription • Free, advertising supported • Any non-web2.0 examples? • Recruit your friends and save money • Market maker, aggregator, switchboard • Ebay, Amazon • Turn cost centers into profit centers • Ryan Air • Hotels (phone, TV, minibar) • Apple Scott Hirsch, MIG scott@mig5.com
    • We shape our buildings, and thereafter they shape us. Scott Hirsch, MIG scott@mig5.com
    • We shape our buildings business models, and thereafter they shape us. Scott Hirsch, MIG scott@mig5.com
    • Why do business models matter? Customers Products Revenue and Costs technology companies succeed by keeping switching costs high, selling version upgrades (think microsoft) Growth -> increase the install ISP service Customers are base, while keeping attrition low motivated by: Customer acquisition costs are high (unless you have a monopoly) availability of other ISPs $/user is largely fixed unwillingness to switch loyalty to AOL “software” Because switching cost is high, and content products only need to be “good enough” Software services for my computer Scott Hirsch, MIG scott@mig5.com
    • Why do business models matter? Customers Products Revenue and Costs Media companies succeed by connecting customers with useful content/services (think craigslist); monetizing more customer interactions (think adsense) Growth -> many levers: increase visits, pageviews, CPM, long-tail Customers are and mass markets motivated by: Customer acquisition costs are low Software services for me the value of the AOL $/user is variable network of content and services Products need to work well -- loyalty to AOL “hooks” innovations can be used to hook (products that uniquely new customers combine content and services) relative value of the AOL experience Monetizable content Scott Hirsch, MIG scott@mig5.com
    • How would you describe eCommerce business models? -Content provider
 -Direct to consumer
 -B2B -Full service provider
 -B2C -Brokerage (e.g., buyer aggregator, -Intermediary auctions, search agent, marketplace) 
- Shared infrastructure 
- Advertising (e.g., portals, free model, attention marketing, bargain discounter) 
- Value net integrator
 -Virtual community
 -Infomediary (e.g. registration)
 - Whole of enterprise -Merchant (e.g., virtual store) 
- Manufacturer (i.e., disintermediation) - Focused distributor (e-tailers, 
- Affiliate (i.e.,click-through purchase) market-places, aggregators, 
- Community (e.g., knowledge infomediaries)
 networks)
 - Portal (horizontal, vertical, affinity)
 -Subscription
 - Producer (manufacturer, info services) - Utility (i.e., pay as you go) - Infrastructure (ISP, hardware, software) Scott Hirsch, MIG scott@mig5.com
    • The Frame of Your Business Model Matters … A LOT! Scott Hirsch, MIG scott@mig5.com
    • The Strategic Continuum Make & Sell Sense & Respond Strategic Lenses Strategic Lenses • Forecasting • Learning • Planning • Adaptation Web2.0 is more like a taxi than a bus. Scott Hirsch, MIG scott@mig5.com
    • The Strategic Continuum Sense & Respond Make & Sell • Respond to the Market • Offer to the Market • Knowledge Embedded in • Knowledge Embedded People/Process in Things • Customization • Mass-production • Focus on Flexibility • Focus on Efficiency • Profit from Return and • Profit from Margin and Scope Scale Is your company a taxi or a bus. Scott Hirsch, MIG scott@mig5.com
    • Business Model Lock-In + the Innovatorʼs Dilemma Abstract Frameworks: We Imperatives: We Fall Identify the Back on the Value Problems That Fit Propositions That Fit In Our Definition of Our Solutions the Industry Analysis Synthesis Observations: Solutions: We Confirmation Bias Create Incremental Leads Us to See What Improvements to the We Know Wrong Problems Concrete Scott Hirsch, MIG scott@mig5.com
    • Example from Telecoms Abstract Frameworks: Imperatives: Invest in Reliability of the POTS Redundancy to Network is Key Ensure Uptime (.99999 availability) Analysis Synthesis Observations: Customers Get Solutions: Fiber Optic Frustrated When They Cables and High Can’t Make Calls Throughput Switches Concrete Scott Hirsch, MIG scott@mig5.com
    • Other Examples “I think there is a world market “The Americans have need of the for maybe five computers.” telephone, but we do not. We have plenty of messenger boys.” - IBM Chairman Tom Watson - British Post Office Commissioner Sir William Preece “So we went to Atari and said, 'Hey, quot;While theoretically and we've got this amazing thing, even built technically television may be with some of your parts, and what do feasible, commercially and you think about funding us? Or we'll financially it is an impossibility.quot; give it to you. We just want to do it. Pay - TV inventor Lee DeForest our salary, we'll come work for you.' And they said, 'No.' So then we went to Hewlett-Packard, and they said, 'Hey, we don't need you. You haven't got through college yet.”. - Apple Founder Steve Jobs Scott Hirsch, MIG scott@mig5.com
    • Innovating on Business Models “…the key to sustained success is business model innovation.” - Harvard Business Schoolʼs Clay Christensen Who do we serve? How do we provide it? What do we provide? How do we How do we differentiate & make money? sustain advantage? Scott Hirsch, MIG scott@mig5.com
    • Developing Business Models What do we provide? Who do we serve? How do we provide it? TARGET PARTNER CUSTOMER NETWORK VALUE PROPOSITION CORE CUSTOMER CAPABILITIES RELATIONSHIP DISTRIBUTION VALUE CHANNEL CONFIGURATION PRODUCT/SERVICE COST REVENUE STRUCTURE STREAMS How do we make money? Scott Hirsch, MIG scott@mig5.com
    • Developing Business Models What do we provide? Who do we serve? How do we provide it? TARGET PARTNER CUSTOMER NETWORK VALUE CORE PROPOSITION CUSTOMER CAPABILITIES RELATIONSHIP DISTRIBUTION VALUE PRODUCT/SERVICE CHANNEL CONFIGURATION How do we COST REVENUE differentiate & STRUCTURE STREAMS sustain advantage? How do we make money? Scott Hirsch, MIG scott@mig5.com
    • Marketing innovations Serving different people,serving What do we them differently provide? How do we provide it? TARGET PARTNER CUSTOMER NETWORK VALUE PROPOSITION CORE CUSTOMER CAPABILITIES RELATIONSHIP DISTRIBUTION VALUE CHANNEL CONFIGURATION PRODUCT/SERVICE COST REVENUE STRUCTURE STREAMS How do we make money? Scott Hirsch, MIG scott@mig5.com
    • Targeting Different Customers YOUR NEXT ACCIDENT COULD BE FORGIVEN Your car insurance rates wonʼt go up just because of an accident. Even if itʼs your fault. Accident Forgiveness starts the day you sign up for Your Choice Auto Insurance. Sign up now. CALL 1–866–621–6900 for details and a free auto quote. Scott Hirsch, MIG scott@mig5.com
    • Channel Innovations Getting products What do we provide? toHow do we provide it? customers Who do we serve? differently TARGET PARTNER CUSTOMER NETWORK VALUE PROPOSITION CORE CUSTOMER CAPABILITIES RELATIONSHIP DISTRIBUTION VALUE CHANNEL CONFIGURATION PRODUCT/SERVICE COST REVENUE STRUCTURE STREAMS How do we make money? Scott Hirsch, MIG scott@mig5.com
    • Opening Up Whole New Markets Platform Innovation at Cement is a commodity … need to differentiate the business model. Major builders and distributors touch only part of the national market for cement. “Platforms” explore major opportunity arenas: How to serve very poor customers How to deliver “solutions” (rather than cement) 1. KEEP THE AIMING How to address the needs of small vendors POINTS FRESH. 2. TIME BOUND THE CHALLENGES. 3. MOVE ON TO THE NEXT. Scott Hirsch, MIG scott@mig5.com
    • New Product Innovations What do we provide? Who do we serve? How do we provide it? TARGET PARTNER CUSTOMER NETWORK VALUE PROPOSITION CORE CUSTOMER CAPABILITIES RELATIONSHIP DISTRIBUTION VALUE CHANNEL CONFIGURATION PRODUCT/SERVICE COST REVENUE STRUCTURE STREAMS How do we make money? Scott Hirsch, MIG scott@mig5.com
    • New Product Categories Scott Hirsch, MIG scott@mig5.com
    • Customer Experience Innovations What do we provide? Who do we serve? How do we provide it? TARGET PARTNER CUSTOMER NETWORK VALUE PROPOSITION CORE CUSTOMER CAPABILITIES RELATIONSHIP DISTRIBUTION VALUE CHANNEL CONFIGURATION PRODUCT/SERVICE COST REVENUE STRUCTURE STREAMS How do we make money? Scott Hirsch, MIG scott@mig5.com
    • Finding new approaches for known needs Can Target make it easier to take your medicine? Can flying actually be fun again? Scott Hirsch, MIG scott@mig5.com
    • Finance innovations What do we provide? Who do we serve? How do we provide it? TARGET PARTNER CUSTOMER NETWORK VALUE PROPOSITION CORE CUSTOMER CAPABILITIES RELATIONSHIP DISTRIBUTION VALUE CHANNEL CONFIGURATION PRODUCT/SERVICE Getting paid by COST REVENUE different STRUCTURE STREAMS people or in How do we make money? different ways Scott Hirsch, MIG scott@mig5.com
    • Innovations in cost structures Dell pioneered a J-I-T production system that allowed them to pay for components after their customers had already paid Dell. Skype uses open internet standards and free infrastructure to offer free and low- cost calls to its customers. Scott Hirsch, MIG scott@mig5.com
    • Innovations in where revenue comes from Trilogy creates customized software that helps its customers solve business problems and gets paid as a percentage of cost savings or new revenue created. Scott Hirsch, MIG scott@mig5.com
    • Hybrid innovations: new revenue, new sales channels Enterprise: Focus on offering short-term replacement vehicles paid for by insurance companies Scott Hirsch, MIG scott@mig5.com
    • Innovative combinations: new cost structures, new customers, new partners vs. Radically reducing costs opens up new target customer possibilities Scott Hirsch, MIG scott@mig5.com
    • Hybrid innovations: new customer experiences, new products, new services, new capabilities Scott Hirsch, MIG scott@mig5.com
    • Business Model (Netflix in 1999) Who do we serve? What value do we provide? How do we provide it? How do we make money? How are we differentiated? Scott Hirsch, MIG scott@mig5.com
    • Activity: Prototyping Business Models Who Is the consumer / market segment? - Target customer - Customer relationship What do we provide (key attribute in the value proposition)? - Product/service - Value proposition How do we provide it? - Partner network: - Distribution channel: - Core capability: How do we make money? How do we -Revenue streams: differentiate -Cost structure & sustain advantage? Scott Hirsch, MIG scott@mig5.com
    • The Innovation Cycle Applied to Business Models Abstract Frameworks Imperatives (Insight) (Ideas) Analysis Synthesis Observations Solutions (Context) (Artifacts) Concrete Scott Hirsch, MIG scott@mig5.com
    • The Innovation Cycle Applied to Business Models Abstract Frameworks Imperatives (Insight) (Ideas) Analysis Synthesis Describe the business model Observations Solutions (Context) (Artifacts) Concrete Scott Hirsch, MIG scott@mig5.com
    • The Innovation Cycle Applied to Business Models Abstract Frameworks Imperatives (Insight) (Ideas) Find the whitespace Analysis Synthesis Observations Solutions (Context) (Artifacts) Concrete Scott Hirsch, MIG scott@mig5.com
    • The Innovation Cycle Applied to Business Models Abstract Frameworks Imperatives (Insight) (Ideas) Describe the new value combination Analysis Synthesis Observations Solutions (Context) (Artifacts) Concrete Scott Hirsch, MIG scott@mig5.com
    • The Innovation Cycle Applied to Business Models Abstract Frameworks Imperatives (Insight) (Ideas) Analysis Synthesis Think through go- to-market strategy Observations Solutions (Context) (Artifacts) Concrete Scott Hirsch, MIG scott@mig5.com
    • Moving from Customer to Business Abstract Frameworks Imperatives (Insight) (Ideas) Find the Analysis Synthesis story Observations Solutions (Context) (Artifacts) Concrete Scott Hirsch, MIG scott@mig5.com
    • Moving from Todayʼs Story to Tomorrowʼs Abstract Frameworks Imperatives (Insight) (Ideas) Tell a new Analysis Synthesis story Observations Solutions (Context) (Artifacts) Concrete Scott Hirsch, MIG scott@mig5.com
    • Telling a New Story What Weʼre Going to Do … - First step was to take an analytic look at the existing story. - Now weʼre going to stretch to be a little more creative to tell a new story - Show you a framework for thinking about business models through innovation lenses. - Weʼre going to practice using these lenses Scott Hirsch, MIG scott@mig5.com
    • Innovation Lenses Finding Opportunity Business Models Customer Needs Trends & Industry Innovations Discontinuities Orthodoxies Products  Services  Markets  Partners  Channels  Latent & Unleveraged Management  Unmet Needs Assets Scott Hirsch, MIG scott@mig5.com
    • Innovation Lenses Opportunities Derived from Customer Needs Customer Needs Trends & Discontinuities Whatʼs happening in the Trends & market? What emerging Innovations Discontinuities technological, social, or Products  economic changes might Services  impact your competitive Markets  environment? Partners  Channels  Latent & Management  Latent & Unmet Needs Unmet Needs Looking at your current customers or target market, what needs are not being addressed? Scott Hirsch, MIG scott@mig5.com
    • Innovation Lenses Finding Opportunity Business Models Industry Orthodoxies Industry What does the industry take Innovations for granted about how to Orthodoxies  Products make money? Can you  Services imagine alternatives?  Markets  Partners  Unleveraged Assets Channels Unleveraged  Management What assets do you have that Assets disruptors donʼt? Are they being used? Scott Hirsch, MIG scott@mig5.com
    • Finding new channels Industry Orthodoxies - people value security Same benefits as MS Office, but via - don’t trust online storage the Web rather than installed software. - MS owns this market Trends & Discontinuities - software as a service - ubiquitous connectivity Scott Hirsch, MIG scott@mig5.com
    • Customer Service and Experience Unmet Needs  people want F2F support  people want education Industry Orthodoxies  retail is a reseller industry  there is no profit in retail Trends & Discontinuities  people are willing to pay extra for service  Ipod halo effect is real Scott Hirsch, MIG scott@mig5.com
    • New customers, new distribution, new value configuration 37Signals’ Basecamp project management tools target end-users as buyers, rather than corporate IT buyers. Unmet Needs  Enterprise solutions overshot needs of users Industry Orthodoxies  IT Manager won’t allow it  Business customers won’t buy it Trends & Discontinuities  Software as service  Corporate rebellion Scott Hirsch, MIG scott@mig5.com
    • Power of Customer Data Unleveraged Assets • Customer browse and purchase histories • Capability to determine likelihood to buy What data do you have access to that can be repurposed to help customers buy from you more often? Scott Hirsch, MIG scott@mig5.com
    • Moving from Todayʼs Story to Tomorrowʼs Abstract Frameworks Imperatives (Insight) (Ideas) Tell a new Analysis Synthesis story Observations Solutions (Context) (Artifacts) Concrete Scott Hirsch, MIG scott@mig5.com
    • Innovation Lenses (Netflix in 1999) Unmet Needs - I hate paying late fees - I want a bigger selection Trends/Discontinuities - Demise of VHS - Rise of DVD players Industry Orthodoxies - People want to see the box - You need retail space to carry inventory Unleveraged Assets - Customer data Scott Hirsch, MIG scott@mig5.com
    • Innovation Lenses (Netflix in 2007) Unmet Needs • I can’t get the darn video onto my ipod Trends/Discontinuities • More and more interest in watching video anywhere and anytime Industry Orthodoxies • Digital Rights Management cannot be overcome Unleveraged Assets - Online relationships, huge selection - Database of customer preferences, recommendations Scott Hirsch, MIG scott@mig5.com
    • Exercise: Telling a new story First, do some brainstorming around the innovation lenses: - Latent/Unmet Needs What insights do you have about how customers behave? - Trends and Discontinuities What trends can you get ahead of the cure on? - Industry Orthodoxies: How can you challenge the current beliefs about your market? - Unleveraged Assets: What assets do you have that others donʼt … or donʼt use? Some challenge questions to get you thinking: How would we make money if we gave the product away? What assets are we not leveraging? Include intangibles! (relationships, data, etc.) If you were a start up with the same assets what would you do to disrupt this market Scott Hirsch, MIG scott@mig5.com
    • Prototyping Business Models Who Is the consumer / market segment? What do we provide (key attribute in the value proposition)? Who is in our value chain? How do we make money? How do we differentiate & sustain advantage? Scott Hirsch, MIG scott@mig5.com
    • Innovation Lenses Finding Opportunity Business Models Customer Needs Trends & Industry Innovations Discontinuities Orthodoxies Products  Services  Markets  Partners  Channels  Latent & Unleveraged Management  Unmet Needs Assets Scott Hirsch, MIG scott@mig5.com
    • Key Takeaways: • The way you frame your business model really matters … Are you a bus company or a taxi company? • Frames help you understand your business model … look for patterns • Frames change when you look forward … break your current frame to look at the future Scott Hirsch, MIG scott@mig5.com
    • Be Like the Internet: Collaborative, Disruptive, Networked Learning from a Failure Experience Activity in Teams of Two Scott Hirsch, Management Innovation Group Web2.0 Expo - November 5, 2007 Scott Hirsch, MIG scott@mig5.com
    • Learning from Experiences: How People Make Decisions opportunity Where You Where You context solution Are Now Want To Be problem Scott Hirsch, MIG scott@mig5.com
    • Why A Failure Experience? • People think much more objectively and critically about failures  In analyzing past successes, people are naturally susceptible to “self-attribution bias” • Those who don’t learn from history are doomed to repeat it. • That which doesn’t kill you, makes you stronger Scott Hirsch, MIG scott@mig5.com
    • Innovation Mindset: Finding Opportunity In Failure What is the context of the failure experience? Who were the key players opportunity involved? How would you handle the situation differently, context solution knowing what you know now? What were the barriers problem you encountered? Focus on interpersonal and systemic barriers. Scott Hirsch, MIG scott@mig5.com
    • Five Things to Remember When Doing Inquiry: 1. Cast aside your biases, listen & observe • Let them tell their story • Listen for emotion 2. Note any contradictions • Inconsistencies beg additional questions • Check for clarity 3. Listen for the personal story • Challenge perceptions for normal • Note sources of pride and frustration 4. Distinguish between needs and solutions • Needs open up possibilities • Solutions constrain them 5. Look beyond the obvious • Watch for workarounds • Great insight is in the nuances Scott Hirsch, MIG scott@mig5.com
    • Discussion and Questions … • What did you learn in your interview?  Were you able to frame the problem?  Were you able to reframe and find the opportunity? Scott Hirsch, MIG scott@mig5.com
    • Thank you! Scott Hirsch Management Innovation Group Scott@mig5.com Scott Hirsch, MIG scott@mig5.com