ING Media Day - Disruptive Innovations - Thaesis strategy consultants

ING Media Day Disruptive Innovations

ING Media Day Disruptive Innovations   May 17, 2011"Left: Theo Huibers, managing partner Thaesis strategy consultants  Right: Koen Voermans, consultant Thaesis strategy consultants"

Business life cycle Phase 1  Phase 2  Phase 3  Phase 4  Phase 5  Phase 6  Phase 7  Creation  Survival" Success" Expansion" Balance  Disruption" Destruction" " " Size andcomplexity of the organization ! Large" " " " " " " Small" Young" ! ! Mature" Finished" ! ! ! ! Age of the organization! ! ! ! ! Pioneering company! Departmental company! Matured company! Matured company! simple structure with functional structure with concern structure with mega structure with strategic centralized functional centralized decision making decentralized staffs and alliances and both internal and orientation targeted at targeted at early adopters business units targeted at external networks targeted at innovators segment." segment.  majority segment.  multiple market segments.! " " " " " Adapted from: Keuning, D. & Wolters, M. (2007). Structuur doorzien - Over ontwerp van organisatiestructuren. Harlow: Pearson Education." "

Accelerated changes

“A lack of speed is a strategic disadvantage” - Jeff Jarvis

“A lack of speed isa strategic disadvantage” Jeff Jarvis

h"p://www.ﬂickr.com/photos/dullhunk/3389581452/sizes/o/in/photostream/

Disruptive Technology

Examples

# iPads in the Netherlands?

Source:"2009: none

Source:"2010: 200.000 based on traffic Ofﬁcial introduction date July 23, 2010"

Source:"2011: 350.000 and counting…Reference date May 1, 2011"

Photos: Polaroid"When did we start replacing these?

Photo: The Fugees"Hint" Best selling record of that year

Photos: Flickr and IBM"Hint" Garri Kasparov versus Deep Blue

Photo: Merien ten Houten by Maarten Kools" Introduction of search engine Ilse Hint"

Photo: Hi there by Dirk Huijssoon"Hint" First successfully cloned sheep

Photo: Khadija BinQinna by Resmi"Hint" Start of Al Jazeera broadcasts

1996 (and it cost $ 949)" Source:"First affordable digital camera

When did this button first appear?

Photo: Caro Emerald"Hint" Best selling record of that year

Photo: Burj Khalifa by Bjørgulf Brevik"Hint" Tallest building completed that year

Photo: Final rescue by Rescate Mineros" Non-stop reality show for 69 days Hint"

Photo: 20th Century Fox"Hint" Highest-grossing film of all time

Illustration: Julian Assange by Ben Heine " WikiLeaks 250.000 documents Hint"

Source:"Like button arrived in april 2010

% Hi subcribers using WhatsApp?

:" 2010: 0% Source:"of Hi subcribers use WhatsApp

:" 2011: 85% Source:"of Hi subcribers use WhatsApp

Wicked World

Dying media markets

Time goes by so slowly…

KPN ‘could not keep up with trends’ Source:" The KPN case

Low profitability telecom infrastructure providers! € 70 "Billions! € 60 " € 50 " € 40 " € 30 " KPN sales" € 20 " Vodafone sales" Deutsche Telekom sales" € 10 " KPN profit" Vodafone profit" Deutsche Telekom profit" €- " € 10-" € 20-" € 30-" 2004" 2005" 2006" 2007" 2008" 2009" 2010" Source: annual reports KPN, Vodafone and Deutsche Telekom 2004-2010" Infrastructure: low profitability

Growth of international Skype-to-Skype trafﬁc! 50" 45"Annual Growth (billions of minutes)" 40" 35" 30" 25" International Phone Trafﬁc" 20" International Skype-to-Skype" 15" 10" 5" 0" 2005" 2006" 2007" 2008" 2009" 2010" Source:"VoIP and ISP: growth businesses

But why couldn’t KPN keep up?

De uitgever aan het woord De uitgever aan het woord 2011 2011 Strategische roadmap voor uitgeverijen - Hoe ver bent u verwijderd van het realiseren van een strategische omslag? Innovatiestrategiemodel voor uitgeverijen - Strategie in een context van disruptieve innovaties Toelichting uitgeefstrategie Toelichting markten Aanwijzingen bij strategische roadmap Disruptieve innovaties zorgen ervoor dat het strategische spel in de Uitgevers spelen in op de behoeften van hun meest veeleisende - en Bepaal aan de hand van de stappen hoe ver u verwijderd bent van het realiseren van een strategische omslag uitgeverijsector op een andere manier gespeeld wordt dan men doorgaans meest winstgevende - klanten in de high-end markt. Dit doen traditioneel gewend is. Deze nieuwe manier van werken - met Uitgeefstrategie zij door de eigenschappen van hun bestaande producten en diensten te nieuwe businessmodellen - is niet alleen anders dan de traditionele verbeteren zodat deze weer met hogere marges verkocht kunnen worden. manier, maar daarmee rechtstreeks in conflict. Disruptieve Portfolio van producten en diensten, Op een gegeven moment bereikt een producteigenschap echter een innovaties conflicteren mogelijk op financieel gebied door een keuze voor distributietechnologieën, prestatieniveau dat voor steeds meer mensen meer dan goed genoeg is. kleinere en onzekere markt, lagere marges en angst voor Dit relatieve surplus doet zich het eerst voor in de minst eisende strategische focus op markt- Stap 1. Inzichten verwerven: strategische klant-, markt-, Stap 8 . Overnames realiseren: uitvoeren kannibalisatie. Ook kunnen zij conflicteren met de huidige reputatie gelederen van de markt (de low-end markt), en dat zijn meestal de meest segmenten en innovatiestrategie en organisatie-inzichten verwerven. buy-strategie en integreren na overname van het bedrijf of met de cultuur en waardes van de werknemers prijsgevoelige klanten. Wanneer differentiatie op basis van een product- binnen het bedrijf. eigenschap zijn waarde verliest verschuift de concurrentiepositie van uitgevers. Dit gegeven opent de deuren voor nieuwe toetreders die met een disruptieve innovatie de aanval inzetten op de lagere regionen van de mainstream markt. Stap 2. Trends analyseren: relevante media-, informatie- Stap 7. Nieuwe allianties aangaan: realiseren en technologietrends analyseren van nieuwe strategische allianties Inrichting Relatieve voordelen Organisatie Markten Stap 3. Uitgeefproducten en -diensten herontwerpen: (her)ontwerpen van Stap 6. Organisatie herontwerpen: (her)ontwerpen uitgeefproducten en -diensten met toegevoegde waarde van de corporate- en businessunitorganisatie Relatief voordeel Integratie Huidige organisatie High-end markt gevestigde uitgevers bij: Huidige competenties Relatief laag tempo ondersteunende innovaties gericht op exploitatie Huidige businessmodellen van markton twikkeling Mainstream markt Relatief voordeel Verbijzondering Nieuwe organisatie Stap 4. Businesscases analyseren: analyseren van Stap 5. Businessmodellen innoveren: innoveren van Relatief hoo nieuwe toetreders bij: Nieuwe competenties g tempo multidimensionale businesscases businessmodellen met focus op diensten disruptieve innovaties gericht op exploratie Nieuwe businessmodellen Low-end markt van marktint roductie Omslagpunt Toelichting relatieve voordelen Toelichting organisatie KIEZEN UIT STRATEGISCHE REACTIES Disruptieve innovaties zijn de tegenhangers van ondersteunende De perceptie van de aantrekkelijkheid van innovaties wordt beïnvloed door de financie!le structuur en de organisatiecultuur Negeer innovaties. Ondersteunende innovaties verhogen het succes van van het bedrijf. Deze zijn mede gebaseerd op de waardeketen waarin de uitgever opereert. Zo hanteren gevestigde Investeer en optimaliseer bestaande producten of methodes. Omdat ondersteunende uitgevers een hogere kostenstructuur bij het leveren van ondersteunende innovaties in de high-end markt, dan voor innovaties tegemoet komen aan de interesses van bestaande disruptieve innovaties in de low-end markt nodig is. Een uitgever die gelijktijdig wil concurreren op zowel zijn high-end Voeg toe en houd gescheiden klanten van een gevestigde uitgever, kunnen ze zonder markt als op een disruptieve low-end markt, riskeert een devaluatie van de waarde van de bestaande activiteiten. De Voeg toe en integreer verandering van strategie verwezenlijkt worden. Bij disruptieve processen, structuren en waarden die met succes werden ontwikkeld voor ondersteunende innovaties in een voorspelbare Sla terug en disrupteer innovaties is dit niet het geval, omdat deze nieuwe markten openen markt, zijn over het algemeen niet toepasbaar op de onzekerheden waarmee disruptieve innovaties omringd worden. Elke Omarm en stimuleer en andere businessmodellen vergen. poging om te managen vanuit de oude systemen, processen, motivaties of mentaliteit van het bedrijf, zullen nieuwe Lees meer over strategische roadmap in: initiatieven alleen maar verstikken. Hoofdstuk 7. Strategische roadmap Pagina 80-87 Meer weten over het innovatiestrategiemodel voor uitgeverijen? Neem contact op met Theo Huibers, managing partner van Thaesis: 030 - 267 3514 en theo.huibers@thaesis.nlThey didn’t read our research reports ;-)

Microsoft buys Skype

Another example…

Did you read the news today?

The New York Times case

Source:"Newspaper circulation is declining

When will there be a tipping point?

Internet killed the videostar…

Blockbuster seeks turnaround in bankruptcy! NEW YORK | Thu Sep 23, 2010 5:52pm EDT!versus" (Reuters) - Video chain Blockbuster Inc filed for bankruptcy protection on Thursday, battered by online and mail-order services such as Netflix Inc that have transformed how customers rent movies.! A group of bondholders led by billionaire Carl Icahn and hedge funds have signed off on a restructuring deal that gives them a controlling stake in the company, court documents show. Blockbuster plans to reinvent itself as a leaner competitor with more digital video offerings, including offerings on mobile devices. It said business is continuing as usual with its roughly 3,000 U.S. stores still open." " The bankruptcy allows the company to break leases and analysts expect Blockbuster to close hundreds of stores. "The company is in a race against time," said David Pauker, a managing director at turnaround firm Goldin Associates. He said Blockbuster needs to find a new format to stop its business from shrinking." " The company, founded in 1985 when video cassette recorders were becoming a fixture in U.S. homes, has been closing stores as it grapples with competition from Netflix, Coinstar Inc unit Redbox and others. It follows in the footsteps of rental chain Movie Gallery Inc, which filed for bankruptcy in February. Blockbuster, which employs about 25,000 people, filed its Chapter 11 petition with the U.S. bankruptcy court in Manhattan." (…)" Source:" The Blockbuster case

Number of video stores in the Netherlands!1,400 "1,200 " 1,100 "1,000 " 800 " 600 " 405 " 400 " 200 " - " 1998" 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" Source:"Stores expected to extinct in 2013

Source:"Online services expected to grow

Free Record Shop versus Bol.com! € 400 "Millions! € 350 " € 300 " € 250 " € 200 " € 150 " € 100 " € 50 " €- " 99" 00" 01" 02" 03" 04" 05" 06" 07" 08" 09" 10" Free Record Shop instore sales" Bol.com online sales" Source: " The Free Record Shop case

Source: "‘No clicks without bricks’

Records for free (but pay for shop)

Say cheese….

Kodak sales and profit! $16 " Source: annual reports Kodak and Fuijifilm 1999-2010"Billions! $14 " $12 " $10 " $14 " $8 " $6 " € 7,6 " $4 " $2 " $- " $-2 " $-4 " 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" Sales" Profit" Fujifilm sales and profit! $40 " Billions! $35 " $30 " $25 " $20 " $26,8" $15 " $17 " $10 " $5 " $- " $-5 " 1999" 2000" 2001" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" Sales" Profit" The case of Kodak (or Fujifilm)

App for free (but pay for extras)

5 dying med re providers" 1.  Telecom infrastructu ers" 2.  Newspaper publish ia markets 3.  Video stores" 4.  Record stores" panie s" 5.  Photo printing comPhoto: KPN Tower by @izaeus"

Why not combine old and new?

No sign of improvingWere like a song that just aint groovinOh, the harder we tryThe more it seems that its just not rightOoh baby, this aint gonna workBaby baby, this aint gonna workOoh baby, this aint gonna work baby baby,this aint gonna work This ain’t gonna work…

Integration! Build new businesses separate from traditional" ! " Personnel! Hire new personnel with the right set of competences" ! " Timing! Be pro-active in formulating a strategic response" !Customer segments! Select and enter new customer segments" ! Partnerships! Identify potential acquisitions and set-up alliances" ! Business models! Design, test and redesign new business models" ! Leadership! Be committed and set the right priorities" Our research recommendations

Strategicresponses

Photos: stills from ʻI Will Surviveʼ video, song by Gloria Gaynor"1.  Ignore disruptive forces and enter ﬁnal stage of your lifecycle"2.  Extend your business lifecycle by creating scale"3.  Extend your business lifecycle by reorganizing and down-sizing"4.  Embrace disruptive forces by splitting, unbundling or buying-out"5.  Embrace disruptive forces by intrapreneuring, new venturing or investing in start-ups"How to survive in a dying market

Photo: Fidel Castro by Fernando Martinho" Response: ignore disruptive forces

Photo: Christiaan van Thillo in Adformatie 42/2009" Response: extend by scale

Photo: Gerard Kleiserlee, Former CEO Philips N.V. " Response: extend by reorganizing

Photo: Daniel Ropers from Bol.com" Response: disrupt by splitting

Strategies in business lifecycle Phase 1  Phase 2  Phase 3  Phase 4  Phase 5  Phase 6  Phase 7  Creation  Survival" Success" Expansion" Balance  Disruption" Destruction" " " Size and Create scale: mega merger,complexity of the 2 acquisition, partnering in networks and alliances or organization ! Reorganizing or rebundling. " down-sizing" Large" " Splitting, unbundling or buying-out" 3 " 4 " " Intrapreneuring,   new venturing or " investing in start-ups" 1 " 5 Small" Young" ! ! Mature" Finished" ! ! ! ! Age of the organization! ! ! ! ! Pioneering company! Departmental company! Matured company! Matured company! simple structure with functional structure with concern structure with mega structure with strategic centralized functional centralized decision making decentralized staffs and alliances and both internal and orientation targeted at targeted at early adopters business units targeted at external networks targeted at innovators segment." segment.  majority segment.  multiple market segments.! " " " " " Adapted from: Keuning, D. & Wolters, M. (2007). Structuur doorzien - Over ontwerp van organisatiestructuren. Harlow: Pearson Education." "

Formulate strategic responseStep 1. Develop strategic insights into clients, markets Step 8 . Develop and realize buy strategy,and organizational strengths and weaknesses integrate acquisitions and find synergies Step 2. Analyze relevant trends in media, Step 7. Create new alliances with strategic information consumption and technology partners for selected competences areas Step 3. (Re)design products and services based on customer Step 6. (Re)design organizational structure and coordination segment specific perceptions of added value mechanisms for corporate and business unit levels Step 4. Analyze business cases with Step 5. Innovate business models with a services multidimensional variables and scenario’s focus based on analysis of insights and trends Turn-around Ignore disruptive forces and enter ﬁnal stage of your lifecycle" Extend your business lifecycle by creating scale" Extend your business lifecycle by reorganizing and down-sizing" Embrace disruptive forces by splitting, unbundling or buying-out" Embrace disruptive forces by intrapreneuring, new venturing or investing in start-ups" Thaesis Strategy Roadmap

Photo: Koen Voermans"Response: disrupt by entrepeneuring

Where do you get your inspiration for entrepreneurial initiatives?

From…

JapanUnited States ChinaScandinavia or …

I got mine in Kenya

510 euro is the GDP per capita

Strong local culture with local needs...

...and strong tribal bounds with rural areas

44% of people is younger than 14 years

Why in Kenya?

It’s mobile revolution

What is the mobile phone penetration in Kenya?

50% of Kenyans have mobile phone

20 millionmobile subscribers in Kenya Source: Communications Commission of Kenya, 2010

What percentage of these mobilephone subscribers could use it to transfer money?

70% is able to transfer money using mobile

> 13.5 millionM-PESA subscribers and 20,000 M-PESA agents Source: Safaricom, 2010

Mobile is currently a gateway for… Communication Money transfer

…and evolves to information and commerce Communication Money transfer Information Commerce

And many more....Due to many startups and entrepreneurs

What is the impact on the telecom,banking and media sector in Kenya?

What if…

Photo: Eelco BLok"Mr. Blok lived in Kenya?

11%of Safaricom’s revenues are from M-PESA Source: Safaricom, 2010

Safaricom’s future actions

Extending in strategic growth areas

What if…

Photo: Christiaan van Thillo in Adformatie 42/2009" Mr. Van Thillo lived in Kenya?

90%of men and 77% of women listen to the radio at least once a weekSource: Central Bureau of Statistics, 2010

MobileMost dominant platform and huge opportunity Source: Central Bureau of Statistics, 2010

Nation Media Group’s response

Top 10 most visited websites via mobile 1.  facebook.com 2.  google.com 3.  wikipedia.org 4.  yahoo.com 5.  youtube.com 6.  waptrick.com 7.  bbc.co.uk 8.  getjar.com 9.  my.opera.com 10. nation.co.keEmbrace: successful mobile website

EAE Publisher’s response

Ignore: profitable educational books

Naspers’ response

Entrepreneur: starting initiatives

What if…

Photo: Jan Hommen"Mr. Hommen lived in Kenya?

> 13.5 millionM-PESA subscribers and 20,000 M-PESA agents Source: Safaricom, 2010

Point of Sales: using mobile to pay

Equity Bank’s response

Too late: trying to regain market position

Concluding

Disruptive innovationstransform many industries in Kenya

But your industry as well?!

What will be your strategic response?

Focus on strengths and opportunities

Strategies in business lifecycle Phase 1  Phase 2  Phase 3  Phase 4  Phase 5  Phase 6  Phase 7  Creation  Survival" Success" Expansion" Balance  Disruption" Destruction" " " Size and Create scale: mega merger,complexity of the 2 acquisition, partnering in networks and alliances or organization ! Reorganizing or rebundling. " down-sizing" Large" " Splitting, unbundling or buying-out" 3 " 4 " " Intrapreneuring,   new venturing or " investing in start-ups" 1 " 5 Small" Young" ! ! Mature" Finished" ! ! ! ! Age of the organization! ! ! ! ! Pioneering company! Departmental company! Matured company! Matured company! simple structure with functional structure with concern structure with mega structure with strategic centralized functional centralized decision making decentralized staffs and alliances and both internal and orientation targeted at targeted at early adopters business units targeted at external networks targeted at innovators segment." segment.  majority segment.  multiple market segments.! " " " " " Adapted from: Keuning, D. & Wolters, M. (2007). Structuur doorzien - Over ontwerp van organisatiestructuren. Harlow: Pearson Education." "

And please remember this song…

I met a devil womanShe took my heart awayShe said, Ive had it comin to meBut I wanted it that wayI say that any love is good lovinSo I took what I could get mmh, mmh, mmhShe looked at me with them brown eyesAnd said, You aint seen nothin yetB-B-B-Baby, you just aint seen n-n-n-nothin yetHeres something that youre never gonna forgetB-B-B-Baby, you just aint seen n-n-n-nothin yet

Thank you... for your attention. Discovered new opportunities? We can help you transform.Strategy Boutique Thaesis Kanaalweg 17L-ASince 2006 3526 KL Utrechthttp://www.thaesis.nl The Netherlandsinfo@thaesis.nl +31 30 267 3514

We research trends and consult clients.We invest in our people.We are Thaesis.What we doThaesis is all about strategy. We develop strategies for large companies, for example in publishing and retail.We challenge outdated assumptions that underly current business models. We understand changes inconsumer behaviour. And we help companies redefine their raison dêtre in today’s business environment.In the last year Thaesis has worked on strategies related to e-books, mobile, digital rights and social media.In formulating winning strategies, Thaesis combines financial analysis with business model design.In short: we translate tomorrow’s developments into today’s answers. And we do it precise and fast.Strategy Boutique Thaesis Kanaalweg 17L-ASince 2006 3526 KL Utrechthttp://www.thaesis.nl The Netherlandsinfo@thaesis.nl +31 30 267 3514

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