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Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
Sse Chesbrough Group 5
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Sse Chesbrough Group 5

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Assignment for SSE

Assignment for SSE

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  • rely on community contributed content supports user-end tagging or labeling encourages promotion of music on Last.fm IP controls permit the owners of the content 30-second previews, free of charge up to three times artists are paid each time the track is played, and may choose their music rights. Monthly fee July 2007, it was announced that Last.fm had also signed a deal with the Sony BMG record label. The partnership will give the service's users access to the entire Sony BMG catalog of music.
  • How to attract the participation of a broad community of contributors, how to sustain their participation over time Open-oriented projects must compete for contributors How the open invention or coordination project is led, how its agenda evolves. How can a company engage in an open source community and still profit from that technology,how should they capture the value created?
  • Transcript

    • 1. Open Innovation and Strategy By Group 5 SSE
    • 2. From Traditional to Open Business Strategy
        • Open Innovation is creating new empirical phenomena that does not fit well with established theories of business strategy.  
      •  
        • All Traditional Business Strategies (TBS) 
          • are based upon ownership and control as key levers in achieving strategic success 
          • focus mainly within the firm, or within the value chain in which the firm exists
          • do NOT take much notice of the potential value of external resources that are not owned by the firm in question, but may still create value for the firm
      •  
    • 3. Open Innovation
        • Open Innovation (O.I.) challanges the need to have ownership over the resources that are creating value.
            • E.g. MySpace, YouTube and Linux have relied foremost on external volunteer contributors.
        •  
        • O.I. does not rely on the ability to exclude others from copying the product
            • In the case of MySpace and YouTube ownership of the posted content is central to their valuations but the users can access the sites abd view the content witout a charge.
            • Linux and Wikipedia relies on its user base to continually refine the product
      •  
      •  
    • 4. Value Creation & Capture in the context of Openness
      • Knowledge Creation through Open Invention
        • The power of openness in terms of value creation resets largely with the inheret characteristic of knowledge-it can be reused and can lead to increasing returns
        • Both the breath and dept of the pooled knowledge can outstrip the knowledge endowement of an individual contributor
        •   Without direct monetary compensation, a vast number of resources have been committed to open innovation (e.g. development of Linux)
      •  
      • Ecosystem Creation through Open Coordination
      •  
        • In addition to O.I., open coordination has led to consensus building around issues such as technology standards that have permitted whole business ecosystems to flourish.
        •   A business ecosystem represents the interplay between multiple industries, so a decision to open up a segment of one industry can have widespread reverberations. (e.g. applications software vendors, internet service providers, video content developers, etc) 
        • A healthy ecosystem can further perpetuate the adoption of the open architecture through network effects, where the value of the user network is heightened with each additional adopter
    • 5. The problem of Open Innovation
        • How to attract the participation of a broad community of contributors, how to sustain their participation over time
        • Open-oriented projects must compete for contributors
        • How the open invention or coordination project is led, how its agenda evolves.
        • How can a company engage in an open source community and still profit from that technology,how should they capture the value created?
    • 6. Last.fm as a media company http://www.last.fm/
        • An internet radio station and music community site, founded in 2002
        • Over 30 million active users based in more than 200 countries 
        • May 2007, CBS Interactive acquired Last.fm for £140m ($280m USD) 
        • Using a music recommender system called "Audioscrobbler"
        • Customized "radio stations" consisting of uninterrupted audio streams of individual tracks selected from the music files in the music library 
        • supports user-end tagging or labeling
        • encourages promotion of music on Last.fm
        • IP controls permit the owners contol of the content
        • Free trial for 30 days
        • 30-second previews, free of charge
        • artists are paid each time the track is played, and may choose their music rights.
        • Monthly fee in some countries
    • 7. Last.fm - a more open approach strategy
        • Knowledge creation through Open Invention
          • after the first plug-in, opened an API to the community 
          • rely on community contributed content
            • users provide music
            • provide preferences that are interpreted by last.fm and that adds to creating the product
            • participants narrates the music history 
    • 8. Last.fm - a more open approach strategy
        • Ecosystem Creation through Open Coordination
          •   New music is discovered, this affects live concert industry, nightclubs and other music outlets
          • Last.fm and other online music spurs the development of products like SONOS Multi-Room Music System and other listening devices (ranging from phones with internet connection to computers)
          • Xbox 360 supports last.fm 
    • 9.  
    • 10. Last.fm - confronting O.I. issues
        • Q1. 
          • Unsigned artists get paid each time the track is played. Labels and artists can choose music right(streaming only, or for purchase or free download)
          • Not only give knowledge for free, music is incentive to continue
          • Gather library and favorite music/switching cost in time 
          • Subscriber accounts are free or very inexpensive
        • Q2.
          • partnership with record label (with the Sony BMG record label in 2007)to have access to music
        • Q3.
          • user-end tagging or labeling of artists, albums, and tracks
          • No obvious hierarchy, a community between music lovers
        • Q4.
          • Advertisement in user account
          • Provide extra features that paid users receive(Subscriber account)
          • Deduction
    • 11. From Traditional to Open Business Strategy
        • Traditional Business Strategies (TBS):
          •   Defensible positions against competition
          •   Creating barriers to competition rather than promoting openness
      •  
        • Open Business Strategy
          • Balances tenets of TBS with promise of Open Innovation
          • Embraces benefits of openness as a means of expanding value creation for organizations 
          • Effective OBS will balance value capture and value creation, instead of loosing sight of value capture in the pursuit of innovation
          • OBS is realistic about the need to sustain open innovation approaches over time 
    • 12.  
    • 13. Sources
        • "Open Innovation and strategy"
        • Henry W. Chesbrough Melissa M. Appleyard
        • www.Last.fm
        • www.wikipedia.com - last.fm

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