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Winning in Networks (May 2010 Version)


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My thinking on the opportunities and challenges in the network era.

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Winning in Networks (May 2010 Version)

  1. 1. Network Era: Opportunities and Challenges<br />Professor N. VenkatVenkatramanDavid J. McGrath Jr. Professor of Management<br />Boston University School of Management<br /><br />May 10, 2010<br />
  2. 2. Overview<br />(c) N. Venkatraman [2010]<br />2<br />
  3. 3. Imagine life without……<br />(c) N. Venkatraman [2010]<br />3<br />
  4. 4. Towards Network Era:A Brief History<br />(c) N. Venkatraman [2010]<br />4<br />1,900,000,000<br />4,400,000,000<br />*March 31, 2010<br />
  5. 5. A brief history… (continued):YouTube and Hulu generate 2X traffic than the entire Internet in 2000<br />(c) N. Venkatraman [2010]<br />5<br />Source: Cisco<br />
  6. 6. And there’s Facebook….<br />(c) N. Venkatraman [2010]<br />6<br /><ul><li>400 million active users
  7. 7. 70% outside USA
  8. 8. 100 Million access using mobile devices
  9. 9. 50% log on in any given day
  10. 10. 500 billion minutes per month</li></li></ul><li>And.. there are tweets…<br />(c) N. Venkatraman [2010]<br />7<br />*May 1, 2010<br />
  11. 11. Tweets seem to be purpose-driven<br />(c) N. Venkatraman [2010]<br />8<br />Link<br />
  12. 12. From 1995 till today..<br />Developments in information technology have been dramatic and significant<br />Shifts in management practices have been incremental and slow<br />A new business infrastructure is emerging<br />Global<br />Digital<br />Connected<br />(c) N. Venkatraman [2010]<br />9<br />
  13. 13. Towards Global Digital Network Era….<br />(c) N. Venkatraman [2010]<br />10<br />
  14. 14. Information technology is impacting products..<br />(c) N. Venkatraman [2010]<br />11<br />
  15. 15. Products linked on all-IP infrastructure<br />Towards40-50 billiondevices<br />12<br />(c) N. Venkatraman [2010]<br />
  16. 16. Impacting next generation business processes..<br />(c) N. Venkatraman [2010]<br />13<br />video<br />
  17. 17. Processes designed for the global All-IP infrastructure<br />Next-generationprocesses<br />14<br />(c) N. Venkatraman [2010]<br />
  18. 18. ….and service delivery…<br />(c) N. Venkatraman [2010]<br />15<br />
  19. 19. Services delivered on the All-IP infrastructure<br />Next-generationservices<br />16<br />(c) N. Venkatraman [2010]<br />
  20. 20. The new business infrastructure….<br />(c) N. Venkatraman [2010]<br />17<br />Transact<br />Innovate<br />Live<br />Learn<br />Play<br />Work<br />Connect<br />Consume<br />
  21. 21. And.. It is accelerating compared to other technologies in the past….<br />(c) N. Venkatraman [2010]<br />18<br />Source: IBM<br />
  22. 22. (c) N. Venkatraman [2010]<br />19<br />How will IT-enabled capabilities impact business sectors?<br />How should we frame strategies for the network era? <br />?<br />
  23. 23. Sketching out the possibilities…<br />(c) N. Venkatraman [2010]<br />IBM, 2005<br />20<br />
  24. 24. Sketching out the possibilities…<br />(c) N. Venkatraman [2010]<br />21<br />IBM, 2005<br />
  25. 25. Sketching out the possibilities…<br />(c) N. Venkatraman [2010]<br />22<br />IBM, 2005<br />
  26. 26. Sketching out the possibilities…<br />(c) N. Venkatraman [2010]<br />23<br />IBM, 2005<br />
  27. 27. Sketching out the possibilities…<br />(c) N. Venkatraman [2010]<br />IBM, 2005<br />24<br />
  28. 28. Sketching out the possibilities…<br />(c) N. Venkatraman [2010]<br />IBM, 2005<br />25<br />
  29. 29. Sketching out the possibilities…<br />(c) N. Venkatraman [2010]<br />IBM, 2005<br />26<br />
  30. 30. Sketching out the possibilities…<br />(c) N. Venkatraman [2010]<br />IBM, 2005<br />27<br />
  31. 31. The World is ‘Flat’ but Connected…<br />(c) N. Venkatraman [2010]<br />28<br />And…connected<br />
  32. 32. Let us introduce three technology laws<br />(c) N. Venkatraman [2010]<br />29<br />
  33. 33. And take them together..<br />(c) N. Venkatraman [2010]<br />“Computer”<br />“Connectivity”<br />“Cloud”<br />30<br />
  34. 34. A working framework to understand how IT impacts business…<br />(c) N. Venkatraman [2010]<br />BandwidthLaw<br />Metcalfe’sLaw<br />Technology<br />Domain<br />Moore’sLaw<br />Process<br />Product<br />Service<br />Business<br />Domain<br />31<br />
  35. 35. Overview<br />(c) N. Venkatraman [2010]<br />32<br />
  36. 36. Setting 1: Computer Industry<br />(c) N. Venkatraman [2010]<br />33<br />
  37. 37. Computer industry [circa 1980]<br />Source: Bill Gates Testimony <br />Source: Bill Gates Testimony<br />34<br />(c) N. Venkatraman [2010]<br />
  38. 38. Computer industry [circa 2002]<br />Source: Bill Gates Testimony <br />35<br />(c) N. Venkatraman [2010]<br />
  39. 39. Key ideas…<br />Vertical integration giving way to horizontal layers of specialized capabilities<br />When and how do new layers emerge? When do layers disappear or morph?<br />Can you disrupt an industry by introducing a new layer where you hold an advantage?<br />Winning requires dominating a layer and connecting across layers<br />What’s your pattern of connections across the layers?<br />How do your competitors connect across the layers?<br />36<br />(c) N. Venkatraman [2010]<br />
  40. 40. Setting 2: Automotive<br />(c) N. Venkatraman [2010]<br />37<br />
  41. 41. GM OnStar: The Beginning…<br />(c) N. Venkatraman [2010]<br />38<br />1995<br />
  42. 42. Automobile– “computers on wheels”<br />(c) N. Venkatraman [2010]<br />39<br />‘Black Box’<br />Lines of Software Code<br />
  43. 43. Automobile– “computers on wheels”<br />(c) N. Venkatraman [2010]<br />40<br />“Cost of electronics<br />in cars” (~20--50%)<br />
  44. 44. GM OnStar & Telematics<br />(c) N. Venkatraman [2010]<br />41<br />
  45. 45. GM OnStar<br />(c) N. Venkatraman [2010]<br />42<br />
  46. 46. Real-time Interactions for Safety and Convenience<br />(c) N. Venkatraman [2010]<br />43<br /><ul><li>2,600 Automatic Crash Responses
  47. 47. 10,400 Emergency Services
  48. 48. 6,000 Good Samaritan Calls
  49. 49. 600 Stolen Vehicle Assistance
  50. 50. 62,700 Remote Door Unlocks
  51. 51. 54,500 Remote Vehicle Diagnostics
  52. 52. 3.4 million OnStar Diagnostics E-mails Sent
  53. 53. 30,200 Roadside Assistance Calls
  54. 54. 961,000 Turn-by-Turn Routes Delivered
  55. 55. 29 million OnStar Hands-Free Calling Minutes</li></ul>Monthly data as of 2008Source: OnStar<br />
  56. 56. Ford (and Microsoft): Sync<br />(c) N. Venkatraman [2010]<br />44<br />In-Car WiFi<br />(2010)<br />
  57. 57. My Ford Touch @ CES 2010<br />(c) N. Venkatraman [2010]<br />45<br />
  58. 58. Further Transformations with Alternative Energy Sources<br />(c) N. Venkatraman [2010]<br />46<br />Source: GM<br />
  59. 59. Setting 3: Music  Mobile Phones & ?<br />(c) N. Venkatraman [2010]<br />47<br />
  60. 60. Music in the analog era….<br />CustomerNetwork<br />Albums and tapes borrowed withinfriends communities.<br />Channel<br />Sold in Physical outlets (general and specialty) & Mail-order Catalogs <br />Content(music)<br />Albums offered by record labelsin standard formats (33-45-78 rpm; & cassette tapes)<br />Hardware<br />Turntables, cassette players, tape decks, Sony Walkman etc.<br />(c) N. Venkatraman [2010]<br />48<br />
  61. 61. Music in the digital era…..<br />Precursor to today’s social network?<br />CustomerNetwork<br />P2P file sharing; personal CD burning and sharing with friends <br />Channel<br />Sold in stores (CDs); Rise of Onlinedownloads<br />Digital Rights Management<br />Apple Fairplay; Windows Play For Sure<br />Content(music)<br />Major lables plus rise of independent labels posting music online <br />Software<br />MP3; itunes; Windows Media; Quicktime; Realone etc.<br />Hardware<br />Digital audio players<br />(c) N. Venkatraman [2010]<br />49<br />
  62. 62. Role of iTunes in the music ecosystem<br />(c) N. Venkatraman [2010]<br />50<br />
  63. 63. Apple’s orchestration of the music ecosystem<br />(c) N. Venkatraman [2010]<br />51<br />ComplementorNetworks<br />CustomerNetworks<br />Indirect<br />iPodAdoption<br />ContentAvailability<br />Direct<br />
  64. 64. Music in the network era……<br />CustomerNetwork<br />P2P file sharing; personal CD burning; social and automated recommendations <br />Channel<br />Sold in stores (CDs); Online downloads;downloaded to phones; Networked streaming<br />MobileOperators<br />Mobile network for accessing music<br />Content(music)<br />CDS offered by major labels; rise of independent labels; <br />Digital Rights Management<br />Apple Fairplay; Windows Play For Sure:Open Mobile Alliance (OMA)<br />Software<br />MP3; Apple itunes; Windows Media; Quicktime; Realone etc.<br />Hardware<br />Multiple network-enabled devices<br />52<br />(c) N. Venkatraman [2010]<br />
  65. 65. Network of Linkages in Music<br />(c) N. Venkatraman [2010]<br />53<br />Customer Network<br />Mobile Operators<br />Channel<br />Content<br />Applications<br />Operating System<br />Hardware<br />
  66. 66. Apple App Store: Extension of iTunes Store<br />(c) N. Venkatraman [2010]<br />54<br />
  67. 67. From iPod to iPhone: Role of iTunes and App Store<br />(c) N. Venkatraman [2010]<br />55<br />
  68. 68. From iPhone to iPad:Role of iTunes and App Store<br />(c) N. Venkatraman [2010]<br />56<br />
  69. 69. Amazon versus Apple<br />(c) N. Venkatraman [2010]<br />57<br />
  70. 70. What should Jeff Bezos do? <br />(c) N. Venkatraman [2010]<br />58<br />
  71. 71. The Evolving Publishing Network<br />(c) N. Venkatraman [2010]<br />59<br />Content<br />Channel<br />‘App’<br />Software<br />Device<br />
  72. 72. Overview<br />(c) N. Venkatraman [2010]<br />60<br />
  73. 73. Winning in Networks<br />(c) N. Venkatraman [2010]<br />61<br />Portfolio<br />Of<br />Businesses<br />Portfolio<br />Of<br />Products<br />Portfolio<br />Of<br />Capabilities<br />Portfolio<br />Of<br />Relationships<br />Can You make the shift?<br /><ul><li>Firm-centric
  74. 74. Vertical Integration
  75. 75. Ownership
  76. 76. Inside-out
  77. 77. Network-centric
  78. 78. Virtual Integration
  79. 79. Relationships
  80. 80. Outside-in</li></li></ul><li>In closing……<br />(c) N. Venkatraman [2010]<br />62<br />“The difficulty lies not so much in developing new ideas as in escaping from old ones.”<br />John M. Keynes<br />
  81. 81. Thank You Very Much<br />Conversation continues..<br />Twitter: NVenkatraman<br />