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Ebusiness course english updated 17.05.2013

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The slides of my course on ebusiness. Video´s connecting to these slides can be found on my YouTube channel "Ville Saarikoski"

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Ebusiness course english updated 17.05.2013

  1. 1. PUTTING THE E INTOBUSINESS, CREATING NEWEBUSINESSES – THE LOGIC OF THENETWORK AND INFORMATIONECONOMYVille Saarikoski 17.5.2013This course is work under progress (will be uploaded to slidehare) andcontains the core elements plus links to c 10 videos (missing videoswill be update on to YouTube) and learning assignments to students(will be available on Googledocs)I am searching for feedback to the course, for opportunities to conductthe course online or in class, in whole or in part, in an internationalcollaborative environmentFree to copy and adapt as long as original citedand new adapted material available with samelicense
  2. 2. GOALS Understand the theories of the information economy – why andhow doing business is different compared to the industrialeconomy Become familiar with how important It-tools are in building theinformation society and to apply these tools on a personallevel, company level and in creating new markets orusing/building new einfrastructure Become familiar with e-business cases, service providers andnew infrastructure Understand how to build new e-markets, to changeindustries, change management, change leadership and strategy To further develop this course (and related courses) The course builds on earlier teaching experimentation with e.g.online courses on ebusiness and classroom courses onoperations management, strategy, innovation, creating yourwebshop etc
  3. 3. METHODS Reference to literature sources both books and articles is madethroughout the slides. The course is built by choosing a set of books . Links to further video material by the authors of above books e.g. TedTalk presentations available on YouTube, Videos explaining the concepts introduced in the books and how theyinterconnect in this course is available on the YouTube channel VilleSaar E-business & E-commerce Management by Dave Chaffey is goodbackground material and could be used as a single course book.However it is missing some key concepts. Setting a framework and approaching the topic from differentperspectives – the student can then choose which path to follow to gaina deeper understanding Excercises Cases Participation, discussion, sharing experiences, collaborative construction Links to thesis on the topic (supervised by lecturer and others)
  4. 4. Turban et al
  5. 5. CONTENTS Trends and change in society – enablers and drivers of change The character of Information, how to earn with information Networks – value creation, value capturing (value delivery) in a networkenvironment Game theory Large scale networks and information – The Internet Six Degrees The logic of flat rate Long Tail The Dilemma of the Commons – the logic of sharing Groundswell – user revolution New ways for users to interact with companies and society Growth strategies – creating new eBusinesses Innovators dilemma, Clayton Christensen Creating market spaces, Mauborgne Kim Open Services Business, Henry Chesbrough The Mesh business, Lisa Gansky5SocietyCompanyIndividual
  6. 6. CONTENTS Business Model Canvas, Osterwalder Change Management, change Leadership Tools Tools for creating new Individual tools (blogs, web pages, social media) Corporate tools (erp, crm, digital marketing), Society i.e. infrastructure (payment systems, authentication systems, the e-citizen and e-consumer) Security concerns Creating New Markets, New eBusinesses, cases Shaping new industries, Emergence of new infrastructure – difference between nations6SocietyCompanyIndividual
  7. 7. SETTING THE SCENE May you live in interesting times – A ChineseSaying
  8. 8. THE MACRO SCENE IN FINLAND - UNDERSTAND THE LOGIC OF THENEW ECONOMY: OLD STRUCTURES REACH A ”TIPPING POINT” AND EXPERIENCE A”MELT DOWN”?Sanoma Oy Newspaperscan be readelectronically, the VAT issueItella Oy,The mail man´s bag gets thinerbecause newspapers and billsbecome epapers and ebillsThe paper industry is buildingoutside of Finland, decreasingpaper consumption?Nokia”Burning Platform””Where there is paper there is inefficiency” => newnetworks, new platforms, new infrastructurePresent businesses become e-businesses, New businessesbuild on an e-infrastructureSOK, Kesko, Stockmann werelate in building web shopsCommunity structure,Structuralreforms in communitystructures, because of lack ofefficiency in health careUniversities of Applied Science facedilemma of globalisation vs localdevelopment, the opportunity toleverage e-learning and to teach e-businessMusic becomes digital, volume ofbusiness in turnoverdecreases, ratio of digital vs totalturnover increases (20% inFinland more elsewhere)E-health, epatientrecords, e-prescriptions
  9. 9. EARNING WITH INFORMATION AND EARNINGIN A NETWORK
  10. 10. INFORMATION ECONOMY – EARNING WITHINFORMATION – VALUE CREATION, VALUECAPTURING Characteristics of information Costly to produce, cheap (=>0) to reproduce => the changing role of copyright Sunk costService provider should avoid commodotization i.e price comparabilityFocus on marketing, note samples can be given for free at no cost, low variable cost offersgreat marketing possibilitiesFocus on segmentation (identifying customers), versioning, personalised pricing,If members of different groups systematically differ in their price sensitivity, you canprofitably offer them different prices. Student and senior citizen discounts are primeexamples. Lock-in: If an organization chooses to standardize on a particular product, it may be very expensive for itto make the switch owing to the costs of coordination and retraining. Again Microsoft serves asan example Positive feedback, preferential attachment Network effects: If the value to an individual depends on how many other members of his group use theproduct, there will be value to standardizing on a single product. Microsoft has exploited thisdesire for standardization with its Microsoft Office suite. Sharing: In many cases it is convenient for the individual user to manage or organize all informationgoods that he or she will want to consume. Information intermediaries such as libraries orsystem administrators can Platforms, ecosystems
  11. 11. COMPANIES IN NETWORKS6/7/2013 Laurea-ammattikorkeakoulu 11
  12. 12. THE GAMES BUSINESSES PLAY – VALUECREATION, VALUE NET FRAMEWORK The Right Game – use game theory to shape strategyHBR July - August1995, Adam brandenburg and BarryJ Nalebuff The importance of value creation and valuecapturing in Value Networks PARTS, Players, added value, rules, tactics, scope
  13. 13. VALUE CREATION VALUE CAPTURING – EXAMPLESOF THE GAMES BUSINESSES PLAY Auction in which both the winner and the second placed have to pay up Destroying your own assets Each player can donate to the community and the community will give a payoff doublethe contribution and divide it equally among the players Collaborative tasks game The value networkLIISAPEKKAKeeps mouth shut TalksKeeps mouth shut 1,1 5,0Talks 0,5 3,3http://www.fiksuhuuto.com/CompanySupplierSubstitutor ComplementorCustomer
  14. 14. COMPETITIVE EDGE IN BUSINESSPay-offsInnova Dolla1 13 22 44 3Innova strong inR&D, Dollafinancially strong.The Businessquestion should Iinvest in R&D?INNOVAlowhighDOLLAhighhighDOLLAlowlow
  15. 15. CLASSIFICATION OF GAMESClassification ExampleTaphtuvatko siirrot samanaikaisesti vaiperäkkäin? *What is the amount of competition orcollaboration between players*Is the game played once and the players willnever ever meet againa?*Do all the players have the same information?*Can the rules be changed?*Are contracts binding?*Zero sum games*Source The Oxford Handbook of strategy p 878-881
  16. 16. GAME THEORY AND SHOULD ICOLLABORATE?COMPETITOR ACOMPETITORBDon’t cooperate cooperateDon’t cooperate B=5, A=5 B=12, A=2cooperate B=2, A=12 B=9, A=9The figure shows B´s payoff and A´s payoff. Try and apply the logic of theprisoners dilemma to understand why the companies end up not collaborating.A market understanding to what collaborating or not could mean. If e.g B doesnot co-operate and A is given to understand that B is co-operating so A will donothing and will wait for joint efforts to emerge and be decided upon. B willquietly build a factory and captures the market. B=12, A=2 tai B=2 A=12,The answer: Find the position in which your competitor choosing differentlywould only make life easier for you.Johnson, Scholes, Whittington p 243, Exploring Corporate Strategy
  17. 17. THE STANDARS GAME, INFORMATION RULES ,SHAPIRO P 250Weak team´s choice BStrong teamschoice AWilling to fight Wants standardWilling to fight Standards war A tries to block BWants standard Voluntarystandard
  18. 18. EARNING ON THE INTERNET – A HUGEINFORMATION NETWORKCombining the logic of earning with information andearning in a network and moving it into a macroenvironment i.e. the Internet
  19. 19. Six degreesCreate communities that can scale upand busines models that benefit fromscalingCapture interest economy, huomiotalous, (Sarasvuo)Participation economy, osallistumistalous (Hintikka)
  20. 20. COMMUNICATION IS NOT ABOUT AVERAGES!LOOK AT THE DATA FROM A NEW PERSPECTIVE –SEARCH FOR THE SUPER NODES How many sms messages do you send per month? How many calls do you make per month? How many pictures do you take and send? How many contacts do you have on your phone? How many hours of music do you have on your phone? How many times do you access the Internet per day from ypurmobile? How many bookmarks do you have on your mobile phone? Which member of parliament sends the most Chrismas Cards?http://www.savonsanomat.fi/teemat/eduskuntavaalit/il-kari-k%C3%A4rkk%C3%A4inen-suoltaa-joulukortteja/627307
  21. 21. THE SUPER CONNECTED, MALCOLMGLADWELL, TIPPING POINT How many do you know? First agree on what knowing means. Secondpick randomly 20 names in your language by e.g. picking the first name onevery 20`th page in a telephone directory Alanen, Brunell, Forssman, Harkonsalo, Hjelt, Ikäheimo, Jääskeläinen,Keinänen, Korhonen, Kyötikki, Lehikoinen, Lindström, Martinmaa, Mäkinen, Nyfors, Parviainen, Pulkkinen, Riijärvi, Saikkonen, Setälä, Summanen, Tihinen, Vaara, Volanen, Åkerblom Concepts structural holes, strong weak ties, the mathematics ofnetworks http://en.wikipedia.org/wiki/Network_science http://en.wikipedia.org/wiki/Social_network_analysis http://en.wikipedia.org/wiki/Interpersonal_ties http://en.wikipedia.org/wiki/Social_network
  22. 22. SIX DEGREES (DISTANCE IN NETWORKS) THEORY:MILLGRAM, WATTS, STROGATZ Communication is about the flow ofinformation in a network. Marginal pricegoes to zero => the individual’s willigness tospread links and information, ”to spin theweb” increases. => from price per minute orper message (transaction based pricing) toflat ratehttp://en.wikipedia.org/wiki/Six_degrees_of_separation25.8.2010 http://gizmodo.com/5620681/all-300000-biggest-websites-visualized-with-their-icons?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+gizmodo%2Ffull+%28Gizmodo%29&utm_content=Google+Reader
  23. 23. Albert Edelfelt 1887, Ruokolahden Eukot kirkonmäellä,AteneumGRAHAM BELL EI NÄHNYT FACEBOOKIAHuhuverkko (rumournetwork),Puskaradio,Viidakkorumpu(jungle drum)
  24. 24. THE LOGIC OF FLAT RATE The problem 1 costs 1,99 10 cost 19,90? (physical product) 1 message costs…. 10 messages cost? Same price (information product) Our social networks are not evenly distributed, communication is not about averages Flat rate pricing allows for connectors to emerge; the individual starts sharing links When pricing is flat i.e. marginal pricing is zero, superconnected nodes emerge e.g. blogswith millions of readers, people with thousands of friends The distance between nodes in a network, which has superconnected nodes shrinks. Ascale free (six degree network) emerges. The flow of information in a network increases.The network becomes interconnected. The Internet is scale free. The Internet has flat rate pricing Mobile networks used transaction based pricing (per minute, per message, per kilobyte).Only when the pricing model (business model) changed, did the mobile Internet start tospread
  25. 25. The Long TailChris Anderson (2006) The Long Tail: What happensto demand when supply is no longer limited
  26. 26. The Long Tail andchangeChris Anderson (2006) The Long Tail: What happensto demand when supply is no longer limitedRemeber: Bricks and Clicks, The Virtual worldcombines with the physical world
  27. 27. Combining six degrees and the Long tail -Companies should focus on building from the the tail.Create communities that can scale upand busines models that benefit fromscalingCapture interest economy, huomiotalous, (Sarasvuo)Participation economy, osallistumistalous (Hintikka)
  28. 28. THE NEW LOGIC OF SHARING, LIMITEDRESOURCES BECOMING UNLIMITED, OPENDATA, OPEN RESOURCES - THE DILEMMA (TRAGEDY) OFTHE COMMONS, RESURSSINIITTY, RESURSSIALUSTACopyrightCopy left (Assetof user)Phone numberNumberportability (Assetof user)LimitedFrequenciesWlan hotspots(Asset of user)CodeOpen codeIn yourBusiness??Bus routesInformation accesible to user(open data)http://www.julkinendata.fi/, ReittiopasYochai Benkler “Sharing and shared efforts become morefeasible, because of developments in technology” TheWealth of Networks: How Social ProductionTransforms Markets and Freedom
  29. 29. THE DILEMMA OF THECOMMONS, REORGANISING RIGHTS...CHANGES INLAW Resource based view vs unlimited resources Some recent reorganisations of rights Creative Commons, restructuring of copyright Lawrence Lessig.Copy left instead of copyright Number portability Non licensed frequencies (WLAN)Yochai Benkler, Some economics of wireless communications.Harvard Journal of Law and Technology Volume 16 Number 1 Fall2002 Yochai Benkler “Sharing and shared efforts become morefeasible, because of developments in technology” The Wealth ofNetworks: How Social Production Transforms Markets andFreedom Public sector information becomes openhttp://www.lvm.fi/c/document_library/get_file?folderId=964902&name=DLFE-10617.pdf&title=Julkinen%20data
  30. 30. WHAT RESOURCES CAN YOU IDENTIFY THAT AREBEING TRANSFERRED INTO THE OPENENVIRONMENT?WHAT OPEN RESOURCES (OPEN DATA) ARE YOUBENEFITTING FROM?
  31. 31. GROUNDSWELL (LI, BERNOFF) – THE USER (THENEW GENERATION) REVOLUTION ON THE INTERNET See also books by Tapscott e.g. Grown up Digital6/7/2013 Laurea University of Applied Sciences 31
  32. 32. THE USER LEAD REVOLUTIONIndividualSocietyCorporation
  33. 33. GROUNDSWELL CHARLENE LI, JOSH BERNOFF 2008 What is groundswell p 9(verkkovalta)? A social trend in which people use technologies to get things theyneed from each other, rather than from traditional institutionslike corporations The strategy for corporations: If you can t beat them, join them The BIG principle for mastering the groundswell p 18: Concentrateon the relationship, not the technologies33
  34. 34. TECHNOLOGIES AND CLASIFICATION P 18-Peoplecreating:blogs, usergeneratedcontentPeopleconnecting: socialnetworksand virtualworldsPeoplecollaborating: wikisand opensourcePeoplereactingto eachother:forumsratings,andreviewsPeopleorganizingcontent:tagsAccelaratingconsumption: rssandwidgetsHow theyworkParticipationHow theyenablerelationshipsHow theythreateninstitutionalpowerHow youcan usethemSee next slide for example
  35. 35. EXAMPLE: BLOGS• How they work:A blog is a personal (or group) journal ofentries containing written thoughts links and often pictures• Participation: Blog reading is one of the most popularactivities in Groundswell with one in four online Americansreading blogs (2006). Video reviewing is also popular.Podcasters and even podcast listeners are rare• Participation: The authors of blogs read and comment onothers blogs. They also cite each other adding links to otherblogs from their own posts6/7/2013 Laurea University of Applied Sciences 35
  36. 36. EXAMPLE CONTINUED:• How they threaten institutional power: Blogs, user generatedvideo and podcasts aren t regulated, so anything is possible.Few YouTube video uploaders check first with the subjects oftheir videos. Companies frequently need to police employeeswho post unauthorized content about their employees andtheir jobs• How you (a company) can use them: First listen, read blogsabout your company. Search for blogs with most influence.Start commenting on those blogs6/7/2013 Laurea University of Applied Sciences 36
  37. 37. THE PROFILES, THE SOCIAL TECHNOGRAPHICSPROFILE – KNOW YOUR CUSTOMER? P 40• Creators:• publish a blog,• publish own web pages,• upload video you created• upload music you created• write articles and post them• Critics:• publish a blog,• post ratings/reviews of products or services• comment on someone else s blog• contribute to on line forums• contribute to/ edit articles in a wiki
  38. 38. THE PROFILES, THE SOCIAL TECHNOGRAPHICSPROFILE – KNOW YOUR CUSTOMER? P 40• Collectors:• Use Rss feeds• Add tags to web pages or photos• Vote for web sites online• Joiners:• Maintain profile on social networking sites• Visit social networking sites• Spectators:• read blogs• watch video from other users• listen to podcasts• read online forums• read customer ratings/reviews• Inactives:• None of these activitieshttp://www.youtube.com/watch?v=kGJTmtEzbwo
  39. 39. 6/7/2013 Laurea University of Applied Sciences 39
  40. 40. 6/7/2013 Laurea University of Applied Sciences 40http://empowered.forrester.com/tool_consumer.html
  41. 41. STRATEGIES FOR TAPPING THE GROUNDSWELL P65 Four step planning proces POST• People: What are your customers ready for• Objectives: What are your goals• Strategy: How do you want relationships with your customer tochange?• Technology: What applications should you build Five objectives:1. Listening, Use for research2. Talking,Use for spreading messages3. Energizing, Find your most enthusiastic customer4. Supporting, Set up tools to help your customers support eachother5. Embracing, Integrate your customers into the way yourbusiness works
  42. 42. EXISTING BUSINESS FUNCTIONS AND THEIRGROUNDSWELL ALTERNATIVE P69You alreadyhaveThis functionNow you can pursuethis groundswellobjectiveHow things are different ingroundswellResearch Listening Ongoing monitoring of yourcustomers conversations with eachother, instead of occasional surveysMarketing Talking Participating in and stimulating two-way conversations with each other,not just outbound communications toyour customersSales Energizing Making it possible for yourenthusiastic customers to help sell toeach otherSupport Suporting Enabling your customers to supporteach otherDevelopment Embracing Helping your customers work witheach other to come up with ideas toimprove your products6/7/2013 Laurea University of Applied Sciences 42
  43. 43. QUESTIONS TO ASK YOURSELF How are the users i.e. your customers taking powerin your context? (Using groundswell) How is your context moving into services? Can youperceive a market for new services or to migratedeeper into a service perspective? What are your value propositions? What technology is behind your service creation? How do you move toward services? How do youcreate services?
  44. 44. THE SERVICE LOGIC, KNOWLEDGE INTENSIVEBUSINESSES (KIBS) AND INFORMATION INTENSIVEBUSINESSES Tools/Theories to identify nee business areas The Innovators Dilemma, Clayton Christensen Open Services Innovation, Chesbrough Creating New Market Space, Mauborgne, Kim The Blue Ocean, Mauborgne, Kim The Mesh
  45. 45. GROWTH GAPThe growthgoalTools:1) Business PlanWhat, to whom, how (channel) at what price(business model)http://en.wikipedia.org/wiki/Business_plan2) Roadmaphttp://en.wikipedia.org/wiki/Technology_roadmap3) Growth plan- R&D&I gap- Gap for strategicdevelopment
  46. 46. GROWTH PLANCurrent Operations Adjacent moves New Growth InitiativesYear 1 Year 2 Year 3 Year 4 Year 5Current revenues Targeted Adjancencies Number launchedFive-year Expectedgrowth rate revenue/initiativein year 5Projected year 5 Projected year 5core revenues adjacent revenues Projected success rateNotes: Notes: Projected year 5new growth revenuesNotes:Target year 5 revenuesProjected year 5 revenuesGrowth gapCurrent revenues: revenues for the current fiscal yearFive year growth rate: projected annual growth rate for ecisting operationsProjected year 5 core revenues: current revenues x(1+ growth rate)x5Targeted adjacencies: description of new customers, regions, or channels that extend the core businessProjected year 5 adjacent revenues: expected revenues from adjacent movesNumber launched this year: estimated number of new growth initiatives launched in a given yearYear 5 revenues/initiative: average expected revenue generated by initiative launched in a given year in year 5(e.g. the third year of revenues for initiatives launched in year 2)Projected success rate: The expected success rate of initiatives launched in a particular yearProjected year 5 new growth revenues: Number launchedx revenue/initiativexsuccess rateTarget year 5 revenues: The strategic target for revenues in year 5The Innovator s Guide toGrowth – PuttingDisruptive Innovation toWork p 26Scott D. Anthony, JosephV. Sinfield, Mark W.Johnson, Elizabeth J.Altman, 2008
  47. 47. INNOVATION AND THE COMPANY LIFE SPANDisruptiveinnovationApplicationinnovationProduct innovationProcessinnovationExperimentalinnovationBusiness modelinnovationStructuralinnovationMarketinginnovation
  48. 48. 48 Explains Predicts Classifies First lesson: integrate toward value!A good theoryA good tool (e.g. a method or aninformation system) gives you the toolsto implement
  49. 49. 49Innovators dilemma: Explains how a and why agrage based company can succeed (Businessaikido)
  50. 50. THE INNOVATORS DILEMMA – COMPANIES FOLLOW ONE KEY VALUEATTRIBUTE, WHICH IS BASED ON A TECHNOLOGICAL ATTRIBUTE.CHALLENGE: BECAUSE OF TECHNOLOGICAL DEVELOPMENT YOUMIGHT GO BEYOND TRUE CUSTOMER NEED (SURPASS CUSTOMEREXPECTATIONS) AND THE CUSTOMER MIGHT BE SATISFIED WITHLESS. => TRY ”POORER IS BETTER”50
  51. 51. WESTERN UNION – THE TELEGRAPH AND FAILEDTO SEE THE VALUE OF THE TELEPHONE Existing processes, resources and values encouraged investing inserving present customers (railroads). The telephone in its early staged worked well only in shortdistances Western Union noticed the emergence of the telephone and howits performance became better, but continued investing in its keyattribute (long distance communication, telegraph and railroads) When the future of the phone was self evident, it was already toolate to invest
  52. 52. DISCUSSION: WHAT DISRUPTIVE INNOVATIONS CANYOU RECOGNISE? HOW DO YOU CREATE NEWVALUE ATTRIBUTES FOR NEW MARKETS?
  53. 53. BLUE OCEAN STRATEGY AND STRATEGYCANVAShttp://en.wikipedia.org/wiki/Blue_Ocean_Strategyhttp://www.blueoceanstrategy.com/
  54. 54. MARKKINATILAN LUOMINEN, STRATEGY CANVAS –CREATING MARKET SPACE MAUBORGNE KIMHTTP://EN.WIKIPEDIA.ORG/WIKI/BLUE_OCEAN_STRATEGY55Chan, Kim; MauborgneRenee, Creating newMarket Space - A systematicapproach to valueinnovation can helpcompanies break free fromthe competitive pack.Harvard Business reviewJanuary-February 2009matala
  55. 55. CHARACTERIZING SERVICES P 373 Intangible Perception and brands are important Can not be stored Consumed simultaneously. The customer is partof the process e.g. educational services, law firms,consultants, airlines, restaurants etc. Services are consumed locally - location Customer contact is key
  56. 56. SERVICES – C 70% OF GDP =>CLASSIFICATION OF SERVICES?Service shope.g restaurantExpert service e.g.consultantService factory e.g. airline Mass service e.g. call centerLabour intensityThe amount ofdirect customercontactHighHighLowLow
  57. 57. OPEN SERVICES INNOVATION - CHESBROUGH58
  58. 58. CONCEPT 1:THINK OF YOUR BUSINESS AS A SERVICE BUSINESS – OPENSERVICE INNOVATION CHESBROUGHP3759Service-Based view of transportationSelectionof vehicleDelivery ofvehicleMaintenance ofvehicleInformation andtrainingPaymentandfinancingProtection andinsuranceCar purchaseor lease(product-focusedapproach)CustomerchoosesCustomerpicks fromdealerstockCustomerdoes thisCustomerdoes thisCustomerdealer, orthird partyCustomerprovidesTaxi SupplierchooseCustomeris pickedupSupplierdoes thisSupplierdoes thisEnterprise carrentalCustomerchoosesfrom localstockCustomerpicks up oris pickedupSupplierdoes thisSupplierdoes thisBy the day Customer isresponsibleZipcar Customerchoosesfrom localstockFromZipcarlocationsSupplierdoes thisSupplierdoes thisBy the hour Customerpurchases fromsupplier
  59. 59. Concept 2: Innovators must co-create with customers The value of tacit knowledge e.g. example riding a bicycle: go faster to stay up, balancing on a rope… One way: Let the customer themselves provide the information, Let the customer have control of the process60FOUR STEPS TO OPEN SERVICE INNOVATION:MakereservationArrive atrestaurantAsk fortableGo totableReceivemenuOrder drinksand foodEat OrderbillPay VisitrestroomLeaveChesprough Open servicesinnovation p 59
  60. 60.  Concept 3: Open innovation accelerates anddeepens service innovation61FOUR STEPS TO OPEN SERVICE INNOVATION
  61. 61.  Concept 4: Transform your business model withservices62FOUR STEPS TO OPEN SERVICE INNOVATIONGrocer ChefTarget market Consumers DinersValue Proposition Wide selection, qualitypriceDining experienceCore elements Rapid inventory turns,choosing correctmerchandiseGreat food, skilled cooks,atmosphereValue chain Food suppliers, relateditems, logistics,information technology,distribution centersFresh produce, localingredients, qualityequipment,knowledgeable andcouteous serviceRevenue mechanism Small markup over cost,very high volume, rapidinventory turnsHigh markups over cost,low volume, alcohol, tipsValue network, ecosystem Other services onpremises, parkingCookbooks, parking,special events
  62. 62. THE MESH, LISA GANSKY,WWW.MESHING.IT6/7/2013 Laurea University of Applied Sciences 63Eg. hammer Mesh sweet spotEg. Tooth brush? Eg. Smart phonesHowoftendoyouuse itOftenSeldomCostCheapExpensivep 22Own-to-meshhttp://www.ted.com/talks/lisa_gansky_the_future_of_business_is_the_mesh.html
  63. 63. THE MESH, LISA GANSKY,WWW.MESHING.IT6/7/2013 Laurea University of Applied Sciences 64Subways, hotelrooms, taxis, museums, parksiTunes, Netflix, Zipcar,Amazon Web ServicesToaster, toothbrush, teacup,socksNotebook computer, mobilephone, GPS deviceFrequencyofusageSharea littleShare alotData-enabledgoodnesslowHighp 139
  64. 64. BUINESS MODELS – BUSINESS MODELGENERATION
  65. 65. BUSINES MODEL GENERATIONDefinition: Abusiness modelanswers thequestion how valueis created andcapturedwww.businessmodelgeneration.comhttp://www.youtube.com/watch?v=QoAOzMTLP5s businessmodel canvas 2 minhttp://www.youtube.com/watch?v=8GIbCg8NpBw Osterwalder53
  66. 66. BUSINESS MODEL GENERATION 9-ELEMENTS(BUILDING BLOCKS) OF THE CANVAS Customer Segments mass market, niche market, segmented, diversified,multisided platforms (or multisided markets) Value Propositions Newness, performance, customization, getting the job done,design, brand/status, price, cost reduction, risk reduction,accessibility, convenience/usability Channels Customer Relationships personal assistance, dedicated personal assistance, self-service, automated service, communities, co-creation Revenue Streams asset sale, usage fee, subscription fees,lending/renting/leasing, licensing, brokerage fees, advertising
  67. 67. BUSINESS MODEL GENERATION 9-ELEMENTS(BUILDING BLOCKS) OF THE CANVAS Key Resources physical, intellectual, human, financial Key Activities production, problem solving, platform/ network Key Partnerships optimization and economies of scale, reduction of riskand uncertainty, acquisition of particular resources andactivities Cost Structure cost driven (driving down costs), value driven, fixedcosts, variable costs, economies of scale (e.g. lowerbulk purchase rates), economies of scope(e.g. samechannel supports multiple products)
  68. 68.  Unbundling business models customer relationship businesses, product innovationbusinesses, infrastruture businesses The Long Tail (selling less of more) Multisided Platforms bring together two or more ditinct but interdependent groupsof customers e.g. Visa, Google, eBay Free as a business model (Freemium) includes Baitand Hook Non paying customers are financed by another customersegment e.g. Metro, Skype Open Business Models companies systematically collaborate with outside partners tocreate and capture valueBUSINESS MODEL GENERATION – 5PATTERNS
  69. 69. CASE http://www.youtube.com/watch?v=Njuo1puB1lg RtB CwF
  70. 70. THE TOOLS, INDIVIDUAL, CORPORATION,SOCIETY
  71. 71. PERSONAL ETOOLSDo you know how to:- create a web page,- create a web shop- implement a viral marketing campaign- do e-accounting, e-invoicing- implement and work with an erp(enterprise planning system)- create an e-survey- search for scientific article- document your processeselectronically, quality system72
  72. 72. SO WHY NOT START AN ONLINE BUSINESS? – FROMSOCIAL MEDIA TO SOCIAL BUSINESSDiscuss the way you usesocial media?Do you trade through socialmedia buy and sell?What steps could you take tomake a hobby into perhaps apart time profession?
  73. 73. THE VALUE OF IT BASED TOOLS AT THE CORPORATIONLEVEL- THE ENGINE METAPHOR6/7/2013 Laurea University of Applied Sciences 74Erp, crm, scm, viral marketing, e-accounting, e-tools for projectmanagement, documentation, process and quality managementetchttp://www.slideboom.com/presentations/44352/Richards_Success-(OpenERP)
  74. 74. INFRASTRUCTURE ELEMENTS Physical infrastructure The amount of computers The speed of connectivity The amount of usage Service infrastructure E-billing Internet banking? E-voting E-identification (mobile?) Online institutions (ePost office) E-Government (e.g. tax return, patient records, e-prescription etc) In Finland www.vero.fi www.suomi.fi www.taltioni.fi www.yrityssuomi.fi http://www.mobiilivarmenne.fi/fi/index.html What services is your government providing
  75. 75. OBSERVING TOOLS IN ACTION Excercise: Take the business model canvas andlook at how it (erp, web commerce, crm, digitamarketing) is a key resource Or get involved in an it project (changemanagement) and observe challenges that youmeet during the project Read cases of it and company turn around
  76. 76. THE EMERGENCE OF NEW E-INDUSTRIES(MARKETS) AND EINFRASTRUCTURE Look at the emergence of new infrastructure Look into how new markets are created and hownew markets emerge
  77. 77. E-COMMERCE6/7/2013 Laurea University of Applied Sciences 78
  78. 78. 6/7/2013 Laurea University of Applied Sciences 79
  79. 79. 6/7/2013 Laurea University of Applied Sciences 8031.8.2012
  80. 80. CHANGE LEADERSHIP AND CHANGEMANAGEMENT
  81. 81. CHANGE MANAGEMENT DEFINED Approaches to managing changes toorganizational processes and structures and theirimpact on organization staff and culture areknown as change management p. 531 Strategy, mission, vision6/7/2013 Laurea University of Applied Sciences 82
  82. 82. 6/7/2013 Laurea University of Applied Sciences 83p535• Process managament, leadership and change• Business models and change• Communicating change• Knowledge/ Competence and change• Culture and changePERSPECTIVES INTO CHANGE MANAGEMENT
  83. 83. DIFFERENT TYPES OF BUSINESS CHANGE• Viewed at an industry level• Incremental change• Discontinuous change• Organizational change looks at change at an organizationallevel and can be both incremental and discontinuous• Anticipatory change vs reactive change• Tuning = anticipating incremental change• Adapting = reacting to incremental change• Re-orientation = anticipating discontinuous change• Re-creation = acting on discontinuous change6/7/2013 Laurea University of Applied Sciences 84
  84. 84. BUSINESS PROCESS MANAGEMENT BPM is a methodology, as well as a collection of tools, that enablesenterprises to specify step by step business processes Classic document work flow, which was BPM s predecessor focused onhumans performing the services. Fueled by the power of applicationintegration BPM focuses on human and automated agents doing the workto deliver the service 1990- Business process re-engineering. Identifying radical new ways ofcarrying out business operations, often enabled by new IT capabilities Business process improvement. Optimizing existing processes typicallycoupled with enhancements in information technology Business process automation. Automating existing ways of workingmanually through information technology6/7/2013 Laurea University of Applied Sciences 85
  85. 85. STEPS• Identify the process for innovation• Identify the change levers• Develop the process vision• Understand the existing processes• Design and prototype the new process6/7/2013 Laurea University of Applied Sciences 86
  86. 86. ORGANIZATIONAL CULTURE S 562 The efficiency of any organization is dependent onthe complex formal and informal relationships thatexist within it• Survival – outward looking flexible• Productivity - Outward looking ordered• Human relations - inward looking flexible• Stability – inward looking, ordered6/7/2013 Laurea University of Applied Sciences 87
  87. 87. KNOWLEDGE MANAGEMENT Knowledge is the combination of data andinformation, to which is added expert opinion,skills and experience. Knowledge Management is the managementof activities and processes for leveragingknowledge to enhance competitivenessthrough better use and creation of individualand collective knowledge resources• Explicit vs Tacit• Identify knowledge• Create new knowledge• Store knowledge• Share knowledge• Use knowledge6/7/2013 Laurea University of Applied Sciences 88
  88. 88. HOW TO CREATE NEW MARKETS
  89. 89. HOW TO CREATE NEW MARKETS? – WHICHMARKET IS/ARE EMERGING?• Focus on• Lobby for new laws and regulations• Create new structures (destroy oldstructures)• New business models• Focus on Lead users• Establish market creating products6/7/2013 Laurea University of Applied Sciences 90
  90. 90. GAME STORMING – A PLAYBOOK FOR INNOVATORSRULEBREAKERS AND CHANGEMAKERS Game storminghttp://www.youtube.com/watch?v=3mrtu4MmthE91
  91. 91. CHALLENGES IN E-TOOLS AND E-BUSINESS,SCALABILITY Challenge 1: how to migrate from personal level to (business)corporate level and society level – migration is a ”chicken andegg” problem. The individual can not change, if there is notenough infrastructure. The company will not change if itscustomers have not moved into new servicesChallenge 2: understanding value creation, value capturing, valuenetwork, process, business modelChallenge 3: The Engine metaphor – perceiving your computer (yourdesktop) as a part of a network (production engine)92IndividualSocietyCorporation
  92. 92. EXAMPLE THE EMERGENCE OF THE MOBILEMARKET Liberalisation of the telecom market in Finland in 1994 createdcompetition and encouraged new markets to emerge GSM 1994 and 97-98 a vision: ”mobile into your pocket” New infrastructure 3G, UMTS In Finland changes in telecom law e.g. allowing bundling of phone andsubscription, number portability, Progress in creating a dataroaming market by establishing cap prices inthe EU Business model: toward monthly flat rate pricing Key market creating products: mokkula (c 2004-2005) a dataconnection to your computer, I-phone, (both arrivals from the outside toFinland), smart phones 2011 Structures: three competitors, service operator and new marketentrants changed the rules of the market Future: ?
  93. 93. Name: 00601 Operative Systems and CommerceFOCUS: INDIVIDUALTRAVEL PLANE-SERVICECONNECT TOREAL WORLDVALUESERVICE PROVIDER /BUSINESS MODELWHO ISLOOSING?COMMUNITYMYE-TOOLS1234594Bricks andclicksVALUECREATION/CAPTURINGIN A NETWORK- value to me- value to company- value (cost, time, quality)- blog- web site- wiki- contact networks-videomeetingconnectpro- e-library-- e-surveyChange in theway of doingthings =innovation =>focus on theprocessflow of goods, information andresources in a repair cyclehttp://en.wikipedia.org/wiki/LogisticsFrom data tonetworkingUse this framework toidentify changes in valuecreation and capturing afteradoption of services likeonline booking and theavailability of onlinecustomer recommendations
  94. 94. THE MUSIC INDUSTRY Excercise: Look at the video. Try and plot all the different earning cases on to thebusiness model canvas and identify the key elementsthat remain the same through different cases. Discuss and identify cases on how the music industry ischanging. Take an example company and discuss how thatcompany can act in the market place to create a newmarket. The video http://www.youtube.com/watch?v=Njuo1puB1lg CwF, Connect with fans RtB, Reson to buy
  95. 95. THE E-HEALTH INDUSTRY Excercise Identify a new entrant to the market Discuss its business model Look into possible new infrasrtucture elements it isattempting to build on e.g. patient records,eprescriptions, Look into databases and are these databaseshierarchical or is power given to the users? To whatextent is open data thinking allowed and applied to thecreation of new services?
  96. 96. http://nyt.fi/20120608-yli-yliopistosta/Nyt Liite koulutuksen muutoksestahttp://www.extension.harvard.edu/distance-education/online-course-offeringsTHE ONLINE EDUCATION MARKET

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