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The Network Multiplier - A One Day Program

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A 1 day program focusing on building Platform and Network Business Models that benefit from today's digital technologies and virtual networks

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The Network Multiplier - A One Day Program

  1. 1. Yoram  (Jerry)  Wind   The  Lauder  Professor  and  Professor  of  Marke9ng   Director,  SEI  Center  for  Advanced  Studies  in   Management   Academic  Director,  Wharton  Fellows  Program   windj@wharton.upenn.edu   Presented  to  LINKS   Jerry  Wind,  SEI  Director   Barry  Libert,  SEI  Senior  Fellow   September  9.  2014   1   COPYRIGHT,  OPENMATTERS,  LLC  
  2. 2. The  material  in  this  curriculum  is  the  property  of   Wharton’s  SEI  Center  and  OpenMa<ers,  LLC  and   shall  not  be  reproduced  and/or  distributed  without   our  express  authorizaDon 2   COPYRIGHT,  OPENMATTERS,  LLC   NOTICE  
  3. 3. Our  Agenda   3  
  4. 4. 4   Sudhakar  Gor9   Chief  Digital  Officer   Environmental  Data  Resources   www.edrnet.com   sgor9@edrnet.com     Luncheon  Panelist
  5. 5. I.  Key  Challenges  Facing  the  ParDcipants   5  
  6. 6. A.  Advances  in   Science  &   Technology   C.  Other  Changes  in   the  Business   Environment   B.  Emergence  of   the  Empowered     &  Skep@cal   Consumer   …And  do  your  challenges  include? 6  
  7. 7. 7   A)  Advances  in  science  and  technology,  such  as…
  8. 8. Social  Networks 8  
  9. 9. The  Cloud 9  
  10. 10. The  Internet  of  things 10  
  11. 11. The  Connected  Home 11  
  12. 12. Wearable  Technologies 12   MIT  Human  Dynamics  Lab  starts   publishing  in  1990   Vigo  –  Human   energy  gauge   Nike+   FuelBand  
  13. 13. Mobile  Devices  -­‐  BYOD 13  
  14. 14. Ubiquitous  Big  Data  and  AnalyDcs 14  
  15. 15. ArDficial  Intelligence 15  
  16. 16. Personalized  Medicine  (and  Gene  Therapy) 16  
  17. 17. Why  Google  is  Involved  in  Deep  Learning?     h_p://video.mit.edu/watch/why-­‐google-­‐is-­‐inves9ng-­‐in-­‐deep-­‐ learning-­‐14382/   17  
  18. 18. Converging  on   Communities:    Let   me  be  a  part  of  it   Converging  on  Channels:   I  want  to  call,  click  and  visit   Converging  on   Competitive  Value:    Give   me  more  for  my  money   Converging  on  Choice:   Give  me  tools  to  make   better  decisions   Converging  on  Customization   and  Personalization:  Make  it   mine   Source:  Wind  and  Mahajan,  Convergence  Marke9ng,  Financial  Times/Pren9ce  Hall,  2001   B)  The  Empowered  &  SkepDcal  Consumer 18  
  19. 19. and  more  skeptical   than  ever  before.     19  
  20. 20. Empowered  Stakeholders  are  Everywhere 20  
  21. 21. 21   C).    Other  Changes  in  the  Environment
  22. 22. The  Chinese  consumer’s  growing  might  is  dictating   business  choices  for  western  brands  .  .  .     The  Global  Landscape  (especially  China) 22  
  23. 23. Societal  Challenges 23   Gini  Coefficient                                                                       0=  perfect  equality                                                     100  =  perfect  inequality   Most   Recent   Emerging  Economies           Brazil   51.9       Russia   42.0       India   36.8       China   47.4   OECD  Countries           Japan   37.6       United  Kingdom   40.0       United  States   45.0   Singapore     47.8   Central  Intelligence  Agency.  "Country   Comparison:  Distribu9on  of  Family  Income  -­‐  Gini   Index,"  2013.    
  24. 24. Regulatory  Changes 24  
  25. 25. CompeDDve  Environment 25  
  26. 26. Opportunities   26   Contagion  &  Risks   •  2008  Global  Financial  Crisis   •  Chinese  Toxic  Milk  Scandal   •  Global  Terrorism   www.ibm.com/ceostudy2012     Network  Growth  and  Universality
  27. 27. Economic   Technological   Geopoli9cal   Societal   Source:       World  Economic  Forum  Global   Risks  2014,   Ninth  Edition   Other  Risks 27   Environmental  
  28. 28. ImplicaDons 28     You  have  to  challenge   your  exis9ng  mental   model  
  29. 29. 29   II.  IdenDfy  and  Challenge  Your  Mental  Models
  30. 30. 30   Let’s  consider…   What  just  happened?   Robbery  at  Knifepoint     Updated  March  11,    2013  8:55am     ..What  are  the  mental  models?
  31. 31. 31   Our  beliefs,  aitudes,   feelings  and  behaviors  are   driven  by  our  Mental   Models,  not  reality.   The  reality  of  the  situa9on  did  not  change,     our  mental  model  did!    
  32. 32. What  is  a  mental  model? 32   Mental model From  Wikipedia,  the  free  encyclopedia     A  mental  model  is  an  explana9on  of  someone’s  thought  process  about  how   something  works  in  the  real  world.    It  is  a  representa9on  of  the  surrounding   world,  the  rela9onships  between  its  various  parts  and  a  person’s  intui9ve   percep9on  about  his  or  her  own  acts  and  their  consequences.    Mental  models   can  help  shape  behavior  and  set  an  approach  to  solving  problems  (akin  to  a   personal  algorithm)  and  doing  tasks.    
  33. 33. 33   Inner  City Alterna.ve  Medicine Roger  Bannister  breaks  the  4  Minute  Mile   on  May  6,  1954 Source:    Gallup  Daily,  April  2014   h_p://www.gallup.com/poll/poli9cs.aspx     What  are  mental  models?
  34. 34. What  is  common  about  all  these  brands? 34   Napster   Samsung     SGH-­‐E760     $2000  Car   MIT’s  Media  Lab   $100  laptop   All  these  breakthrough  innovations  challenged  the  mental  models  of  their  industries.   Sayaka  Endoscope   Capsule   Apple  iPad   Microsoft  Xbox   360  Kinect   Google   Glasses  
  35. 35. 35   Mental  Models  and  leadership  over  the  ages Power   Emo9onal   Intellectual   Network       Technology   Time  
  36. 36. 4  Examples  of  Mental  and  Leadership  Models 36  
  37. 37. 37   “Without  changing  our  pa<ern  of  thought,  we  will  not  be  able   to  solve  the  problems  we  created  with  our  current  pa<ern  of   thought.” -­‐  Albert  Einstein   •  Mental  Models  are  cri.cal.   The  Key  Points
  38. 38. 38   III.  InnovaDve  Business  Models
  39. 39. Business  Models 39  
  40. 40. Different  ages,  different  Business  Models Industrial   revolution  -­‐  1800   Services   revolution  -­‐  1975   Information   revolution  -­‐  1990   Network     revolution  -­‐  2010   Technology   Time   40  
  41. 41. Example  of  Business  Models  scaling exponential     algebraic  growth   arithmetic  growth   geometric  growth   Time   Growth   41  
  42. 42. Business  Models  scale  differently  based  on  technology Network     Facilitators   Technology   Facilitators   Service   Facilitators   Asset   Facilitators   make  many,  sell  many   make  one,  sell  many   hire  one,  sell  one     make  one,  sell  one   zero  marginal  cost   low  marginal  cost   medium  marginal  cost   high  marginal  cost   42  
  43. 43. Four  Business  Models  and  their  revenue  MulDpliers 4 Network  Technology   8 1 Services  Assets   2 43   Digital  divide  
  44. 44. Examples  of  companies 44   Credit  card  companies   Stock  exchanges   Social  Networks   Biotech     Software   Pharmaceutical     Retails   Industrials   Manufacturing   Consultants   Financial  Services   Insurance   4 Network  Technology   8 1 Services  Assets   2 Digital  divide  
  45. 45. Why  “8”  type  Business  Models  are  criDcal Networks   45   Services  Assets   Technology   8 Business  that  are  8’s  scale  using   other  people’s  money,   intelligence  and  relationships,   creating  less  need  for  capital  and   more  future  opportunity  for  open   innovation  in  a  flat  world   Digital  divide  
  46. 46. EXERCISE:    What  type  of  business  model  are  you? 46  
  47. 47. IV.  The  PracDDoner’s  PerspecDves   Sudhakar  Gor@   Chief  Digital  Officer   Environmental  Data  Resources   www.edrnet.com     sgor9@edrnet.com   47  
  48. 48. 48   V.  Transform  Your  Business  Model
  49. 49. What  Can  You  Do  to  Benefit  from  Networks? 49   ?  
  50. 50. Networks  are  all  around  us NETWORK  CATEGORY   POSSIBLE  VALUE  PROVIDED   Customers   •  Increased  loyalty/brand  awareness   •  Data  assets  about  customer  profile  or  ac9vity   •  Marke9ng  or  product  ideas   Employees   •  New  product  and  marke9ng  ideas   •  Opera9onal  improvements   •  Expert  support  –  both  internal  and  external   Suppliers  and  Partners   •  Improved  market/compe9tor  awareness   •  More  efficient  rela9onships   •  New  sales  and  marke9ng  channels   Investors   •  Sugges9ons  to  improve  valua9on   •  Market  awareness   •  Crowd  funding  solu9ons  –  e.g.  new  sources   Communi9es  (geographic,   business,  etc.)   •  Source  new  employees   •  Understand  local  poli9cs/news  as  it  affects  company   •  Advocacy  and  support    
  51. 51. •  Customers   •  Employees     •  Suppliers   •  Distributors   •  Partners     •  Investors     •  Communi9es     •  Other     Which  Networks  Do  You  have? 51   Not  Effective   at  all   Extremely   Effective    1                2                  3                  4                  5                  6                  7                8                9                10   Not  Effective   at  all   Extremely   Effective    1                2                  3                  4                  5                  6                  7                8                9                10   Not  Effective   at  all   Extremely   Effective    1                2                  3                  4                  5                  6                  7                8                9                10   Not  Effective   at  all   Extremely   Effective    1                2                  3                  4                  5                  6                  7                8                9                10   Not  Effective   at  all   Extremely   Effective    1                2                  3                  4                  5                  6                  7                8                9                10   Not  Effective   at  all   Extremely   Effective    1                2                  3                  4                  5                  6                  7                8                9                10   Not  Effective   at  all   Extremely   Effective    1                2                  3                  4                  5                  6                  7                8                9                10   Not  Effective   at  all   Extremely   Effective    1                2                  3                  4                  5                  6                  7                8                9                10  
  52. 52.   Select  a  network  to  develop.     Look  for  one  that  is  large,  ac9ve,   underserved,  and  poten9ally   aware  of  your  company     Create  incen9ves  for  par9cipants   to  add  content,  share  their   knowledge,  capabili9es  and   assets  with  others     Seed  the  network  with  content,   informa9on,  and  products  and   orchestrate  its  interac9ons  to   drive  engagement     Build  technology  plaporm  to   connect  the  network  and  create   an  eco  system.    Begin  small  and   experiment   1   4  3   2   4  steps  to  building  your  network 52  
  53. 53. Case  study:  Nike+   Select  a  network:  runners  who   want  to  log  runs       Create  incen9ves  to  par9cipate:   ability  share  runs  with  social   groups  (pride  and  recogni9on)     Seed  the  network  with  content:   mo9va9on  and  training  advice       Connect  the  network:  Wireless   devices,  apps,  and  integra9on   with  Facebook   1   4  3   2   53  
  54. 54. Case  study:  AT&T   Select  a  network:  employees       Create  incen9ves  to  par9cipate:   Recogni9on  of  peers,  face9me   with  leaders     Seed  the  network:  ask  managers   and  leaders  to  par9cipate         Connect  the  network:  Online   plaporm  to  propose  and  vote  on   ideas   1   4  3   2   54  
  55. 55. Case  study:  Nest  thermostat   Select  a  network:  high-­‐end   thermostat  users     Create  incen9ves  to  par9cipate:   Improved  energy  efficiency   through  big  data  analysis     Seed  the  network:  begin  with   public  data  about  temperatures   and  energy  uses     Connect  the  network:  Internet   networked  devices   1   4  3   2   55  
  56. 56. Portfolio of assets Create A network that can add value to your existing business Add To an existing network so it can create more value Revise An existing network based on its potential Eliminate Investments in a network that are not productive Network 1 Network 2 Network 3 Network 4 Use  CARE  to  reallocate  capital  to  Networks 56  
  57. 57. EXERCISE:    Create  a  new  network  asset 57     Select  a  network  to  develop.     Look  for  one  that  is  large,  ac9ve,   underserved,  and  aware  of  your   company     Create  incen9ves  for  par9cipants   to  begin  adding  content   themselves.    Incen9ves  could  be   recogni9on  or  shared  revenus     Seed  the  network  with  content,   informa9on,  and  products  in   order  to  grow  awareness  and   membership.     Use  a  technological  solu9on  to   connect  the  network.    Begin  with   something  inexpensive  and  quick   to  implement.   1   4  3   2   Discuss  the  following  steps  for  a  high  poten9al  network  
  58. 58. Portfolio of business assets Create A network that can add value to your existing business Add To an existing network so it can create more value Revise An existing network based on its potential Eliminate Investments in a network that are not productive Network 1 Network 2 Network 3 Network 4 EXERCISE:  Use  CARE  to  reallocate  your  capital Market  not     responding   Need   different   content   Engaged   customer   group   Add  new   geography   58  
  59. 59. Remember:      Networks  can  be  added  to  your  firm 59   Assets   Services   Technology   Networks   …  it  is  not  all  or  nothing!
  60. 60. Where  can  you  begin  experimenDng 60   1.      2.      3.      4.      5.      6.      7.     
  61. 61. VI.  ReflecDons  and  AcDon  Plans   61  
  62. 62. Our  Agenda   62  
  63. 63. Key  takeaway 63   “To  break  a  mental  model  [and  therefore   business  model]  is  harder  than  spliCng   the  atom.”     Albert  Einstein  
  64. 64. Business  Models  and  Mental  Models  are  linked  to  value 64   Mental  Model   Business  Model   What  leadership…   •  Believes  is  important   •  Has  developed  their  own  skills   •  Gives  9me  and  a_en9on   •  Measures  and  reports   How  a  company…   •  Spends  and  makes  money   •  Hires  people  and  develops  skills   •  Uses  and  leverages  technologies   •  Engages  with  customers   Drives •  Enterprise  value   •  Revenue  growth   •  Profitability   Value  and   performance   Determines
  65. 65. Next  Steps… 65  
  66. 66. 66  
  67. 67. Yoram  (Jerry)  Wind   The  Lauder  Professor  and  Professor  of  Marke9ng   Director,  SEI  Center  for  Advanced  Studies  in   Management   Academic  Director,  Wharton  Fellows  Program   windj@wharton.upenn.edu   Presented  to  LINKS   Jerry  Wind,  SEI  Director   Barry  Libert,  SEI  Senior  Fellow   September  9.  2014   67   COPYRIGHT,  OPENMATTERS,  LLC  

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