Business model innovation in the cloud v1


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Discussion deck for cloud and innovation session in SMU's Masters of Innovation Program.

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Business model innovation in the cloud v1

  1. 1. MI Feb 2014 Innovation & Digital Networks FACILITATOR Michael Netzley, PhD Academic Director, SMU ExD
  2. 2. Weekend Objectives
  3. 3. What You Can Expect •  Explore connection between innovation & digital networks •  Understand it is all about networks •  Discuss how connecting via the cloud invites business process innovations •  See how connecting to the human cloud can benefit idea generation and resource gathering •  Learn about crowdsourcing, pro and con •  Reflect on how these ideas can apply to business today. Please  create  a  personal  Twi0er  account  for  Saturday  
  4. 4. About The Prof Michael Netzley
  5. 5. Michael Netzley, PhD •  Academic Director, SMU Executive Development •  Daddy with 3 daughters & 1 son •  SMU since 2002 •  Champion’s Award 2011, Innovative Course Design and Delivery •  Research Fellow, Society for New Communication Research •  Visiting positions in Argentina, Berlin, Finland, Slovenia, and Japan •  Clients include: Unilever, IBM, TCS, IHG, 3M, Singapore Airline, UOB, BNP Paribas, CPF, MFA, MoE and
  6. 6. Opportunity
  7. 7. DARPA Red Balloon Challenge •  2009 challenge on wide area collaboration •  Defense Advance Research Project Agency •  $40,000 prize to be first at finding 10 balloons around the United States •  How long did the winning team need to find them?
  9. 9. How Did the MIT Team Win? •  Shared the reward –  $2000 correct coordinates –  $1000 for whomever invited them –  $500 for inviting the inviter –  $250 for inviting them –  And so on… •  Created sustained activity on Twitter (recursive incentive) •  Data mining via social media Summary  Ar)cle  
  10. 10. Theoretical Underpinnings Multi-level Marketing Query Incentive Network •  Participants are compensated both for the sales they make, and for the sales of any additional salespeople downline they recruit. •  Pyramid scheme can be an example •  Avon products are an early business example •  Users can post a question or request, along with an incentive for answering, which then spreads widely through the network. •  Games online can be a good example •  Kleinberg & Raghavan, Paper
  11. 11. Created a Recursive Incentive Structure •  Jargon for “teamwork” •  People cooperate toward a shared goal and subsequently are rewarded for the impact of their contribution(s). •  Allowed anyone – anywhere to play, leading to a final team of 5000 helpers
  12. 12. Quality Control Tactics 1.  Multiple entries indicating same coordinates were likely accurate 2.  Check IP address of submitter & compare to location claim 3.  Examine photos accompanying submission for DARPA logos
  13. 13. What Was The Challenge? •  Competition to win •  Large scale, geographically dispersed information •  Nontraditional problem requiring nontraditional solution InnovaAve  SoluAon  
  14. 14. DARPA Applied
  15. 15. MyHeartMap Challenge: Penn Med •  Contest for team/individual to report the location of a maximum number of Automatic External Defibrillators (AED) •  $10,000 prize of 750 AEDs reported in total, or 500 reported by a single entry; also 200 “golden” AEDs which earn the submitting team $50 •  January 31 – March 13, 2012 •  More than 1500 AEDs submitted by 300+ teams •  2 $9000 prizes to two people submitting 400+ each •  Database given to the public and 911
  16. 16. We  Live  in  Networks  
  17. 17. Expands Your Resource Base
  18. 18. Why Now?
  19. 19. Digital Technology Connecting the Globalizing World
  20. 20. Space of Places
  21. 21. Flows: Information & People
  22. 22. Misdirect: Networks, not Information •  The defining characteristic of the modern age is networks –  All societies have had information (e.g., Ancient Athens and Rome) –  Digital networks are unique to the current age –  Networks, for the first time, can be a sustained structure for organizing people and work Source:  Manuel  Castells  
  23. 23. Cloud & Driving  Business  Model  InnovaAon  with  the  Power  of  Cloud  
  24. 24. What  is  Cloud  Computing?   Plain  English:  “storing  and  accessing  data  and  programs  over  the   Internet  instead  of  your  computer's  hard  drive.”                                                    Source:  PC  Magazine   Complicated:  “A  pay-­‐per-­‐use  consumption  and  delivery  model  that   enables  real-­‐time  delivery  of  configurable  computing  resources  ( for   example,  networks,  servers,  storage,  applications,  services).  Typically,   these  are  highly  scalable  resources  delivered  over  the  Internet  to   multiple  companies,  which  pay  only  for  what  they  use.”                     Source:  IBM  
  25. 25. Examples  
  26. 26. 3  Stats  About  Cloud  
  27. 27. Two  out  of  three  executives  believe  that  cloud-­‐ based  collaboration  tools  accelerate  business   results  (this  number  increases  to  82%    when  we   speak  to  executives  who  are  leading  adopters  of   cloud  solutions)   •  Source:  Forbes  Insights  Report  
  28. 28. By  2016,  the  bulk  of  IT  spend  is  expected  to  be  on   cloud  computing,  and  by  2017  nearly  half  of  the   MNCs  are  expected  to  have  hybrid  cloud     deployments.   •  Gartner  Symposium,  2013,  Goa  India  
  29. 29. Global  cloud  computing  market  is  forecast  to  grow  22%   annually  to  US$241  billion  by  2020    
  30. 30. Cloud  can  help  businesses  exploit   capabilities  born  out  of  digital  and   mobile  transformations  to  better  meet   customers’  needs  and  drive  growth  
  31. 31. Relatively  few  organizations  today   actively  use  Cloud  to  drive  business  model  innovation     Potential  remains  huge,  particularly  in  transforming   product  and  service  development,  and  reforming   customer  relationships      
  32. 32. Cloud  Enablement  Framework  
  33. 33. Cloud  Enablement  Framework   •  Framework  created  using  extent  to  which  an   organization’s  use  of  cloud  can  affect  value  propositions   and  value  chains  as  dimensions   •  Identifies  impact  of  organization’s  cloud-­‐enabled  business   strategy   •  Businesses  should  determine  place  in  the  Framework   based  on  the  their  strategy,  risk  profile,  competitive   landscape,  among  others    
  34. 34. Cloud  Enablement  Framework  -­‐   Optimizers   •  Optimizers  use  cloud  to  incrementally  enhance  customer   value  propositions  while  improving  organizational  efficiency   •  Deepen  customer  relationships  without  risk  of  potential   failure  in  radical  business  models   •  North  Carolina  State  University  moved  to   cloud-­‐based  infrastructure.  Benefits:   –  Increased  flexibility  to  shift  computing   capacity  between  sites   –  Ability  to  scale  up  to  match  increasing   enrolment   –  Ability  to  share  resources  with   students  throughout  the  State  
  35. 35. Cloud  Enablement  Framework  -­‐   Innovators   •  Use  cloud  to  significantly  increase  customer  value   propositions  ,  resulting  in  new  revenue  streams     •  Example:  3M  Visual  Attention  Service.     Transformed  product  development  value   chain  by  integrating  a  global  network  of   designers.  Benefits:   –  Highly  scalable  environment   –  Low  up-­‐front  investment  and  a  flexible   pay-­‐as-­‐you-­‐go  pricing  model  
  36. 36. Cloud  Enablement  Framework  -­‐   Disruptors   •  Invent  completely  different  value  propositions  &  create  new   “needs”,  providing  customers  what  they  weren’t  even  aware  they   wanted  or  needed   •  Greater  risk,  but  possibly  greater  reward   •  Example:  Comcast  Xcalibur’s  cloud-­‐ based  platform  created  different   customer  value  proposition  by  shifting   the  ability  to  control  content  into  the   cloud.  Benefits:   –  Delivering  content  to  more  devices   and  meeting  customer  demands   –  Creating  new  apps  and  changing   User  Interface  faster  and  more  easily  
  37. 37. What  are  their  motivations?   To  improve  business  capabilities  and  also   internal  efficiencies  
  38. 38. Optimize,  Innovate,  or  Disrupt?   •  Organizations  should  evaluate  opportunities  available  to  harness   the  power  of  cloud  -­‐  as  optimizer,  innovator,  or  disruptor  –  and  pick   the  opportunity  suited  to  their  particular  situation     Optimizer   Innovator   Disruptor  
  39. 39. Case  Study  
  40. 40. Group Discussion Questions (30 minutes) 1.  Who were the noncustomers of the noncustomers of the traditional CRM software industry? What were the biggest blocks to buyer utility in traditional CRM offerings? 2.  Which one(s) of the six paths did Salesforce look across to create new market space? Can you draw the value curve of Salesforce’s initial on-demand CRM offering in the early 2000s versus traditional CRM vendors? 3.  How was Salesforce able to sustain its market leadership in the on-demand CRM market vis-à-vis both large players and new entrants for a decade?
  41. 41. Lessons
  42. 42. What  Does  Cloud  Do?   Source:   Forbes   Insights  
  43. 43. Cloud  attributes  helping  to  drive   business  model  innovation  
  44. 44. Cloud’s  Business  Enablers   COST  FELXIBILITY   BUSINESS  SCALABILITY   •  Key  reason  for  executives  to   •  Cloud  offers  more  than  just  IT   consider  Cloud  adoption     •  Cloud  can  help  organizations   reduce  fixed  IT  costs  by   enabling  a  pay-­‐per-­‐use  model.     scalability   •  Companies  can  benefit  from   economies  of  scale  without   achieving  large  volumes  on  their   own  
  45. 45. Cloud’s  Business  Enablers   MARKET  ADAPTABILITY   •  Ability  to  adjust  to  rapidly   changing  market  demands  is   key  competitive  advantage   MASKED  COMPLEXITY   •  Business  can  mask  operational   intricacies  from  end  users   •  Enables  product  and  service   •  Business  can  adjust  processes,   sophistication  without   products  and  services  quickly,   increasing  level  of  user   enabling  faster  time  to  market   knowledge  necessary  
  46. 46. Cloud’s  Business  Enablers   CONTENT  DRIVEN  VARIABILITY   •  Product  and  service  customization   enabled  because  of  Cloud’s  expanded   computing  power  and  capacity   •  Business  can  offer  consumers   ECOSYSEM  CONNECTIVITY   •  Organizations  can   collaborate  with  partners   and  customers,  leading  to   personalized  and  context-­‐relevant   productivity  improvements   experiences   and  innovation  
  47. 47. Cloud-­‐enabled  Innovation   Organizations  using  cloud  for     •  additional  revenue  streams  by  changing  customer  value  propositions   •  changing  organization  and  industry  value  chains  
  48. 48. Cloud-­‐enabled  Innovation  –   Customer  Value  Propositions     •  Enhance  –  improve   products,  services,  and   customer  experiences   •  Extend  –  create  new   products,  services  &  use   new  channels  or  payment   methods       •  Invent  –  create  new   “need”  and  own  the   market     Retain  current   and  attract  new   customers       Attract  existing   or  adjacent   customer   segments       Attract  new   customer   segments       Incremental   Revenue       Significant   new   revenues       Entirely  new   revenue   streams  
  49. 49. Cloud-­‐enabled  innovation  – Value  Chains   •  Improve  –  organizations  maintain  their  place  in   existing  value  chain  through  increased  efficiency  and   improved  ability  to  partner,  source  and  collaborate   •  Transform  –  businesses  can  change  role  within  their   industries  or  enter  a  different  industry   •  Create  –  businesses  can  create  radically  change   industry  dynamics    
  50. 50. 1.  Establish  shared  responsibility  for  cloud  strategy   and  governance  across  the  business  and  IT  to  help   ensure  cloud  remains  a  top  business  priority   2.  Look  within  and  beyond  your  organization’s   borders  to  maximize  the  value  derived  from  cloud   adoption  
  51. 51. 3.  Identify  whether  your  organization  seeks  to  be  an   optimizer,  innovator  or  disruptor  and  use  cloud  to  innovate   your  business  model  to  realize  that  potential   –  Consider  organizational  and  market  factors     –  Where  is  your  company  positioned  in  Cloud  Enablement   Framework  today?   –  Where  should  your  company  be  in  the  next  3-­‐5  years?   –  Build  capabilities  to  close  the  gap  between  your  current  and   future  cloud  position/maintain  your  current  position  
  52. 52. Thank  You  To:   •  IBM,  The  Power  of  Cloud     •  Forbes  Insight,  Collaborating  in  the  Cloud   •  Gartner,  Symposium   •  Akanksha  Rath