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Data Insights Driven Business Model Innovation

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Is data the next thing? Really, or are the insights into data the next big thing?
This is my keynote at the Sights 2107 conference by the Data Insight company Squirro.

If you want to understand the power of data insights, it is important to understand the business models of Monsanto's Climate Corporation, BlackRock's Aladdin, Würth, Amadeus, Google, and others.

What will be next frontiers of data insight driven business model innovations? The war is on audio and voice. That's why Amazon, Google, Microsoft, and Apple have all launched voice recognition services. Google is the winner so far in text, pictures, and video. Who will it be for audio?

The challenge is that data insights driven business models tend to create monopolies due to the underlying economics, that raises ethical questions since without ethics eg. the control of all data from farmers and their crops is close to world domination since food is the basic of our living. So do we want to have Monsanto's Climate Corporation be the only big kid on the block?

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Data Insights Driven Business Model Innovation

  1. 1. Sights Conference Dr. Patrick Stähler, fluidminds Follow the white rabbit: Data Insight Driven Business Model Innovation
  2. 2. Who do you want to be in the data insight game? The prey or the hunter?
  3. 3. That’s me, Patrick Stähler, innovator by chance of the concept of business model innovation, entrepreneur, blogger, book author and digital since 1995
  4. 4. Something special on this picture? Who took this picture? Actually, was this picture ever taken? If not, who created it?
  5. 5. An algorithm from Google created automatically this picture from these originals
  6. 6. What do the colors mean? Beyond optimization of the past We have to unlearn the past and rethink our business from the customer perspective. 3 Is Kodak innovative? What were the tacit assumptions behind Kodak’s innovations? Take 5 min and discuss it with your neighbors. Take-aways are in red Exercises and questions for you
  7. 7. Who knows more about temperature, humidity and pressure than anybody else in the world? But company does not even know it
  8. 8. Bosch is world market leader of engine control system that measures temperature, humidity, etc. However, the date is trapped in the car. However, that is changing..
  9. 9. 2017. The German car manufacturers want to use the data from sensors to make driving safer but there are more use cases…
  10. 10. However, who does even know more about the world?
  11. 11. Connecting the dots of data. Who thought that a digital calendar is great business aka data source if connected with other data Place Map Calendar Mail
  12. 12. Google understood that a phone is a not a phone anymore but a location and travel sensor
  13. 13. Google maps is the central for mapping location-based data including real-time data of movement
  14. 14. Picture search allows Google to understand what is on the picture
  15. 15. With Google Streetview they even know how the streets look and even have pictures form the inside
  16. 16. With the existing data, they can create 3D models of the real world
  17. 17. What would happen if we have the real-time data from 20% of the fields?
  18. 18. Agricircle, a Swiss Startup founded 2012, is helping farmers to better manage their fields. It‘s state of the art for data aggregation, collection and analytics, but with little support…
  19. 19. Monsanto is doing it. It paid 2013 1.1bn for The Climate Corporation. In 2014, it has the data of 20% of corn and soybean acreage in the US
  20. 20. Pretty scary, if one company controls the seeds, the herbicide and now also the data like Monsanto
  21. 21. Mr Blofeld would have loved to have this information on food on his way to world domination
  22. 22. Data Economics have a strong tendency to natural monopolies due to network effects on the demand side and economies of scale on supply side. So there is a strong ethical side to data driven businesses
  23. 23. Who will go for the race of audio data? Who will understand the content of audio?
  24. 24. Will the hearing aid industry be the master of audio data? Currently, they just amplify audio and filter frequencies. However, they do not understand the content of audio
  25. 25. Or will it be Google, the master of text understanding with Google home?
  26. 26. Or Amazon with Amazon Echo and Alexa
  27. 27. The fight is who will dominate the voice interface aka voice data to the world. Amazon, Google, Microsoft or Apple?
  28. 28. Image you had the portfolio data from 10% of all global assets under management. What would you do?
  29. 29. BlackRock has the data of USD 15 trillion Assets under Management of which 10 trillion are from 25.000 external portfolio managers 3.1 15 GDP Germany BlackRock Aladdin AUM
  30. 30. BlackRocks gets the data because it offers a superior service in providing better risk and portfolio management
  31. 31. data/ technology value creates X enables business model Your data or technology does not create value. It is the business model
  32. 32. Erlang is a 31 year old programming language developed by Ericsson and widely used to program telco switches. However, you can do more…
  33. 33. Any idea for which disruptive business model Erlang was the foundation?
  34. 34. WhatsApp used Erlang to build its backbone messaging system. 1 bn users (2016), acquired by Facebook for 19 bn USD (2014), when it had 55 employees
  35. 35. Not the data/ technology itself is valuable, but what business model we can base on it is decisive for value creation 1
  36. 36. Business Model Innovation Würth - from C-parts reseller to C-parts management for customers based on data Value Proposition Reducing the excessive procurement costs compared to C-parts value by delivering the right parts, at the right place, right time, right quantity, right quality and right price that means lower total costs of procurement
  37. 37. amadeus – the travel data company Amadeus provides travel technology solutions to help travel professionals (travel agencies, hotels, airlines, airports, etc.) to serve their customers better. Originally owned by Airlines like Lufthansa Market Cap. €23 billion, 27.1% EBIT margin, Lufthansa Market cap €5.8 billion, 7.8% EBIT margin* Business Model Innovation It concentrates on the data about travel and has no assets in travel infrastructure like hotels, planes, etc.*2016 data, stock price per 23.June 17
  38. 38. Kodak invented the digital camera in 1973 …
  39. 39. …was the partner of choice for Apple to enter the digital camera market
  40. 40. …invented an app so you can seamlessly print your pictures…
  41. 41. So you can easily hold your pictures in your hand.
  42. 42. Was Kodak innovative? What were the tacit assumptions behind Kodak’s innovations?
  43. 43. Kodak was highly innovative, but did not understand that digital is more than product innovation.
  44. 44. Digital was not about the best quality that traditional customers of Kodak loved
  45. 45. From keeping to sharing memories – Digital solves new jobs for customers
  46. 46. Customers discovered new uses, no sane person would have ever thought off
  47. 47. Tradition is not a strategy.* A transfer of the current business model in the digital world is not enough 2
  48. 48. Innovation can come with very different horizons depending on the closeness to current business and time Value Time Horizon 1 extend the current business Horizon 2 Business builders develop new opportunities Horizon 3 Visionaries create viable options 1 2 3
  49. 49. Competition is changing. New competitors do not care for the past and compete on Horizon 2 and 3, TODAY! Value Time H1 H2 H3
  50. 50. Value Time Hotels battle the data war on all 3 horizons already today The future is today in the hotel industry driven by new-comers! H1 H2 H3
  51. 51. product & process innovation are not sufficient Innovation is not a guarantee for survival in a hypercompetitive world. The right innovation is 3
  52. 52. You had an answer in the past, how about the future? Why should your business exist?
  53. 53. The Purpose of a Company Is to Create a Customer (Peter Drucker) and not to have low costs or products nobody needs
  54. 54. Why should I listen to you as a customer? Why should I engage with you as a customer? Do you have something relevant to say?
  55. 55. Where do you create your WOW?
  56. 56. Customer job to be done We have to learn to unlearn. We have to learn to see beyond the product and understand what the customer really wants. Customer needs are to imprecise. Let’s talk about jobs-to-be-done.
  57. 57. Do we need trucks and truck drivers?
  58. 58. We need to move goods around. Human driven trucks are just one mean to do this.
  59. 59. Do we need accountants?
  60. 60. Actually, accountants are just one mean to get our books done, manage cash or get expenses ready for taxes
  61. 61. Do we need taxis?
  62. 62. People want to move easily and with convenience in cities. Taxis are just one mean to do it. Uber just connected the dots
  63. 63. Beyond optimization of the past We have to unlearn the past and rethink our business from the customer perspective 4
  64. 64. Do we need hotels?
  65. 65. Or do we just need a bed like at Formule 1?
  66. 66. Or do we need a place with lovely people to connect to the place like at AirBnB?
  67. 67. Customer job to be done We do not need a hotel. We need an accommodation plus extras like connecting to people. That are the jobs-to- be-done. Customers hire a product or service to get a job done. The products are a means to an end, not an end in themselves.
  68. 68. Value Proposition The job-to-get-done is solution neutral. The job is to provide accommodation plus extra benefits like connecting to people. Potential solution: § 3* hotel § Formule 1 Hotel § AirBnB (accommodation plus connection to people) § friend that lives in the city
  69. 69. product/services happy customers creates X value proposition solves delivered by business model The customer perspective: Technology does not create value. It is the value proposition the customer loves customer’s job-to-be-done addressed by
  70. 70. Start dreaming from badly solved jobs-to-be- done of your customers. Use technology to build new business models upon and create a Wow! 5
  71. 71. The laws of the data game: 1. Understand what data you have today 2. Understand what data do you want to have from others 3. Create a value proposition that is so convincing that customers share their data 4. Analyze the meta data and give insights and value back to your customers 6
  72. 72. JUST DO IT.
  73. 73. More Information on http://blog.business-model-innovation.com Dr. oec. Patrick Stähler fluidminds GmbH Kreuzstrasse 2 CH-8008 Zürich Patrick.Staehler@fluidminds.ch www.fluidminds.ch blog.business-model-innovation.com
  74. 74. Slides are based on the Book „Das Richtige gründen: Werkzeugkasten für Unternehmer“ Available at any bookstore or at Amazon.de More on blog.business-model- innovation.com
  75. 75. 1) What data do you have in or are triggered by your company’s activities which you do not use today and which might be valuable? (10min) 2) a) What jobs can you solve with this data for your customers? b) What value can you extract from the data for your company? (totally 20 min)

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