Filled in for Lane Becker at the Berlin Web2.0 Expo and presented some of the research findings from a book I'm working on. Also, some frameworks for looking at innovative business model opportunitites.
1. Be Like the Internet:
Collaborative, Disruptive, Networked
Scott Hirsch, Management Innovation Group (scott@mig5.com)
Web2.0 Expo - November 5, 2007
Scott Hirsch, MIG scott@mig5.com
2. MIG is a strategy consultancy …
here are some companies we’ve helped:
Scott Hirsch, MIG scott@mig5.com
5. Web2.0 Changes the Way You
Think About Your Company
By changing the way you think about your …
• development process
• products/services
• strategy
• business model
• management decisions
• personal skills and leadership style
“We need to stop confusing web2.0 with AJAX,
yellow fades, and social networks … it’s a whole
new way of thinking about business.”
--SixApart
Scott Hirsch, MIG scott@mig5.com
6. Web2.0 Innovators Are Always Re-framing
The advertising model is something that we've looked at. Can I see
an immediate application for the Wii, no. However, one of the
things that we are smart enough to say is quot;never say never.quot; But it
is clear that the Mii consumers love to create their Miis. They would
like more and more options to decorate their Miis.
We're going to address part of that with a channel called quot;Check
Me Out,quot; where you'll be able to post your Miis and create Miis of
historical or popular figures and compare and vote on them. This is
a recognition of a deep-seated need by consumers to drive a lot of
personalization with these Mii characters and we're looking to help
bring that to life in a way that makes sense.
Reggie Fils-Aime
COO, Nintendo
What word defines the Wii?
Scott Hirsch, MIG scott@mig5.com
7. Web2.0 Innovators Are Always Re-framing
A conversation in early 2002
- from The Search by John Battelle
Scott Hirsch, MIG scott@mig5.com
8. How?
By organizing the worldʼs
information and making it
accessible and useful
Or?
By providing advertisers with the opportunity to deliver
measurable, cost-effective online advertising that is
relevant to the information displayed on any given page
Scott Hirsch, MIG scott@mig5.com
9. Find the Frame
Product Culture
Products Process
Process
> Rapid prototyping
> For consumers - search that > Fast execution
> Willingness to change the
works and snazzy new apps Open innovation - one day
paradigm
> For advertisers - access to per week for research
> Commitment to serving
motivated customers Darwinian prioritization
advertisers and consumers
> For content owners - free > “Do no evil”
money
Scott Hirsch, MIG scott@mig5.com
10. What Weʼre Going to Do
9:30 - 9:45 Introduction and Start-Ups
9:45 - 10:15 Learn About Each Other
10:15 - 10:45 Bottom-Up Innovation
10:45 - 11:00 Break
11:00 - 11:45 Web2.0 Strategy and Business Models
11:45 - 12:00 Leadership in a Web2.0 World
12:00 - 12:15 Learning from Failure Experiences
12:15 - 12:30 Putting It Into Practice
Scott Hirsch, MIG scott@mig5.com
11. The Demise of the Internally Focused System:
Silicon Valley Before 2000
• If I discover it, I will find a market for it.
• If I launch it first, I will own it.
• I can build the most important technology pieces
myself.
• If I fail, I will move on to something else.
• If I am successful, the best people will want to work for
me.
Web2.0 Shifts
• Good Ideas are widely distributed today … there is no
monopoly on useful knowledge.
• Innovation doesn’t happen within a single firm anymore.
• Failure is an opportunity to learn and change.
• Not all the smart people in the world work for us.
Scott Hirsch, MIG scott@mig5.com
12. Trends and Discontinuities in Silicon Valley -
How Web2.0 Changed the Way We Think
About Strategy About Business
Customers as Partners New Revenue Streams
• Customers lead the • Google Adsense makes
conversation business out of hobby
• Customers as developers • Open platforms broaden
on open platforms potential audiences
Emergent Business Models Greatly Reduced Costs
• Value first … business • Global talent pools
model second • (Almost) anyone can start
• Experimentation over set a company
strategies • VCs become less
• Openness is king (ir)relevant
Scott Hirsch, MIG scott@mig5.com
13. Some Provocative Points of View -
This Sets Up Our First Activity
• You don’t own your ideas
• You don’t want to own the infrastructure
• You certainly don’t own your customers
“Intellectual property is a vestige of dumb markets”
Scott Hirsch, MIG scott@mig5.com
14. Learning About (and from) Each Other
In the spirit of this being a global conference
… that is focused on web2.0 …
Let’s model some collaborative problem solving via
social networking
Instructions
1. Take a moment to think about a challenge you are facing
today, it might be about …
a) an innovation challenge
b) a new product idea
c) a sticky issue you are facing with a client
2. Make sure the problem is something you feel comfortable
sharing with the group. If not, think of something else.
3. Write a short description of your issue … try your best to
keep it under three sentences.
Scott Hirsch, MIG scott@mig5.com
16. Be Like the Internet:
Collaborative, Disruptive, Networked
Bottom-Up Innovation
Scott Hirsch, Management Innovation Group
Web2.0 Expo - November 5, 2007
Scott Hirsch, MIG scott@mig5.com
17. Bottom-Up Innovation:
A Personal Guide to Disrupting the World
Demystifying the Issue: Methodology:
- Too much high-level analysis and - Open inquiry with web2.0
“armchair quarterbacking” innovators
- Not enough personal stories from - Pull characteristics and qualities
real innovators of innovators
- Too much emphasis on products, - Ask for referrals for more
not enough on process interviews
Proposal:
- A “how-to” guide for innovation as told by web2.0
entrepreneurs and other market disruptors
- Analysis and practical guidance for people at any
level or type of organization
- Focus on analytic frameworks, as well as softer
skills of leadership and facilitation
Scott Hirsch, MIG scott@mig5.com
18. Generally, what I’ve heard:
Web2.0 Innovators are … and create cultures that ...
embrace
Collaborative transparency
Persuasive
embrace many
points of view
are accepting
Passionate
of failure
have fluid concept
Humble of “ownership”
Facilitative
don’t over-plan
Flexible their strategy
value inspiration
Persistent don’t over-
and production
(but not defensive) commit to solutions
Scott Hirsch, MIG scott@mig5.com
19. Generally, what I heard:
Web2.0 Innovators are … and create cultures that … to manage ….
embrace many
Flexible
points of view
Uncertainty
have fluid concept
Persuasive
Openness
of idea ownership
Leadership
embrace
Collaborative Management
transparency
Hiring
share success &
Strategy
Humble
accept failure
Competition
value inspiration Marketing
Passionate
and production Biz Development
Product Development
are open to many
Facilitative
viewpoints/options
Persistent Commit to direction,
(but not defensive) not solutions
Scott Hirsch, MIG scott@mig5.com
20. How Web2.0 Innovators Look at the World
Strategy - Disruptive
• Look at their business as a poker game, rather than a chess
game
• Aim to be the most open, rather than the first mover
• Look for directional alignment, rather than the “right” answer
Business Models - Networked
• Focus on solving universal customer problems, rather than
technology solutions
• Favor experimentation over rationalization
• Focus on building platforms, rather than owning customers
Management - Collaborative
• View opportunity cost as the scarce resource, rather than
people and time.
• View themselves as facilitators, rather than managers
• Constantly seek to reframe challenges, rather than validate
old points of view.
Scott Hirsch, MIG scott@mig5.com
22. Web2.0 Innovators’ View of Strategy
Poker
Chess
• Pay to play … small ante
• Plan several moves
required to join
ahead
• Pay for new information
• No new information
each round
needed
• You discover what you’ve
• You know what you’ve
got and can only guess at
got and what your
other players
opponent has
• Business case is useless,
• Decisions can be made
you look at options
with a business case
Web2.0 Innovators look at their business
like a poker game, not a chess game
Adapted from Henry Chesborough, UC-Berkeley
Scott Hirsch, MIG scott@mig5.com
23. Web2.0 Innovators’ View of Strategy
High external awareness
Open
Closed
platform
platform
Low external awareness
Web2.0 Innovators aim to be the most open,
rather than the first mover.
Scott Hirsch, MIG scott@mig5.com
25. Web2.0 Innovators’ View of Business Models
“We knew that our focus was on collaboration -- not wikis -- and
Joe had been talking about the long-tail of applications, so we
started taking a broader view of the business … Google
wouldn’t have acquired us if it weren’t for that shift in mindset.”
-- Ken Norton
Web2.0 Innovators focus on solving universal problems,
rather than technology solutions.
Scott Hirsch, MIG scott@mig5.com
26. Web2.0 Innovators’ View of Business Models
“Only time will tell whether Google has succeeded in building an
evolutionary advantage. But consider: Since it's founding, it has
repeatedly morphed its business model. Google 1.0 was a search
engine that crawled the Web but generated little revenue; which led
to Google 2.0, a company that sold its search capacity to
AOL/Netscape, Yahoo and other major portals; which gave way to
Google 3.0, an Internet contrarian that rejected banner ads and
instead sold simple text ads linked to search results; which spawned
Google 4.0, an increasingly global entity that found a way to insert
relevant ads into any and all Web content, dramatically enlarging
the online ad business; which mutated into Google 5.0, an
innovation factory that produces a torrent of new Web-based
services, including Gmail, Google Desktop, and Google Base. More
than likely, 6.0 is around the corner.”
- Gary Hamel, Wall Street Journal
“Management A la Google” 04/26/06
Web2.0 Innovators favor experimentation over rationalization.
Scott Hirsch, MIG scott@mig5.com
28. Web2.0 Innovators’ View of Management
Top-Down Management Bottom-Up Management
Example: Yahoo! PBmemo Example: Google 80/20 rule
Scarce Resources: Scarce Resources:
• People (engineers) • Servers, opportunity to test
• Time and money • Opportunity cost
Bottlenecks: Bottlenecks:
• Getting management support • Getting peer support
• Big “P” Politics • Little “p” politics
Decision Models: Decision Models:
• Pre-Rationalization process • Darwinian “natural selection”
• Business cases • Strategic options
Fear of false positives Fear of false negatives
Web2.0 Innovators believe opportunity cost is the scarce resource,
not people, time, or money.
Scott Hirsch, MIG scott@mig5.com
29. Web2.0 Innovators’ View of Management
Traditional Rationalized View Web2.0 and the Beta View
Management Decides Management Facilitates
Triage,
Generate,
Senior experiment,
Nurture,
Leadership critique,
Promote,
Gathers / Adopt
Fund prioritize,
Reward ->
group,
Generate ideas
abahdon,
Ideas
filter & sort
Tyranny of the
business case Narrowing through
experimentation provides
better data and more criteria
than a business case.
Web2.0 Innovators view themselves as facilitators rather than managers,
and encourage smart divergence over quick convergence.
Scott Hirsch, MIG scott@mig5.com
30. How Web2.0 Innovators Look at the World
s
k
or
Strategy - Disruptive w
et
• Look at their business as a poker game, rather than a chess n
al
ci
game
so
• Aim to be the most open, rather than the first mover
d
n“right” answer
,a
• Look for directional alignment, rather than the
de
fa
w
Business Models - Networked
llo problems, rather than
ye
• Focus on solving universal customer
X,
technology solutions
JA rationalization
• Favor experimentation A
n over
• Focus on buildingha
t platforms, rather than owning customers
e
or
m
ut
Management - Collaborative
bo
• View opportunity cost as the scarce resource, rather than
s a and time.
i
people
.0
b2 View themselves as facilitators, rather than managers
•
e • Constantly seek to reframe challenges, rather than validate
W
old points of view.
Scott Hirsch, MIG scott@mig5.com
32. Be Like the Internet:
Collaborative, Disruptive, Networked
Uncovering Strategies and Business Models
Scott Hirsch, Management Innovation Group
Web2.0 Expo - November 5, 2007
Scott Hirsch, MIG scott@mig5.com
33. What is a business model?
Scott Hirsch, MIG scott@mig5.com
35. Can anyone think of a web2.0 version of this?
Dangerʼs
Sidekick
Scott Hirsch, MIG scott@mig5.com
36. Generic Business Models
Which are Web2.0?
• Per item and “all you can eat”
• Razors and blades
• Free trial, followed by subscription
• Free, advertising supported
• Any non-web2.0 examples?
• Recruit your friends and save money
• Market maker, aggregator, switchboard
• Ebay, Amazon
• Turn cost centers into profit centers
• Ryan Air
• Hotels (phone, TV, minibar)
• Apple
Scott Hirsch, MIG scott@mig5.com
37. We shape our
buildings, and
thereafter they
shape us.
Scott Hirsch, MIG scott@mig5.com
38. We shape our
buildings business
models, and thereafter
they shape us.
Scott Hirsch, MIG scott@mig5.com
39. Why do business
models matter?
Customers Products Revenue and Costs
technology companies succeed by
keeping switching costs high,
selling version upgrades
(think microsoft)
Growth -> increase the install
ISP service
Customers are base, while keeping attrition low
motivated by:
Customer acquisition costs are
high (unless you have a monopoly)
availability of other ISPs
$/user is largely fixed
unwillingness to switch
loyalty to AOL “software” Because switching cost is high,
and content products only need to be “good
enough”
Software services for my
computer
Scott Hirsch, MIG scott@mig5.com
40. Why do business
models matter?
Customers Products Revenue and Costs
Media companies succeed by
connecting customers with useful
content/services (think craigslist);
monetizing more customer
interactions (think adsense)
Growth -> many levers: increase
visits, pageviews, CPM, long-tail
Customers are and mass markets
motivated by:
Customer acquisition costs are low
Software services for me
the value of the AOL
$/user is variable
network of content and
services
Products need to work well --
loyalty to AOL “hooks”
innovations can be used to hook
(products that uniquely
new customers
combine content and
services)
relative value of the AOL
experience
Monetizable content
Scott Hirsch, MIG scott@mig5.com
41. How would you describe
eCommerce business
models? -Content provider
-Direct to consumer
-B2B
-Full service provider
-B2C -Brokerage (e.g., buyer aggregator,
-Intermediary
auctions, search agent, marketplace)
- Shared infrastructure
- Advertising (e.g., portals, free model,
attention marketing, bargain discounter) - Value net integrator
-Virtual community
-Infomediary (e.g. registration)
- Whole of enterprise
-Merchant (e.g., virtual store)
- Manufacturer (i.e., disintermediation)
- Focused distributor (e-tailers,
- Affiliate (i.e.,click-through purchase)
market-places, aggregators,
- Community (e.g., knowledge infomediaries)
networks)
- Portal (horizontal, vertical, affinity)
-Subscription - Producer (manufacturer, info
services)
- Utility (i.e., pay as you go)
- Infrastructure (ISP, hardware,
software)
Scott Hirsch, MIG scott@mig5.com
42. The Frame of Your Business Model Matters
… A LOT!
Scott Hirsch, MIG scott@mig5.com
43. The Strategic Continuum
Make & Sell Sense & Respond
Strategic Lenses Strategic Lenses
• Forecasting • Learning
• Planning • Adaptation
Web2.0 is more like a taxi than a bus.
Scott Hirsch, MIG scott@mig5.com
44. The Strategic Continuum
Sense & Respond
Make & Sell
• Respond to the Market
• Offer to the Market
• Knowledge Embedded in
• Knowledge Embedded
People/Process
in Things
• Customization
• Mass-production
• Focus on Flexibility
• Focus on Efficiency
• Profit from Return and
• Profit from Margin and
Scope
Scale
Is your company a taxi or a bus.
Scott Hirsch, MIG scott@mig5.com
45. Business Model Lock-In +
the Innovatorʼs Dilemma
Abstract
Frameworks: We Imperatives: We Fall
Identify the Back on the Value
Problems That Fit Propositions That Fit
In Our Definition of Our Solutions
the Industry
Analysis Synthesis
Observations: Solutions: We
Confirmation Bias Create Incremental
Leads Us to See What Improvements to the
We Know Wrong Problems
Concrete
Scott Hirsch, MIG scott@mig5.com
46. Example from Telecoms
Abstract
Frameworks: Imperatives: Invest in
Reliability of the POTS Redundancy to
Network is Key Ensure Uptime
(.99999 availability)
Analysis Synthesis
Observations:
Customers Get Solutions: Fiber Optic
Frustrated When They Cables and High
Can’t Make Calls Throughput Switches
Concrete
Scott Hirsch, MIG scott@mig5.com
47. Other Examples
“I think there is a world market “The Americans have need of the
for maybe five computers.” telephone, but we do not. We have
plenty of messenger boys.”
- IBM Chairman Tom Watson
- British Post Office
Commissioner Sir William Preece
“So we went to Atari and said, 'Hey,
quot;While theoretically and
we've got this amazing thing, even built
technically television may be
with some of your parts, and what do
feasible, commercially and
you think about funding us? Or we'll
financially it is an impossibility.quot;
give it to you. We just want to do it. Pay
- TV inventor Lee DeForest
our salary, we'll come work for you.'
And they said, 'No.' So then we went to
Hewlett-Packard, and they said, 'Hey,
we don't need you. You haven't got
through college yet.”.
- Apple Founder Steve Jobs
Scott Hirsch, MIG scott@mig5.com
48. Innovating on Business Models
“…the key to sustained success is business model innovation.”
- Harvard Business Schoolʼs Clay Christensen
Who do we serve?
How do we provide it? What do we provide?
How do we
How do we differentiate &
make money?
sustain advantage?
Scott Hirsch, MIG scott@mig5.com
49. Developing Business Models
What do we
provide?
Who do we serve?
How do we provide it?
TARGET
PARTNER CUSTOMER
NETWORK
VALUE
PROPOSITION
CORE CUSTOMER
CAPABILITIES RELATIONSHIP
DISTRIBUTION VALUE
CHANNEL CONFIGURATION
PRODUCT/SERVICE
COST REVENUE
STRUCTURE STREAMS
How do we make money?
Scott Hirsch, MIG scott@mig5.com
50. Developing Business Models
What do we
provide?
Who do we serve?
How do we provide it?
TARGET
PARTNER CUSTOMER
NETWORK
VALUE
CORE PROPOSITION CUSTOMER
CAPABILITIES RELATIONSHIP
DISTRIBUTION VALUE
PRODUCT/SERVICE
CHANNEL CONFIGURATION
How do we
COST REVENUE
differentiate & STRUCTURE STREAMS
sustain
advantage? How do we make money?
Scott Hirsch, MIG scott@mig5.com
51. Marketing innovations Serving different
people,serving
What do we
them differently
provide?
How do we provide it?
TARGET
PARTNER CUSTOMER
NETWORK
VALUE
PROPOSITION
CORE CUSTOMER
CAPABILITIES RELATIONSHIP
DISTRIBUTION VALUE
CHANNEL CONFIGURATION
PRODUCT/SERVICE
COST REVENUE
STRUCTURE STREAMS
How do we make money?
Scott Hirsch, MIG scott@mig5.com
52. Targeting Different Customers
YOUR NEXT ACCIDENT
COULD BE FORGIVEN
Your car insurance rates wonʼt go
up just because of an accident.
Even if itʼs your fault. Accident
Forgiveness starts the day you
sign up for Your Choice Auto
Insurance.
Sign up now.
CALL 1–866–621–6900
for details and a free auto quote.
Scott Hirsch, MIG scott@mig5.com
53. Channel Innovations
Getting products What do we
provide?
toHow do we provide it?
customers Who do we serve?
differently TARGET
PARTNER CUSTOMER
NETWORK
VALUE
PROPOSITION
CORE CUSTOMER
CAPABILITIES RELATIONSHIP
DISTRIBUTION VALUE
CHANNEL CONFIGURATION
PRODUCT/SERVICE
COST REVENUE
STRUCTURE STREAMS
How do we make money?
Scott Hirsch, MIG scott@mig5.com
54. Opening Up Whole New Markets
Platform Innovation at
Cement is a commodity … need to differentiate the business
model. Major builders and distributors touch only part of
the national market for cement.
“Platforms” explore major opportunity arenas:
How to serve very poor customers
How to deliver “solutions” (rather than cement) 1. KEEP THE AIMING
How to address the needs of small vendors POINTS FRESH.
2. TIME BOUND THE
CHALLENGES.
3. MOVE ON TO THE
NEXT.
Scott Hirsch, MIG scott@mig5.com
55. New Product Innovations
What do we
provide?
Who do we serve?
How do we provide it?
TARGET
PARTNER CUSTOMER
NETWORK
VALUE
PROPOSITION
CORE CUSTOMER
CAPABILITIES RELATIONSHIP
DISTRIBUTION VALUE
CHANNEL CONFIGURATION
PRODUCT/SERVICE
COST REVENUE
STRUCTURE STREAMS
How do we make money?
Scott Hirsch, MIG scott@mig5.com
57. Customer Experience Innovations
What do we
provide?
Who do we serve?
How do we provide it?
TARGET
PARTNER CUSTOMER
NETWORK
VALUE
PROPOSITION
CORE CUSTOMER
CAPABILITIES RELATIONSHIP
DISTRIBUTION VALUE
CHANNEL CONFIGURATION
PRODUCT/SERVICE
COST REVENUE
STRUCTURE STREAMS
How do we make money?
Scott Hirsch, MIG scott@mig5.com
58. Finding new approaches
for known needs
Can Target make it easier
to take your medicine?
Can flying actually be fun again?
Scott Hirsch, MIG scott@mig5.com
59. Finance innovations
What do we
provide?
Who do we serve?
How do we provide it?
TARGET
PARTNER CUSTOMER
NETWORK
VALUE
PROPOSITION
CORE CUSTOMER
CAPABILITIES RELATIONSHIP
DISTRIBUTION VALUE
CHANNEL CONFIGURATION
PRODUCT/SERVICE
Getting paid by
COST REVENUE
different STRUCTURE STREAMS
people or in How do we make money?
different ways
Scott Hirsch, MIG scott@mig5.com
60. Innovations in cost
structures
Dell pioneered a J-I-T
production system that
allowed them to pay for
components after their
customers had already paid
Dell.
Skype uses open
internet standards
and free
infrastructure to
offer free and low-
cost calls to its
customers.
Scott Hirsch, MIG scott@mig5.com
61. Innovations in where
revenue comes from
Trilogy creates
customized software
that helps its customers
solve business problems
and gets paid as a
percentage of cost
savings or new revenue
created.
Scott Hirsch, MIG scott@mig5.com
62. Hybrid innovations: new
revenue, new sales channels
Enterprise: Focus on offering
short-term replacement vehicles
paid for by insurance companies
Scott Hirsch, MIG scott@mig5.com
63. Innovative combinations:
new cost structures, new
customers, new partners
vs.
Radically reducing costs opens up
new target customer possibilities
Scott Hirsch, MIG scott@mig5.com
65. Business Model
(Netflix in 1999)
Who do we serve?
What value do we provide?
How do we provide it?
How do we make money?
How are we differentiated?
Scott Hirsch, MIG scott@mig5.com
66. Activity: Prototyping Business Models
Who Is the consumer / market segment?
- Target customer
- Customer relationship
What do we provide (key attribute in the value proposition)?
- Product/service
- Value proposition
How do we provide it?
- Partner network:
- Distribution channel:
- Core capability:
How do we make money?
How do we
-Revenue streams:
differentiate
-Cost structure
& sustain
advantage?
Scott Hirsch, MIG scott@mig5.com
67. The Innovation Cycle Applied to
Business Models Abstract
Frameworks Imperatives
(Insight) (Ideas)
Analysis Synthesis
Observations Solutions
(Context) (Artifacts)
Concrete
Scott Hirsch, MIG scott@mig5.com
68. The Innovation Cycle Applied to
Business Models Abstract
Frameworks Imperatives
(Insight) (Ideas)
Analysis Synthesis
Describe the
business model
Observations Solutions
(Context) (Artifacts)
Concrete
Scott Hirsch, MIG scott@mig5.com
69. The Innovation Cycle Applied to
Business Models Abstract
Frameworks Imperatives
(Insight) (Ideas)
Find the
whitespace
Analysis Synthesis
Observations Solutions
(Context) (Artifacts)
Concrete
Scott Hirsch, MIG scott@mig5.com
70. The Innovation Cycle Applied to
Business Models Abstract
Frameworks Imperatives
(Insight) (Ideas)
Describe the new
value combination
Analysis Synthesis
Observations Solutions
(Context) (Artifacts)
Concrete
Scott Hirsch, MIG scott@mig5.com
71. The Innovation Cycle Applied to
Business Models Abstract
Frameworks Imperatives
(Insight) (Ideas)
Analysis Synthesis
Think through go-
to-market strategy
Observations Solutions
(Context) (Artifacts)
Concrete
Scott Hirsch, MIG scott@mig5.com
72. Moving from Customer to Business
Abstract
Frameworks Imperatives
(Insight) (Ideas)
Find the
Analysis Synthesis
story
Observations Solutions
(Context) (Artifacts)
Concrete
Scott Hirsch, MIG scott@mig5.com
73. Moving from Todayʼs Story to Tomorrowʼs
Abstract
Frameworks Imperatives
(Insight) (Ideas)
Tell a
new
Analysis Synthesis
story
Observations Solutions
(Context) (Artifacts)
Concrete
Scott Hirsch, MIG scott@mig5.com
74. Telling a New Story
What Weʼre Going to Do …
- First step was to take an analytic look at the existing
story.
- Now weʼre going to stretch to be a little more creative
to tell a new story
- Show you a framework for thinking about business
models through innovation lenses.
- Weʼre going to practice using these lenses
Scott Hirsch, MIG scott@mig5.com
76. Innovation Lenses
Opportunities Derived from Customer Needs
Customer Needs Trends & Discontinuities
Whatʼs happening in the
Trends & market? What emerging
Innovations
Discontinuities technological, social, or
Products
economic changes might
Services
impact your competitive
Markets
environment?
Partners
Channels
Latent &
Management
Latent & Unmet Needs
Unmet Needs
Looking at your current
customers or target market,
what needs are not being
addressed?
Scott Hirsch, MIG scott@mig5.com
77. Innovation Lenses
Finding Opportunity
Business Models
Industry Orthodoxies
Industry
What does the industry take
Innovations
for granted about how to Orthodoxies
Products
make money? Can you Services
imagine alternatives? Markets
Partners
Unleveraged Assets Channels Unleveraged
Management
What assets do you have that Assets
disruptors donʼt? Are they
being used?
Scott Hirsch, MIG scott@mig5.com
78. Finding new channels Industry Orthodoxies
- people value security
Same benefits as MS Office, but via
- don’t trust online storage
the Web rather than installed software.
- MS owns this market
Trends & Discontinuities
- software as a service
- ubiquitous connectivity
Scott Hirsch, MIG scott@mig5.com
79. Customer Service and Experience
Unmet Needs
people want F2F support
people want education
Industry Orthodoxies
retail is a reseller industry
there is no profit in retail
Trends & Discontinuities
people are willing to pay
extra for service
Ipod halo effect is real
Scott Hirsch, MIG scott@mig5.com
80. New customers, new distribution,
new value configuration
37Signals’ Basecamp project management tools target
end-users as buyers, rather than corporate IT buyers.
Unmet Needs
Enterprise solutions
overshot needs of users
Industry Orthodoxies
IT Manager won’t allow it
Business customers
won’t buy it
Trends & Discontinuities
Software as service
Corporate rebellion
Scott Hirsch, MIG scott@mig5.com
81. Power of Customer Data Unleveraged Assets
• Customer browse and
purchase histories
• Capability to determine
likelihood to buy
What data do you
have access to that
can be repurposed to
help customers buy
from you more often?
Scott Hirsch, MIG scott@mig5.com
82. Moving from Todayʼs Story to Tomorrowʼs
Abstract
Frameworks Imperatives
(Insight) (Ideas)
Tell a
new
Analysis Synthesis
story
Observations Solutions
(Context) (Artifacts)
Concrete
Scott Hirsch, MIG scott@mig5.com
83. Innovation Lenses
(Netflix in 1999)
Unmet Needs
- I hate paying late fees
- I want a bigger selection
Trends/Discontinuities
- Demise of VHS
- Rise of DVD players
Industry Orthodoxies
- People want to see the box
- You need retail space to carry inventory
Unleveraged Assets
- Customer data
Scott Hirsch, MIG scott@mig5.com
84. Innovation Lenses
(Netflix in 2007)
Unmet Needs
• I can’t get the darn video
onto my ipod
Trends/Discontinuities
• More and more interest in watching video anywhere and anytime
Industry Orthodoxies
• Digital Rights Management cannot be overcome
Unleveraged Assets
- Online relationships, huge selection
- Database of customer preferences, recommendations
Scott Hirsch, MIG scott@mig5.com
85. Exercise: Telling a new story
First, do some brainstorming around the innovation lenses:
- Latent/Unmet Needs
What insights do you have about how customers behave?
- Trends and Discontinuities
What trends can you get ahead of the cure on?
- Industry Orthodoxies:
How can you challenge the current beliefs about your market?
- Unleveraged Assets:
What assets do you have that others donʼt … or donʼt use?
Some challenge questions to get you thinking:
How would we make money if we gave the product away?
What assets are we not leveraging? Include intangibles!
(relationships, data, etc.)
If you were a start up with the same assets what would you do
to disrupt this market
Scott Hirsch, MIG scott@mig5.com
86. Prototyping Business Models
Who Is the consumer / market segment?
What do we provide (key attribute in the value proposition)?
Who is in our value chain?
How do we make money?
How do we
differentiate
& sustain
advantage?
Scott Hirsch, MIG scott@mig5.com
88. Key Takeaways:
• The way you frame your business model really
matters … Are you a bus company or a taxi
company?
• Frames help you understand your business model
… look for patterns
• Frames change when you look forward … break
your current frame to look at the future
Scott Hirsch, MIG scott@mig5.com
89. Be Like the Internet:
Collaborative, Disruptive, Networked
Learning from a Failure Experience
Activity in Teams of Two
Scott Hirsch, Management Innovation Group
Web2.0 Expo - November 5, 2007
Scott Hirsch, MIG scott@mig5.com
90. Learning from Experiences:
How People Make Decisions
opportunity
Where You Where You
context solution
Are Now Want To Be
problem
Scott Hirsch, MIG scott@mig5.com
91. Why A Failure Experience?
• People think much more objectively and critically
about failures
In analyzing past successes, people are naturally
susceptible to “self-attribution bias”
• Those who don’t learn from history are doomed to
repeat it.
• That which doesn’t kill you, makes you stronger
Scott Hirsch, MIG scott@mig5.com
92. Innovation Mindset:
Finding Opportunity In Failure
What is the context of the
failure experience? Who
were the key players
opportunity involved?
How would you handle the
situation differently,
context solution knowing what you know
now?
What were the barriers
problem you encountered? Focus
on interpersonal and
systemic barriers.
Scott Hirsch, MIG scott@mig5.com
93. Five Things to Remember When Doing Inquiry:
1. Cast aside your biases, listen & observe
• Let them tell their story
• Listen for emotion
2. Note any contradictions
• Inconsistencies beg additional questions
• Check for clarity
3. Listen for the personal story
• Challenge perceptions for normal
• Note sources of pride and frustration
4. Distinguish between needs and solutions
• Needs open up possibilities
• Solutions constrain them
5. Look beyond the obvious
• Watch for workarounds
• Great insight is in the nuances
Scott Hirsch, MIG scott@mig5.com
94. Discussion and Questions …
• What did you learn in your interview?
Were you able to frame the problem?
Were you able to reframe and find the opportunity?
Scott Hirsch, MIG scott@mig5.com
95. Thank you!
Scott Hirsch
Management Innovation Group
Scott@mig5.com
Scott Hirsch, MIG scott@mig5.com