These slides discuss Network Effects, Platforms, Standards, and Complex Systems. All of these concepts continue to become more important as the digital economy progresses. From Uber to Instacart, and from smart phones to driverless vehicles, these concepts are playing an increasingly important role in the global economy. Their impact is most obvious when one thinks of the winner take all markets that are becoming increasingly common.
These slides discuss Network Effects, Platforms, Standards, and Complex Systems. All of these concepts continue to become more important as the digital economy progresses. From Uber to Instacart, and from smart phones to driverless vehicles, these concepts are playing an increasingly important role in the global economy. Their impact is most obvious when one thinks of the winner take all markets that are becoming increasingly common.
Long-standing electric utility business models are rapidly becoming outdated in light of new technologies, policy changes and more demanding consumers. Roles along the value chain are shifting, with traditional buyers gaining a foothold as value providers. To succeed in this new environment, industry model innovators will develop fresh business models, as well as the infrastructure, rules and standards to facilitate not only traditional energy generation and delivery, but also emerging products and services enabled by new technologies.
Output- and Outcome-Based Service Delivery and Commercial ModelsCognizant
To extract more from IT sourcing arrangements, buyers and providers must embrace value-based models that prioritize measurable and meaningful results over human resource-oriented inputs.
New Services, No Silos: The Next 15 YearsPeter Coffee
The cloud is now the mainstream. Congratulations. That means it’s no longer special to be cloudy. What’s needed now is a re-thinking of what IT does. Let legacy IT incumbents relocate the past century’s silos to the past decade’s server farms. The salesforce.com community is already re-inventing business processes, around the informed and elevated expectations of cloud-native collaborative customers and their connected things. Peter Coffee shares a global perspective on present facts, near-term implications, and the opportunities and challenges of continued leadership above the cloud.
Presented as opening keynote at Midwest Dreamin' 2014 in Chicago by Peter Coffee of salesforce.com inc.
Identifying and Evaluating Winning IT ServicesCognizant
Evaluating IT services is notoriously tricky and increasingly essential. We present a guide and several equations for a service measurement continuum based on ease of evaluation of a given service and taking into consideration perceived benefits and costs (monetary and nonmonetary) as well as intangible factors
Advantages and Issues to overcome when going for a eBusiness.
Explain Channel Conflict.
Disruptive technologies that have paved the way for eBusiness
Customer and Business Interaction present and past
2014 Tech M&A Monthly - Annual Seller's PanelCorum Group
With deals closing globally during this booming market, many sellers are taking advantage. Could M&A be in your company’s future? Tune in to our annual seller's panel to hear from CEOs and owners of tech firms like you who successfully sold their company during this record spring. Learn how they did it in today's M&A market and tips to take advantage of this historic cycle to improve your value and partnering options.
You will hear from the following:
- Javier Medina-Mora, General Director of Inffinix (Mexico City), acquired by Equifax
- Chau Ngyuen, President & CEO of Campus Special (Atlanta), acquired by Chegg
- Matt Van Bergen, Co-founder of CITYTECH (Chicago), acquired by ICF International
We will also examine another Disruptive Tech Trends in depth, with a look at Digital Force Multipliers and how they're driving deals in today’s market. Join us for all this, plus a look at key deals, valuations and trends from Corum’s research team.
Discussing about the Business Environment focusing on external entities. In here specifically identify what is the difference between customer-supplier relationship and business partner relationship.
Talking about the nature of business interactions among both the internal and external parties of an organization. The success factors of an perfect interaction in a business process. Three flows in the interaction, and how technology had impact these flows. And how the jargon had been changed.
Depending on the level of digitization how the business organizations were categorized.
And finally the step by step roadmap for an successful ebusiness.
Premise control - strategic control - strategic implementationmanumelwin
Premise control is designed to check systematically and continuously whether the premises on which the strategy is based are still valid. If an important premise is no longer valid, the strategy may have to be changed.
Long-standing electric utility business models are rapidly becoming outdated in light of new technologies, policy changes and more demanding consumers. Roles along the value chain are shifting, with traditional buyers gaining a foothold as value providers. To succeed in this new environment, industry model innovators will develop fresh business models, as well as the infrastructure, rules and standards to facilitate not only traditional energy generation and delivery, but also emerging products and services enabled by new technologies.
Output- and Outcome-Based Service Delivery and Commercial ModelsCognizant
To extract more from IT sourcing arrangements, buyers and providers must embrace value-based models that prioritize measurable and meaningful results over human resource-oriented inputs.
New Services, No Silos: The Next 15 YearsPeter Coffee
The cloud is now the mainstream. Congratulations. That means it’s no longer special to be cloudy. What’s needed now is a re-thinking of what IT does. Let legacy IT incumbents relocate the past century’s silos to the past decade’s server farms. The salesforce.com community is already re-inventing business processes, around the informed and elevated expectations of cloud-native collaborative customers and their connected things. Peter Coffee shares a global perspective on present facts, near-term implications, and the opportunities and challenges of continued leadership above the cloud.
Presented as opening keynote at Midwest Dreamin' 2014 in Chicago by Peter Coffee of salesforce.com inc.
Identifying and Evaluating Winning IT ServicesCognizant
Evaluating IT services is notoriously tricky and increasingly essential. We present a guide and several equations for a service measurement continuum based on ease of evaluation of a given service and taking into consideration perceived benefits and costs (monetary and nonmonetary) as well as intangible factors
Advantages and Issues to overcome when going for a eBusiness.
Explain Channel Conflict.
Disruptive technologies that have paved the way for eBusiness
Customer and Business Interaction present and past
2014 Tech M&A Monthly - Annual Seller's PanelCorum Group
With deals closing globally during this booming market, many sellers are taking advantage. Could M&A be in your company’s future? Tune in to our annual seller's panel to hear from CEOs and owners of tech firms like you who successfully sold their company during this record spring. Learn how they did it in today's M&A market and tips to take advantage of this historic cycle to improve your value and partnering options.
You will hear from the following:
- Javier Medina-Mora, General Director of Inffinix (Mexico City), acquired by Equifax
- Chau Ngyuen, President & CEO of Campus Special (Atlanta), acquired by Chegg
- Matt Van Bergen, Co-founder of CITYTECH (Chicago), acquired by ICF International
We will also examine another Disruptive Tech Trends in depth, with a look at Digital Force Multipliers and how they're driving deals in today’s market. Join us for all this, plus a look at key deals, valuations and trends from Corum’s research team.
Discussing about the Business Environment focusing on external entities. In here specifically identify what is the difference between customer-supplier relationship and business partner relationship.
Talking about the nature of business interactions among both the internal and external parties of an organization. The success factors of an perfect interaction in a business process. Three flows in the interaction, and how technology had impact these flows. And how the jargon had been changed.
Depending on the level of digitization how the business organizations were categorized.
And finally the step by step roadmap for an successful ebusiness.
Premise control - strategic control - strategic implementationmanumelwin
Premise control is designed to check systematically and continuously whether the premises on which the strategy is based are still valid. If an important premise is no longer valid, the strategy may have to be changed.
Presented to an internal audience on 4.14.17 regarding the implementation pros and cons of the Two Speed IT management approach and some modifications for it's successful implementation.
An introductory presentation here for business students outlining the relationship between business strategy and technological environment. The role of technological change as an opportunity or threat is examined as are the drivers of innovation and the process of diffusion.
Processes in the Networked Economies: Portal, Vortex, and Dynamic Trading Pro...Amit Sheth
Amit Sheth, Keynote at the Software Architectures for Business Process Management (SABPM'99) Workshop at CAiSE *99, Heidelberg, June 1999.
Processes will be chief differentiating and the competitive force indoing business in the networked economy. They will be deeply integrated with the way of doing business, and that they will be
critical components of almost all types of systems supporting enterprise-level and business critical activities.
http://knoesis.org/amit
Processes Driving the Networked Economy: Process Portals, Process Vortex and ...Amit Sheth
Amit Sheth's keynote at SABPM '99: Software Architectures for Business Process Management, (Workshop at the CAiSE*99, Heidelberg, Germany, June 14-15, 2009.
http://www.informatik.uni-hamburg.de/cgi-bin/TGI/pnml/getpost?id=1999/04/1203
Related paper: http://knoesis.org/library/resource.php?id=00246
Cisco ERP Implementation and related results about Systems Integration.
Project Members:
Rohan Kumbhar, Chris Moss, Dhanesh Gandhi, John Hicks and Gouthami Gurram
IT creates applications that provide strategic advantages to companies
IT is a competitive weapon
IT supports strategic change, e.g, re-engineering
IT networks with business partners
IT provides cost reduction
IT provides competitive business intelligence
MIRAI - Managing Industry Restructuring and Adoptions InquisitivelyQuEST Forum
MIRAI - Managing Industry Restructuring and Adoptions Inquisitively presented by S.M. Balasubramaniyan - Digital Core Technologies. Predict the course of business in the short (Manageable) or medium (Profitable) term will help to determine the organization’s success.
Bending the IT Op-Ex Cost Curve Through IT SimplificationCognizant
CIOs can cut back operations expenditures (Op-Ex) and redirect the funds to strategic digital transformation by reducing IT complexity and rooting out inefficiencies while engaged in IT simplification.
These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Ola Cabs, an Indian ride sharing company that has beaten Uber in India and is now challenging Uber on the global level. It has introduced a wide variety of low end vehicle service (two and three-wheelers), is expanding into last mile e-commerce deliveries, trucking, ambulance services, 2-wheelers for deliveries, and is linking with restaurants, ticket booking and used good marketplaces.
The slides summarize the business model for Ola Cabs including the value proposition, customers, method of value capture, scope of activities, and method of strategic control.
These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for PlugSurfing. PlugSurfing is creating a global network of EV charging stations that can be used with a single account thus eliminating the need for multiple passwords, credit cards, and other identifiers. It had created a network of 25,000 charging points by January 2016, mostly in Germany and the Netherlands. It already has a density of 17 charging points per square kilometer in central cities and 4 per square kilometer in suburbs. It has also begun expanding into France, Italy, and Belgium. The slides summarize the business model for PlugSurfing including the value proposition, customers, method of value capture, scope of activities, and method of strategic control.
These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Zomato, a food discovery site that is transforming the global restaurant business and that is a member of the WSJ’s billion dollar startup club. Not only does it connect users and restaurants, it is also helping restaurants manage their finances, food and equipment orders, and design restaurants. Its core business is helping users find, book, and evaluate restaurants and helping restaurants advertise their services to users and accept bookings. However, the global network that Zomato is building of users and restaurants is enabling Zomato to extend its business into all aspects of F&B.
These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Vishuo Biomedical, a Singaporean startup. This startup offers a data analytics bioinformatics platform that includes an integrated drug-gene-relation database and this platform is constantly updated as scientific advances are reported in academic journals. The platform analyzes genetic sequence data and provides visualization and reports for hospitals. Vishuo targets hospitals and research institutes with DNA sequencers but who need data analytic tools to interpret the DNA sequencing output. The slides summarize the business model for Vishuo including the value proposition, customers, method of value capture, scope of activities, and method of strategic control.
These slides describe my efforts to change engineering education. By focusing on group projects and presentations and real-world engineering issues that are applicable to much of industry, we can help students develop and demonstrate real-world skills. Industry will notice well done analysis of real-world issues and this has occurred in my two classes. The next steps are to work more closely with industry, focus more engineering classes on group projects and presentations, and to create new forms of resumes and transcripts. These resumes and transcripts should promote the students through linked presentations that demonstrate the real-world capabilities of students and that help engineering departments build brand images.
These slides analyze the value propositions for the members (more than 140) of Wall Street Journal's Billion Dollar Startup Club. Value propositions are important, because they are a major reason for the success of a product or a service. Many of these value propositions involved multiple dimensions of performance and large changes in user behavior. Young entrepreneurs should look for these types of value propositions.
These slides use concepts from my (Jeff Funk) course on Business Models at National University of Singapore to analyze the business model of Augmented Reality for travel. Augmented reality superimposes information on top of our sensory data. One way to do AR is to use a smart phone’s camera to view a world with information superimposed on the smart phone’s display. For travel, nearby places of interest can be provides along with ratings, reviews directions, public transport, and other information on them. This information can be obtained from Google Earth and other sources. The slides describe the value proposition, method of value capture, customers, scope of activities, and method of strategic control for two startups involved with AR and travel.
These slides use concepts from my (Jeff Funk) course on Business Models at National University of Singapore to analyze the business model of SCIO’s molecular sensor. This pocket sensor uses infrared light to determine the molecular makeup of fruits, vegetables, drugs, and other organic materials. As a replacement for bulky spectrometers, it can be used by scientists, engineers, and consumers to determine the sugar content, nutritional value, and other aspects of organic materials. The slides describe the value proposition, method of value capture, customers, scope of activities, and method of strategic control for SCIO.
These slides use concepts from my (Jeff Funk) course on Business Models at National University of Singapore to analyze the business model of Garena. Garena provides a platform for online multi-player games and is now striving to become a platform for a wider variety of activities. Players compete through both skill and money, with purchases of tools and characters helping them win games. Garena profits from the sale of these tools and characters. Garena also provides communication services that complement the online games and it is using these services to expand the breadth and power of its platform. The slides describe the value proposition, method of value capture, customers, scope of activities, and method of strategic control for Garena.
These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Expliseat, a provider of ultralight airline seats. Made from titanium and carbon fiber, these seats have 40% the weight, 10% the number of parts, and are 5 centimeters thinner than existing seats. The lighter weight saves on fuel cost and the fewer parts reduce assembly and logistics costs, making the seat cost about the same as existing seats. The thinner seats can enable more legroom or more seats, depending on the airline’s preference. These slides describe the value proposition, customers, method of value capture, scope of activities and the method of strategic control for Expliseat.
These slides use concepts from my (Jeff Funk) course on Business Models at National University of Singapore to analyze the business model for Google Cardboard. Google Cardboard provides users with a virtual reality experience for a much lower price than that from Occulus Rift. It combines a fold-out cardboard mount with an Android smart phone to enable users to feel as though they are part of a video or game. It is light, does not require wires, and content will be available from YouTube and Google Play. Young males are expected to be the largest users of Google Cardboard. Google expects to make money from sales of content through Google Play. The slides describe the value proposition, method of value capture, customers, scope of activities, and method of strategic control for Google Cardboard.
These slides use concepts from my (Jeff Funk) course on Business Models at National University of Singapore to analyze the business model for Theranos. Theranos provides diagnostic testing for consumers that is faster and cheaper than the existing system. Its tests are done in easy to access pharmacies (e.g., Walgreens) as opposed to hard-to reach doctors’ offices. The tests use small bio-electronic integrated circuits (ICs) instead of large scientific instruments. These ICs utilize micro-fluidic channels that require a pin-prick of blood instead of a vial of blood, which makes the tests more appealing and faster than the traditional tests. The slides describe the value proposition, method of value capture, customers, scope of activities, and method of strategic control for Theranos.
These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Airware, a provider of operating systems for drones. Developing applications for drones involves high development costs and these costs can be reduced through the use of a well-designed operating system that is used in many types of drones. Just as Android, iOS, and Windows have reduced the development costs for application software in smart phones and personal computers, Airware’s operating system, or aerial information platform as they call it, can reduce the cost of implementing drones for agriculture, delivery, movie production, security, and the many other applications that have been proposed. Airware is trying to develop an eco-system of drone manufacturers, application developers, sensor manufacturers, and drone operators, each of which contributes towards low cost and high performance applications for drones. These slides describe the value proposition, customers, method of value capture, scope of activities and the method of strategic control for Airware.
These slides use concepts from my (Jeff Funk) course on Business Models at National University of Singapore to analyze the business model for a fictitious alliance between Qualcomm and Bosch. Together, these firms can create a dense network of wireless charging stations that can enable the use of inexpensive electric vehicles. The dense network of charging stations reduces the importance of range and thus the weight, volume, and cost of batteries that are needed to propel the vehicle. The slides describe the value proposition, method of value capture, customers, scope of activities, and method of strategic control for Q-Bo, a fictitious alliance between Qualcomm and Bosch.
These slides use concepts from my (Jeff Funk) course on Business Models at National University of Singapore to analyze the business model for Jasper. Jasper provides a platform for the Internet of Things that enable companies to connect their “things” to the Internet. It provides each thing with a global SIM card that works with local telco wireless systems. It also provides a middleware platform that enables data analysis and presentation. This enables users to monitor their things 24/7, better manage costs and customer usage, and integrate these outputs with their own IT systems. Jasper charges for each connection and thus begins making money as soon as users connect to their systems. The slides describe the value proposition, method of value capture, customers, scope of activities, and method of strategic control for Jasper.
These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Slack, a supplier of collaborative tools for teams. These tools offer a new form of mail service that is very different from that of traditional e-mail programs such as Microsoft Outlook, G-Mail, and Yahoo-Mail. Slack designed its mail service for the cloud computing environment, as opposed to the traditional in-house computing environment. Accessing documents from the cloud is easier with Slack’s service than with Microsoft Outlook as is enabling apps for Slack’s service and reading messages. Reading messages is easier because they are organized by person (like instant messaging on smart phones) as opposed to time. By measuring usage, Slack can charge by active user thus reducing the risk of trying Slack, particularly for individuals, who are the main market for Slack. These slides describe the value proposition, customers, method of value capture, scope of activities and the method of strategic control for Slack.
These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Oscar Health Insurance. Unlike most health care insurance companies, Oscar focuses on end-users as opposed to companies. It connects end users with its network of health care providers (e.g., doctors, hospitals). It focuses on end-users, largely because America’s new health care plan, usually called Obamacare, opened up this opportunity for focusing on end-users, who didn’t have coverage through employers. Oscar reduces its costs through a simpler form of web-based billing, Telemedicine, and wearable technology. These slides describe the value proposition, customers, method of value capture, scope of activities and the method of strategic control for Oscar.
These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Zenefits, a supplier of cloud-based human resource (HR) software. Traditionally, HR departments have dealt with benefits brokers, who act as intermediaries between HR departments and insurance companies. Zenefits offer HR software that replaces these benefits brokers thus enabling HR departments to deal with insurance companies through the software. Zenefits offers its software for free to HR departments and takes a commission from insurance that is purchased through its software. This commission is much lower than that taken by traditional benefits brokers because Zenefits has simplified the process of purchasing the insurance. These slides describe the value proposition, customers, scope of activities, method of value capture, and method of strategic control for Zenefits.
Understanding User Needs and Satisfying ThemAggregage
https://www.productmanagementtoday.com/frs/26903918/understanding-user-needs-and-satisfying-them
We know we want to create products which our customers find to be valuable. Whether we label it as customer-centric or product-led depends on how long we've been doing product management. There are three challenges we face when doing this. The obvious challenge is figuring out what our users need; the non-obvious challenges are in creating a shared understanding of those needs and in sensing if what we're doing is meeting those needs.
In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
• Illustrate how customer journey maps capture activity-level and task-level goals
• Demonstrate the best approach to selection and prioritization of user-goals to address
• Highlight the crucial benchmarks, observable changes, in ensuring fulfillment of customer needs
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Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
Know more: https://www.synapseindia.com/technology/mean-stack-development-company.html
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
An introduction to the cryptocurrency investment platform Binance Savings.Any kyc Account
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B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
In the Adani-Hindenburg case, what is SEBI investigating.pptxAdani case
Adani SEBI investigation revealed that the latter had sought information from five foreign jurisdictions concerning the holdings of the firm’s foreign portfolio investors (FPIs) in relation to the alleged violations of the MPS Regulations. Nevertheless, the economic interest of the twelve FPIs based in tax haven jurisdictions still needs to be determined. The Adani Group firms classed these FPIs as public shareholders. According to Hindenburg, FPIs were used to get around regulatory standards.
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1. Method of Strategic Control
7th Session in MT5016
Biz Models for Hi-Tech Products
A/Prof Jeffrey Funk
Division of Engineering and Technology Management
National University of Singapore
Sources: (Teece, 1986; Trajtenberg, 1990; Pisano and Teece, 2007; Zuckerman, 2008)
2. Business Model
Value proposition: what to offer and how to
differentiate
Customer selection: whom to serve and not serve
Scope of activities: what activities to carry out and
what relationships to have
Value capture: dominant sources of revenue
Strategic control: how to sustain profitability (e.g.,
how to control architecture and standards)
3. Strategic Control
Methods to ensure profitability for a product/business
Some use the term “competitive advantage” (e.g.,
strategy class)
Both deal with factors that enable firms to survive
and achieve above average profitability
Survival is one outcome of good strategic control
Ability to be profitable over long period of time (one
measure is market capitalization) is stronger outcome
Some firms have higher profitability than others
Some industries have higher profitability than others
4. Shakeouts Often Occur in an Industry
Defining an industry is problematic
◦ Industry is defined by specific technology
◦ And a specific vertically disintegrated layer in the industry
But for a specific layer, number of suppliers often
rises initially, but then falls
◦ Initially it is new entrants copying previous entrants
◦ But then falls through exits, mergers, and acquisitions as
economies of scale in operations and R&D increase
How can your firm survive?
◦ This requires good method of strategic control
6. Change is More Rapid in Some Industries
Some industries experience more rapid change than
others
◦ Not just economies of scale drive shakeouts
◦ Also changes in technology
For example, Internet experienced very rapid changes
◦ Fiber optic cable
◦ Servers and routers
◦ Access devices: desk-top, laptop, and tablet computers; and
smart phones
◦ Software and content for these devices
Has caused large changes in leading firms
7. Rank Company Market
Capitalization
Type of Business
1 Apple $742 Billion Hardware
3 Google $375 Billion Search
4 Microsoft $360 Billion Software
21 Facebook $211 Billion Content
26 Oracle $192 Billion Software
30 Amazon $177 Billion Online Sales
37 Intel $171 Billion Integrated Circuits
39 Samsung $162 Billion Electronics
40 IBM $158 Billion Hardware
41 Tencent $156 Billion Internet content
43 Comcast $153 Billion Cable TV, content
51 Cisco $150 Billion Hardware
53 TMSC $122 Billion Integrated Circuits
57 Qualcomm $117 Billion Integrated Circuits
98 SAP $92 Billion Software
Top IT Firms Among Top 100 - Market Capitalization (17 Feb 2015)
http://www.corpo
rateinformation.c
om/Top-
100.aspx?topcase
=b%3b+http%3a
%2f%2fwww.lib.
uwo.ca%2fnews
%2fbusiness%2f
2011%2f04%2f0
8%2ftopglobal10
0companiesbyma
rketcapitalization.
html
8. Success of Billion Dollar Startups in Internet Also
Reflects Degree of Technology Change and Lack of
Strategic Control
Software (33)
e-commerce (25)
Consumer internet (22)
Financial services (11)
Hardware: phones,
wearable computing (10)
Healthcare (5)
Energy (3)
Entertainment and Games (2)
Aerospace and defense (1)
Real Estate (1)
Education (1)
Mostly Internet
related firms
with a few
exceptions
9. Lots of change is also evident
when we look at most popular
web sites
http://www.washingtonpost.com/news/the-
intersect/wp/2014/12/15/from-lycos-to-ask-
jeeves-to-facebook-tracking-the-20-most-
popular-web-sites-every-year-since-1996/
Only 6 of the most popular web sites in 2000
were still in top 20 in 2013
◦ And they aren’t very profitable, at least from
Internet activities
10.
11.
12. Changes in Leading Internet Firms
Initially first stop services for users were
popular
◦ Search, Portal
◦ Service provider
Specialty sites have become most visited
sites
◦ Facebook, eBay, Apple, Amazon, Wikimedia,
Ask, Weather Co, Walmart, Answers, Linkedin,
Glam Media
Only a few first stop services remain of
which one is very profitable
◦ Google
◦ Yahoo, Microsoft, AOL
13. Outline
Insufficient methods of strategic control
Intellectual Property and Appropriability
◦ Strong and Weak Appropriability
◦ Efforts to change appropriability
◦ Standards and appropriability
Complementary assets
◦ old emphasis: different functions
◦ new emphasis: industry architecture [includes level of vertical
(dis)integration]
Example of innovations in which complementary
assets/functions played critical role: EMI and the CAT
Scanner
IBM in PCs and Services
14. Insufficient Methods of Strategic
Control
Being a first entrant
◦ Many first entrants fail
Having a better product/service
◦ A better product can be copied
Having a better product development
process might be sufficient
◦ Japanese firms used their short product
development times (and superior manufacturing
systems) to create competitive advantage for
many years.
◦ But then competition changed…..
15. Being First Entrant is not Sufficient
EMI lost to GE, Siemens, and Philips in CAT
scanners
Bowmar lost to many in electronics calculators
Altair, IMS Associates, South West Technical,
Apple, Radio Shack, and Commodore lost to IBM
(now Lenovo), Dell, and HP in PCs
Xerox (PARC) and Apple invented graphical user
interface, but Microsoft Windows dominates
market (until recently)
Apple introduced first PDA (Newton) but Palm
became dominant player (at least until
emergence of “smart phones”)
16. Being First Entrant is not
Sufficient (2)
Netscape invented browser, but Microsoft
dominates it
Early MP3 suppliers lost to Apple’s iPod
Merck was pioneer in cholesterol lowering
drugs (Zocor)
◦ but Pfizer, a late entrant, secured a superior
market position with Lipitor
Excite and Lycos were first real search
engines, but they lost to Yahoo—
◦ and Yahoo lost to Google
17. Why is being first entrant insufficient?
They had reasonably good business models along
some elements
◦ Value proposition: what to offer and how to differentiate
◦ Customer selection: whom to serve and not serve
◦ Scope of activities: what activities and relationships to
have, i.e., level of vertical integration
◦ Value capture: how to make money
But changes occurred in these areas that prevent
them from succeeding (discussed in previous weeks)
In this session, we pull some of these ideas together
under the term method of strategic control
18. Why is being first entrant insufficient? (2)
Other firms may enter the market unless first
mover
◦ has strong natural protection against imitation and/or
strong intellectual property protection
◦ controls complementary assets or standards
◦ has advantages in scale or network effects
These new entrants may succeed
◦ for many reasons discussed in previous weeks
◦ in this session, we discuss other reasons under concept
of strategic control
Some new entrants provide same types of
products while other provide complementary
products (or have complementary assets)
19. Why is being first entrant insufficient? (3)
Few innovations provide value by themselves
every innovation requires complementary “assets”
- service, manufacturing, product development,
and distribution
many innovations require complementary
technologies such as components, equipment,
materials, etc.
network-based innovations, discussed in Week 6
(last week), require standards and complementary
products and services (hardware, software,
content, apps)
firms must think of entire value chain when
innovating
20. Insufficient Methods of Strategic
Control
Being a first entrant
◦ Many first entrants fail
Having a better product/service
◦ A better product can be copied
Having a better product development
process might be sufficient
◦ Japanese firms used their short product
development times (and superior manufacturing
systems) to create competitive advantage for
many years.
◦ But then competition changed…..
21. Better Product Development was
Insufficient for Japanese Firms
Other firms copied Japan’s product
development process (and manufacturing
methods)
Low-cost and efficient manufacturing
became available in China
◦ reducing Japan’s manufacturing advantages
22. Better Product Development was
Insufficient for Japanese Firms (2)
Entrepreneurial startups focused on
lucrative niches as vertical disintegration
emerged
◦ Placing vertically integrated Japanese firms at
a disadvantage
Japan only has advantages in some hi-
tech industries now
23. Outline
Insufficient methods of strategic control
Intellectual Property and Appropriability
◦ Strong and Weak Appropriability
◦ Efforts to change appropriability
◦ Standards and appropriability
Complementary assets
◦ old emphasis: different functions
◦ new emphasis: industry architecture [includes level of vertical
(dis)integration]
Example of innovations in which complementary
functions played critical role: EMI and the CAT
Scanner
IBM in PCs and Services
24. Appropriability
Dictionary’s definition of appropriate
◦ 1) suitable
◦ 2) to take or obtain possession (today’s focus)
Appropriability regime – a regime in which a firm is
able to capture profits from an innovation
◦ Nature of technology: economies of scale, network effects,
tacit vs. explicit knowledge, complexity
◦ Legal mechanisms of protection: patent (17 years in U.S.),
copyright, trademark, trade secret
◦ Control of industry architecture or complementary assets
Protecting vs. appropriating benefits
◦ You can protect your technology without appropriating the
benefits from it
25. Nature of Technology:
Economies of Scale
Some technologies benefit from
economies of scale more than do other
technologies
Manufacturing: chemicals benefit more
than does discrete-parts assembly
Software and other digital products: very
large economies of scale and thus winner
take all
◦ Products with small market shares have trouble
surviving
26. Nature of Technology:
Economies of Scale (2)
Economies of scale across different
markets: how many different markets can
your digital product be sold?
JK Rowling’s Harry Potter is sold in
◦ Books, Movies
◦ games across the world
Marvel Comics created more than 100
characters
◦ They profit from every movie made with these
characters
◦ Capitan America, Thor, Ant Man
27. Nature of Technology:
Economies of Scale (3)
While the Long Tail enables more niche
products, the Internet has enabled
creation of superstars and super products
◦ Top 10% of one publisher’s books generate
64% of costs but 126% of profits
◦ 102 of the 8 million digital musical tracks
generated almost 1/6 of the sales
Source: Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment)
28. Economies of Scale in R&D
(From Week 2)
R&D is a fixed cost in many industries
◦ Firms must spend a certain amount on R&D just to participate
in industry
Largest firms can spend more on R&D and thus
introduce more products and obtain higher shares
◦ Positive feedback between R&D, new products, and share
◦ Initially successful firms can spend more on R&D, which lead
to better products, higher profits, more money for R&D
Economies of scale in R&D causes a “shakeout” in the
industry: smaller firms are acquired or exit the industry
29. Economies of Scale in R&D (2)
Depends on the trajectory that the industry takes
Firms that follow the same trajectory as the industry
will benefit
◦ Same technologies, dominant design, standards or
architecture
◦ Firms that don’t, perhaps because the industry went in a
different direction than they did, will not benefit from the
economies of scale in R&D
◦ For example, what will be the trajectory for wearable
computing, what types of designs, what architecture?
30. Appropriability
Dictionary’s definition of appropriate
◦ 1) suitable
◦ 2) to take or obtain possession (today’s focus)
Appropriability regime – a regime in which a firm is
able to capture profits from an innovation
◦ Nature of technology: economies of scale, network effects,
tacit vs. explicit knowledge, complexity
◦ Legal mechanisms of protection: patent (17 years in U.S.),
copyright, trademark, trade secret
◦ Control of industry architecture or complementary assets
Protecting vs. appropriating benefits
◦ You can protect your technology without appropriating the
benefits from it
31. Legal Mechanims: (Relatively)
Strong/Tight Appropriability (1)
Software
◦ specific lines of codes and concepts can be
protected by both patents and copyrights in the
U.S. and Europe
◦ producers can also shield the source code from
competitors and users
◦ Exceptions: inexpensive copies are available for
many popular software programs (plus music,
video games, and movies) outside rich countries
Books
◦ Steven King and J.K. Rowling do not need to own
a printing press, publication house, or book
distributor to make money, but copies are made
32. Examples of (Relatively)
Strong/Tight Appropriability (2)
Chemicals, drugs, and materials
◦ Strong patent protection
◦ Difficult to re-engineer many of these products (e.g.,
Synthetic dyes, cellophane, photographic film)
For example Pfizer
◦ employs 330 attorneys for intellectual property protection
◦ won judgment of $56 million in 1983 involving doxycycline,
an orally administered antibiotic
◦ won $53 million in 1989 involving blood oxygenators
◦ won recent dismissal of patent infringement lawsuit
regarding COX-2 inhibitors and lawsuit alleging possible
suicidal effects of antidepressant Zoloft®.
33. Examples of (Relatively)
Strong/Tight Appropriability (3)
Mobile phone services in Singapore
Cable television in Singapore
Internet services in Singapore
Why do they have strong
appropriability?
How does this affect their behavior?
What might cause changes to this
strong appropriability?
34. Possible Changes to Monopolies
Young people don’t pay for mobile
phone services
◦ Instead they use free Wi-Fi
Young people don’t pay for cable TV
◦ Instead they watch free content on Internet
◦ Example are FB and YouTube, which profit
from advertising
Will young people pay for Internet as
free Wi-Fi increaes
35. Outline
Insufficient methods of strategic control
Intellectual Property and Appropriability
◦ Strong and Weak Appropriability
◦ Efforts to change appropriability
◦ Standards and appropriability
Complementary assets
◦ old emphasis: different functions
◦ new emphasis: industry architecture [includes level of vertical
(dis)integration]
Example of innovations in which complementary
functions played critical role: EMI and the CAT
Scanner
IBM in PCs and Services
37. First , What do Economists Think?
What economists think. Protection of IP
should balance:
◦ Benefits from spread of information
◦ Enable firms to recoup investments in R&D
Of course, firms are concerned about their
own profits and thus this determines
whether they want to strengthen or weaken
patent laws
38. Firms can try to strengthen
patent laws, other forms of IP
European and US firms strengthened IP
protection in late 1980s to compete better
against Japanese firms
E.g., European mobile phone firms did so
in GSM
U.S. and European firms are always
trying to do this with respect to China and
India
39. Firms may also try to Weaken
Appropriability Regimes (1)
Genes
◦ Possibility that firms might take
ownership of specific genes caused
concern in governments, drug companies,
and other organizations
◦ Why?
40. Firms may also try to Weaken
Appropriability Regimes (2)
Open Source
◦ make source code for computer programs
available to everyone so that other
developers can build upon on the code base
◦ reduces the profits for providers of basic
software such as operating systems
IBM supports Linux in order to weaken
Microsoft
41. Outline
Insufficient methods of strategic control
Intellectual Property and Appropriability
◦ Strong and Weak Appropriability
◦ Efforts to change appropriability
◦ Standards and appropriability
Complementary assets
◦ old emphasis: different functions
◦ new emphasis: industry architecture [includes level of vertical
(dis)integration]
Example of innovations in which complementary
functions played critical role: EMI and the CAT
Scanner
IBM in PCs and Services
42. Standards and Appropriability
Control of standards enable firms to make
above average profits
So competition between firms to make
your technology the standard
Due to big impact of standards on
competition, Most standard-setting bodies,
i.e., committees, insist that technology
providers be willing to
◦ license relevant IP before the standard-setting
body will adopt a standard that requires the
practice of technology
◦ license to all interested parties on reasonable
and non-discriminatory terms
43. Standards and Appropriability
But what
◦ should the royalty rates be?
◦ is reasonable and non-discriminatory?
Closed-door debates (and coalitions) in
standard setting committees often revolve
around these issues
For example,
◦ IEEE recently placed less emphasis on
Qualcomm’s technology until royalty rates are
reduced below 5% of phone price
◦ Stock price fell
http://www.wsj.com/articles/qualcomms-main-profit-driver-is-under-pressure-1428967051
44. Outline
Insufficient methods of strategic control
Intellectual Property and Appropriability
◦ Strong and Weak Appropriability
◦ Efforts to change appropriability
◦ Standards and appropriability
Complementary assets
◦ old emphasis: different functions
◦ new emphasis: industry architecture [includes level of vertical
(dis)integration]
Example of innovations in which complementary
functions played critical role: EMI and the CAT
Scanner
IBM in PCs and Services
45. Complementary Assets
What are complementary assets?
◦ any capabilities or assets needed to commercialize an innovation
manufacturing, marketing, sales, service, brand name, distribution
complementary products, any new technological capabilities that are needed
to commercialize the innovation
◦ accurate description of value chain/network can help us
understand these assets
In 1980s and 1990s focus (e.g., 1986 paper by David
Teece) was on these kinds of complementary assets:
◦ manufacturing
◦ marketing, sales
◦ service, maintenance
◦ development
46. Complementary Assets (2)
Japanese firms were the leaders in manufacturing and
David Teece argued that Japanese firms would thus
dominate all hi-tech industries
It didn’t happen………for a variety of reasons
As discussed in previous slides
◦ Emergence of vertical disintegration has enabled separation
between design, manufacturing and other functions, which
enables firms to outsource manufacturing and other functions
◦ Focus of strategic control has changed to interface standards
and industry architecture for many industries
47. Outline
Insufficient methods of strategic control
Intellectual Property and Appropriability
◦ Strong and Weak Appropriability
◦ Efforts to change appropriability
◦ Standards and appropriability
Complementary assets
◦ old emphasis: different functions
◦ new emphasis: industry architecture [includes level of vertical
(dis)integration]
Example of innovations in which complementary
functions played critical role: EMI and the CAT
Scanner
IBM in PCs and Services
48. Industry Architecture
Industry architectures characterize nature
and degree of specialization of firms and
the interfaces between their products
In addition to levels of vertical
(dis)integration, industry architecture also
◦ specifies interfaces
◦ who controls them
For a specific industry (for a final
product), we can very roughly distinguish
between
◦ modular industry architectures
◦ integral industry architectures
49. Industry Architecture, Modular Design,
and Profits to Component Suppliers (1)
Modular design often causes most profitable
firms to be suppliers of key components. For
example, in personal computers
◦ Microsoft and Intel are most profitable firms
◦ Much lower profits in disk drives, memory, displays
Why?
◦ Microsoft and to lesser extent Intel control interfaces
between operating systems, microprocessors, etc.
◦ Other suppliers of components do not control these
interfaces and thus there is excessive competition
and low profits
50. Rank Company Market Capitalization Type of Business
1 Apple $742 Billion Hardware
3 Google $375 Billion Search
4 Microsoft $360 Billion Software
21 Facebook $211 Billion Content
26 Oracle $192 Billion Software
30 Amazon $177 Billion Online Sales
37 Intel $171 Billion Integrated Circuits
39 Samsung $162 Billion Electronics
40 IBM $158 Billion Hardware
41 Tencent $156 Billion Internet content
43 Comcast $153 Billion Cable TV, content
51 Cisco $150 Billion Hardware
53 TMSC $122 Billion Integrated Circuits
57 Qualcomm $117 Billion Integrated Circuits
98 SAP $92 Billion Software
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Industry Architecture, Modular Design,
and Profits to Component Suppliers (2)
As noted last, week most of the profits are flowing to
modular components: exceptions are Apple, IBM, Samsung
51. Industry Architecture, Modular Design,
and Profits to Component Suppliers (3)
Apple is a big exception
◦ It uses proprietary OS, microprocessor design,
and app and user interface
Google offers “components” in the form
of Android OS and mobile ads
Will Android (or something else) grow
stronger and thus weaken Apple
Or will Apple grow stronger by
dominating other markets
52. Industry Architecture, Modular Design,
and Profits to Component Suppliers (4)
Who will dominate new markets such as
◦ Smart watches, other forms of wearable
computing
◦ Online TV
◦ Automated Vehicles
◦ Internet of Things
◦ Home Automation
◦ Smart televisions
53. Industry Architecture, Modular Design,
and Profits to Component Suppliers (4)
Other component suppliers also have big
profits
◦ Many materials such as chemicals, plastics, and
elastomers do not involve interface standards.
Similar story with drugs
◦ If the materials have a big impact on a system’s
performance or stand-alone benefits (e.g.,
drugs), profits flow to suppliers with best
materials or ones with lowest cost
Scale is a major issue
◦ Production cost is function of scale
◦ Output from R&D also depends on scale of R&D
Patent protection can raise profits
54. Industry Architecture, Modular Design,
and Profits to Component Suppliers (5)
Movies
◦ Motion picture studios are assemblers of various
resources required to produce a movie
actors and actresses
director and other specialists
finance, technology,
◦ Movies make money, but movie studios often do
not. Why?
rents flow to the bottleneck “modules,” or
“complementary assets” that are in short supply such as
star performers
How about Professors?
56. Industry Architecture, Integral
Design, and Profits to System
Suppliers (1)
Integral architectures shift the locus of
innovation and rent appropriation up to
system level
◦ “owner” of architecture has power to set
interface protocols and to decide which
innovations are adopted and which ones are not
innovators
◦ This bargaining power creates a source of
above average profits for the system owner and
below average profits for the component
supplier
57. Consider the Automobile
Industry
Cars are highly integral systems
E.g., BMW 325ix sedan consists of
interdependent sub-systems
◦ chassis, body panels
◦ suspension system, power train
◦ interior, dashboard
◦ that are not “plug compatible” with those of for
example, a Toyota Camry
58. Consider the Automobile
Industry (2)
Car companies tightly coordinate integration
across development of these systems
◦ It is a major driver of high-quality development
performance
◦ Tight integration limits opportunities for independent
innovation to occur
Japanese firms are leaders in automobiles
partly because of need for integral design
Japanese firms used to be leaders in other
products when the products required integral
design…..but as modular design emerged,
their advantages disappeared……..
60. Consider the Automobile
Industry (3)
BMW, Daimler, and Audii Purchase Nokia’s
Maps Business
Why? Because they think
◦ integral design is essential
◦ Nokia’s map business should not be acquired
by Google, Uber, or Apple
Could automobiles become a modular
business in which Google, Uber, or Apple
are dominant suppliers of driverless
vehicles?
◦ Uber just opened a research group in SG
http://www.wsj.com/articles/bmw-daimler-audi-agree-to-buy-nokias-here-maps-business-1438580698
61. Systems Integration
Complex and high-value products involve
system integration
◦ Boeing and Airbus in aircraft
◦ Alstom in trains and signaling systems
◦ Thales in flight simulators
◦ Ericsson in mobile communication systems
◦ Atkins in baggage handling systems
Although lots of vertical disintegration, the
interdependencies between sub-systems
require integral design and this enables
systems integrators to be very profitable
Source: Charting a Path Toward Integrated Solutions, Andrew Davies, Tim Brady
and Michael Hobday, Sloan Management Review, Spring 2006
62. Integral vs. Modular Design
When is integral design required and thus
profits will flow to system
suppliers/designers?
When does modular design work and thus
profits will flow to component
suppliers/designers?
This is one reason why these issues and
vertical (dis)integration were covered in
previous sessions
63. Outline
Insufficient methods of strategic control
Intellectual Property and Appropriability
◦ Strong and Weak Appropriability
◦ Efforts to change appropriability
◦ Standards and appropriability
Complementary assets
◦ old emphasis: different functions
◦ new emphasis: industry architecture [includes level of vertical
(dis)integration]
Example of innovations in which complementary
functions played critical role: EMI and the CAT
Scanner
IBM in PCs and Services
64. Context (1)
First commercially viable CAT (computer-
aided tomography) scanner invented by Sir
Godfrey Hounsfield in Hayes, United Kingdom
at EMI Central Research Laboratories
Hounsfield conceived his idea in 1967, and it
was publicly announced in 1972. Allan
McLeod Cormack of Tufts University in
Massachusetts independently invented a
similar process
Both Hounsfield and Cormack shared the
1979 Nobel Prize in Medicine
EMI was a fairly large “conglomerate” in the
1970s that did defense, health care, music
Source: Capturing Value Through Technology Strategy, Presentation by Ezra Zuckerman, 2008
65. Context (2): Key Complementary
Assets
Success in medical equipment requires
specialized sales, manufacturing, and
maintenance departments
EMI (record and defense company) did not
have these capabilities while Siemens,
Phillips, and GE did
None of these assets were externally
available in 1970s and service and sales
are still not available
Why still not available?
66. Implications for EMI
Should EMI commercialize alone or work with
leaders?
If the CT cannot be imitated or replicated, EMI
could do either. If it works with leaders, it would
have a lot of leverage
◦ Could threaten to go to Siemens (and vice versa)
◦ If also large market potential known in advance, GE
and Siemens would have to pay a great deal for
license
But if it can be imitated or replicated,
◦ it will be very hard for EMI to go it alone
◦ And less negotiating leverage with GE and Siemens
Let’s focus on negotiation with GE or Siemens
67. Capturing Value from
Negotiation: Challenges for EMI
Can they convince GE or Siemens that
they have rights to technology?
Can they write an effective license
without giving away the innovation?
Can they convince GE or Siemens that
the market will be big?
What percentage of profits should EMI
give to GE or Siemens in the license?
◦ Give too much, no profits
◦ Give too little, and GE has no incentive to
manufacture and sell product
68. Negotiation scenario
GE: Oh, you have a great innovation, huh?
Let’s see it.
EMI: Here it is.
GE: Oh, one of those 3-D X-Ray thingies!
We’ve been working on that for years! And we
expect to have one out within 12 months. Nice
try, record-company guys! But you should
leave medical equipment to the big boys
69. The Upshot
EMI had a great innovation, with temporary
uniqueness, and no real ability to capture
value through license
But they didn’t succeed in negotiations
Just went alone. But to capture value by
themselves, would need to:
1. Defend uniqueness as much as possible
2. Build (differentiated) complementary assets to
compete once uniqueness disappears.
But they didn’t do either:
◦ Slow to respond to patent infringement
◦ Rather than building complementary assets, they
just sold what they could
70. Too Much Value-Creation… ?
Ironic: EMI’s strategy made sense if
market turned out to be small
But massive demand increased likelihood
of entry and increased the importance of
complementary assets.
◦ Often hard to capture a bigger slice of big pies!
Should have switched to licensing once it
became a big market, and once they saw
so much entry.
◦ Big mistake was thinking they could go alone
◦ Could have built up business to a point where
they had a viable product, and then sold it to
GE
72. .. And then too little?
EMI was especially ill-prepared for shakeout.
Demand decelerates (4% growth from 376 ordered in
U.S. in 1976 to 389 in 1977; and then plummets (-35%
decline from to 251 in 1978).
– Note: By 1977, half of all U.S. 100+ bed hospitals had
already ordered a scanner.
Against large capacity, leads to intense price wars,
product and service competition; $99,000 scanners in
the market.
Shakeout: 12 companies drop out between 1976 and
1980, including Searle and Pfizer, and Technicare sells
to Johnson & Johnson (good example of economies of
scale in manufacturing, service, sales, and R&D)
73. Outline
Insufficient methods of strategic control
Intellectual Property and Appropriability
◦ Strong and Weak Appropriability
◦ Efforts to change appropriability
◦ Standards and appropriability
Complementary assets
◦ old emphasis: different functions
◦ new emphasis: industry architecture [includes level of vertical
(dis)integration]
Example of innovations in which complementary
functions played critical role: EMI and the CAT
Scanner
IBM in PCs and Services
74. Why did IBM have less success than
expected in PCs? (1)
A previous session (two weeks ago) focused on
◦ Network effects
◦ Open vs. closed strategy
◦ Compatibility vs. Performance
Degree of openness was critical
◦ IBM should have pursued more closed policy
◦ Apple should have pursued more open policy
This session (strategic control) tells a broader story
◦ IBM thought it controlled the:
critical complementary assets in functions (sales force, R&D)
IP/architecture (BIOS software and chip)
75. Personal Computers
Initial competition
◦ First PC released in 1975
◦ Apple, Commodore, Tandy released PCs in 1977
◦ Apple and CP/M compatible (OS) machines were leaders by
1978
◦ Apples machine used proprietary technology such as OS
IBM PC
◦ IBM introduced open-modular product in 1981 that used
external technology (e.g., Microsoft and Intel) that is
summarized on the next slide
76. Personal Computer: IBM’s PC
Operating System from Microsoft
Hybrid 8- and 16-bit microprocessor from Intel
◦ 8-bit capability provided compatibility with software written
for CP/M OS
◦ 16-bit capability enabled software superior to that used in
Apple computer: Word Perfect replaced Word Star in word
processing software, Lotus 1-2-3 replaced VisiCalc in
spreadsheets
But other manufacturers introduced clones
Microsoft (and Intel) became big winners through
control of key interfaces. Subsequently, they have
introduced products that are backward compatible
77. Personal Computers - Interpretation
Network Effects
◦ Increased in importance following release of IBM PC
Openness versus control
◦ Openness of IBM machine contributed to its success
◦ But openness enabled Microsoft, Intel to become big winners
◦ Lessons:
IBM should have pursued more closed policy
Apple should have pursued more open policy
Compatibility and performance
◦ IBM PC was not compatible with previous generations of
computers (but compatible with some previous PCs)
◦ But for many users IBM PC was superior in terms of
performance-price ratio to mainframe and mini-computers
78. This Session Gives us Another
Interpretation
Focusing on complementary assets and IP
IBM thought it controlled the:
◦ critical complementary assets in functions (sales
force, R&D)
◦ IP/architecture (BIOS software and chip)
79. Why did IBM have less success than
expected in PCs? (2)
But
◦ emergence of computer retail outlets for consumers
eliminated IBM’s advantages with sales force
◦ imitation of BIOS chip through reverse engineering
eliminated IBM’s advantage in software, enabled firms to
copy IBM, and led to emergence of IBM compatible clones
◦ Other open interfaces, i.e., modular design, enabled other
firms to use same external modules and caused R&D to
move from computer to components (microprocessor, hard
disk drive, operating systems, and application software)
80. Why was Lou Gerstner able to Make
IBM a Leader Again in the Late 1990s
IBM focused on a market segment in which integral
design was needed (in corporate information systems)
and IBM had strong complementary assets
◦ Computer and information services
Complementary assets
◦ Large installed base of hardware and software
◦ Large computer services business
◦ Better understanding of customer needs than any other firm
Lou Gerstner focused IBM on helping users integrate
and upgrade systems
IBM is one of the few computer incumbents to succeed
in the Internet
81. Conclusions (1)
Innovators, i.e., first entrants, often fail
Examples of reasons. They
◦ don’t have sufficient protection of IP
◦ can’t build up sufficient scale in R&D, manufacturing, etc.
◦ don’t have as much access to the relevant complementary
assets as do the incumbents/imitators
◦ Someone else controls the industry architecture
Firms must think of strategic control from the
beginning
◦ they can’t wait until after they have introduced their product
◦ and must keep thinking of strategic control
82. Conclusions (2)
Industry architectures are becoming more complex due
to increasing complexity of systems and vertical
disintegration
◦ This increases the opportunities to control an interface
Complementary assets are
◦ Becoming more available through vertical disintegration,
which increases the opportunities for outsourcing
◦ But also increases the complexity of the choices
What are the important complementary assets?
Which ones are tightly or freely available?
This is one reason why I want you to identify all the
collaborators and customers in the “value chain”
83. For Your Presentations
In addition to other aspects of Biz Model, tell me about
“Strategic control: how to sustain profitability”
◦ IP that is relevant to a specific innovation/technology
◦ complementary assets that are relevant to the specific
innovation/technology
◦ Control of industry architecture and who this favors
Editor's Notes
Drug companies published results in order to prevent a change in appropriability regime from development and commercialization to gene patenting