The document discusses how cloud computing and digital networks can drive business model innovation. It introduces a cloud enablement framework that categorizes companies based on how their use of cloud impacts value propositions and value chains. Companies are classified as optimizers, innovators, or disruptors. Optimizers use cloud to incrementally enhance customer value, innovators significantly increase customer value through new revenue streams, and disruptors invent new value propositions by creating customer needs they were unaware of. Examples of each category are provided.

1. MI Feb 2014
Innovation & Digital Networks
FACILITATOR
Michael Netzley, PhD
Academic Director, SMU ExD

2. Weekend
Objectives

3. What You Can Expect
• Explore connection between innovation & digital networks
• Understand it is all about networks
• Discuss how connecting via the cloud invites business process
innovations
• See how connecting to the human cloud can benefit idea
generation and resource gathering
• Learn about crowdsourcing, pro and con
• Reflect on how these ideas can apply to business today.
Please
create
a
personal
Twi0er
account
for
Saturday

4. About The Prof
Michael Netzley

5. Michael Netzley, PhD
• Academic Director, SMU Executive
Development
• Daddy with 3 daughters & 1 son
• SMU since 2002
• Champion’s Award 2011, Innovative
Course Design and Delivery
• Research Fellow, Society for New
Communication Research
• Visiting positions in Argentina, Berlin,
Finland, Slovenia, and Japan
• Clients include: Unilever, IBM, TCS, IHG,
3M, Singapore Airline, UOB, BNP Paribas,
CPF, MFA, MoE and CARE.org

6. Opportunity

7. DARPA Red Balloon Challenge
• 2009 challenge on wide
area collaboration
• Defense Advance
Research Project
Agency
• $40,000 prize to be first
at finding 10 balloons
around the United
States
• How long did the
winning team need to
find them?

8. FEWER
THAN
NINE
HOURS

9. How Did the MIT Team Win?
• Shared the reward
– $2000 correct
coordinates
– $1000 for whomever
invited them
– $500 for inviting the
inviter
– $250 for inviting them
– And so on…
• Created sustained activity
on Twitter (recursive
incentive)
• Data mining via social
media
Summary
Ar)cle

10. Theoretical Underpinnings
Multi-level Marketing
Query Incentive Network
• Participants are
compensated both for the
sales they make, and for
the sales of any
additional salespeople
downline they recruit.
• Pyramid scheme can be
an example
• Avon products are an
early business example
• Users can post a
question or request,
along with an incentive
for answering, which then
spreads widely through
the network.
• Games online can be a
good example
• Kleinberg & Raghavan,
Paper

11. Created a Recursive Incentive
Structure
• Jargon for “teamwork”
• People cooperate toward
a shared goal and
subsequently are
rewarded for the impact
of their contribution(s).
• Allowed anyone –
anywhere to play, leading
to a final team of 5000
helpers

12. Quality Control Tactics
1. Multiple entries
indicating same
coordinates were likely
accurate
2. Check IP address of
submitter & compare to
location claim
3. Examine photos
accompanying
submission for DARPA
logos

13. What Was The Challenge?
• Competition to win
• Large scale, geographically dispersed information
• Nontraditional problem requiring nontraditional
solution
InnovaAve
SoluAon

14. DARPA Applied

15. MyHeartMap Challenge: Penn Med
• Contest for team/individual to report the location
of a maximum number of Automatic External
Defibrillators (AED)
• $10,000 prize of 750 AEDs reported in total, or
500 reported by a single entry; also 200 “golden”
AEDs which earn the submitting team $50
• January 31 – March 13, 2012
• More than 1500 AEDs submitted by 300+ teams
• 2 $9000 prizes to two people submitting 400+
each
• Database given to the public and 911

16. We
Live
in
Networks

17. Expands
Your
Resource
Base

18. Why Now?

23. Digital Technology
Connecting the Globalizing World

24. Space of Places

25. Flows: Information & People

26. Misdirect: Networks, not Information
• The defining characteristic of the modern
age is networks
– All societies have had information (e.g., Ancient
Athens and Rome)
– Digital networks are unique to the current age
– Networks, for the first time, can be a sustained
structure for organizing people and work
Source:
Manuel
Castells

27. Cloud &
Salesforce.com
Driving
Business
Model
InnovaAon
with
the
Power
of
Cloud

28. What
is
Cloud
Computing?
Plain
English:
“storing
and
accessing
data
and
programs
over
the
Internet
instead
of
your
computer's
hard
drive.”
Source:
PC
Magazine
Complicated:
“A
pay-­‐per-­‐use
consumption
and
delivery
model
that
enables
real-­‐time
delivery
of
configurable
computing
resources
( for
example,
networks,
servers,
storage,
applications,
services).
Typically,
these
are
highly
scalable
resources
delivered
over
the
Internet
to
multiple
companies,
which
pay
only
for
what
they
use.”
Source:
IBM

29. Examples

30. 3
Stats
About
Cloud

31. Two
out
of
three
executives
believe
that
cloud-­‐
based
collaboration
tools
accelerate
business
results
(this
number
increases
to
82%
when
we
speak
to
executives
who
are
leading
adopters
of
cloud
solutions)
• Source:
Forbes
Insights
Report

32. By
2016,
the
bulk
of
IT
spend
is
expected
to
be
on
cloud
computing,
and
by
2017
nearly
half
of
the
MNCs
are
expected
to
have
hybrid
cloud
deployments.
• Gartner
Symposium,
2013,
Goa
India

33. Global
cloud
computing
market
is
forecast
to
grow
22%
annually
to
US$241
billion
by
2020

34. Cloud
can
help
businesses
exploit
capabilities
born
out
of
digital
and
mobile
transformations
to
better
meet
customers’
needs
and
drive
growth

35. Relatively
few
organizations
today
actively
use
Cloud
to
drive
business
model
innovation
Potential
remains
huge,
particularly
in
transforming
product
and
service
development,
and
reforming
customer
relationships

36. Cloud
Enablement
Framework

37. Cloud
Enablement
Framework
• Framework
created
using
extent
to
which
an
organization’s
use
of
cloud
can
affect
value
propositions
and
value
chains
as
dimensions
• Identifies
impact
of
organization’s
cloud-­‐enabled
business
strategy
• Businesses
should
determine
place
in
the
Framework
based
on
the
their
strategy,
risk
profile,
competitive
landscape,
among
others

38. Cloud
Enablement
Framework
-­‐
Optimizers
• Optimizers
use
cloud
to
incrementally
enhance
customer
value
propositions
while
improving
organizational
efficiency
• Deepen
customer
relationships
without
risk
of
potential
failure
in
radical
business
models
•
North
Carolina
State
University
moved
to
cloud-­‐based
infrastructure.
Benefits:
– Increased
flexibility
to
shift
computing
capacity
between
sites
– Ability
to
scale
up
to
match
increasing
enrolment
– Ability
to
share
resources
with
students
throughout
the
State

39. Cloud
Enablement
Framework
-­‐
Innovators
• Use
cloud
to
significantly
increase
customer
value
propositions
,
resulting
in
new
revenue
streams
• Example:
3M
Visual
Attention
Service.
Transformed
product
development
value
chain
by
integrating
a
global
network
of
designers.
Benefits:
– Highly
scalable
environment
– Low
up-­‐front
investment
and
a
flexible
pay-­‐as-­‐you-­‐go
pricing
model

40. Cloud
Enablement
Framework
-­‐
Disruptors
• Invent
completely
different
value
propositions
&
create
new
“needs”,
providing
customers
what
they
weren’t
even
aware
they
wanted
or
needed
• Greater
risk,
but
possibly
greater
reward
• Example:
Comcast
Xcalibur’s
cloud-­‐
based
platform
created
different
customer
value
proposition
by
shifting
the
ability
to
control
content
into
the
cloud.
Benefits:
– Delivering
content
to
more
devices
and
meeting
customer
demands
– Creating
new
apps
and
changing
User
Interface
faster
and
more
easily

41. What
are
their
motivations?
To
improve
business
capabilities
and
also
internal
efficiencies

42. Optimize,
Innovate,
or
Disrupt?
• Organizations
should
evaluate
opportunities
available
to
harness
the
power
of
cloud
-­‐
as
optimizer,
innovator,
or
disruptor
–
and
pick
the
opportunity
suited
to
their
particular
situation
Optimizer
Innovator
Disruptor

43. Salesforce.com
Case
Study

44. Group Discussion Questions
(30 minutes)
1. Who were the noncustomers of the
noncustomers of the traditional CRM
software industry? What were the
biggest blocks to buyer utility in
traditional CRM offerings?
2. Which one(s) of the six paths did
Salesforce look across to create new
market space? Can you draw the value
curve of Salesforce’s initial on-demand
CRM offering in the early 2000s versus
traditional CRM vendors?
3. How was Salesforce able to sustain its
market leadership in the on-demand
CRM market vis-à-vis both large players
and new entrants for a decade?

45. Lessons

46. What
Does
Cloud
Do?
Source:
Forbes
Insights

47. Cloud
attributes
helping
to
drive
business
model
innovation

48. Cloud’s
Business
Enablers
COST
FELXIBILITY
BUSINESS
SCALABILITY
• Key
reason
for
executives
to
• Cloud
offers
more
than
just
IT
consider
Cloud
adoption
• Cloud
can
help
organizations
reduce
fixed
IT
costs
by
enabling
a
pay-­‐per-­‐use
model.
scalability
• Companies
can
benefit
from
economies
of
scale
without
achieving
large
volumes
on
their
own

49. Cloud’s
Business
Enablers
MARKET
ADAPTABILITY
• Ability
to
adjust
to
rapidly
changing
market
demands
is
key
competitive
advantage
MASKED
COMPLEXITY
• Business
can
mask
operational
intricacies
from
end
users
• Enables
product
and
service
• Business
can
adjust
processes,
sophistication
without
products
and
services
quickly,
increasing
level
of
user
enabling
faster
time
to
market
knowledge
necessary

50. Cloud’s
Business
Enablers
CONTENT
DRIVEN
VARIABILITY
• Product
and
service
customization
enabled
because
of
Cloud’s
expanded
computing
power
and
capacity
• Business
can
offer
consumers
ECOSYSEM
CONNECTIVITY
• Organizations
can
collaborate
with
partners
and
customers,
leading
to
personalized
and
context-­‐relevant
productivity
improvements
experiences
and
innovation

51. Cloud-­‐enabled
Innovation
Organizations
using
cloud
for
• additional
revenue
streams
by
changing
customer
value
propositions
• changing
organization
and
industry
value
chains

52. Cloud-­‐enabled
Innovation
–
Customer
Value
Propositions
• Enhance
–
improve
products,
services,
and
customer
experiences
• Extend
–
create
new
products,
services
&
use
new
channels
or
payment
methods
• Invent
–
create
new
“need”
and
own
the
market
Retain
current
and
attract
new
customers
Attract
existing
or
adjacent
customer
segments
Attract
new
customer
segments
Incremental
Revenue
Significant
new
revenues
Entirely
new
revenue
streams

53. Cloud-­‐enabled
innovation
–
Value
Chains
• Improve
–
organizations
maintain
their
place
in
existing
value
chain
through
increased
efficiency
and
improved
ability
to
partner,
source
and
collaborate
• Transform
–
businesses
can
change
role
within
their
industries
or
enter
a
different
industry
• Create
–
businesses
can
create
radically
change
industry
dynamics

54. 1.
Establish
shared
responsibility
for
cloud
strategy
and
governance
across
the
business
and
IT
to
help
ensure
cloud
remains
a
top
business
priority
2.
Look
within
and
beyond
your
organization’s
borders
to
maximize
the
value
derived
from
cloud
adoption

55. 3.
Identify
whether
your
organization
seeks
to
be
an
optimizer,
innovator
or
disruptor
and
use
cloud
to
innovate
your
business
model
to
realize
that
potential
– Consider
organizational
and
market
factors
– Where
is
your
company
positioned
in
Cloud
Enablement
Framework
today?
– Where
should
your
company
be
in
the
next
3-­‐5
years?
– Build
capabilities
to
close
the
gap
between
your
current
and
future
cloud
position/maintain
your
current
position

56. Thank
You
To:
• IBM,
The
Power
of
Cloud
• Forbes
Insight,
Collaborating
in
the
Cloud
• Gartner,
Symposium
• Akanksha
Rath