1) Irene C L Ng is a professor of marketing and service systems at the University of Warwick who studies new business models in the digital ecosystem. 2) She discusses how value is created contextually through the competency and availability of offerings to enable resources for customers. Ownership is no longer the only way for customers to access value from products and services. 3) Ng analyzes how business models must change in the digital economy, using the music industry as an example, to remain tightly coupled with customer consumption contexts and experience spaces where value is created.

1. Irene C L Ng
Professor of Marketing & Service Systems, WMG
Director, International Institute of Product & Service
Innovation
Adjunct Professor, NUS ISS
New Business Models in the
Digital Ecosystem
irene.ng@warwick.ac.uk
@ireneclng
http://uk.linkedin.com/in/ireneclng
bit.ly/vcssblog
www.warwick.ac.uk/go/sswmg
www.ireneng.com

2. Copyright Irene Ng, 2012. All rights reserved.
Value was exchange (what I got for what I gave)
$$$
15 January 2013

3. Copyright Irene Ng, 2012. All rights reserved.
Value-in use
We buy because of the service of the object, even
if it was an emotional ‘service’
15 January 2013

4. Copyright Irene Ng, 2012. All rights reserved.
Value created is Contextual. Resources are
therefore also Contextual.
This camera is
available so it
is a resource in
context
This
camera is
not
Things become more valuable in context because they
enable resources for value creation
Value is created
in CONTEXT
15 January 2013

5. Copyright Irene Ng, 2012. All rights reserved.
Two functionally the SAME cameras but not the
same value for the user in context. Because one
camera is less competent in context, one is a
lesser service avatar (or is just simply not
around!)
COMPETENCY OF OFFERING IN CONTEXT
IS KEY TO NEW MARKETS
Why context is important
15 January 2013

6. Copyright Irene Ng, 2012. All rights reserved.
Ownership/Possession was the only way to
get the ‘service’ of an object
• Previously, the only route to service/outcomes was
through ownership e.g. music CDs
• Firms have talked, promoted and sold on the basis of
benefit and use of things but benefit (outcomes) and
use is not aligned to revenues – we still only buy
ownership and not outcomes
• But outcomes/benefits come only in the context of use
and experience
• If firms found a way to serve contexts, ownership may
not be the dominant biz model
• Case study: Music
15 January 2013

7. WMG
THE BUSINESS MODEL- traditional loosely coupled
system and relationship with the market and customer
1/15/13
33
Value
Creation
(Experience)
Value
prop
(Offering)
Valuecapture
(Revenuestreams)
Customer
Consumption
space (in context)
The Firm
Design, create,
deliver (channel)
space
Exchange
space
Supply Chain
Marketing
Manufacturing
Strategy
HRM, Finance
Consumption culture
Consumer research
The market

8. WMG
THE BUSINESS MODEL- digital economy
1/15/13
33
Value
Creation
(Experience)
Value
prop
(Offering)
Valuecapture
(Revenuestreams)
Customer
Design, Create,
deliver (channel)
space
Exchange
space
Tightly coupled service
systems
(Change one, change all)
The market
The Firm
Consumption
space (in context)

9. WMG
THE BUSINESS MODEL- e.g. Music
1/15/13
33
Value
Creation
(Experience)
Value
prop
(Offering)
Valuecapture
(Revenuestreams)
EMI, Sony BMG
Customer
MUSIC
ENJOYING
MUSIC
Money fr access e.g.
spotify
Money fr ownership
e.g. CD
Money fr eyeballs
The Firm
Design,
Create, deliver
(channel)
space
CHANGES
CHANGES
CHANGES
The market
The Firm

10. WMG
Value Constellation and potential
disruption
1/15/13
33
Value
Creation
(Experience)
Value
prop
(Offering)
Valuecapture
(Revenuestreams)
EMI, Sony BMG
Customer
MUSIC
ENJOYING
MUSIC
Money fr access e.g.
spotify
Money fr ownership
e.g. CD
Money fr eyeballs
The Firm
Design,
Create, deliver
(channel)
space
CHANGES
CHANGES
CHANGES
The market
The Firm
Value
Creation
(Experience)
Value
Creation
(Experience)
Connected
Products

11. WMG
THE BUSINESS MODEL to the
Economic model
1/15/13
33
Value
Creation
(Experience)
Value
prop
(Offering)
Valuecapture
(Revenuestreams)
EMI, Sony BMG
Customer
MUSIC
ENJOYING
MUSIC
Tightly coupled BUT non-
linear or sequential
Relationship with the
customer changes
Where market exchanges
occur could also change
The market
The Firm
Value
Creation
(Experience)
Value
Creation
(Experience)
Connected
Products

12. WMG
THE BUSINESS MODEL- implications
on material products
1/15/13
33
Value
Creation
(Experience)
Value
prop
(Offering)
Customer
The nature of
the offering
Experience in
high variety of
contexts
Design,
Create,
deliver space
CHANGES
The Firm
The
Incomplete
Product
Completed in the
'high contextual
variety' customer
space by
(A) digital interface
(B) 3D printing

13. Serving Contexts (the kinetic)
• Current market platforms - tablets and mobiles
• More platforms for context-based markets now
need to be created e.g. Internet-of-Things at
home, in buildings
• A revolution in the way we think about
manufacturing for contexts - modularity and
boundaries
• Fragmentation of the material from the information
• boundary of customer resource, material resource,
information resource in value creation.material

14. Copyright Irene Ng, 2012. All rights reserved.
Future innovation
• Separate user experiences come together, new
affordances
• exchanges held at different time/space – pervasive
platforms
• Industry verticals become members of same
constellation – land grab/jumping verticals for revenues
• Combinatorial innovation – ‘mashing’ software, hardware,
materials
• Incomplete products, constrained serendipity (emergent
use, emergent contexts)
• Decomposition, modularity, user-experience, business
model – this is a new world for all of us
20 February 2013

15. Markets are forming at where service creates
most wealth – in context
•Serving contexts demand a rethink
about how we research, design, innovate
•Question for every offering: what
contexts do you serve (value creation),
where is exchange (value capture) and
how do you design for contextual
experience (value prop) i.e. how should
you innovate your business model

16. The new world
Collapse of boundaries
Changes in industry dynamics - giant killers
abound
Green field for all nations
Connectivity is direct driver of wealth creation
(jobs, markets)
Innovation and Speed will prevail

17. The new world
Disruption is only enabled by
technology. It happens because of
the market and customer adoption
and when lived lives are improved
from it. Technology does not
disrupt businesses. People do.

18. Copyright Irene Ng, 2012. All rights reserved.
For more information.....
Read the book!
Value & Worth: Creating New
Markets in the Digital
Economy
- Now out on Amazon Kindle
and PDF
15 January 2013
*
www.valueandmarkets.com

19. Multi-sided Market
Platform for New
Economic and
Business Models
http://www.hubofallthings.org

20. Copyright Irene Ng, 2012. All rights reserved.
Thank you
15 January 2013