The document discusses the transition to a global digital network era driven by advances in information technology. Key developments include the rise of social media platforms with hundreds of millions of users, the transformation of industries like automobiles which now have computers and connectivity, and the evolution of the music business from physical to digital formats. It argues that businesses must shift from vertical integration to virtual integration based on relationships across networks to succeed in this new environment.

1. Network Era: Opportunities and ChallengesProfessor N. VenkatVenkatramanDavid J. McGrath Jr. Professor of ManagementBoston University School of Managementvenkat@bu.eduMay 10, 2010

2. Overview(c) N. Venkatraman [2010]2

3. Imagine life without……(c) N. Venkatraman [2010]3

4. Towards Network Era:A Brief History(c) N. Venkatraman [2010]41,900,000,0004,400,000,000*March 31, 2010

5. A brief history… (continued):YouTube and Hulu generate 2X traffic than the entire Internet in 2000(c) N. Venkatraman [2010]5Source: Cisco

6. And there’s Facebook….(c) N. Venkatraman [2010]6400 million active users

7. 70% outside USA

8. 100 Million access using mobile devices

9. 50% log on in any given day

10. 500 billion minutes per monthAnd.. there are tweets…(c) N. Venkatraman [2010]7*May 1, 2010

11. Tweets seem to be purpose-driven(c) N. Venkatraman [2010]8Link

12. From 1995 till today..Developments in information technology have been dramatic and significantShifts in management practices have been incremental and slowA new business infrastructure is emergingGlobalDigitalConnected(c) N. Venkatraman [2010]9

13. Towards Global Digital Network Era….(c) N. Venkatraman [2010]10

14. Information technology is impacting products..(c) N. Venkatraman [2010]11

15. Products linked on all-IP infrastructureTowards40-50 billiondevices12(c) N. Venkatraman [2010]

16. Impacting next generation business processes..(c) N. Venkatraman [2010]13video

17. Processes designed for the global All-IP infrastructureNext-generationprocesses14(c) N. Venkatraman [2010]

18. ….and service delivery…(c) N. Venkatraman [2010]15

19. Services delivered on the All-IP infrastructureNext-generationservices16(c) N. Venkatraman [2010]

20. The new business infrastructure….(c) N. Venkatraman [2010]17TransactInnovateLiveLearnPlayWorkConnectConsume

21. And.. It is accelerating compared to other technologies in the past….(c) N. Venkatraman [2010]18Source: IBM

22. (c) N. Venkatraman [2010]19How will IT-enabled capabilities impact business sectors?How should we frame strategies for the network era? ?

23. Sketching out the possibilities…(c) N. Venkatraman [2010]IBM, 200520

24. Sketching out the possibilities…(c) N. Venkatraman [2010]21IBM, 2005

25. Sketching out the possibilities…(c) N. Venkatraman [2010]22IBM, 2005

26. Sketching out the possibilities…(c) N. Venkatraman [2010]23IBM, 2005

27. Sketching out the possibilities…(c) N. Venkatraman [2010]IBM, 200524

28. Sketching out the possibilities…(c) N. Venkatraman [2010]IBM, 200525

29. Sketching out the possibilities…(c) N. Venkatraman [2010]IBM, 200526

30. Sketching out the possibilities…(c) N. Venkatraman [2010]IBM, 200527

31. The World is ‘Flat’ but Connected…(c) N. Venkatraman [2010]28And…connected

32. Let us introduce three technology laws(c) N. Venkatraman [2010]29

33. And take them together..(c) N. Venkatraman [2010]“Computer”“Connectivity”“Cloud”30

34. A working framework to understand how IT impacts business…(c) N. Venkatraman [2010]BandwidthLawMetcalfe’sLawTechnologyDomainMoore’sLawProcessProductServiceBusinessDomain31

35. Overview(c) N. Venkatraman [2010]32

36. Setting 1: Computer Industry(c) N. Venkatraman [2010]33

37. Computer industry [circa 1980]Source: Bill Gates Testimony Source: Bill Gates Testimony34(c) N. Venkatraman [2010]

38. Computer industry [circa 2002]Source: Bill Gates Testimony 35(c) N. Venkatraman [2010]

39. Key ideas…Vertical integration giving way to horizontal layers of specialized capabilitiesWhen and how do new layers emerge? When do layers disappear or morph?Can you disrupt an industry by introducing a new layer where you hold an advantage?Winning requires dominating a layer and connecting across layersWhat’s your pattern of connections across the layers?How do your competitors connect across the layers?36(c) N. Venkatraman [2010]

40. Setting 2: Automotive(c) N. Venkatraman [2010]37

41. GM OnStar: The Beginning…(c) N. Venkatraman [2010]381995

42. Automobile– “computers on wheels”(c) N. Venkatraman [2010]39‘Black Box’Lines of Software Code

43. Automobile– “computers on wheels”(c) N. Venkatraman [2010]40“Cost of electronicsin cars” (~20--50%)

44. GM OnStar & Telematics(c) N. Venkatraman [2010]41

45. GM OnStar(c) N. Venkatraman [2010]42

46. Real-time Interactions for Safety and Convenience(c) N. Venkatraman [2010]432,600 Automatic Crash Responses

47. 10,400 Emergency Services

48. 6,000 Good Samaritan Calls

49. 600 Stolen Vehicle Assistance

50. 62,700 Remote Door Unlocks

51. 54,500 Remote Vehicle Diagnostics

52. 3.4 million OnStar Diagnostics E-mails Sent

53. 30,200 Roadside Assistance Calls

54. 961,000 Turn-by-Turn Routes Delivered

55. 29 million OnStar Hands-Free Calling MinutesMonthly data as of 2008Source: OnStar

56. Ford (and Microsoft): Sync(c) N. Venkatraman [2010]44In-Car WiFi(2010)

57. My Ford Touch @ CES 2010(c) N. Venkatraman [2010]45

58. Further Transformations with Alternative Energy Sources(c) N. Venkatraman [2010]46Source: GM

59. Setting 3: Music  Mobile Phones & ?(c) N. Venkatraman [2010]47

60. Music in the analog era….CustomerNetworkAlbums and tapes borrowed withinfriends communities.ChannelSold in Physical outlets (general and specialty) & Mail-order Catalogs Content(music)Albums offered by record labelsin standard formats (33-45-78 rpm; & cassette tapes)HardwareTurntables, cassette players, tape decks, Sony Walkman etc.(c) N. Venkatraman [2010]48

61. Music in the digital era…..Precursor to today’s social network?CustomerNetworkP2P file sharing; personal CD burning and sharing with friends ChannelSold in stores (CDs); Rise of OnlinedownloadsDigital Rights ManagementApple Fairplay; Windows Play For SureContent(music)Major lables plus rise of independent labels posting music online SoftwareMP3; itunes; Windows Media; Quicktime; Realone etc.HardwareDigital audio players(c) N. Venkatraman [2010]49

62. Role of iTunes in the music ecosystem(c) N. Venkatraman [2010]50

63. Apple’s orchestration of the music ecosystem(c) N. Venkatraman [2010]51ComplementorNetworksCustomerNetworksIndirectiPodAdoptionContentAvailabilityDirect