Business model innovation in the cloud v1
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Discussion deck for cloud and innovation session in SMU's Masters of Innovation Program.
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Business model innovation in the cloud v1
- 1. MI Feb 2014 Innovation & Digital Networks FACILITATOR Michael Netzley, PhD Academic Director, SMU ExD
- 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
- 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
- 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
- 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