Talk at LBi "What's next in UX design",February 2012 In the past designers made products useful, usable and delightful. If we adhered to these principles we believed products would sell. The business factors were mostly external to the product. Now the business model is an integral requirement that shapes digital design.  The consumer electronic products we used to own were the embodiment of access to entertainment, personal media and communication. The past decade witnessed the demise of products we own to the explosion of services, enabled by the internet, we use. Value perceptions are shifting from ownership towards seamless accessibility and habitual choice. Technology convergence affords ever new interactions between context, content and social relationships and consequently value perceptions are in perpetual flux. We've become aware, in retrospect, that business models driven by the internet and reacting to this flux seem to follow evolutionary tendencies.  - A look at a brief history of business models on the internet affected by evolutionary forces. - Is it all about the survival of the fittest? And are there successful niche opportunities? - Although evolution is inherently non-deterministic it doesn't harm to ask the question: what lies ahead and where are we going? Can products and services be designed to become more adaptive to evolutionary requirements? 

1. The rise of disruptive
digital business models.
Darwinism goes digital
– how will businesses
adapt or die?
The rise of disruptive digital business models & © digital wellbeing labs 2012

2. I am a designer
not
a business man
The rise of disruptive digital business models & © digital wellbeing labs 2012

3. For a
designer
33%
business development
models 33%
manufacture
used to be
simple 33%
retail
The rise of disruptive digital business models & © digital wellbeing labs 2012

4. Gillette - handle & razor blade
HP - printer & cartridges
Vodafone - phone & airtime
Adobe - reader & Indesign etc.
The rise of disruptive digital business models & © digital wellbeing labs 2012

5. Embodiment of ownership
access to entertainment, personal
media and communication
The rise of disruptive digital business models & © digital wellbeing labs 2012

6. The internet has enabled
radically new (disruptive)
b-models
eBay
Amazon
Google Adsense
Airbnb
The rise of disruptive digital business models & © digital wellbeing labs 2012

7. Demise of products we own
Explosion of services we use
Streetcar / Zipcar Spotify Ecomodo
The rise of disruptive digital business models & © digital wellbeing labs 2012

8. Shifting value perceptions
Towards seamless
accessibility
and habitual
choice
The rise of disruptive digital business models & © digital wellbeing labs 2012

9. What is more valuable?
access vs ownership
managing value perceptions
and creating mental models
The rise of disruptive digital business models & © digital wellbeing labs 2012

10. What is more valuable?
access vs ownership
The rise of disruptive digital business models & © digital wellbeing labs 2012

11. What is more valuable?
access vs ownership
http://arstechnica.com/microsoft/news/
2009/05/microsofts-next-apple-price-
attack-zune-pass-vs-itunes.ars
The rise of disruptive digital business models & © digital wellbeing labs 2012

12. The rise of disruptive digital business models & © digital wellbeing labs 2012

13. Shifting value expectations
The face of free
The rise of disruptive digital business models & © digital wellbeing labs 2012

14. Customer perception of value
own use
how much can pay per subscribe
one own and use
consume ?
The rise of disruptive digital business models & © digital wellbeing labs 2012

15. The perceived value of free
App usage patterns
The rise of disruptive digital business models & © digital wellbeing labs 2012

16. Technology convergence
affords ever new interactions
between context, content
and social relationships
consequently value
perceptions are in
perpetual flux.
The rise of disruptive digital business models & © digital wellbeing labs 2012

17. Consumer behaviour
continuous to change
Bandwidth
Accessibility
Trust
Customisation
The rise of disruptive digital business models & © digital wellbeing labs 2012

18. Business models driven by the
internet and reacting to this
flux seem to follow
evolutionary tendencies.
The rise of disruptive digital business models & © digital wellbeing labs 2012

19. useful
usable
delightful
The rise of disruptive digital business models & © digital wellbeing labs 2012

20. useful
usable
delightful
viable
The rise of disruptive digital business models & © digital wellbeing labs 2012

21. useful
usable
delightful
viable
Now the business model is an
integral requirement that
shapes digital design.
The rise of disruptive digital business models & © digital wellbeing labs 2012

22. Business Model integration
across all customer engagements
EIL
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The rise of disruptive digital business models & © digital wellbeing labs 2012

23. New UX design tools ?
business model canvas
www.businessmodelgeneration.com
The rise of disruptive digital business models & © digital wellbeing labs 2012

24. Ecology
Technology evolution
The rise of disruptive digital business models & © digital wellbeing labs 2012

25. Ecology
The rise of disruptive digital business models & © digital wellbeing labs 2012

26. Ecology
The rise of disruptive digital business models & © digital wellbeing labs 2012

27. Geography of Social Networks
The rise of disruptive digital business models & © digital wellbeing labs 2012

28. Network Economy
Value is added through social
networks operating on large
scales.
The rise of disruptive digital business models & © digital wellbeing labs 2012

29. Changing business models
societies & economies
hunter agrarian industrial information
gatherer
The rise of disruptive digital business models & © digital wellbeing labs 2012

30. Emergent species requires a new
ecology to operate in
The rise of disruptive digital business models & © digital wellbeing labs 2012

31. What does this map show?
The rise of disruptive digital business models & © digital wellbeing labs 2012

32. Coffee selling shops in London
The rise of disruptive digital business models & © digital wellbeing labs 2012

33. Coffee selling shops in London
The rise of disruptive digital business models & © digital wellbeing labs 2012

34. New business models driven by the internet
The rise of disruptive digital business models & © digital wellbeing labs 2012

35. Business opportunities
through cross-breeding
Bike repair + cafe
Bookstore + cafe
Bookstore + restaurant
Fashion + bar
Laundry + cafe
Bank + design shop
Bank + work lounge
Barber + nail studio + money transfer
Internet + cafe
The rise of disruptive digital business models & © digital wellbeing labs 2012

36. Introduction :
What is evolution ?
The rise of disruptive digital business models & © digital wellbeing labs 2012

37. Evolution
The process of
change over
generations.
The rise of disruptive digital business models & © digital wellbeing labs 2012

38. Evolution
The diversity of
models evolves
by means of
mutations,
genetic drift and
selection.
The rise of disruptive digital business models & © digital wellbeing labs 2012

39. Selection
1_hereditary materials, genes
2_produce more offspring than
the environment can support.
3_variations among offspring
through mutations or
reproduction
The rise of disruptive digital business models & © digital wellbeing labs 2012

40. Selection
1_design patterns
2_rapid growth
3_unexpected use cases and
mergers
The rise of disruptive digital business models & © digital wellbeing labs 2012

41. A brief history of business
models on the internet not
necessarily affected by
evolutionary forces.
The rise of disruptive digital business models & © digital wellbeing labs 2012

42. Period β
experiments and visions
1979 book Future Cities: Homes and Living into the 21st Century
The rise of disruptive digital business models & © digital wellbeing labs 2012

43. Period β
experiments and visions
The rise of disruptive digital business models & © digital wellbeing labs 2012

44. Period β
experiments and visions
Apple Newton
The rise of disruptive digital business models & © digital wellbeing labs 2012

45. Period 1
emulate existing business
models but apply to new
infrastructure.
_the World Wide Web
_Brochureware
The rise of disruptive digital business models & © digital wellbeing labs 2012

46. Period 1
The rise of disruptive digital business models & © digital wellbeing labs 2012

47. Web 1.0 vs CD-rom
When business models didn’t
transfer.
The rise of disruptive digital business models & © digital wellbeing labs 2012

48. Period 1
.com crash
equivalent to a meteorite
The rise of disruptive digital business models & © digital wellbeing labs 2012

49. Period 2
realisation of the network
emergence of social media.
_The semantic web
The rise of disruptive digital business models & © digital wellbeing labs 2012

50. abc
The rise of disruptive digital business models & © digital wellbeing labs 2012

51. Period 2
realisation of
the evolutionary
nature, similar
to the cambrian
explosion
The rise of disruptive digital business models & © digital wellbeing labs 2012

52. Evolution is driven by death
The rise of disruptive digital business models & © digital wellbeing labs 2012

53. Period 2
Disappearing geographical borders, shrinking distances, instant
communication lead to competition on a global scale.
The rise of disruptive digital business models & © digital wellbeing labs 2012

54. Period 3
Seamless, continuous,
integrated, fully mediated
The rise of disruptive digital business models & © digital wellbeing labs 2012

55. abc
The rise of disruptive digital business models & © digital wellbeing labs 2012

56. Period 3
NIN Nine Inch Nails
The rise of disruptive digital business models & © digital wellbeing labs 2012

57. Period 3
NIN Nine Inch Nails
TapTap music + game
revenge
Free $ 5.00
The rise of disruptive digital business models & © digital wellbeing labs 2012

58. Period 3
NIN Nine Inch Nails
NIN access music + social
app network
Free The rise of disruptive digital business models & © digital wellbeing labs 2012

59. Business models :
Oh no ... not today
The rise of disruptive digital business models & © digital wellbeing labs 2012

60. Evolving business models
Brokerage : charges a fee or Merchant model : curator Subscription
commission for each Virtual Merchant - e-Tailer online only eg amazon
Catalog Merchant Users are charged a periodic --
Click and Mortar (barns & Noble)
transaction it enables. Bit Vendor daily, monthly or annual -- fee
Marketplace Exchange
Buy / Sell Fullfillment Manufacturer (Direct) a to subscribe to a service. It is
Demand collection system (priceline)
Auction Broker
Transaction Broker - 3rd party payment fullfilment - Paypall company that creates a not uncommon for sites to
Distributor
Search Agent product or service to reach combine free content with
Virtual Market Place - hosting services at a price
buyers directly and thereby "premium"
Advertising: The advertising Content Services : - Netflix
compress the distribution Person-to-Person Networking Services
model works best when the Trust Services :
channel. Internet Services Providers : AOL
volume of viewer traffic is large Purchase -- the sale of a product in which the right of ownership is transferred to
the buyer.
or highly specialised. Lease Utility : pay as you go
License "on-demand" model is based on metering usage, or a "pay as you go" approach.
Portal Brand Integrated Content Unlike subscriber services, metered services are based on actual usage rates.
Classifieds
ISPs
Use Registration
Query-based Paid Placement -, automate what you see, when.
Contextual Advertising / Behavioral Marketing
Affiliate : passing traffic Metered Usage :
Metered Subscriptions : slashdot
Content-Targeted Advertising - Googe adsense Banner Exchange
Intromercials Pay-per-click
Ultramercials Revenue Sharing (iTunes click thru)
Infomediary: analytical data of Community : shared resources
Open Source - Instead of licensing code for a fee, open source relies on revenue
consumption or navigation generated from related services like systems integration, product support,
tutorials and user documentation.
habits and patterns Open Content - wikipedia
Public Broadcasting - user-supported model used by not-for-profit through
Advertising Networks voluntary donations.
Audience Measurement Services Social Networking Services - Social networking services can provide
Incentive Marketing - loyalty opportunities for contextual advertising and subscriptions for premium services.
Metamediary (FLickr, Friendsetr, Flickr)
The rise of disruptive digital business models & © digital wellbeing labs 2012

61. Evolving business models
designing customer engagement
Frequency - repeat use
Duration - dwell-time
creating a context of use to drive
towards embedded b-models
The rise of disruptive digital business models & © digital wellbeing labs 2012

62. Darwinism :
Is it all about the survival of
the fittest?
Are there successful niche
opportunities?
The rise of disruptive digital business models & © digital wellbeing labs 2012

63. Niches
One Million Dollar page
The rise of disruptive digital business models & © digital wellbeing labs 2012

64. Niches
I am rich App
Value?
The rise of disruptive digital business models & © digital wellbeing labs 2012

65. Niches
Red Paperclip - 14 barters
http://oneredpaperclip.blogspot.com/
The rise of disruptive digital business models & © digital wellbeing labs 2012

66. Niches
Red Paperclip - 14 barters
One red paper clip
Novelty pen
Ceramic doorknob
Camping stove
1,000-watt generator
Beer keg with neon sign
Snowmobile
Trip to Yakh
A large van
One recording contract
One year rent-free in Phoenix
Afternoon with Alice Cooper
Kiss Snow globe
Hollywood movie role
House in Kipling
The rise of disruptive digital business models & © digital wellbeing labs 2012

67. Game Changers
Square,
small transaction
processing services
The rise of disruptive digital business models & © digital wellbeing labs 2012

68. Game Changers
www.khanacademy.org
The rise of disruptive digital business models & © digital wellbeing labs 2012

69. Darwinism :
In a connected world ...
When ecologies are merged ...
The rise of disruptive digital business models & © digital wellbeing labs 2012

70. ecology
When foreign species are introduced in formerly closed ecologies, soon a
dominant species will outcompete the native species. On a global scale this
leads to fewer species, although ultimately from perspective of evolution this
competition will determine the best suited solution.
http://images3.realestate.co.nz/edi/genilnk001/photos/L11008-1.jpg
The rise of disruptive digital business models & © digital wellbeing labs 2012

71. Dying species
The rise of disruptive digital business models & © digital wellbeing labs 2012

72. Network effect instantly
distributes, recycles and
accelerates ideas.
No originality, reusing patterns
The rise of disruptive digital business models & © digital wellbeing labs 2012

73. Each ecological niche affords
optimised solution
Acceleration to optimised
solutions.
The rise of disruptive digital business models & © digital wellbeing labs 2012

74. Each ecological niche affords
optimised solution
Solutions are homologue
Troodon & Dinosauroid
The rise of disruptive digital business models & © digital wellbeing labs 2012

75. Are we still evolving at the same
speed?
1920 1930 1940 1950 1960 1970 1980 1990 2000
The rise of disruptive digital business models & © digital wellbeing labs 2012

76. Are we in a period of
optimisation & stagnation?
A picture of you now, and compared to styles 15
years back will not show many differences.
The rise of disruptive digital business models & © digital wellbeing labs 2012

77. Are we in a period of
optimisation & stagnation?
Acceleration of evolution of ideas leads to
converging solutions and stagnation of progress.
Speed of development has slowed and will only
be perceivable at an evolutionary pace in the
long term future.
The rise of disruptive digital business models & © digital wellbeing labs 2012

78. We seem to have gained more
choices
With increasingly less variety
The rise of disruptive digital business models & © digital wellbeing labs 2012

79. Network effect instantly
distributes, recycles and
accelerates ideas.
No originality, reusing patterns
Should we become ignorant
again?
The rise of disruptive digital business models & © digital wellbeing labs 2012

80. Evolution is inherently
non-deterministic
three questions
The rise of disruptive digital business models & © digital wellbeing labs 2012

81. three questions
_What b-models are about to emerge?
_How can products and services be
designed to become more adaptive to
evolutionary forces ?
_Will evolutionary business models kill
the designer?
The rise of disruptive digital business models & © digital wellbeing labs 2012

82. Thank You!
Alexander Grünsteidl
alexander @ method.com
www.method.com
www.digitalwellbeinglabs.com
The rise of disruptive digital business models & © digital wellbeing labs 2012