digital business models

1. The University of Warwick
Facts and ................................. Figures
 Established 1965  Undergraduates 12,979
 Postgraduates 10,441
 League table positions
– Times and Sunday Times (2012) - 8th
 International students 6,411
– Guardian (2012 guide) – 6th  International students 27%
– Independent (2012 guide) - 8th
– RAE 2008 – 7th overall
 Total staff 4,912
– QS* World University Ranking (2011) – 50th  Academic staff 687
– We aimed to be in the top 50 by 2015
 International staff 25%
 International working  Turnover £419m
– Formal working relationships with Boston  Campus size 292 hectares
University, Monash University, IIT
Kharagpur, Jawaharlal Nehru University  Academic departments 28
and Nanyang Technological University
 Research centres 48
 Overseas alumni 44,194
* Quacquarelli Symonds Ltd

2. WMG Research and Development
Centres
International International Automotive
Manufacturing Centre
Research Centre
Engineering
International Digital Management Building
Laboratory (IDL)

3. New Centres
International Institute for Product and Service Innovation (IIPSI)

4. Global Partners
4

5. International Digital Laboratory
Product Life-Cycle Management
Robotics
Digital Experiential Engineering
Manufacturing Product Evaluation Technologies
Embedded Systems
Simulation and Modelling
Cloud Computing Security
Privacy Enhancing Technologies
Institute for
Data Loss Monitoring
e-Security
Vulnerability Research
Trust Management
Health Informatics
e-Health
Institute of
Neural Engineering
Digital Healthcare
Biomedical Engineering
Virtual Reality Medical Training
Visualisation
Digital
Digital Media
Technologies
e-Business

6. International Institute of Product
& Service Innovation (IIPSI)
Irene C L Ng
Professor of Marketing & Service Systems, WMG
Director, International Institute of Product & Service
Innovation
irene.ng@warwick.ac.uk
@ireneclng
http://uk.linkedin.com/in/ireneclng
bit.ly/vcssblog
www.warwick.ac.uk/go/sswmg
www.ireneng.com

7. International Institute of Product &
Service Innovation (IIPSI)
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

8. Digital Software Innovation (tech
demonstrators)
Cloud for Business
Mobile for Business
Smarter Social Media
Data to Intelligence

9. Polymer Innovation (sample tech
demonstrators)
Adding Functionality to Plastic
Parts
Low Volume Production
Polymer Recycling

10. Experience-led Innovation (sample
tech demonstrators)
User Focussed Product/Service Desig
Customer Engagement
Visitor Experience
Energy Usage Behaviour
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

11. IIPSI Service Systems & Business+
• Technology disruptions cause challenges to existing business
models (e.g. Kodak)
• Adaptability, transformation needed – both for their business
models (the firm’s capability to serve the market) and their
economic models (the way they derive their revenues and the
market exchanges they participate in)
• Business+ research into value creating service systems,
digitisation/virtualisation, service-dominant logic (e.g.
Bombardier, Rolls Royce, GSK); also into pricing/revenue models,
methodology for new transactions & markets
• Transdisciplinary team of social science, technology, business &
engineering
• 4 RCUK/EPSRC DE projects, NEMODE virtual collaboration host

12. 17
Markets
Practice
Scale Inform
IIPSI Marketspace
2 1
corporate Mkt modularity
6
space
7 SME space Startup
space
Education
9 11 SME funding
8 Social
Devt
Science IP Passing Model, 3 Pre- 10 Student
IP Passing Model, independence incubating s
demonstrators
15 5 demonstrators
14 4
Research
Service Systems, New Econ/Biz models 10
Experience- Digital Lower
Polymer TRLs Knowledge
led (software)
Innovation innovation
Innovation
18 Transfer & 19
Trade Tools
pubs
Academic Bootstrap Projects
pubs 13
12 11 primary knowledge flows, 8 secondary flows

13. Impact
• created 12 new high tech start‐up
businesses,
• directly generated 70 new jobs,
• trained over 450 small business in a range
of digital technologies over the last 4 years
• International publications, patents, tools
etc.
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

14. New Economic and Business
Models in the Digital Economy
Outcomes, Boundaries and Contexts
Irene C L Ng
Professor of Marketing & Service Systems, WMG
Director, International Institute of Product & Service
Innovation
irene.ng@warwick.ac.uk
@ireneclng
http://uk.linkedin.com/in/ireneclng
bit.ly/vcssblog
www.warwick.ac.uk/go/sswmg
www.ireneng.com

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

16. But it wasn’t exchange that made us happy. It was
experiencing what we bought that gave us the
outcomes we wanted
We buy because of the service of the object,
even if it was an emotional ‘service’ i.e. things are
service avatars* Mike Kuniavsky, 2010
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

17. Ownership 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
• But outcomes/benefits come only in the
context of use and experience
• If firms found a way to serve contexts,
individuals may not need to own
• Case study: Music
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

18. VALUE & WORTH
• BUT… we needed to BUY before
experiencing – so industry focus is still on
buy (WORTH) even while design focus is
on experience (VALUE)
• Worth and Value is separated in time/space
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

19. Something is happening……
• Exchange used to be in further in advance
• With digitisation and connectivity, exchange can now
be closer to contexts of use e.g. Music
• i.e. worth is getting closer to value creation
• For offerings that could be digitised, collapse of buy
(potential) and use (kinetic) into the same time/space
• VALUE has become more relevant again in determining
WORTH
• With some new business models, VALUE is increasingly
determining WORTH (due to collapse of buy and
experience time/space

20. With digital connectivity, markets are
now possible to be formed in context
• Digitisation results in “digital backwash” of
the offering
• Serving contexts increases worth!
• New business and economic models
emerge
• So how should we think about value now
in terms of how it might be related to
worth and markets?

21. Value+ and Service-dominant logic*
• value is the goodness we create out of the
experience with something or someone in
context, and that experience/interaction is
the enactment of our social and cultural
values
++ Ng and Smith (2012)
*Vargo and Lusch (2004, 2008)
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

22. Value is co-created for
outcomes/benefits/value-in-use
Peace of mind
Entertainment
Love
CO-CREATED Realise
VALUE that cd be
RESOURCES higher than
proposed Enhance
RESOURCES????

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

24. 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
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

25. 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
• markets are now in the same space as creatives,
sociologists, interactive designers - looking at
contexts and lived lives
• For non-digital things, linking supply chains to
home market platforms essential for new
business models

26. Once upon a time, our contexts were
rather homogenous
• Where/when we ate meal
• Where/when we listened to music
• Where/when we exercised
• *Technology liberates us from constraints of
– time, when things can be done
– place, where things can be done
– actor, who can do what
– constellation, with whom it can be done
*Reframing Business, Normann, 2001
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

27. Why is this important
• Future digital connectivity for innovation and new
markets;
• Understanding how current things should evolve for
connectivity (e.g. biopharmaceauticals) to serve us
better – new business models, new econ models,
exchange & new ways to serve
• Innovating offerings/service that is scalable and
replicable in creating value in context
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

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

29. Why context is important
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
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

30. But to bring your digitised offering
(content) into context, you need a
medium/platform (widget),
connectivity, and a social space
E.g. of ‘service’ in context
digitally through your mobile
• Dictionary
• Calculator
• Calendar
• Torchlight
• Camera

31. The New Battleground
Content
Social CONTEXT Widget
Connecti
vity

32. Who is digitising to serve use
context next? Tea? ;)
• Digitisation enables traditional offerings to become a
resource in context, reducing time between acquiring a
resource and using a resource - expanding demand
Digitised offering in
context
In context
Digitisation+Data is the
new oil, Context is the new
oil-field
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

33. Mobile phone as the medium to
propose digitised offerings in context
• Why is the mobile phone one of the most
popular device for digitised offerings
today?
• because it is often present in MANY lived
experiences (contexts)
• It may not be the only widget in the future
serving multiple contexts, but it is now
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

34. Once upon a time, our contexts were
rather homogenous
• Where/when we ate meals
• Where/when we listened to music
• Where/when we exercised
• *Technology liberates us from constraints of
– time, when things can be done
– place, where things can be done
– actor, who can do what
– constellation, with whom it can be done
*Reframing Business, Normann, 2001
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

35. Markets are forming at where
service creates most wealth – in
context Digitisation allows new
offerings to be
resources available,
accessible on demand,
in context
The better you are able
to serve context, the
bigger your market

36. Competitive Dynamics
• Serving Contexts changes the nature of
competition
• Land grab creates disruption, enabled by
new technologies. How?
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

37. Context
Enjoying music
on spotify and
seeing other
friends choices
of music while
in a gym

38. BUSINESS MODEL VS ECONOMIC
MODEL
ECONOMIC MODEL
BUSINESS MODEL
- Where exchanges come
from, what exchanges are
there, creating worth from person
value creation
Value
ENJOYING
Value capture
Money fr access e.g. Creation MUSIC
spotify
Money fr ownership (e.g.
CD)
Money fr eyeballs (eg. Value
Google)
prop
MUSIC
15/01/2013
EMI, Sony BMG
WMG 38

39. E.G. MUSIC - CONTENT
person
Money fr access e.g. Value
ENJOYING
Value capture
last.fm Creation MUSIC
Money fr ownership
e.g. iTunes
Money fr medium Value
(e.g. CD) prop
MUSIC
EMI, Sony BMG
15/01/2013
WMG 39

40. E.G. MUSIC - WIDGET
person
Value ENJOYING
Value capture
Creation MUSIC
Money fr ownership
Value
prop WIDGET
Apple, MP3 player, Computer
15/01/2013 WMG 40

41. E.G. MUSIC - CONNECTIVITY
person
Value ENJOYING
Value capture
Creation MUSIC
Money fr access
Value
prop WIFI, 3G
O2, Vodafone, Three, Orange
15/01/2013 WMG 41

42. E.G. MUSIC - SOCIAL
person
Value ENJOYING
Value capture
Creation MUSIC
Money fr eyeballs
(ads)
Value Sharing
prop platform
Myspace, facebook,
google+, twitter,
spotify
15/01/2013 WMG 42

43. E.G. MUSIC - GYM
person
Value ENJOYING
Value capture
Creation MUSIC &
SPORT
Money fr access
Value Sport &
prop fitness
environment
GYMS
15/01/2013 WMG 43

44. Industries propose value in
context SKY, VIRGIN
Value Value
FACEBOOK, MYSPACE (CONNECTIVITY)
prop prop
(SOCIAL)
capture
capture
Value
Value
Value Value
Value capture Creatio Creatio
n n
person person
Creation
person
Value
Value
prop
person person
Value Value
GYMS Creatio Creatio
n n
capture
capture
Value
Value
APPLE, Value Value
CREATIVE SONY, EMI
prop prop
(WIDGET) (CONTENT)
15/01/2013 WMG 44

45. Value Constellation of Music in Context
Value Value SKY, VIRGIN
FACEBOOK, MYSPACE (CONNECTIVITY)
prop prop
(SOCIAL)
capture
capture
Value
Value
Value Value
Value capture Creatio Creatio
n n
person person
Creation
person
Many persons enjoying
Person enjoying music
Value
Value
prop
musiccontext
in in context
person person
Value Value
GYMS Creatio Creatio
n n
capture
capture
Value
Value
APPLE, Value Value
CREATIVE SONY, EMI
prop prop
(WIDGET) (CONTENT)
15/01/2013 WMG 45

46. Value Constellation of Music in
Context
Value Value SKY, VIRGIN
FACEBOOK, MYSPACE (CONNECTIVITY)
prop prop
(SOCIAL)
capture
capture
Value
Value
Value capture PIE
Many persons enjoying
Person enjoying music
Value
prop
musiccontext
in in context
person
GYMS
capture
capture
Value
Value
APPLE, Value Value
CREATIVE SONY, EMI
prop prop
(WIDGET) (CONTENT)
15/01/2013 WMG 46

47. Value Constellation of Music in Context
SKY, VIRGIN
FACEBOOK, MYSPACE Value Value (CONNECTIVITY)
prop prop
Value capture
(SOCIAL)
capture
Value
Value capture PIE
Personpersons enjoying
Many enjoying music in
Value
prop
music in context
context
person
GYMS
Value capture
Value capture
APPLE,
Value Value
CREATIVE SONY, EMI
prop prop
(WIDGET) (CONTENT)
• The Value constellation map shows you which industry has a
stake in which OTHER industry to expand their market
penetration, driving disruption, convergence, land grab
15/01/2013 WMG 47

48. Value Constellation of Music in
Context
Value Value SKY, VIRGIN
FACEBOOK, MYSPACE (CONNECTIVITY)
prop prop
(SOCIAL)
capture
capture
Value
Value
Value capture PIE
I want to play
Many persons enjoying
Person enjoying music there because
Value
prop
musiccontext more content
in in context
person that I control will
drive my
GYMS connectivity
business
capture
capture
Value
Value
APPLE, Value Value
CREATIVE SONY, EMI
prop prop
(WIDGET) (CONTENT)
15/01/2013 WMG 48

49. Value Constellation of Music in
Context
Value Value SKY, VIRGIN
FACEBOOK, MYSPACE (CONNECTIVITY)
prop prop
(SOCIAL)
capture
capture
Value
Value
Value capture PIE
Many persons enjoying play
Person enjoying musicto
Value
prop
I want
musiccontext there because
in in context
person widget that I
control will secure
GYMS
my connectivity
business
capture
capture
Value
Value
APPLE, Value Value
CREATIVE SONY, EMI
prop prop
(WIDGET) (CONTENT)
15/01/2013 WMG 49

50. Value Constellation of Music in
FACEBOOK, MYSPACE
Context
(SOCIAL)
Value Value SKY, VIRGIN
prop prop (CONNECTIVITY)
capture
capture
Value
Value
Value capture PIE
Many persons enjoying
Person enjoying music
Value
prop
musiccontext
in in context
person
I just want to make sure
these guys can’t do it
GYMS without me
capture
capture
Value
Value
APPLE, Value Value
CREATIVE SONY, EMI
prop prop
(WIDGET) (CONTENT)
15/01/2013 WMG 50

51. Connectivity & Digitisation
• TV was in a room
• Music was on speakers and stereo players
• Digitisation & Connectivity is changing contexts
of use
• Changing contexts of use is bringing different
industries into a context e.g. Tesco has a stake in
your car – will they pay insurance?
• Disruption & Convergence comes from
understanding value constellation of the context
15/01/2013 WMG 51

52. Changing Value Constellations
• With more digital connectivity, there are
more connected contexts
• more constellations with different players
will emerge, converging stuff, creating
new ways to capture value, generating
new business models, creating disruptions
• Move from vertical business models to
systemic (horizontal & vertical)

53. For more information:
Read the book!
*
Value: Creating New
Markets in the Digital
Economy
- out January 2013
www.valueandmarkets.com
* Tentative cover
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

54. Making Value Creation in
Context Digitally visible
Hub-of-all-Things
(H.A.T) – a designed
experiment for new
business models
powered by IoT

55. New (market) platform to serve
context powered by IoT
• The Internet of Things (IoT) refers to uniquely
identifiable objects (things) and virtual
addressability that would create an Internet-like
structure for remote locating, sensing, operating
and/or actuating of such ‘things’. There is a sense
that equipping all objects in the world with the
ability to be animated and connected could
transform lived lives.
• The home and the building as new platforms to
serve contexts in the future
15 January, 2013 Copyright Irene Ng, 2012. All rights reserved.

56. Hub-of-All-Things – tentative platform
architecture for multi-sided markets
‘Thing 2’ landlord Building mgr
Network
3D ‘Thing Store’
Printing/Scanning
Type1
M
Thing 1s
Standard
Data formats Private Info ‘App in-Store’ The H.A.T.
and defined Hub
Type1 protocols App App App
M
External platforms
Actuating M
Legacy TG ‘App out-Store’
Type 1 Thing Interface
Public Info App App
Data for developers Hub
Thing 2s
Legacy
Applications
Developed
Private Info
‘Thing POD’ using open-
Legacy source API
Hub Thing Platform for
Open-source Design
Key
Use of Virtual Devices
= IoT Enabler = IoT Enabled = IoT Enhancer TG= Trustgate

57. New Economic Models in the
Digital Economy (NEMODE)
Professor Roger Maull

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