Agenda Examination. Sakari Luukkainen

Transcription

1 Agenda Introduction, Sakari Luukkainen Product management, Jari Haggren Innovation process, Sakari Luukkainen 2.2. Technology marketing, Varian, Sakari Luukkainen 3.2. Startup business development, Maria Biniari, hall T Theoretical frameworks, Varian, Sakari Luukkainen Business model design, Sakari Luukkainen 1.3. ICT and economic growth, Sakari Luukkainen 8.3. Mobile ecosystems, Juha Winter Cloud computing, Sakari Luukkainen Summary, Sakari Luukkainen 8.4. Examination 1

2 Why business model? Unexpected success stories Market pull Facebook, Google search, AppStore, YouTube, Twitter, PayPal, Skype, Netflix, Dropbox Business model and many failures videophone, IN, WAP, PoC, mobile TV, paging Technology push 2

3 Business model Describes how to extract value from a service innovation It converts new technology to economic value (utility for customers) Plan by which a business intends to generate revenue and profits taken into account the dynamics of related value network 3

4 Internet business models The brokerage model is practiced by brokers, market-makers who bring buyers and sellers together and facilitate transactions. Brokers make money by charging a fee or commission for each transaction they enable. Example ebay.com. The advertising model can be seen as an extension of the traditional media broadcasting model. In this model, a website serves as a broadcaster and provides content and services, usually for free. The web page contains advertising messages in the form of banner ads, which are the major or sole source of revenue for the broadcaster. This business model only works when the volume of visitors on the site is large. A portal may contain search engines, directories, and other diversified content or services. Example Google.com. 4 Source: Rappa 2001

5 Internet business models Infomediary Model. Some companies function as information intermediaries, infomediaries who collect and sell information to sellers and buyers on the Web. Example Nielsen. Merchant Model. Merchants are wholesalers or retailers of goods and services. Sales can be based on fixed list prices or the price can be determined through an auction. Example itunes. Manufacturer Model. The manufacturer model is based on the power of the Web to allow manufactures to reach buyers directly. This compression of the distribution channel aims for an efficient, improved customer service, or a better understanding of customer preferences. Example Dell. 5 Source: Rappa 2001

6 Internet business models The affiliate model is the opposite of the generalized portal, which seeks to drive a high volume of traffic to one specific site. The affiliate model provides purchase opportunities wherever people may be surfing by offering financial incentives to affiliated partner sites in the form of a percentage of revenue. It is a pay-forperformance model, because it represents no cost to the merchant, if the affiliate does not generate sales. There are many variations of the model, including banner exchange, pay-per-click and revenue sharing programs. A simple example of the affiliate model is that affiliates are invited to put a banner of a vendor, such as Amazon.com, on their sites. Whenever a consumer clicks on Amazon s banner at a vendor s site, a commission is paid to the vendor if the customer makes a purchase. 6 Source: Rappa 2001

7 Internet business models The community model is based on user loyalty: users are supposed to have high investment in the Web site in both time and emotion and they may be regular contributors of content or money. Having users who visit the site continually offers advertising, infomediary and specialized portal opportunities. The model may also run on subscription fees for premium service. Example Wikipedia. In the subscription model, users are charged a periodic fee to subscribe to a service every day, month, or year. Sites may combine free content with premium, member-only content. The model is often combined with the advertising model. Example Netflix, Spotify. The utility model is based on metering usage and charging the users by actual usage rates in an on-demand manner e.g. in public cloud computing services. Example Amazon EC2. 7 Source: Rappa 2001

8 Business model components Rappa (2001) Sustainability Revenue stream Cost structure Value chain positioning Chesbrough & Rosenbloom (2002) Value proposition Market segment Value chain Cost structure Value network Competitive strategy 8

9 Business Model Canvas 9

10 STOF business model framework Practical tool derived from academic research - checklist of relevant factors to consider including their interrelationships in a complex innovation process Presents a holistic view of the business model design of an emerging service idea Can help in identifying the key weaknesses which could cause a service to fail as well as the strengths of a service Identifying these issues in an early phase makes it easier and cheaper to react to any problems and to approach the right market segments by right timing, differentiation and pricing Usage requires wide techno-economic skills - typically done by a group of experts working in different fields 10

11 STOF business model framework 11 Source: Bouwman et al., 2008

12 STOF process phasing 12 Source: Bouwman et al., 2008

13 STOF process over time Phases R&D Roll out Market Market Regulation Market Regulation Market Regulation T S O F T S O F T S O F Technology Technology Technology 13 Source: Bouwman et al., 2008

14 Service design 14 Source: Bouwman et al., 2008

15 Technology design 15 Source: Bouwman et al., 2008

16 Organization design 16 Source: Bouwman et al., 2008

17 Finance design 17 Source: Bouwman et al., 2008

18 Balancing of different goals NETWORK VALUE Strategic interests of partners CUSTOMER VALUE Design requirements usefulness 18 Source: Bouwman et al., 2008

19 CDIs: Service domain Critical Design issue Description Balancing requirements Targeting Creating value How to define the target group of a mobile service? How to create value for end users? Generic vs. Niche service B2C vs. B2B service Technological possibilities vs. user needs and wishes Branding How to promote/ brand the service? Operator vs. content brand Trust How to enhance end users trust in the service? Security vs. ease of use Privacy vs. added value Customer retention How to stimulate recurrent usage of the service Customer lock-in vs. customer annoyance 19 Source: Bouwman et al., 2008

20 CDIs: Technology domain Critical Design issue Description Balancing requirements Security Quality of Service System integration Accessibility Management of user profiles How to arrange secure access and communication? How to provide for the desired level of quality? How to integrate new services with existing systems? How to realize technical accessibility to the service for the target group? How to manage and maintain user profiles? Ease of use vs. abuse and privacy. Quality vs. costs Flexibility vs. costs Open vs. closed system User involvement vs. automatic generation 20 Source: Bouwman et al., 2008

21 CDIs: Organization domain Critical Design issue Partner selection Network openness Network governance Network complexity Description Who is offering access to critical resources and capabilities in order to offer service? Degree to which new partners can join the network, and are allowed to offer services Dominant partners set and monitor rules over partnership, support partners. Customer ownership and control is key asset Degree of complexity of network, both organizational and technical Balancing requirements Limited number of partners versus quality of service and strategic interest Openness and customer reach versus control and exclusiveness Entry, compliance and exit conditions: individual versus network interest Need to reduce complexity versus need of access to critical resources & capabilities 21 Source: Bouwman et al., 2008

22 CDIs: Finance domain Critical Design issue Description Balancing requirements Pricing Price level Pricing seems to be aligned with maximizing profits versus creating market share Investments Division and valuation of costs and revenues between network actors Capital investment and risk assessment Assessment of valuation is based on access to resources, direct revenue and strategic benefits. Operational financial interest (ROI) versus intangible benefits (Options) Costs-benefits valuation on level of network versus cost benefits for individual partners 22 Source: Bouwman et al., 2008

23 CDIs and CSFs relating to customer value 23 Source: Bouwman et al., 2008

24 CDIs and CSFs relating to network value 24 Source: Bouwman et al., 2008

25 Business model analysis of mobile traffic safety services Sakari Luukkainen Luukkainen, S., Karjalainen, M, Bagheri, M., Winter, J Business model analysis of mobile traffic safety services. The journal of policy, regulation and strategy for telecommunications, information and media, Vol. 18, Issue1. 25

26 Idea Although pedestrians are among the most vulnerable road users in fatal accidents most of the attention on traffic safety via vehicular networks has concentrated on vehicle-to-vehicle accidents and thus improving pedestrian safety has not been extensively addressed Related personal injuries are a significant cost for the insurance companies Integrating pedestrians and cyclists into the vehicular networks by means of their smartphones would enable development of innovative applications like vehicle to pedestrian (V2P) collision avoidance A pilot system done recently in our research group 26

27 Service design Early collisions avoidance alerts to mobile phone of driver to activate vigilance Usage in most dangerous places, local drivers and pedestrians as target group Discounts of traffic insurance for driver, free for pedestrian Promotion in the beginning of school / dark time Integation to complementary services e.g. ridesharing which can use same location information Mobile app for driver and pedestrian Statistics of alerts can be used in road safety and insurance 27

28 Technology design Location, speed, direction data needed from GPS 28

29 Organization design 29

30 Finance design 30

31 Conclusion All interviewees found the basic idea of such a service to be promising and saw that it should at least be tested at a larger scale The initial costs and operating expenses are minimal thanks to the lack of required special hardware, which has been seen as a problem for the swift adoption of other proposed systems Usage of adaptive algorithms to reduce energy consumption of GPS and false alarms, accuracy of GPS still open question Safety alone does not provide enough value and incentive to activate long-term usage -> bundling needed The interviewed insurance company expressed financial interest The safety service should be integrated with other services like navigation and ridesharing, always on for pedestrian It should be introduced first locally in places, where accidents take place and where the community mutually wants increased safety If the service will be promoted in small communities by around 8000 driver customers, the financial break-even point could be reached 31