A 1 day program focusing on building Platform and Network Business Models that benefit from today's digital technologies and virtual networks

1. Yoram
(Jerry)
Wind
The
Lauder
Professor
and
Professor
of
Marke9ng
Director,
SEI
Center
for
Advanced
Studies
in
Management
Academic
Director,
Wharton
Fellows
Program
windj@wharton.upenn.edu
Presented
to
LINKS
Jerry
Wind,
SEI
Director
Barry
Libert,
SEI
Senior
Fellow
September
9.
2014
1
COPYRIGHT,
OPENMATTERS,
LLC

2. The material in this curriculum is the property of
Wharton’s SEI Center and OpenMa<ers, LLC and
shall not be reproduced and/or distributed without
our express authorizaDon
2
COPYRIGHT,
OPENMATTERS,
LLC
NOTICE

3. Our
Agenda
3

4. 4
Sudhakar
Gor9
Chief
Digital
Officer
Environmental
Data
Resources
www.edrnet.com
sgor9@edrnet.com
Luncheon Panelist

5. I. Key Challenges Facing the ParDcipants
5

6. A.
Advances
in
Science
&
Technology
C.
Other
Changes
in
the
Business
Environment
B.
Emergence
of
the
Empowered
&
Skep@cal
Consumer
…And do your challenges include?
6

7. 7
A) Advances in science and technology, such as…

8. Social Networks
8

9. The Cloud
9

10. The Internet of things
10

11. The Connected Home
11

12. Wearable Technologies
12
MIT
Human
Dynamics
Lab
starts
publishing
in
1990
Vigo
–
Human
energy
gauge
Nike+
FuelBand

13. Mobile Devices -­‐ BYOD
13

14. Ubiquitous Big Data and AnalyDcs
14

15. ArDficial Intelligence
15

16. Personalized Medicine (and Gene Therapy)
16

17. Why Google is Involved in Deep Learning?
h_p://video.mit.edu/watch/why-­‐google-­‐is-­‐inves9ng-­‐in-­‐deep-­‐
learning-­‐14382/
17

18. Converging
on
Communities:
Let
me
be
a
part
of
it
Converging
on
Channels:
I
want
to
call,
click
and
visit
Converging
on
Competitive
Value:
Give
me
more
for
my
money
Converging
on
Choice:
Give
me
tools
to
make
better
decisions
Converging
on
Customization
and
Personalization:
Make
it
mine
Source:
Wind
and
Mahajan,
Convergence
Marke9ng,
Financial
Times/Pren9ce
Hall,
2001
B) The Empowered & SkepDcal Consumer
18

19. and
more
skeptical
than
ever
before.
19

20. Empowered Stakeholders are Everywhere
20

21. 21
C). Other Changes in the Environment

22. The
Chinese
consumer’s
growing
might
is
dictating
business
choices
for
western
brands
.
.
.
The Global Landscape (especially China)
22

23. Societal Challenges
23
Gini
Coefficient
0=
perfect
equality
100
=
perfect
inequality
Most
Recent
Emerging
Economies
Brazil
51.9
Russia
42.0
India
36.8
China
47.4
OECD
Countries
Japan
37.6
United
Kingdom
40.0
United
States
45.0
Singapore
47.8
Central
Intelligence
Agency.
"Country
Comparison:
Distribu9on
of
Family
Income
-­‐
Gini
Index,"
2013.

24. Regulatory Changes
24

25. CompeDDve Environment
25

26. Opportunities
26
Contagion
&
Risks
• 2008
Global
Financial
Crisis
• Chinese
Toxic
Milk
Scandal
• Global
Terrorism
www.ibm.com/ceostudy2012
Network Growth and Universality

27. Economic
Technological
Geopoli9cal
Societal
Source:
World
Economic
Forum
Global
Risks
2014,
Ninth
Edition
Other Risks
27
Environmental

28. ImplicaDons
28
You
have
to
challenge
your
exis9ng
mental
model

29. 29
II. IdenDfy and Challenge Your Mental Models

30. 30
Let’s
consider…
What
just
happened?
Robbery
at
Knifepoint
Updated
March
11,
2013
8:55am
..What are the mental models?

31. 31
Our
beliefs,
aitudes,
feelings
and
behaviors
are
driven
by
our
Mental
Models,
not
reality.
The
reality
of
the
situa9on
did
not
change,
our
mental
model
did!

32. What is a mental model?
32
Mental model
From
Wikipedia,
the
free
encyclopedia
A
mental
model
is
an
explana9on
of
someone’s
thought
process
about
how
something
works
in
the
real
world.
It
is
a
representa9on
of
the
surrounding
world,
the
rela9onships
between
its
various
parts
and
a
person’s
intui9ve
percep9on
about
his
or
her
own
acts
and
their
consequences.
Mental
models
can
help
shape
behavior
and
set
an
approach
to
solving
problems
(akin
to
a
personal
algorithm)
and
doing
tasks.

33. 33
Inner City
Alterna.ve Medicine
Roger Bannister breaks the 4 Minute Mile
on May 6, 1954
Source:
Gallup
Daily,
April
2014
h_p://www.gallup.com/poll/poli9cs.aspx
What are mental models?

34. What is common about all these brands?
34
Napster
Samsung
SGH-­‐E760
$2000
Car
MIT’s
Media
Lab
$100
laptop
All
these
breakthrough
innovations
challenged
the
mental
models
of
their
industries.
Sayaka
Endoscope
Capsule
Apple
iPad
Microsoft
Xbox
360
Kinect
Google
Glasses

35. 35
Mental Models and leadership over the ages
Power
Emo9onal
Intellectual
Network
Technology
Time

36. 4 Examples of Mental and Leadership Models
36

37. 37
“Without changing our pa<ern of thought, we will not be able
to solve the problems we created with our current pa<ern of
thought.”
-­‐
Albert
Einstein
• Mental Models are cri.cal.
The Key Points

38. 38
III. InnovaDve Business Models

39. Business Models
39

40. Different ages, different Business Models
Industrial
revolution
-­‐
1800
Services
revolution
-­‐
1975
Information
revolution
-­‐
1990
Network
revolution
-­‐
2010
Technology
Time
40

41. Example of Business Models scaling
exponential
algebraic
growth
arithmetic
growth
geometric
growth
Time
Growth
41

42. Business Models scale differently based on technology
Network
Facilitators
Technology
Facilitators
Service
Facilitators
Asset
Facilitators
make
many,
sell
many
make
one,
sell
many
hire
one,
sell
one
make
one,
sell
one
zero
marginal
cost
low
marginal
cost
medium
marginal
cost
high
marginal
cost
42

43. Four Business Models and their revenue MulDpliers
4
Network
Technology
8
1
Services
Assets
2
43
Digital
divide

44. Examples of companies
44
Credit
card
companies
Stock
exchanges
Social
Networks
Biotech
Software
Pharmaceutical
Retails
Industrials
Manufacturing
Consultants
Financial
Services
Insurance
4
Network
Technology
8
1
Services
Assets
2
Digital
divide

45. Why “8” type Business Models are criDcal
Networks
45
Services
Assets
Technology
8
Business
that
are
8’s
scale
using
other
people’s
money,
intelligence
and
relationships,
creating
less
need
for
capital
and
more
future
opportunity
for
open
innovation
in
a
flat
world
Digital
divide

46. EXERCISE: What type of business model are you?
46

47. IV. The PracDDoner’s PerspecDves
Sudhakar
Gor@
Chief
Digital
Officer
Environmental
Data
Resources
www.edrnet.com
sgor9@edrnet.com
47

48. 48
V. Transform Your Business Model

49. What Can You Do to Benefit from Networks?
49
?

50. Networks are all around us
NETWORK
CATEGORY
POSSIBLE
VALUE
PROVIDED
Customers
• Increased
loyalty/brand
awareness
• Data
assets
about
customer
profile
or
ac9vity
• Marke9ng
or
product
ideas
Employees
• New
product
and
marke9ng
ideas
• Opera9onal
improvements
• Expert
support
–
both
internal
and
external
Suppliers
and
Partners
• Improved
market/compe9tor
awareness
• More
efficient
rela9onships
• New
sales
and
marke9ng
channels
Investors
• Sugges9ons
to
improve
valua9on
• Market
awareness
• Crowd
funding
solu9ons
–
e.g.
new
sources
Communi9es
(geographic,
business,
etc.)
• Source
new
employees
• Understand
local
poli9cs/news
as
it
affects
company
• Advocacy
and
support

51. • Customers
• Employees
• Suppliers
• Distributors
• Partners
• Investors
• Communi9es
• Other
Which Networks Do You have?
51
Not
Effective
at
all
Extremely
Effective
1
2
3
4
5
6
7
8
9
10
Not
Effective
at
all
Extremely
Effective
1
2
3
4
5
6
7
8
9
10
Not
Effective
at
all
Extremely
Effective
1
2
3
4
5
6
7
8
9
10
Not
Effective
at
all
Extremely
Effective
1
2
3
4
5
6
7
8
9
10
Not
Effective
at
all
Extremely
Effective
1
2
3
4
5
6
7
8
9
10
Not
Effective
at
all
Extremely
Effective
1
2
3
4
5
6
7
8
9
10
Not
Effective
at
all
Extremely
Effective
1
2
3
4
5
6
7
8
9
10
Not
Effective
at
all
Extremely
Effective
1
2
3
4
5
6
7
8
9
10

52.
Select
a
network
to
develop.
Look
for
one
that
is
large,
ac9ve,
underserved,
and
poten9ally
aware
of
your
company
Create
incen9ves
for
par9cipants
to
add
content,
share
their
knowledge,
capabili9es
and
assets
with
others
Seed
the
network
with
content,
informa9on,
and
products
and
orchestrate
its
interac9ons
to
drive
engagement
Build
technology
plaporm
to
connect
the
network
and
create
an
eco
system.
Begin
small
and
experiment
1
4
3
2
4 steps to building your network
52

53. Case study: Nike+
Select
a
network:
runners
who
want
to
log
runs
Create
incen9ves
to
par9cipate:
ability
share
runs
with
social
groups
(pride
and
recogni9on)
Seed
the
network
with
content:
mo9va9on
and
training
advice
Connect
the
network:
Wireless
devices,
apps,
and
integra9on
with
Facebook
1
4
3
2
53

54. Case study: AT&T
Select
a
network:
employees
Create
incen9ves
to
par9cipate:
Recogni9on
of
peers,
face9me
with
leaders
Seed
the
network:
ask
managers
and
leaders
to
par9cipate
Connect
the
network:
Online
plaporm
to
propose
and
vote
on
ideas
1
4
3
2
54

55. Case study: Nest thermostat
Select
a
network:
high-­‐end
thermostat
users
Create
incen9ves
to
par9cipate:
Improved
energy
efficiency
through
big
data
analysis
Seed
the
network:
begin
with
public
data
about
temperatures
and
energy
uses
Connect
the
network:
Internet
networked
devices
1
4
3
2
55

56. Portfolio of
assets
Create
A network that can add value
to your existing business
Add
To an existing network so it
can create more value
Revise
An existing network based
on its potential
Eliminate
Investments in a network
that are not productive
Network 1
Network 2
Network 3
Network 4
Use CARE to reallocate capital to Networks
56

57. EXERCISE: Create a new network asset
57
Select
a
network
to
develop.
Look
for
one
that
is
large,
ac9ve,
underserved,
and
aware
of
your
company
Create
incen9ves
for
par9cipants
to
begin
adding
content
themselves.
Incen9ves
could
be
recogni9on
or
shared
revenus
Seed
the
network
with
content,
informa9on,
and
products
in
order
to
grow
awareness
and
membership.
Use
a
technological
solu9on
to
connect
the
network.
Begin
with
something
inexpensive
and
quick
to
implement.
1
4
3
2
Discuss
the
following
steps
for
a
high
poten9al
network

58. Portfolio of
business
assets
Create
A network that can add value
to your existing business
Add
To an existing network so it
can create more value
Revise
An existing network based
on its potential
Eliminate
Investments in a network
that are not productive
Network 1
Network 2
Network 3
Network 4
EXERCISE: Use CARE to reallocate your capital
Market
not
responding
Need
different
content
Engaged
customer
group
Add
new
geography
58

59. Remember: Networks can be added to your firm
59
Assets
Services
Technology
Networks
… it is not all or nothing!

60. Where can you begin experimenDng
60
1.
2.
3.
4.
5.
6.
7.

61. VI. ReflecDons and AcDon Plans
61

62. Our
Agenda
62

63. Key takeaway
63
“To
break
a
mental
model
[and
therefore
business
model]
is
harder
than
spliCng
the
atom.”
Albert
Einstein

64. Business Models and Mental Models are linked to value
64
Mental
Model
Business
Model
What
leadership…
• Believes
is
important
• Has
developed
their
own
skills
• Gives
9me
and
a_en9on
• Measures
and
reports
How
a
company…
• Spends
and
makes
money
• Hires
people
and
develops
skills
• Uses
and
leverages
technologies
• Engages
with
customers
Drives
• Enterprise
value
• Revenue
growth
• Profitability
Value
and
performance
Determines

65. Next Steps…
65

66. 66

67. Yoram
(Jerry)
Wind
The
Lauder
Professor
and
Professor
of
Marke9ng
Director,
SEI
Center
for
Advanced
Studies
in
Management
Academic
Director,
Wharton
Fellows
Program
windj@wharton.upenn.edu
Presented
to
LINKS
Jerry
Wind,
SEI
Director
Barry
Libert,
SEI
Senior
Fellow
September
9.
2014
67
COPYRIGHT,
OPENMATTERS,
LLC