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RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
Neal and Nik, thank you for the introduc@on. It is a pleasure to be here. I am here to talk about Real Time Communica@on business models. I have been working with business models since 2002 across a broad range of opportuni@es and mainly with high tech companies. I have worked with advanced research labs discussing how to design a business model around new technology, worked with innova@on groups to develop new business models, developed a disrup@ve business model across an ecosystem and I currently volunteer and mentor start up CEOs on their business model as part of Springboard Enterprises. I have a consultancy focused on business model innova@on and using business model thinking to solve a range of business problems. In this discussion, I will first provide some broader context before discussing business model hypotheses and then discussing methods for geKng to specific business model opportuni@es.
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RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
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Business models balance technology, customer and business requirements and are defined at the intersec@on of Is it possible, is it desirable and is it viable. As we seek to design and define business models, we are looking to answer some key ques@ons:
-‐ What technology exists today to enable my business model? -‐ What likely technology innova@ons would enable business model innova@on? -‐ What high value customers are targeted? -‐ For what reasons will customers pay a premium, switch supplies or increase their loyalty? -‐ What is the differen@ated business model value proposi@on? -‐ What profit model is used to capture value? How does high profit happen? What are or will be the profit zones? -‐ How can we maximize the sustainability of out – year cash flows? -‐ What economics and performance systems are required to execute?
RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
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I wanted to start the conversa@on by looking at the broader context. This graph is from the Economist and speaks to the stages of IT expansion and I have added a perspec@ve on the shiY in dominant profit models. In the 70’s and 80’s, we had a systems centric period with proprietary systems. High profit happened in the early years/months of with new product introduc@ons. In the 90’s as PCs decentralized to the desk, we shiYed to a PC Centric period. High profit happened with the de facto standards and high market share. This has been the wintel profit engine. We are now moving into a network centric period intermediated by the internet. High profit happens through the network effect where ventures intermediate between reciprocal par@es e.g. buyers and sellers. Why is this important? As we design business models, it is helpful to understand the dominant sources of value crea@on
Over the past 20 years, the product was the key component of the business strategy. And although s@ll cri@cally important, it is important to recognize that as we move more toward network centric business models, we need to evolve our mindset. In the systems and PC centric era most of the focus was on the product and on providing complete solu@ons. As we are moving into the network centric era, we now need to shiY our focus beyond the product and solu@on, and look to the ecosystem for sources of profit. There are industries where the profit has moved away from the product to other elements of a complete solu@on and the broader ecosystem.
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RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
Now let’s talk about the consumer / customer. How do they experience Real Time Communica@ons? It is a confusing landscape from many op@ons on the screen to many op@ons around the screen. The ques@on is how does a consumer make sense of it all? One of the drivers of consumer choice is what I call consumer economics. This is not only about dollars and cents but also about @me and hassle. There is much variability with Real Time Communica@ons consumer economics. Just in terms of dollars and cents there is great variability around hardware, installa@on and services. An example is VOIP services. Fixed home can run from $10 a month to $30 a month for virtually the same outcome. Interna@onal calls (to France) using your cell phone can run from $3.41/minute to $0.02/minute without using any cell minutes. To make sense of this environment, we look at the job to be done.
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RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
What is the job to be done? It is all about puKng what the consumer wants to accomplish at the center of our thinking. The job to be done is defined not only by the desired outcome but also by understanding where there is an experience gap, what mo@va@ons the consumer has, what the customer economics are, what are the choice available to the consumer in what contexts and with what social networks. Examples of a job to be done includes communica@ng visually between a hotel room and the head office, collabora@ng on a presenta@on between Shanghai, Chicago and Paris, issuing a tsunami warning to parts of the west cost of Hawaii.
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RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
How do we use the “job to be done” and start linking the consumer with technology and product. This work is also part of the founda@on we need to build to uncover business model opportuni@es. One approach that I have developed involves mapping possible value delivery systems and itera@vely link them to desired outcomes. The result is a structured approach to answering the “is it viable is it possible and is it desirable” ques@on for each desired outcome. Let’s take one concrete example” Disaster warnings. Now let’s look at the implica@ons for possible RTC business models
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RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
At this point we have some business model hypotheses that we can make. One set of business models exist at the infrastructure / service provider level and are part of the RTC ecosystem. These business models are mainly at the product and solu@on level and there is much focus on crea@ng common standards that enable interoperability among players. At another level, there are business models that are enabled by the RTC ecosystem. The RTC ecosystem can be considered a keystone and what is unique is that the keystone is the ecosystem and not just a single company. [A keystone aims to improve the overall health of their ecosystems by providing a stable and predictable set of common assets that other organiza@ons use to build their own offerings.] [walk through the details]
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RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
Before talking about how do we develop specific business model opportuni@es, I thought that it would be helpful to provide informa@on on the different elements of a business model and how they inter-‐relate.
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RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
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The big ques@on is how do we move from a hypothesis to developing an understanding of the opportuni@es available to companies. In 2004 I developed some unique IP that looks at ecosystems from a business models perspec@ve. The analysis is not an end in of itself but rather fundamental research and understanding of how value is created in the ecosystem. The key benefit to organiza@ons is developing context around your company’s role and posi@on in the ecosystem and make visible opportuni@es to play addi@onal or different roles and access significant value. It also serves as a framework for technology development and link to the value delivery systems and jobs to be done most likely to succeed. This approach has been used at Hewleo Packard when significant value was sought by senior management. It allowed HP to deconstruct Kodak’s master plan in the digital imaging space and uncover both risks and opportuni@es that had not been visible before. It was also used to develop a disrup@ve Billion dollar business model opportunity in the commercial prin@ng ecosystem.
RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
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This is an example of what can be developed as an outcome of this work. The graphic depicts all the games that can be played within an ecosystem across the value delivery system and with value crea@on opportuni@es in the millions to the billions. There are number of other concrete outputs but the challenge is that many of those remain confiden@al.
RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
Today we started a discussion on RTC business models yet we have barely scratched the surface. As work con@nues on RTC technologies and addi@onal standards are agreed to, a ques@on is what context will you have to make decisions? How will you balance technology, consumers and business requirements? How will you find the intersec@on of what is possible, what is viable and what is desirable? How will you decide which jobs to be done are more likely to thrive and create value and which ones are likely not to take off? These are the types of ques@ons I have been working on for some @me now and that my consultancy specializes in.
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RTC Business Models, RTC Conference, Chicago, Sept 10 – 12, 2012
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