Irene C L Ng Professor of Marketing & Service Systems, WMG

Director, International Institute of Product & Service Innovation

Adjunct Professor, NUS ISS

New Business Models in the Digital Ecosystem

irene.ng@warwick.ac.uk @ireneclng

http://uk.linkedin.com/in/ireneclng bit.ly/vcssblog

www.warwick.ac.uk/go/sswmg

www.ireneng.com

Copyright Irene Ng, 2012. All rights reserved.

Value was exchange (what I got for what I gave)

$$$15 January 2013

Copyright Irene Ng, 2012. All rights reserved.

Value-in use

We buy because of the service of the object, even if it was an emotional ‘service’

15 January 2013

Copyright Irene Ng, 2012. All rights reserved.

Value created is Contextual. Resources are therefore also Contextual.

This camera is available so it

is a resource in context

This camera is

not

Things become more valuable in context because they enable resources for value creation

Value is created in CONTEXT

15 January 2013

Copyright Irene Ng, 2012. All rights reserved.

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

Why context is important

15 January 2013

Copyright Irene Ng, 2012. All rights reserved.

Ownership/Possession 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

• Firms have talked, promoted and sold on the basis of benefit and use of things but benefit (outcomes) and use is not aligned to revenues – we still only buy ownership and not outcomes

• But outcomes/benefits come only in the context of use and experience

• If firms found a way to serve contexts, ownership may not be the dominant biz model

• Case study: Music

15 January 2013

WMG

THE BUSINESS MODEL- traditional loosely coupled system and relationship with the market and customer

1/15/13

33

Value Creation

(Experience)

Value prop

(Offering)

Valu

e ca

ptur

e (R

even

ue s

tream

s)

Customer

Consumption space (in context)

The Firm

Design, create, deliver (channel) space

Exchange space

Supply Chain

Marketing

Manufacturing Strategy HRM, Finance

Consumption culture Consumer research

The market

WMG

THE BUSINESS MODEL- digital economy

1/15/13

33

Value Creation

(Experience)

Value prop

(Offering)

Valu

e ca

ptur

e (R

even

ue s

tream

s)

Customer

Design, Create, deliver (channel) space

Exchange space

Tightly coupled service systems

(Change one, change all)

The market

The Firm

Consumption space (in context)

WMG

THE BUSINESS MODEL- e.g. Music

1/15/13

33

Value Creation

(Experience)

Value prop

(Offering)

Valu

e ca

ptur

e (R

even

ue s

tream

s)

EMI, Sony BMG

Customer

MUSIC

ENJOYING MUSIC

Money fr access e.g. spotify

Money fr ownership e.g. CD

Money fr eyeballs The FirmDesign, Create, deliver (channel) space

CH

ANG

ES

CHANGES

CHANGES

The market

The Firm

WMG

Value Constellation and potential disruption

1/15/13

33

Value Creation

(Experience)

Value prop

(Offering)

Valu

e ca

ptur

e (R

even

ue s

tream

s)

EMI, Sony BMG

Customer

MUSIC

ENJOYING MUSIC

Money fr access e.g. spotify

Money fr ownership e.g. CD

Money fr eyeballs The FirmDesign, Create, deliver (channel) space

CH

ANG

ES

CHANGES

CHANGES

The market

The Firm

Value Creation

(Experience)

Value Creation

(Experience)

Connected

Products

WMG

THE BUSINESS MODEL to the Economic model

1/15/13

33

Value Creation

(Experience)

Value prop

(Offering)

Valu

e ca

ptur

e (R

even

ue s

tream

s)

EMI, Sony BMG

Customer

MUSIC

ENJOYING MUSIC

Tightly coupled BUT non-linear or sequential Relationship with the customer changes Where market exchanges occur could also change

The market

The Firm

Value Creation

(Experience)

Value Creation

(Experience)

Connected

Products

WMG

THE BUSINESS MODEL- implications on material products

1/15/13

33

Value Creation

(Experience)

Value prop

(Offering)

Customer

The nature of the offering

Experience in high variety of contexts

Design, Create, deliver space

CH

ANG

ES

The Firm

The Incomplete

Product

Completed in the 'high contextual

variety' customer space by

(A) digital interface (B) 3D printing

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

• A revolution in the way we think about manufacturing for contexts - modularity and boundaries

• Fragmentation of the material from the information • boundary of customer resource, material resource,

information resource in value creation.material

Copyright Irene Ng, 2012. All rights reserved.

Future innovation• Separate user experiences come together, new

affordances • exchanges held at different time/space – pervasive

platforms • Industry verticals become members of same

constellation – land grab/jumping verticals for revenues • Combinatorial innovation – ‘mashing’ software, hardware,

materials • Incomplete products, constrained serendipity (emergent

use, emergent contexts) • Decomposition, modularity, user-experience, business

model – this is a new world for all of us

20 February 2013

Markets are forming at where service creates most wealth – in context

•Serving contexts demand a rethink about how we research, design, innovate •Question for every offering: what contexts do you serve (value creation), where is exchange (value capture) and how do you design for contextual experience (value prop) i.e. how should you innovate your business model

The new world

Collapse of boundaries Changes in industry dynamics - giant killers abound Green field for all nations Connectivity is direct driver of wealth creation (jobs, markets) Innovation and Speed will prevail

The new world

Disruption is only enabled by technology. It happens because of the market and customer adoption and when lived lives are improved from it. Technology does not disrupt businesses. People do.

Copyright Irene Ng, 2012. All rights reserved.

For more information.....

Read the book! Value & Worth: Creating New Markets in the Digital Economy

- Now out on Amazon Kindle

and PDF

15 January 2013

*

www.valueandmarkets.com

Multi-sided Market Platform for New

Economic and Business Models

http://www.hubofallthings.org

Copyright Irene Ng, 2012. All rights reserved.

Thank you

15 January 2013