O slideshow foi denunciado.
Seu SlideShare está sendo baixado. ×

Disruptive Technologies: Impact on Strategic Alliances, Partnerships & Channels

Próximos SlideShares
Introduction to Data Science
Introduction to Data Science
Carregando em…3

Confira estes a seguir

1 de 48 Anúncio

Mais Conteúdo rRelacionado

Diapositivos para si (20)

Quem viu também gostou (20)


Semelhante a Disruptive Technologies: Impact on Strategic Alliances, Partnerships & Channels (20)

Mais recentes (20)


Disruptive Technologies: Impact on Strategic Alliances, Partnerships & Channels

  1. 1. Disruptive Technologies Impact on Strategic Alliances, Partnerships & Channels Phil Hogg Vice-President, Strategic Alliances, Moneris Solutions President, Association of Strategic Alliance Professionals (Toronto Chapter) Co-Author, Financial Post Series on “Successful Strategic Alliances”
  2. 2. Agenda I. An Introduction to Disruptive Technology Theory • Why Seemingly Great Companies Fail • Sustaining versus Disruptive Innovation • The Innovator’s Dilemma II. Key Disruptive Technology Enablers • Mobile Internet • Cloud Computing • The Internet of Things III. Winning Partnership Strategies to Exploit Disruptive Technology • Strategic Alliances; • Partnerships & Channels.
  3. 3. Overview of Moneris Solutions Global Rank*• Established and incorporated in 2000 – Joint Venture between the Royal Bank of Canada and the Bank of Montreal. – Over 40% Market Share in Canada. – Over 40 years of card processing experience. • Corporate Head Office – Toronto, Ontario. • US Head Office – Schaumburg, Illinois. • Number of Merchants – Process for 380,000 merchants. • Transaction Processed/Year – 3.5 Billion. 1. Bank of America 2. Vantiv 3. First Data 4. Chase Paymentech 5. Citi Merchant Services 6. WorldPay (EMEA) 7. Cielo 8. Moneris Solutions 9. Barclays 10. WorldPay (USA) * Source: Nilson Report, Top 150 Acquirers Worldwide 2011, November, 2012
  4. 4. I. An Introduction to Disruptive Technology Theory
  5. 5. • Background: – Founded by George Eastman in 1880 and developed the first snapshot camera in 1888 – Core products included film manufacturing, photofinishing, and cameras – Market share of 90% for film and 85% for cameras by ‘76 • Sales: – $1 Billion by 1962 – $10 Billion by 1981 – $20 Billion by 1992 • Technology Prowess: – Invented the first digital camera in ’75 (patent in ’78) – In 1986, invented the first megapixel sensor, capturing 1.4 million pixels – Invented another 50 products that were tied to the capture or conversion of digital images When Being Rational Kills Your Business (I)
  6. 6. Eastman Kodak Files for Bankruptcy (2012) • Profitability – “We’re moving into an information-based company, but it is very hard to find anything [with profit margins] like color photography that is legal” • Bureaucracy – With over 145,000 employees in a multi-layered organization, it was difficult to change. Middle management thought they were in the film business and not the imaging business. • Too Little. Too Late – By 2000, the value of digital cameras sold exceeded the value of film cameras sold. – Kodak “officially” entered the digital market in 2003. Source: Kodak
  7. 7. When Being Rational Kills Your Business (II) • Background: – 1985, Blockbuster was founded by David Cook in Dallas, Texas – 1987, Wayne Huizenga and two partners invested $18.5 Million for 50% of the business using a similar franchise model as Waste Management (1 new store every 24 hours) – 1994, Viacom purchased Blockbuster for $8.4 Billion – 1999, Viacom sells off 20% of company in an IPO – 2004, Viacom sold Blockbuster to the public (Icahn buys10 million shares) • Sales: – $7.4 Million in 1987 – $2.2. Billion in 1994 – $6 Billion by 2005 • Technology: – 2004, Blockbuster starts online business while eliminating late fees
  8. 8. Entering the Disruptive Technology “Perfect Storm” Captain! There’s just too many of them Damn It! Get Me Spielberg on the Radio! Mark Walhberg & George Clooney “The Perfect Storm”
  9. 9. Blockbuster Files for Bankruptcy (2011) • Profitability Ran Supreme – As the company changed ownership from Huizenga to Viacom to Icahn’s controlling interest, strategy changed and maintaining profitability was paramount • Misunderstood the Impact of Technology Changes (It is “Net” Flix) – All understood that technology would change the business, but none thought it would destroy a $6 Billion business. • Challenges in Running a Start-Up within the Core Business – The online business was a start-up. Blockbuster could not come to grips with starting a start- up operationally or support for the fulfillment side of the business.
  10. 10. Disruptive Technology – The Origins • Term coined by Clayton Christensen and Joseph Bower in 1995 in an article for the Harvard Business Review entitled “Disruptive Technologies: Catching the Wave”. • In 1997, Christensen wrote “The Innovator’s Dilemma” where he further explored cases of disruptive innovation. – The Economist, in 2011, named the Innovator’s Dilemma as one of the six most important business books ever written. • In 2003, Christensen wrote “The Innovator’s Solution” where he replaced the term “disruptive technology” with “disruptive innovation”
  11. 11. Sustaining Innovations  Improvement to existing markets and value networks.  Improvements can either be considered incremental or radical.  Industry Leaders have a high probability of beating new entrants in sustaining technologies. Influence & Shape Existing Markets
  12. 12. Disruptive Innovations  Help create a new market or value network.  Eventually disrupts an existing market and value network over a short or long period.  Very difficult for Industry Leaders to compete against New Entrants as it changes the whole market. Transform Existing Markets And Create New Ones
  13. 13. • Lower Performance Thresholds – Lower performance metrics – Industry Leaders existing clients do not want to use the product. • Unique Product Attributes – A disruptive innovation usually offers new features not found in today’s market. – A key feature in many disruptive innovations is moving away from a centralized business model. • Lower Cost Base – The firm establishing the disruptive innovation has a lower cost base than Industry Leaders. Canon Countertop Photocopiers Microsoft Operating System Sony Portable Radios & TVs Disruptive Innovations Characteristics When first introduced…
  14. 14. The Disruptive Innovation Model Performance Time Disruptive Technologies Performance that customers can utilize or absorb Industry Leaders Nearly Always Win New Entrants Nearly Always Win Pace of Technological Progress Sustaining Innovations Source: Clayton Christensen, The Innovators Solution
  15. 15. Two Types of Disruptive Innovation Performance Time Disruptive Technologies Performance that customers can utilize or absorb Pace of Technological Progress Sustaining Innovations 1. Low End Disruption Clayton Christensen, The Innovator’s Solution Non-consum ers or Non-consum ing occasions DifferentMeasure OfPerformance Time 2. New Market Disruption
  16. 16. US Integrated Steel Mills vs. Mini Mills SteelQuality Time % of Tons Rebar 7% Gross Margin 4% Angle Iron: Bars & Rods 12% Gross Margin 8% Structural Steel 18% Gross Margin 22% Sheet Steel 25%-30% Gross Margin 55% Source: Clayton Christensen, The Innovator’s Solution
  17. 17. The Innovator’s Dilemma • Lessons Learned from Business School – Customer • Listen to your customer to understand future demands and requirements, especially your most valuable customers. – Margin and Market for Growth • Unrelenting focus on moving towards higher margin products (even if it requires moving resources from lower margin products). Focus on new markets that can support growth for large organizations. • When Confronted with a Disruptive Technology – Customer • Customers, especially most valued customer, reject the product. – Margin and Market for Growth • Management rejects the project as it provides lower margins to support the needs of large organizations and thus, not considered a market for growth.
  18. 18. II. Key Disruptive Technology Enablers
  19. 19. McKinsey Global Institute Twelve Potentially Economically Disruptive Technologies Source: McKinsey Global Institute, Disruptive Technologies: Advances that will transform life, business and the global economy, May 2013
  20. 20. Mobile Internet
  21. 21. Mobile Internet – When First Introduced • Lower Performance Thresholds – Slow connectivity speeds – Limited downloading of attachments (20K for Mobitex) – Few web pages had been designed for mobile browsing • Unique Product Attributes – Allowed users to access e-mail, mobility calling, text messages, and access the internet • Lower Cost Base – Primary feature, and costs for the user, was for the voice network. Data rates for e-mail were reasonable. Disruptive Innovation Characteristics
  22. 22. The Next Disruptive Force – Mobile Internet • Global Mobile Traffic in 2012 – Increased by 70% in 2012 – Now represents 12x’s the size of the entire global internet in 2000 – Mobile video traffic exceeded 50% for first time • Introduction of 4G – 4G generated 19x’s more traffic on average than non-4G connections – 4G connections only represent 0.9 % of the mobile connections today, but account for 14% of the mobile data traffic • Offloading to Fixed Networks – 33% of total mobile traffic was offloaded onto fixed networks (w/o offload, global traffic would have increased by 96% rather than 70%) Source: Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012-2017
  23. 23. Machine-to-Machine (“M2M”) Opportunities • Machine-to-Machine* is: – The ability of machines, assets and devices exchange data with people or company’s management systems in need of the information* – Derived from telemetry technology • A Disruptive Innovation Enabler** – Over 60 Billion Machines on the Planet – 10x’s more connected machines than people – 15x’s more connected machines than handsets • On the Cusp of Stunning Growth – Ericsson has forecasted mobile connection growth of 50B machines by 2020 • Transportation Government • HealthCare Manufacturing • Energy Education • Retail Financial Services • Oil & Gas * Source: Webopedia ** Source: Frost & Sullivan Industry Verticals
  24. 24. Machine-to-Machine (“M2M”) Applications Fleet Management Remote Patient Monitoring Facilities Management Device Monitoring & Mgmt. Asset Management Security Management Smart Grid Remote Inventory Management Home Energy Management
  25. 25. Potential Impact by 2025 $3.7 Trillion to $10.8 Trillion per year by 2025 • Developing Nations – 50% of the value derived by spreading internet to developing nations – Expected that 3.5 Billion citizens in developing nations to have internet by 2025 (2 Billion via Mobile Internet) • Health Care – Potential to cut more than $2 Trillion in the projected cost of chronic disease – Patients with heart disease and diabetes can be monitored through ingestible or attached sensors to transmit readings • Education – Potential to increase lesson quality, improve student performance, and increase graduation rates through hybrid online/offline teaching models • Public Sector – Online services through mobile apps, such as information requests, license applications, and tax payments) can enhance productivity • Retail Sector – Productivity gains by delivering retail goods through a digital channel could be 6-15 %. – By 2025, 30%-50% of retail transactions could take place online • Mobile Payments – Globally, cash payments represent 90% of the more than 3 trillion transaction made every year – Digital wallet technology is evolving exponentially Source: McKinsey Global Institute, Disruptive Technologies: Advances that will transform life, business and the global economy, May 2013
  26. 26. Cloud Computing • Defined: – Internet-based computing whereby information, IT resources, and software applications are provided to computers and mobile devices on-demand • Essential Characteristics: – On-Demand Self Service – Broad Network Access – Resource Pooling – Rapid Elasticity – Measured Service • Service Models: – Software as a Service (“SaaS”) – Platform as a Service (“PaaS”) – Infrastructure as a Service (“IaaS”) • Deployment Models: – Private Cloud – Community Cloud – Public Cloud – Hybrid Cloud National Institute of Standards & Technology, Special Publication 800-145
  27. 27. Created by Sam Johnston
  28. 28. Why Cloud Computing is Disruptive… • Lower Performance Thresholds – Not as Secure – Not as Fast – Not as reliable as your internal network • Unique Product Attributes – Lower OPEX and CAPEX required to run – Rapid elasticity – Broad Network Access • Lower Cost Base – Costs are spread over many, many users
  29. 29. Amazon Web Services • Started in 2006 by Amazon, originally as a way to make use of excess computer capacity not used for Amazon’s own retail shopping site. • Revenues of $2 Billion, supporting “hundreds of thousands of customers in over 190 countries”. • Morgan Stanley believes that AWS will reach $24 Billion in Revenues by 2022. – In a recent report they write that AWS is making waves in conventional IT by “applying retail economics”.
  30. 30. Potential Impact by 2025 $1.7 Trillion to $6.2 Trillion per year by 2025 • Sale of Cloud Based Services – $1.2T to $5.5T could be in the form of surpluses in selling products & services – An additional 2B to 3B additional internet users – In developing countries, estimated that there will be 3.5B internet users; many of whom will only have mobile devices • Productivity Improvements – Estimated that $500B to $700B could come in the form of productivity improvements for the enterprise IT – Includes savings in: • Infrastructure (Both Capital & Operating Expenses) • Software Development & Packaged Software Costs Source: McKinsey Global Institute, Disruptive Technologies: Advances that will transform life, business and the global economy, May 2013
  31. 31. The Internet of Things • Defined: – The Internet of Things refers to the use of: • sensors, • actuators, and • data communications technology – built into physical objects that enable those objects to be: • Tracked, • Coordinated, or • Controlled – Across a data network or Internet • Three Essential Steps: – Capturing data from the Object – Aggregating that data from the object – Acting on that Information • The Technology – From simple identification tags to complex sensors and actuators – Radio Frequency Identification Tags being the least expensive – Micro electromechanical Systems (MEMS) allow very sophisticated sensors in virtually any object (and even people) • Applications – RFID to track the flow of raw materials, parts, and goods through production and distributions – RFID tags on containers and boxes are used to track products as they make their way through warehouses and transportation hubs to store shelves and even all the way to the consumer
  32. 32. Technology Roadmap – The Internet of Things Source: SRI Consulting Business Intelligence
  33. 33. Potential Impact by 2025 $2.7 Trillion to $6.2 Trillion per year by 2025 • Health Care – Estimated an economic impact of $1.1T to $2.5T per year by 2025 – Assist with in-hospital health monitoring where physicians and nurses have access to real-time data – Using sensors on drug bottles and packages to reduce the $75B worth of counterfeit drugs sold each year • Manufacturing – Savings of $900B to $2.3T – Improvements in operational efficiency: • Tracking machinery • Supply chain tracking & management • Flow of inventory around shop floor • Oil, Metal & Mineral Extraction – Savings of $100B to $200B – Help find and map mineral deposits and increase recoverability • Smart Electrical Grid – Savings of $200B to $500B – For consumers of energy, demand- management applications that could reduce costly peak usage – For utility operators, real-time information on the state of the grid in reducing total outage times • Agriculture – Savings of $100B per year – Leaf sensors can measure stress in plants base upon moisture levels – Soil sensors can gather information on how water moves through the soil • Urban Infrastructure – Traffic – Waste Water Systems – Garbage collection – Water Managemet Source: McKinsey Global Institute, Disruptive Technologies: Advances that will transform life, business and the global economy, May 2013
  34. 34. III. Winning Partnership Strategies to Exploit Disruptive Technology
  35. 35. Corporate Strategies Responses to Disruptive Innovation In the Innovator’s Dilemma, Christensen suggests the following three methods to handle disruptive innovation in an organization: 1. Acquisition 3. Spin-Off2. Internal Development
  36. 36. Corporate Strategies Responses to Disruptive Innovation In the Innovator’s Dilemma, Christensen suggests the following three methods to handle disruptive innovation in an organization: 1. Acquisition 3. Spin-Off2. Internal Development 4. Strategic Alliances
  37. 37. Strategic Alliance Strategies A Low Cost Corporate Strategy for Disruptive Technology 1. Acquisition 3. Spin-Off 2. Internal Development Advantages • Least Cost Solution • The “Borrowing” Strategy • Quick Entry into Disruptive Technology Market • Limited Integration Challenges • Usually quicker exit if disruptive innovation is not successful
  38. 38. Moneris’ Disruptive Innovation Strategy Internal Development & Strategic Alliances • Recognizing the disruptive impact of smart phones and tablets as vehicles for payment processing, Moneris used an internal development strategy to establish: – Low End Disruption • For its existing client base, Moneris introduced eSELECTplus Mobile – New Market Disruption • To attract non-consumers, Moneris introduced its Payd service • Being the first to market in Canada, established our technical leadership • Required Strategic Alliances strategy for Retail Distribution Capabilities Performance Time Sustaining Strategy Low-End Disruption: DifferentMeasure OfPerformance New-Market Disruption Time
  39. 39. 1 Giga Ethernet 100M Ethernet 10M Ethernet * Graph Source: Ericsson Canada 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 10M HSPA 100M LTE 1Giga LTE*A (“4G”) MobilePC 10 Years Strategic Alliance Strategies – Mobile Internet “It’s Déjà Vu All Over Again” Internet Protocol Networks The First Wave = Enhanced Strategic Alliance Activity High Speed Mobile Data The Second Wave = Enhanced Strategic Alliance Activity Speed
  40. 40. Recent Strategic Alliances for Mobile Internet Mobile Wallet IBM MobileFirst US Department of Defence Smart Grid Initiative Single, Global M2M Platform Mobile Commerce Usage Based Insurance
  41. 41. Strategic Alliance Strategies – Existing Alliances Analyse for “Strategic Fit” Strategic Fit • Must posses the following attributes: – Compelling/Competitive Market Strategy • Supports sufficient revenue and net income for a win/win alliance • Provides strong value add to the customer – Strategic Alignment • Compatible long term strategies • Complementary Strategic Drivers • Synergistic Strengths & Weaknesses • As a Disruptive Innovation matures, Strategic Alliances built on legacy technology are at risk of no longer supporting the strategic drivers originally considered in establishing the strategic alliance in the first place. X
  42. 42. Strategic Alliance Strategies – Existing Alliances Analyse for “Operational Fit” Operational Fit • The evaluation of a good operational fit involves evaluating: – The degree to which alliance partners’ day to day business practices and policies are compatible; – the effectiveness of the system of metrics and rewards, and, – organizational support to the success of the alliance. • When an existing alliance is pressure due to a disruptor entering their market, they will retrench from existing alliances. Operational Fit Challenges Resource Allocation Survival instincts will cause reduced staff and capital. Communications As the party retrenches, external communications will lessen. Time Allocation Company alliance responsiveness will be reduced to focus internally. Day-to-Day Problem Solving Problems will not likely be solved early as the retrenching party has reduced resources Corporate Culture Likely to change due to intense pressure from Disruptive Innovator.
  43. 43. Channel Partner Strategies – IT Distributors • While the technology landscape is changing, the VAR Ecosystem will remain a central component of how SME’s will adopt and procure new technology. • VARs have been struggling with a challenging market, changes in technology, and skill gaps in key areas. – VARs require more from an IT Distributor than a partner portal and a 1-800 for service – IT Distributors must support VARs by offering them IT education and marketing programs designed to build upon their growth and expertise in disruptive technologies • IT Distributors have to stay ahead of the curve in understanding how disruptive technology will impact hardware, software and services sales. • Finally, the time is right for IT Distributors to start searching out and researching strategic alliance partners to establish additional revenue enhancing opportunities.
  44. 44. Channel Partner Strategies – Value Added Resellers • Disruptive Technologies, such as Cloud Computing, will accelerate the growth of new customers in the Small & Medium Enterprise Market • Given the change VARs must focus on providing their clients with additional options, including the provision of managed services. • VARs, and potentially with the assistance of IT Distributors, should seek out alternative channel relationships to off-set the reduced revenue erosion from some disruptive technologies – e.g. partnering with payment processors
  45. 45. In Conclusion… • Encourage you to get better acquainted with disruptive innovation theories and practice • From a strategic management perspective, disruptive innovation can create challenges and opportunities. – Make Use of the Alliance Health Check • Look for Disruption activity • Review Strategic Fit • Review Operational Fit – Look at Disruptors as Potential Strategic Alliance Candidates • From a Channel Management perspective, IT Distributors must provide educational and marketing support to their VAR Community to educate them on Disruptive Technology and winning strategies to garner additional revenue • VARs should also seek out additional channel relationships based upon Disruptive Technology changes to enhance revenue opportunities.
  46. 46. Phil Hogg Vice-President, Strategic Alliances Moneris Solutions Phil.hogg@moneris.com www.linkedin.com/in/philhogg