The slides of my course on ebusiness. Video´s connecting to these slides can be found on my YouTube channel "Ville Saarikoski"

1. PUTTING THE E INTO
BUSINESS, CREATING NEW
EBUSINESSES – THE LOGIC OF THE
NETWORK AND INFORMATION
ECONOMY
Ville Saarikoski 17.5.2013
This course is work under progress (will be uploaded to slidehare) and
contains the core elements plus links to c 10 videos (missing videos
will be update on to YouTube) and learning assignments to students
(will be available on Googledocs)
I am searching for feedback to the course, for opportunities to conduct
the course online or in class, in whole or in part, in an international
collaborative environment
Free to copy and adapt as long as original cited
and new adapted material available with same
license

2. GOALS
 Understand the theories of the information economy – why and
how doing business is different compared to the industrial
economy
 Become familiar with how important It-tools are in building the
information society and to apply these tools on a personal
level, company level and in creating new markets or
using/building new einfrastructure
 Become familiar with e-business cases, service providers and
new infrastructure
 Understand how to build new e-markets, to change
industries, change management, change leadership and strategy
 To further develop this course (and related courses)
 The course builds on earlier teaching experimentation with e.g.
online courses on ebusiness and classroom courses on
operations management, strategy, innovation, creating your
webshop etc

3. METHODS
 Reference to literature sources both books and articles is made
throughout the slides. The course is built by choosing a set of books .
 Links to further video material by the authors of above books e.g. Ted
Talk presentations available on YouTube,
 Videos explaining the concepts introduced in the books and how they
interconnect in this course is available on the YouTube channel VilleSaar
 E-business & E-commerce Management by Dave Chaffey is good
background material and could be used as a single course book.
However it is missing some key concepts.
 Setting a framework and approaching the topic from different
perspectives – the student can then choose which path to follow to gain
a deeper understanding
 Excercises
 Cases
 Participation, discussion, sharing experiences, collaborative construction
 Links to thesis on the topic (supervised by lecturer and others)

4. Turban et al

5. CONTENTS
 Trends and change in society – enablers and drivers of change
 The character of Information, how to earn with information
 Networks – value creation, value capturing (value delivery) in a network
environment
 Game theory
 Large scale networks and information – The Internet
 Six Degrees
 The logic of flat rate
 Long Tail
 The Dilemma of the Commons – the logic of sharing
 Groundswell – user revolution
 New ways for users to interact with companies and society
 Growth strategies – creating new eBusinesses
 Innovators dilemma, Clayton Christensen
 Creating market spaces, Mauborgne Kim
 Open Services Business, Henry Chesbrough
 The Mesh business, Lisa Gansky
5
Society
CompanyIndividual

6. CONTENTS
 Business Model Canvas, Osterwalder
 Change Management, change Leadership Tools
 Tools for creating new
 Individual tools (blogs, web pages, social media)
 Corporate tools (erp, crm, digital marketing),
 Society i.e. infrastructure (payment systems, authentication systems, the e-
citizen and e-consumer)
 Security concerns
 Creating New Markets,
 New eBusinesses, cases
 Shaping new industries,
 Emergence of new infrastructure – difference between nations
6
Society
CompanyIndividual

7. SETTING THE SCENE
 May you live in interesting times – A Chinese
Saying

8. THE MACRO SCENE IN FINLAND - UNDERSTAND THE LOGIC OF THE
NEW ECONOMY: OLD STRUCTURES REACH A ”TIPPING POINT” AND EXPERIENCE A
”MELT DOWN”?
Sanoma Oy Newspapers
can be read
electronically, the VAT issue
Itella Oy,
The mail man´s bag gets thiner
because newspapers and bills
become epapers and ebills
The paper industry is building
outside of Finland, decreasing
paper consumption?
Nokia
”Burning Platform”
”Where there is paper there is inefficiency” => new
networks, new platforms, new infrastructure
Present businesses become e-businesses, New businesses
build on an e-infrastructure
SOK, Kesko, Stockmann were
late in building web shops
Community structure,Structural
reforms in community
structures, because of lack of
efficiency in health care
Universities of Applied Science face
dilemma of globalisation vs local
development, the opportunity to
leverage e-learning and to teach e-
business
Music becomes digital, volume of
business in turnover
decreases, ratio of digital vs total
turnover increases (20% in
Finland more elsewhere)
E-health, e
patient
records, e-
prescriptions

9. EARNING WITH INFORMATION AND EARNING
IN A NETWORK

10. INFORMATION ECONOMY – EARNING WITH
INFORMATION – VALUE CREATION, VALUE
CAPTURING
 Characteristics of information
 Costly to produce, cheap (=>0) to reproduce => the changing role of copyright
 Sunk cost
Service provider should avoid commodotization i.e price comparability
Focus on marketing, note samples can be given for free at no cost, low variable cost offers
great marketing possibilities
Focus on segmentation (identifying customers), versioning, personalised pricing,
If members of different groups systematically differ in their price sensitivity, you can
profitably offer them different prices. Student and senior citizen discounts are prime
examples.
 Lock-in:
 If an organization chooses to standardize on a particular product, it may be very expensive for it
to make the switch owing to the costs of coordination and retraining. Again Microsoft serves as
an example
 Positive feedback, preferential attachment
 Network effects:
 If the value to an individual depends on how many other members of his group use the
product, there will be value to standardizing on a single product. Microsoft has exploited this
desire for standardization with its Microsoft Office suite.
 Sharing:
 In many cases it is convenient for the individual user to manage or organize all information
goods that he or she will want to consume. Information intermediaries such as libraries or
system administrators can
 Platforms, ecosystems

11. COMPANIES IN NETWORKS
6/7/2013 Laurea-ammattikorkeakoulu 11

12. THE GAMES BUSINESSES PLAY – VALUE
CREATION, VALUE NET FRAMEWORK
 The Right Game – use game theory to shape strategy
HBR July - August1995, Adam brandenburg and Barry
J Nalebuff
 The importance of value creation and value
capturing in Value Networks
 PARTS, Players, added value, rules, tactics, scope

13. VALUE CREATION VALUE CAPTURING – EXAMPLES
OF THE GAMES BUSINESSES PLAY
 Auction in which both the winner and the second placed have to pay up
 Destroying your own assets
 Each player can donate to the community and the community will give a payoff double
the contribution and divide it equally among the players
 Collaborative tasks game
 The value network
LIISA
PEKKA
Keeps mouth shut Talks
Keeps mouth shut 1,1 5,0
Talks 0,5 3,3
http://www.fiksuhuuto.com/
Company
Supplier
Substitutor Complementor
Customer

14. COMPETITIVE EDGE IN BUSINESS
Pay-offs
Innova Dolla
1 1
3 2
2 4
4 3
Innova strong in
R&D, Dolla
financially strong.
The Business
question should I
invest in R&D?
INNOVA
low
high
DOLLA
high
high
DOLLA
low
low

15. CLASSIFICATION OF GAMES
Classification Example
Taphtuvatko siirrot samanaikaisesti vai
peräkkäin? *
What is the amount of competition or
collaboration between players*
Is the game played once and the players will
never ever meet againa?*
Do all the players have the same information?*
Can the rules be changed?*
Are contracts binding?*
Zero sum games
*Source The Oxford Handbook of strategy p 878-881

16. GAME THEORY AND SHOULD I
COLLABORATE?
COMPETITOR A
COMPETITOR
B
Don’t cooperate cooperate
Don’t cooperate B=5, A=5 B=12, A=2
cooperate B=2, A=12 B=9, A=9
The figure shows B´s payoff and A´s payoff. Try and apply the logic of the
prisoners dilemma to understand why the companies end up not collaborating.
A market understanding to what collaborating or not could mean. If e.g B does
not co-operate and A is given to understand that B is co-operating so A will do
nothing and will wait for joint efforts to emerge and be decided upon. B will
quietly build a factory and captures the market. B=12, A=2 tai B=2 A=12,
The answer: Find the position in which your competitor choosing differently
would only make life easier for you.
Johnson, Scholes, Whittington p 243, Exploring Corporate Strategy

17. THE STANDARS GAME, INFORMATION RULES ,
SHAPIRO P 250
Weak team´s choice B
Strong teams
choice A
Willing to fight Wants standard
Willing to fight Standards war A tries to block B
Wants standard Voluntary
standard

18. EARNING ON THE INTERNET – A HUGE
INFORMATION NETWORK
Combining the logic of earning with information and
earning in a network and moving it into a macro
environment i.e. the Internet

19. Six degrees
Create communities that can scale up
and busines models that benefit from
scaling
Capture interest economy, huomiotalous, (Sarasvuo)
Participation economy, osallistumistalous (Hintikka)

20. COMMUNICATION IS NOT ABOUT AVERAGES!
LOOK AT THE DATA FROM A NEW PERSPECTIVE –
SEARCH FOR THE SUPER NODES
 How many sms messages do you send per month?
 How many calls do you make per month?
 How many pictures do you take and send?
 How many contacts do you have on your phone?
 How many hours of music do you have on your phone?
 How many times do you access the Internet per day from ypur
mobile?
 How many bookmarks do you have on your mobile phone?
 Which member of parliament sends the most Chrismas Cards?
http://www.savonsanomat.fi/teemat/eduskuntavaalit/il-kari-
k%C3%A4rkk%C3%A4inen-suoltaa-joulukortteja/627307

21. THE SUPER CONNECTED, MALCOLM
GLADWELL, TIPPING POINT
 How many do you know? First agree on what knowing means. Second
pick randomly 20 names in your language by e.g. picking the first name on
every 20`th page in a telephone directory
 Alanen, Brunell, Forssman, Harkonsalo, Hjelt, Ikäheimo, Jääskeläinen,
Keinänen, Korhonen, Kyötikki, Lehikoinen, Lindström, Martinmaa, Mäk
inen, Nyfors, Parviainen, Pulkkinen, Riijärvi, Saikkonen, Setälä, Summ
anen, Tihinen, Vaara, Volanen, Åkerblom
 Concepts structural holes, strong weak ties, the mathematics of
networks
 http://en.wikipedia.org/wiki/Network_science
 http://en.wikipedia.org/wiki/Social_network_analysis
 http://en.wikipedia.org/wiki/Interpersonal_ties
 http://en.wikipedia.org/wiki/Social_network

22. SIX DEGREES (DISTANCE IN NETWORKS) THEORY:
MILLGRAM, WATTS, STROGATZ
 Communication is about the flow of
information in a network. Marginal price
goes to zero => the individual’s willigness to
spread links and information, ”to spin the
web” increases. => from price per minute or
per message (transaction based pricing) to
flat rate
http://en.wikipedia.org/wiki/Six_degrees_of_separation
25.8.2010 http://gizmodo.com/5620681/all-300000-biggest-websites-
visualized-with-their-
icons?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A
+gizmodo%2Ffull+%28Gizmodo%29&utm_content=Google+Reader

23. Albert Edelfelt 1887, Ruokolahden Eukot kirkonmäellä,
Ateneum
GRAHAM BELL EI NÄHNYT FACEBOOKIA
Huhuverkko (rumour
network),
Puskaradio,
Viidakkorumpu
(jungle drum)

24. THE LOGIC OF FLAT RATE
 The problem
 1 costs 1,99 10 cost 19,90? (physical product)
 1 message costs…. 10 messages cost? Same price (information product)
 Our social networks are not evenly distributed, communication is not about averages
 Flat rate pricing allows for connectors to emerge; the individual starts sharing links
 When pricing is flat i.e. marginal pricing is zero, superconnected nodes emerge e.g. blogs
with millions of readers, people with thousands of friends
 The distance between nodes in a network, which has superconnected nodes shrinks. A
scale free (six degree network) emerges. The flow of information in a network increases.
The network becomes interconnected.
 The Internet is scale free. The Internet has flat rate pricing
 Mobile networks used transaction based pricing (per minute, per message, per kilobyte).
Only when the pricing model (business model) changed, did the mobile Internet start to
spread

25. The Long Tail
Chris Anderson (2006) The Long Tail: What happens
to demand when supply is no longer limited

26. The Long Tail and
change
Chris Anderson (2006) The Long Tail: What happens
to demand when supply is no longer limited
Remeber: Bricks and Clicks, The Virtual world
combines with the physical world

27. Combining six degrees and the Long tail -
Companies should focus on building from the the tail.
Create communities that can scale up
and busines models that benefit from
scaling
Capture interest economy, huomiotalous, (Sarasvuo)
Participation economy, osallistumistalous (Hintikka)

28. THE NEW LOGIC OF SHARING, LIMITED
RESOURCES BECOMING UNLIMITED, OPEN
DATA, OPEN RESOURCES - THE DILEMMA (TRAGEDY) OF
THE COMMONS, RESURSSINIITTY, RESURSSIALUSTA
Copyright
Copy left (Asset
of user)
Phone number
Number
portability (Asset
of user)
Limited
Frequencies
Wlan hotspots
(Asset of user)
Code
Open code
In your
Business??
Bus routes
Information accesible to user
(open data)
http://www.julkinendata.fi/, Reitti
opas
Yochai Benkler “Sharing and shared efforts become more
feasible, because of developments in technology” The
Wealth of Networks: How Social Production
Transforms Markets and Freedom

29. THE DILEMMA OF THE
COMMONS, REORGANISING RIGHTS...CHANGES IN
LAW
 Resource based view vs unlimited resources
 Some recent reorganisations of rights
 Creative Commons, restructuring of copyright Lawrence Lessig.
Copy left instead of copyright
 Number portability
 Non licensed frequencies (WLAN)
Yochai Benkler, Some economics of wireless communications.
Harvard Journal of Law and Technology Volume 16 Number 1 Fall
2002
 Yochai Benkler “Sharing and shared efforts become more
feasible, because of developments in technology” The Wealth of
Networks: How Social Production Transforms Markets and
Freedom
 Public sector information becomes open
http://www.lvm.fi/c/document_library/get_file?folderId=964902&na
me=DLFE-10617.pdf&title=Julkinen%20data

30. WHAT RESOURCES CAN YOU IDENTIFY THAT ARE
BEING TRANSFERRED INTO THE OPEN
ENVIRONMENT?
WHAT OPEN RESOURCES (OPEN DATA) ARE YOU
BENEFITTING FROM?

31. GROUNDSWELL (LI, BERNOFF) – THE USER (THE
NEW GENERATION) REVOLUTION ON THE INTERNET
 See also books by Tapscott e.g. Grown up Digital
6/7/2013 Laurea University of Applied Sciences 31

32. THE USER LEAD REVOLUTION
Individual
Society
Corporation

33. GROUNDSWELL CHARLENE LI, JOSH BERNOFF 2008
 What is groundswell p 9(verkkovalta)?
 A social trend in which people use technologies to get things they
need from each other, rather than from traditional institutions
like corporations
 The strategy for corporations: If you can t beat them, join them
 The BIG principle for mastering the groundswell p 18: Concentrate
on the relationship, not the technologies

33

34. TECHNOLOGIES AND CLASIFICATION P 18-
People
creating:
blogs, u
ser
generate
d
content
People
connectin
g: social
networks
and virtual
worlds
People
collabora
ting: wikis
and open
source
People
reacting
to each
other:
forums
ratings,
and
reviews
People
organizin
g
content:
tags
Accelarat
ing
consump
tion: rss
and
widgets
How they
work
Participatio
n
How they
enable
relationshi
ps
How they
threaten
institutional
power
How you
can use
them
See next slide for example

35. EXAMPLE: BLOGS
• How they work:A blog is a personal (or group) journal of
entries containing written thoughts links and often pictures
• Participation: Blog reading is one of the most popular
activities in Groundswell with one in four online Americans
reading blogs (2006). Video reviewing is also popular.
Podcasters and even podcast listeners are rare
• Participation: The authors of blogs read and comment on
others blogs. They also cite each other adding links to other
blogs from their own posts
6/7/2013 Laurea University of Applied Sciences 35

36. EXAMPLE CONTINUED:
• How they threaten institutional power: Blogs, user generated
video and podcasts aren t regulated, so anything is possible.
Few YouTube video uploaders check first with the subjects of
their videos. Companies frequently need to police employees
who post unauthorized content about their employees and
their jobs
• How you (a company) can use them: First listen, read blogs
about your company. Search for blogs with most influence.
Start commenting on those blogs
6/7/2013 Laurea University of Applied Sciences 36

37. THE PROFILES, THE SOCIAL TECHNOGRAPHICS
PROFILE – KNOW YOUR CUSTOMER? P 40
• Creators:
• publish a blog,
• publish own web pages,
• upload video you created
• upload music you created
• write articles and post them
• Critics:
• publish a blog,
• post ratings/reviews of products or services
• comment on someone else s blog
• contribute to on line forums
• contribute to/ edit articles in a wiki

38. THE PROFILES, THE SOCIAL TECHNOGRAPHICS
PROFILE – KNOW YOUR CUSTOMER? P 40
• Collectors:
• Use Rss feeds
• Add tags to web pages or photos
• Vote for web sites online
• Joiners:
• Maintain profile on social networking sites
• Visit social networking sites
• Spectators:
• read blogs
• watch video from other users
• listen to podcasts
• read online forums
• read customer ratings/reviews
• Inactives:
• None of these activities
http://www.youtube.com/watch?v=kGJTmtEzbwo

39. 6/7/2013 Laurea University of Applied Sciences 39

40. 6/7/2013 Laurea University of Applied Sciences 40
http://empowered.forrester.com/tool_consumer.html

41. STRATEGIES FOR TAPPING THE GROUNDSWELL P
65
 Four step planning proces POST
• People: What are your customers ready for
• Objectives: What are your goals
• Strategy: How do you want relationships with your customer to
change?
• Technology: What applications should you build
 Five objectives:
1. Listening, Use for research
2. Talking,Use for spreading messages
3. Energizing, Find your most enthusiastic customer
4. Supporting, Set up tools to help your customers support each
other
5. Embracing, Integrate your customers into the way your
business works

42. EXISTING BUSINESS FUNCTIONS AND THEIR
GROUNDSWELL ALTERNATIVE P69
You already
have
This function
Now you can pursue
this groundswell
objective
How things are different in
groundswell
Research Listening Ongoing monitoring of your
customers conversations with each
other, instead of occasional surveys
Marketing Talking Participating in and stimulating two-
way conversations with each other,
not just outbound communications to
your customers
Sales Energizing Making it possible for your
enthusiastic customers to help sell to
each other
Support Suporting Enabling your customers to support
each other
Development Embracing Helping your customers work with
each other to come up with ideas to
improve your products
6/7/2013 Laurea University of Applied Sciences 42

43. QUESTIONS TO ASK YOURSELF
 How are the users i.e. your customers taking power
in your context? (Using groundswell)
 How is your context moving into services? Can you
perceive a market for new services or to migrate
deeper into a service perspective?
 What are your value propositions?
 What technology is behind your service creation?
 How do you move toward services? How do you
create services?

44. THE SERVICE LOGIC, KNOWLEDGE INTENSIVE
BUSINESSES (KIBS) AND INFORMATION INTENSIVE
BUSINESSES
 Tools/Theories to identify nee business areas
 The Innovators Dilemma, Clayton Christensen
 Open Services Innovation, Chesbrough
 Creating New Market Space, Mauborgne, Kim
 The Blue Ocean, Mauborgne, Kim
 The Mesh

45. GROWTH GAP
The growth
goal
Tools:
1) Business Plan
What, to whom, how (channel) at what price
(business model)
http://en.wikipedia.org/wiki/Business_plan
2) Roadmap
http://en.wikipedia.org/wiki/Technology_roadmap
3) Growth plan
- R&D&I gap
- Gap for strategic
development

46. GROWTH PLAN
Current Operations Adjacent moves New Growth Initiatives
Year 1 Year 2 Year 3 Year 4 Year 5
Current revenues Targeted Adjancencies Number launched
Five-year Expected
growth rate revenue/initiative
in year 5
Projected year 5 Projected year 5
core revenues adjacent revenues Projected success rate
Notes: Notes: Projected year 5
new growth revenues
Notes:
Target year 5 revenues
Projected year 5 revenues
Growth gap
Current revenues: revenues for the current fiscal year
Five year growth rate: projected annual growth rate for ecisting operations
Projected year 5 core revenues: current revenues x(1+ growth rate)x5
Targeted adjacencies: description of new customers, regions, or channels that extend the core business
Projected year 5 adjacent revenues: expected revenues from adjacent moves
Number launched this year: estimated number of new growth initiatives launched in a given year
Year 5 revenues/initiative: average expected revenue generated by initiative launched in a given year in year 5
(e.g. the third year of revenues for initiatives launched in year 2)
Projected success rate: The expected success rate of initiatives launched in a particular year
Projected year 5 new growth revenues: Number launchedx revenue/initiativexsuccess rate
Target year 5 revenues: The strategic target for revenues in year 5
The Innovator s Guide to
Growth – Putting
Disruptive Innovation to
Work p 26
Scott D. Anthony, Joseph
V. Sinfield, Mark W.
Johnson, Elizabeth J.
Altman, 2008

47. INNOVATION AND THE COMPANY LIFE SPAN
Disruptive
innovation
Application
innovation
Product innovation
Process
innovation
Experimental
innovation
Business model
innovation
Structural
innovation
Marketing
innovation

48. 48
 Explains
 Predicts
 Classifies
 First lesson: integrate toward value!
A good theory
A good tool (e.g. a method or an
information system) gives you the tools
to implement

49. 49
Innovators dilemma: Explains how a and why a
grage based company can succeed (Business
aikido)

50. THE INNOVATORS DILEMMA – COMPANIES FOLLOW ONE KEY VALUE
ATTRIBUTE, WHICH IS BASED ON A TECHNOLOGICAL ATTRIBUTE.
CHALLENGE: BECAUSE OF TECHNOLOGICAL DEVELOPMENT YOU
MIGHT GO BEYOND TRUE CUSTOMER NEED (SURPASS CUSTOMER
EXPECTATIONS) AND THE CUSTOMER MIGHT BE SATISFIED WITH
LESS. => TRY ”POORER IS BETTER”
50

51. WESTERN UNION – THE TELEGRAPH AND FAILED
TO SEE THE VALUE OF THE TELEPHONE
 Existing processes, resources and values encouraged investing in
serving present customers (railroads).
 The telephone in its early staged worked well only in short
distances
 Western Union noticed the emergence of the telephone and how
its performance became better, but continued investing in its key
attribute (long distance communication, telegraph and railroads)
 When the future of the phone was self evident, it was already too
late to invest

53. DISCUSSION: WHAT DISRUPTIVE INNOVATIONS CAN
YOU RECOGNISE? HOW DO YOU CREATE NEW
VALUE ATTRIBUTES FOR NEW MARKETS?

54. BLUE OCEAN STRATEGY AND STRATEGY
CANVAS
http://en.wikipedia.org/wiki/Blue_Ocean_Strategy
http://www.blueoceanstrategy.com/

55. MARKKINATILAN LUOMINEN, STRATEGY CANVAS –
CREATING MARKET SPACE MAUBORGNE KIM
HTTP://EN.WIKIPEDIA.ORG/WIKI/BLUE_OCEAN_STRATEGY
55
Chan, Kim; Mauborgne
Renee, Creating new
Market Space - A systematic
approach to value
innovation can help
companies break free from
the competitive pack.
Harvard Business review
January-February 2009
matala

56. CHARACTERIZING SERVICES P 373
 Intangible
 Perception and brands are important
 Can not be stored
 Consumed simultaneously. The customer is part
of the process e.g. educational services, law firms,
consultants, airlines, restaurants etc.
 Services are consumed locally - location
 Customer contact is key

57. SERVICES – C 70% OF GDP =>
CLASSIFICATION OF SERVICES?
Service shop
e.g restaurant
Expert service e.g.
consultant
Service factory e.g. airline Mass service e.g. call center
Labour intensity
The amount of
direct customer
contact
High
High
Low
Low

58. OPEN SERVICES INNOVATION - CHESBROUGH
58

59. CONCEPT 1:THINK OF YOUR BUSINESS AS A SERVICE BUSINESS – OPEN
SERVICE INNOVATION CHESBROUGHP37
59
Service-Based view of transportation
Selection
of vehicle
Delivery of
vehicle
Maintena
nce of
vehicle
Informatio
n and
training
Payment
and
financing
Protection and
insurance
Car purchase
or lease
(product-
focused
approach)
Customer
chooses
Customer
picks from
dealer
stock
Customer
does this
Customer
does this
Customer
dealer, or
third party
Customer
provides
Taxi Supplier
choose
Customer
is picked
up
Supplier
does this
Supplier
does this
Enterprise car
rental
Customer
chooses
from local
stock
Customer
picks up or
is picked
up
Supplier
does this
Supplier
does this
By the day Customer is
responsible
Zipcar Customer
chooses
from local
stock
From
Zipcar
locations
Supplier
does this
Supplier
does this
By the hour Customer
purchases from
supplier

60. Concept 2: Innovators must co-create with customers
 The value of tacit knowledge
 e.g. example riding a bicycle: go faster to stay up,
 balancing on a rope…
 One way:
 Let the customer themselves provide the information,
 Let the customer have control of the process
60
FOUR STEPS TO OPEN SERVICE INNOVATION:
Make
reservation
Arrive at
restaurant
Ask for
table
Go to
table
Receive
menu
Order drinks
and food
Eat Order
bill
Pay Visit
restroom
Leave
Chesprough Open services
innovation p 59

61.  Concept 3: Open innovation accelerates and
deepens service innovation
61
FOUR STEPS TO OPEN SERVICE INNOVATION

62.  Concept 4: Transform your business model with
services
62
FOUR STEPS TO OPEN SERVICE INNOVATION
Grocer Chef
Target market Consumers Diners
Value Proposition Wide selection, quality
price
Dining experience
Core elements Rapid inventory turns,
choosing correct
merchandise
Great food, skilled cooks,
atmosphere
Value chain Food suppliers, related
items, logistics,
information technology,
distribution centers
Fresh produce, local
ingredients, quality
equipment,
knowledgeable and
couteous service
Revenue mechanism Small markup over cost,
very high volume, rapid
inventory turns
High markups over cost,
low volume, alcohol, tips
Value network, ecosystem Other services on
premises, parking
Cookbooks, parking,
special events

63. THE MESH, LISA GANSKY,
WWW.MESHING.IT
6/7/2013 Laurea University of Applied Sciences 63
Eg. hammer Mesh sweet spot
Eg. Tooth brush? Eg. Smart phones
How
often
do
you
use it
Often
Seldom
CostCheap
Expensive
p 22
Own-to-mesh
http://www.ted.com/talks/lisa_gansky_the_f
uture_of_business_is_the_mesh.html

64. THE MESH, LISA GANSKY,
WWW.MESHING.IT
6/7/2013 Laurea University of Applied Sciences 64
Subways, hotel
rooms, taxis, museums, pa
rks
iTunes, Netflix, Zipcar,
Amazon Web Services
Toaster, toothbrush, teacup,
socks
Notebook computer, mobile
phone, GPS device
Frequ
ency
of
usage
Share
a little
Share a
lot
Data-enabled
goodness
low
High
p 139

65. BUINESS MODELS – BUSINESS MODEL
GENERATION

66. BUSINES MODEL GENERATION
Definition: A
business model
answers the
question how value
is created and
captured
www.businessmod
elgeneration.com
http://www.youtube.c
om/watch?v=QoAOz
MTLP5s business
model canvas 2 min
http://www.youtube.c
om/watch?v=8GIbCg
8NpBw Osterwalder
53

67. BUSINESS MODEL GENERATION 9-ELEMENTS
(BUILDING BLOCKS) OF THE CANVAS
 Customer Segments
 mass market, niche market, segmented, diversified,
multisided platforms (or multisided markets)
 Value Propositions
 Newness, performance, customization, getting the job done,
design, brand/status, price, cost reduction, risk reduction,
accessibility, convenience/usability
 Channels
 Customer Relationships
 personal assistance, dedicated personal assistance, self-
service, automated service, communities, co-creation
 Revenue Streams
 asset sale, usage fee, subscription fees,
lending/renting/leasing, licensing, brokerage fees, advertising

68. BUSINESS MODEL GENERATION 9-ELEMENTS
(BUILDING BLOCKS) OF THE CANVAS
 Key Resources
 physical, intellectual, human, financial
 Key Activities
 production, problem solving, platform/ network
 Key Partnerships
 optimization and economies of scale, reduction of risk
and uncertainty, acquisition of particular resources and
activities
 Cost Structure
 cost driven (driving down costs), value driven, fixed
costs, variable costs, economies of scale (e.g. lower
bulk purchase rates), economies of scope(e.g. same
channel supports multiple products)

69.  Unbundling business models
 customer relationship businesses, product innovation
businesses, infrastruture businesses
 The Long Tail (selling less of more)
 Multisided Platforms
 bring together two or more ditinct but interdependent groups
of customers e.g. Visa, Google, eBay
 Free as a business model (Freemium) includes Bait
and Hook
 Non paying customers are financed by another customer
segment e.g. Metro, Skype
 Open Business Models
 companies systematically collaborate with outside partners to
create and capture value
BUSINESS MODEL GENERATION – 5
PATTERNS

70. CASE
 http://www.youtube.com/watch?v=Njuo1puB1lg
 RtB
 CwF

71. THE TOOLS, INDIVIDUAL, CORPORATION,
SOCIETY

72. PERSONAL ETOOLS
Do you know how to:
- create a web page,
- create a web shop
- implement a viral marketing campaign
- do e-accounting, e-invoicing
- implement and work with an erp
(enterprise planning system)
- create an e-survey
- search for scientific article
- document your processes
electronically, quality system
72

73. SO WHY NOT START AN ONLINE BUSINESS? – FROM
SOCIAL MEDIA TO SOCIAL BUSINESS
Discuss the way you use
social media?
Do you trade through social
media buy and sell?
What steps could you take to
make a hobby into perhaps a
part time profession?

74. THE VALUE OF IT BASED TOOLS AT THE CORPORATION
LEVEL- THE ENGINE METAPHOR
6/7/2013 Laurea University of Applied Sciences 74
Erp, crm, scm, viral marketing, e-accounting, e-tools for project
management, documentation, process and quality management
etchttp://www.slideboom.com/presentations/44352/Richard's_Success-
(OpenERP)

75. INFRASTRUCTURE ELEMENTS
 Physical infrastructure
 The amount of computers
 The speed of connectivity
 The amount of usage
 Service infrastructure
 E-billing
 Internet banking?
 E-voting
 E-identification (mobile?)
 Online institutions (ePost office)
 E-Government (e.g. tax return, patient records, e-prescription etc)
 In Finland
 www.vero.fi
 www.suomi.fi
 www.taltioni.fi
 www.yrityssuomi.fi
 http://www.mobiilivarmenne.fi/fi/index.html
 What services is your government providing

76. OBSERVING TOOLS IN ACTION
 Excercise: Take the business model canvas and
look at how it (erp, web commerce, crm, digita
marketing) is a key resource
 Or get involved in an it project (change
management) and observe challenges that you
meet during the project
 Read cases of it and company turn around

77. THE EMERGENCE OF NEW E-INDUSTRIES
(MARKETS) AND EINFRASTRUCTURE
 Look at the emergence of new infrastructure
 Look into how new markets are created and how
new markets emerge

78. E-COMMERCE
6/7/2013 Laurea University of Applied Sciences 78

79. 6/7/2013 Laurea University of Applied Sciences 79

80. 6/7/2013 Laurea University of Applied Sciences 80
31.8.2012

81. CHANGE LEADERSHIP AND CHANGE
MANAGEMENT

82. CHANGE MANAGEMENT DEFINED
 Approaches to managing changes to
organizational processes and structures and their
impact on organization staff and culture are
known as change management p. 531
 Strategy, mission, vision
6/7/2013 Laurea University of Applied Sciences 82

83. 6/7/2013 Laurea University of Applied Sciences 83
p535
• Process managament, leadership and change
• Business models and change
• Communicating change
• Knowledge/ Competence and change
• Culture and change
PERSPECTIVES INTO CHANGE MANAGEMENT

84. DIFFERENT TYPES OF BUSINESS CHANGE
• Viewed at an industry level
• Incremental change
• Discontinuous change
• Organizational change looks at change at an organizational
level and can be both incremental and discontinuous
• Anticipatory change vs reactive change
• Tuning = anticipating incremental change
• Adapting = reacting to incremental change
• Re-orientation = anticipating discontinuous change
• Re-creation = acting on discontinuous change
6/7/2013 Laurea University of Applied Sciences 84

85. BUSINESS PROCESS MANAGEMENT
 BPM is a methodology, as well as a collection of tools, that enables
enterprises to specify step by step business processes
 Classic document work flow, which was BPM s predecessor focused on
humans performing the services. Fueled by the power of application
integration BPM focuses on human and automated agents doing the work
to deliver the service
 1990- Business process re-engineering. Identifying radical new ways of
carrying out business operations, often enabled by new IT capabilities
 Business process improvement. Optimizing existing processes typically
coupled with enhancements in information technology
 Business process automation. Automating existing ways of working
manually through information technology
6/7/2013 Laurea University of Applied Sciences 85

86. STEPS
• Identify the process for innovation
• Identify the change levers
• Develop the process vision
• Understand the existing processes
• Design and prototype the new process
6/7/2013 Laurea University of Applied Sciences 86

87. ORGANIZATIONAL CULTURE S 562
 The efficiency of any organization is dependent on
the complex formal and informal relationships that
exist within it
• Survival – outward looking flexible
• Productivity - Outward looking ordered
• Human relations - inward looking flexible
• Stability – inward looking, ordered
6/7/2013 Laurea University of Applied Sciences 87

88. KNOWLEDGE MANAGEMENT
 Knowledge is the combination of data and
information, to which is added expert opinion,
skills and experience.
 Knowledge Management is the management
of activities and processes for leveraging
knowledge to enhance competitiveness
through better use and creation of individual
and collective knowledge resources
• Explicit vs Tacit
• Identify knowledge
• Create new knowledge
• Store knowledge
• Share knowledge
• Use knowledge
6/7/2013 Laurea University of Applied Sciences 88

89. HOW TO CREATE NEW MARKETS

90. HOW TO CREATE NEW MARKETS? – WHICH
MARKET IS/ARE EMERGING?
• Focus on
• Lobby for new laws and regulations
• Create new structures (destroy old
structures)
• New business models
• Focus on Lead users
• Establish market creating products
6/7/2013 Laurea University of Applied Sciences 90

91. GAME STORMING – A PLAYBOOK FOR INNOVATORS
RULEBREAKERS AND CHANGEMAKERS
 Game storming
http://www.youtube.com/watch?v=3mrtu4MmthE
91

92. CHALLENGES IN E-TOOLS AND E-BUSINESS,
SCALABILITY
 Challenge 1: how to migrate from personal level to (business)
corporate level and society level – migration is a ”chicken and
egg” problem. The individual can not change, if there is not
enough infrastructure. The company will not change if its
customers have not moved into new services
Challenge 2: understanding value creation, value capturing, value
network, process, business model
Challenge 3: The Engine metaphor – perceiving your computer (your
desktop) as a part of a network (production engine)
92
Individual
Society
Corporation

93. EXAMPLE THE EMERGENCE OF THE MOBILE
MARKET
 Liberalisation of the telecom market in Finland in 1994 created
competition and encouraged new markets to emerge
 GSM 1994 and 97-98 a vision: ”mobile into your pocket”
 New infrastructure 3G, UMTS
 In Finland changes in telecom law e.g. allowing bundling of phone and
subscription, number portability,
 Progress in creating a dataroaming market by establishing cap prices in
the EU
 Business model: toward monthly flat rate pricing
 Key market creating products: mokkula (c 2004-2005) a data
connection to your computer, I-phone, (both arrivals from the outside to
Finland), smart phones 2011
 Structures: three competitors, service operator and new market
entrants changed the rules of the market
 Future: ?

94. Name: 00601 Operative Systems and Commerce
FOCUS: INDIVIDUALTRAVEL PLAN
E-SERVICE
CONNECT TO
REAL WORLD
VALUE
SERVICE PROVIDER /
BUSINESS MODEL
WHO IS
LOOSING?
COMMUNITY
MY
E-TOOLS
1
2
3
4
5
94
Bricks and
clicks
VALUE
CREATION/CAPTURING
IN A NETWORK
- value to me
- value to company
- value (cost, time, quality)
- blog
- web site
- wiki
- contact networks
-videomeeting
connectpro
- e-library
-- e-survey
Change in the
way of doing
things =
innovation =>
focus on the
process
flow of goods, information and
resources in a repair cycle
http://en.wikipedia.org/wiki/Lo
gistics
From data to
networking
Use this framework to
identify changes in value
creation and capturing after
adoption of services like
online booking and the
availability of online
customer recommendations

95. THE MUSIC INDUSTRY
 Excercise: Look at the video.
 Try and plot all the different earning cases on to the
business model canvas and identify the key elements
that remain the same through different cases.
 Discuss and identify cases on how the music industry is
changing.
 Take an example company and discuss how that
company can act in the market place to create a new
market.
 The video
 http://www.youtube.com/watch?v=Njuo1puB1lg
 CwF, Connect with fans
 RtB, Reson to buy

96. THE E-HEALTH INDUSTRY
 Excercise
 Identify a new entrant to the market
 Discuss its business model
 Look into possible new infrasrtucture elements it is
attempting to build on e.g. patient records,
eprescriptions,
 Look into databases and are these databases
hierarchical or is power given to the users? To what
extent is open data thinking allowed and applied to the
creation of new services?

97. http://nyt.fi/20120608-yli-yliopistosta/
Nyt Liite koulutuksen muutoksesta
http://www.extension.harvard.edu/distance-
education/online-course-offerings
THE ONLINE EDUCATION MARKET