Applied Business Development

IBCDP 6 – 2011-06-15

Matti Kaulio Royal Institute of Technology (KTH)Dept. of Industrial Economics and Management, KTHmkaulio@kth.se

Matti Kaulio

• Associate professor, - Dept. Of Industrial Management and

Economics, Royal Institute of Technology (KTH).

• Research interest: - Technology Management and Organizational

Behaviour

• Ongoing research:- Leadership in technology-intensive organizations- Management of Strategic Alliances- Swedish-Chinese collaboration in the Automotive

Industry

Applied Business Development and the Business Case

• Applied Business Development (ABD) is a lecture stream aiming to develop the students abilities:- To act entrepreneurial within a firm in order to create new

businesses and/or develop existing ones

• ABD consists of Lectures and Business Case Work is to enhance Business Development Skills among the course participants.

• The Business Case is primary a learning tool for integration of theories, methods and models, however, if the findings presented can lead to a real business this is positive, but not a requirement.

… in other words

•How will the new business opportunities look like in your industry?

•How can we develop competencies that are crucial in order to reach these opportunities?

Four lectures which follows the F2F modules

•Strategic awarness

•Understanding Business Environments

•Adding Value (Service Design)

•Service Production & Launch

•“Making it Happen” & Examination

Strategic awarness

”Innovation”

”Ipad is a bad computer, I cannot imagine that it will substitute the usual computer”

Anssi Vanjoki, SvD 20100919

If I would have asked the customer what they wanted – the answer would have been ”faster horses”. Henry Ford

Market and Technology Evolution:Past – Present – Future?

Generative Network•New Industry Entrants•Converging Tech., Industries & Businesses

“Open” Network•Deregulation•Competiton•IP-based Tech.

Propritarian Network•Market monopoly•Switch-based Tech.

Telcom – an Emerging Technology?

EmergingTechnology

Adapted from Day and Schoemaker 2000

IndustryHow will the (emerging) competitive landscape look like?

InfrastructureWhat infrastructure will be present in the future that supportes the emerging technology?

MarketHow should we interpret the ambiguous market signals?

TechnologyWhat are the technological trends and uncertainties related to those?

Challenges for established firms facing Emerging technologies

•Past success has developed core competencies, however those can in a new situation become core ridgidities

•Character of emerging technologies: Uncertianties, ambiguity and a possible potential that is too big too ignore

•First mover advantage vs Fist mover (dis)advantage

•Underestimation of Non-industry competitors (horizontal competition)

The Telcom Industry - The Players

Service and Content Providers

OperatorsEnd users

(B2B and B2C)TelcomVendors

Subsystem and Component

Manuf

Hand set and Computer

Manuf.

Regulators andStandardization

What to do?

•Business intelligence, Openness and Diverse View points

•Challenger the Prevailing Mind-Set

•Experiment Continually

•Organizational Separation

•Cannibalize Yourself

Adapted from Day and Schoemaker 2000

….. Learn fast! And Experiment!

ABD and a theory of learning

Experiment/experience

Theorizing

ReflectionConclusions/Implications

Kolb, 1984)

Adapted from the Venture Cup handbook

http://www.venturecup.se/graphics/user/vc_swe/vc_swe_files/vc_swe_handbok/Handbook%20english.pdf

Executive Summary

Offering Risks FinanceImplemen-

tation

TechnicalFeasibility / Assessment

Business System

Marketing

Executive Summary

Offering Risks FinanceImplemen-

tation

TechnicalFeasibility / Assessment

Business System

Marketing

Application selection:PSO analysis Appendix

Market analysis:SegmentationMarket estimations5-forces, PEST

Service DesignCustomer Interaction MapValue Network

Business Model

Launch strategy

Homeworkassignments

Finance

Lectures

The Bussiness Model

The Business Model I

C

ORRevenue

model

BS

Costs Costs

Costs

Value Propositions

Business Concept

Customers

Offering

BusinessSystem

Source: Based on SIAR Normann, 1977, & Dr. Tommy Bergkvist, Strategic Management Institute, modified

The Business Model II

C

O

BS

Customers

Offering

BusinessSystem

Source: Based on SIAR Normann, 1977, & Dr. Tommy Bergkvist, Strategic Management Institute, modified

Market = The Set of Actual and PotentialCustomers

− Products− Services− Bundles

Value Chain

Value Co-creation (multi-actor)− Value Star− Value Network

The Business Model III

C

O

BS

Customers

Offering

BusinessSystem

External

Internal

Source: Based on SIAR Normann, 1977, & Dr. Tommy Bergkvist, Strategic Management Institute, modified

”World of Business”

”World of Management”

Tra

nsf

orm

ati

on P

roce

ss

The Business Model IV

C

O

BS

Customers

Offering

BusinessSystem

Source: Based on SIAR Normann, 1977, & Dr. Tommy Bergkvist, Strategic Management Institute, modified

External ”Fit”

Doing the right things

Internal ”Fit”

Doing things right

Efficiency

Effectiveness

Developing Offerings

Example: Reflection on Customer Value

•Coffe beans (from producers) <0,01 /cup

•Roasted, branded & packaged 3 EUR/pkg

•One cup of coffe (Machine) 1 EUR/cup

•”Latte” in Stockholm city 3,5 EUR

•Espresso Piazza San Marco, Venezia 14 EUR

24

Problem-Segment-Offering (PSO) model

An identified market - Segment

The Problem/need a customer face

”Offering” and Revenue Model

An identified market - Segment

The Problem/need a customer face

”Offering” and Revenue Model

Problem: Gap between a current state and an (unspoken) future state

Offering: The Product Service and Price model

Segment: Identifiable, similar needs, reachable and react in the same way on marketing activities

Pricing

Total for 3 PassengersFare Price 6.00 SEKInfant Fee 182.00 SEKAirport Check-in Fee 174.00 SEKSEK Web Baggage Fe 112.00 SEKCredit card fee 174.00 SEKSEK Priority Board 168.00 SEKSEK Web Baggage Fe 560.00 SEKTaxes, Fees & Charges 528.00 SEK InsuranceTotal Price 1,904.00 SEK

Revenue Models

• Producer model• Broker model• Consultancy model• Performance-based model• The TelCom model/combination model (fixed cost +

opening cost + variable cost; opening fee + downloaded data)

• The TechTrade model: Licenciering + royalty• The ”Gilette” model• The ”Drug Dealer” model• The ”Gore-Tex model”• The ”Adobe” model• The ”Singer” model• The Construction Industry model• ”Free” models

”Free” models

Type of free What’s free Free for whom Example (s)

Direct cross-subsidies

A product that makes you buy something else

Everyone willing to pay

Buy one – get one for free, Charge for something else (like Ryanair)

Three-party market Content, SW, services, etc Everyone Advertisers (3rd party) pay for access to audience (consumer) through paying for products (producer) Ex: Google and Metro

Freemium Anything matched with a premium version

Basic users Spotify / Spotify Premium, Flickr / Flickr Pro, Multiple iStore apps

Non-monetary markets

Anything anybody wants to give away without expected payment

Everyone Wikipedia, Musicians promoting themselves

Homework assigmnent ABD I

To be handed in on the 24th of June

Purpose

•The purpose of this group assignment is to train ”divergent thinking” as well as be able to formulate potential offerings.

Assigmnent and deliverable

Assignment:Make an divergent analysis of your case topic. That mean that

you should develop a few (3-5) different possible applications, analyze and characterized them, and when you meet in the next module be prepared to chose one of these applications to continue with.

DeliverablesHand in: A report including a comparison of generated possible

applications. The report is written in Power Point and covers the ssigmnemnt, description of your research findings, description of 3-5 PSO offerings and a summarizing table

The report should be written in and handed in no later than on the 24st of June.

Application selection: WWGD

Group A and D ”Payment and paying”Case

Group 1 and 4 ”Google Medica” alternativeHow can an search application for a medical purpouse look like? It could focus on private life (family or individual), or foucus on professinal useds (doctors, for example c.p. google.scholar).

Group 2 and 5 ”Google Wallet”How can an transaction application look like? Private life/business life; specific applications

Group 3 and 6 ”Google Wave”How can an application look like that should rationalize individual and group working processes and practices? C.p. ”Wave”

Process

1. Do research: What similar applications exists? What are their offerings? Etc. Use internet and other sources

2. Redflect upon the findings

3. Generate alternatives: Develop 3-5 new PSO descriptions of new applications

4. Summarize your findings in a power Point Presentation where your potential applications are presented in text and in a table- do not select which application to continue work with! This is a task för the next F2F module

5. Before leaving today you should have showed your preliminary applications for the coaches

6. Coaches will be walking around bewteen the groups. They should be seen as resources for your work.

Criteria for a ”good” application

• Technology-Product gap product or service composed of existing and/or new technology

• Unique customer value? (reduce/add)• Market potential – revenue• Market protential – growth• Related to TeliaSonera’s business

• NOTE: In your case it is not impiortant that your business case fits in TeliaSoneras product portfolio. However, it need to be related.

•The password for WiFi bAGpYgnC

To be continued. . .

•Six conference rooms in Sing-Sing are avaliable•Work on all your three assignments

- Finish competence inventory and work agreement (prel)- Continue with ABD – application generation and Dinner

18.00

•Continue after Dinner•Coaches will meet your team during the evening•You need to show 3-5 alternative PSO:s to the coaches

before you leave today!