Innovation & Digital Networks FACILITATOR

Michael Netzley, PhD Academic Director, SMU ExD

MI Feb 2014

Weekend Objectives

What You Can Expect

•  Explore connection between innovation & digital networks

•  Understand it is all about networks

•  Discuss how connecting via the cloud invites business process innovations

•  See how connecting to the human cloud can benefit idea generation and resource gathering

•  Learn about crowdsourcing, pro and con

•  Reflect on how these ideas can apply to business today.

Please  create  a  personal  Twi0er  account  for  Saturday  

Michael Netzley About The Prof

Michael Netzley, PhD

•  Academic Director, SMU Executive Development

•  Daddy with 3 daughters & 1 son •  SMU since 2002 •  Champion’s Award 2011, Innovative

Course Design and Delivery •  Research Fellow, Society for New

Communication Research •  Visiting positions in Argentina, Berlin,

Finland, Slovenia, and Japan •  Clients include: Unilever, IBM, TCS, IHG,

3M, Singapore Airline, UOB, BNP Paribas, CPF, MFA, MoE and CARE.org

Opportunity

DARPA Red Balloon Challenge •  2009 challenge on wide

area collaboration •  Defense Advance

Research Project Agency

•  $40,000 prize to be first at finding 10 balloons around the United States

•  How long did the winning team need to find them?

FEWER  THAN  NINE  HOURS  

How Did the MIT Team Win?

•  Shared the reward –  $2000 correct

coordinates –  $1000 for whomever

invited them –  $500 for inviting the

inviter –  $250 for inviting them –  And so on…

•  Created sustained activity on Twitter (recursive incentive)

•  Data mining via social media

Summary  Ar)cle  

Theoretical Underpinnings

•  Users can post a question or request, along with an incentive for answering, which then spreads widely through the network.

•  Games online can be a good example

•  Kleinberg & Raghavan, Paper

•  Participants are compensated both for the sales they make, and for the sales of any additional salespeople downline they recruit.

•  Pyramid scheme can be an example

•  Avon products are an early business example

Query Incentive Network Multi-level Marketing

Created a Recursive Incentive Structure

•  Jargon for “teamwork” •  People cooperate toward

a shared goal and subsequently are rewarded for the impact of their contribution(s).

•  Allowed anyone – anywhere to play, leading to a final team of 5000 helpers

Quality Control Tactics

1.  Multiple entries indicating same coordinates were likely accurate

2.  Check IP address of submitter & compare to location claim

3.  Examine photos accompanying submission for DARPA logos

What Was The Challenge?

•  Competition to win

•  Large scale, geographically dispersed information

•  Nontraditional problem requiring nontraditional solution

InnovaAve  SoluAon  

DARPA Applied

•  Contest for team/individual to report the location of a maximum number of Automatic External Defibrillators (AED)

•  $10,000 prize of 750 AEDs reported in total, or 500 reported by a single entry; also 200 “golden” AEDs which earn the submitting team $50

•  January 31 – March 13, 2012 •  More than 1500 AEDs submitted by 300+ teams •  2 $9000 prizes to two people submitting 400+

each •  Database given to the public and 911

MyHeartMap Challenge: Penn Med

We  Live  in  Networks  

Expa

nds

Your

R

esou

rce

Bas

e

Why Now?

Digital Technology

Connecting the Globalizing World

Space of Places

Flows: Information & People

Misdirect: Networks, not Information

•  The defining characteristic of the modern age is networks – All societies have had information (e.g., Ancient

Athens and Rome) – Digital networks are unique to the current age – Networks, for the first time, can be a sustained

structure for organizing people and work

Source:  Manuel  Castells  

Cloud & Salesforce.com Driving  Business  Model  InnovaAon  with  the  Power  of  Cloud  

What  is  Cloud  Computing?  

Plain  English:  “storing  and  accessing  data  and  programs  over  the  

Internet  instead  of  your  computer's  hard  drive.”  

                                                 Source:  PC  Magazine  

Complicated:  “A  pay-­‐per-­‐use  consumption  and  delivery  model  that  

enables  real-­‐time  delivery  of  configurable  computing  resources  (for  

example,  networks,  servers,  storage,  applications,  services).  Typically,  

these  are  highly  scalable  resources  delivered  over  the  Internet  to  

multiple  companies,  which  pay  only  for  what  they  use.”  

                 Source:  IBM  

Examples  

3  Stats  About  Cloud  

Two  out  of  three  executives  believe  that  cloud-­‐

based  collaboration  tools  accelerate  business  

results  (this  number  increases  to  82%    when  we  

speak  to  executives  who  are  leading  adopters  of  

cloud  solutions)  •  Source:  Forbes  Insights  Report  

By  2016,  the  bulk  of  IT  spend  is  expected  to  be  on  

cloud  computing,  and  by  2017  nearly  half  of  the  

MNCs  are  expected  to  have  hybrid  cloud    

deployments.  •  Gartner  Symposium,  2013,  Goa  India  

Global  cloud  computing  market  is  forecast  to  grow  22%  annually  to  US$241  billion  by  2020    

Cloud  can  help  businesses  exploit  

capabilities  born  out  of  digital  and  

mobile  transformations  to  better  meet  

customers’  needs  and  drive  growth  

Relatively  few  organizations  today  

actively  use  Cloud  to  drive  business  model  innovation  

 

Potential  remains  huge,  particularly  in  transforming  

product  and  service  development,  and  reforming  

customer  relationships    

 

Cloud  Enablement  Framework  

Cloud  Enablement  Framework  

•  Framework  created  using  extent  to  which  an  

organization’s  use  of  cloud  can  affect  value  propositions  

and  value  chains  as  dimensions  

•  Identifies  impact  of  organization’s  cloud-­‐enabled  business  

strategy  

•  Businesses  should  determine  place  in  the  Framework  

based  on  the  their  strategy,  risk  profile,  competitive  

landscape,  among  others    

Cloud  Enablement  Framework  -­‐  Optimizers  

•  North  Carolina  State  University  moved  to  

cloud-­‐based  infrastructure.  Benefits:  

–  Increased  flexibility  to  shift  computing  

capacity  between  sites  

–  Ability  to  scale  up  to  match  increasing  

enrolment  

–  Ability  to  share  resources  with  

students  throughout  the  State  

•  Optimizers  use  cloud  to  incrementally  enhance  customer  value  propositions  while  improving  organizational  efficiency  

•  Deepen  customer  relationships  without  risk  of  potential  failure  in  radical  business  models  

Cloud  Enablement  Framework  -­‐  Innovators  

•  Example:  3M  Visual  Attention  Service.    

Transformed  product  development  value  

chain  by  integrating  a  global  network  of  

designers.  Benefits:  

–  Highly  scalable  environment  

–  Low  up-­‐front  investment  and  a  flexible  

pay-­‐as-­‐you-­‐go  pricing  model  

 

•  Use  cloud  to  significantly  increase  customer  value  propositions  ,  resulting  in  new  revenue  streams    

Cloud  Enablement  Framework  -­‐  Disruptors  

•  Example:  Comcast  Xcalibur’s  cloud-­‐based  platform  created  different  customer  value  proposition  by  shifting  the  ability  to  control  content  into  the  cloud.  Benefits:  –  Delivering  content  to  more  devices  

and  meeting  customer  demands  –  Creating  new  apps  and  changing  

User  Interface  faster  and  more  easily  

•  Invent  completely  different  value  propositions  &  create  new  “needs”,  providing  customers  what  they  weren’t  even  aware  they  wanted  or  needed  

•  Greater  risk,  but  possibly  greater  reward  

What  are  their  motivations?  

To  improve  business  capabilities  and  also  

internal  efficiencies  

Optimize,  Innovate,  or  Disrupt?  

•  Organizations  should  evaluate  opportunities  available  to  harness  

the  power  of  cloud  -­‐  as  optimizer,  innovator,  or  disruptor  –  and  pick  

the  opportunity  suited  to  their  particular  situation    

Optimizer   Innovator   Disruptor  

Salesforce.com Case  Study  

Group Discussion Questions (30 minutes)

1.  Who were the noncustomers of the noncustomers of the traditional CRM software industry? What were the biggest blocks to buyer utility in traditional CRM offerings?

2.  Which one(s) of the six paths did Salesforce look across to create new market space? Can you draw the value curve of Salesforce’s initial on-demand CRM offering in the early 2000s versus traditional CRM vendors?

3.  How was Salesforce able to sustain its market leadership in the on-demand CRM market vis-à-vis both large players and new entrants for a decade?

Lessons

What  Does  Cloud  Do?  

Source:  Forbes  Insights  

Cloud  attributes  helping  to  drive  business  model  innovation  

Cloud’s  Business  Enablers  COST  FELXIBILITY  

•  Key  reason  for  executives  to  

consider  Cloud  adoption    

•  Cloud  can  help  organizations  

reduce  fixed  IT  costs  by  

enabling  a  pay-­‐per-­‐use  model.    

BUSINESS  SCALABILITY  

•  Cloud  offers  more  than  just  IT  

scalability  

•  Companies  can  benefit  from  

economies  of  scale  without  

achieving  large  volumes  on  their  

own  

Cloud’s  Business  Enablers  MARKET  ADAPTABILITY  

•  Ability  to  adjust  to  rapidly  

changing  market  demands  is  

key  competitive  advantage  

•  Business  can  adjust  processes,  

products  and  services  quickly,  

enabling  faster  time  to  market  

MASKED  COMPLEXITY  

•  Business  can  mask  operational  

intricacies  from  end  users  

•  Enables  product  and  service  

sophistication  without  

increasing  level  of  user  

knowledge  necessary  

Cloud’s  Business  Enablers  CONTENT  DRIVEN  VARIABILITY  

•  Product  and  service  customization  

enabled  because  of  Cloud’s  expanded  

computing  power  and  capacity  

•  Business  can  offer  consumers  

personalized  and  context-­‐relevant  

experiences  

ECOSYSEM  CONNECTIVITY  

•  Organizations  can  

collaborate  with  partners  

and  customers,  leading  to  

productivity  improvements  

and  innovation  

Cloud-­‐enabled  Innovation  Organizations  using  cloud  for    

•  additional  revenue  streams  by  changing  customer  value  propositions  

•  changing  organization  and  industry  value  chains  

   Retain  current  and  attract  new  customers      Attract  existing  or  adjacent  customer  segments      Attract  new  customer  segments  

Cloud-­‐enabled  Innovation  –  Customer  Value  Propositions  

•  Enhance  –  improve  

products,  services,  and  

customer  experiences  

•  Extend  –  create  new  

products,  services  &  use  

new  channels  or  payment  

methods    

 

•  Invent  –  create  new  

“need”  and  own  the  

market  

   Incremental  Revenue      Significant  new  revenues      Entirely  new  revenue  streams  

Cloud-­‐enabled  innovation  –Value  Chains  

•  Improve  –  organizations  maintain  their  place  in  

existing  value  chain  through  increased  efficiency  and  

improved  ability  to  partner,  source  and  collaborate  

•  Transform  –  businesses  can  change  role  within  their  

industries  or  enter  a  different  industry  

•  Create  –  businesses  can  create  radically  change  industry  dynamics    

1.  Establish  shared  responsibility  for  cloud  strategy  

and  governance  across  the  business  and  IT  to  help  

ensure  cloud  remains  a  top  business  priority  

2.  Look  within  and  beyond  your  organization’s  

borders  to  maximize  the  value  derived  from  cloud  

adoption  

3.  Identify  whether  your  organization  seeks  to  be  an  

optimizer,  innovator  or  disruptor  and  use  cloud  to  innovate  

your  business  model  to  realize  that  potential  

–  Consider  organizational  and  market  factors    

–  Where  is  your  company  positioned  in  Cloud  Enablement  

Framework  today?  

–  Where  should  your  company  be  in  the  next  3-­‐5  years?  

–  Build  capabilities  to  close  the  gap  between  your  current  and  

future  cloud  position/maintain  your  current  position  

Thank  You  To:  

•  IBM,  The  Power  of  Cloud    

•  Forbes  Insight,  Collaborating  in  the  Cloud  

•  Gartner,  Symposium  

•  Akanksha  Rath