Business Idea generation

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MGMT20143_Week6.ppt
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MGMT20128 / MGMT20132:
Innovation and (Sustainable) Business Development

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MGMT20143: THINK BIG

Week 6: Digital age and integration of value chains and people’s networks

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Seminar Outline

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Lecture

  • The digital age
  • Value chain integration
  • Network advantages

Workshop

  • Idea generation and workshopping ideas

Digital age

Removing NBN's artificial barriers could stop our system being 'worst of both worlds'
Timothy Nulty, Leslie Nulty, April 27, 2016

“Today and for the forseeable future the internet is the chief engine of the global economy. Those that don't learn to ride it will sit by the wayside and watch prosperity go elsewhere. Consider a recent note on the web from IBM:

  • The world's largest taxi company owns no vehicles (Uber)
  • The world's largest accommodation provider owns no real estate (Airbnb)
  • The world's largest telephone companies own no telecom infrastructure (Skype, WeChat)
  • The world's most valuable retailer has no inventory (Alibaba)
  • The most popular media owner creates no content (Facebook)
  • The world's fastest growing bank has no cash and no branches (SocietyOne)
  • The world's largest movie house has no cinemas (Netflix)

But: they all live and die by the internet ... and the broadband that carries it.

And so do millions of small and medium businesses — especially rural ones —for whom the internet is their umbilical cord to markets for their products and services.”

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Disruptive Technologies

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Digital Economy Non-digital or Indirectly Digital
Mobile internet Autonomous or near autonomous vehicles
Automated knowledge work Next generation genomes
Internet of Things Energy storage
Cloud technology 3D printing
Advanced materials
Advanced oil and gas exploration and recovery
Renewable energy

“The value of an idea lies in the using of it”

Thomas Edison

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What is ‘Value’?

  • Value = Perceived benefits / cost

  • Perception of benefits includes augmented product or services being provided

  • Costs to the client is the sum of current (initial) and recurrent (ongoing)

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Value Chains and Supply Chains

  • A Value Chain is a network of facilities and processes that describes the flow of materials through to the creation of finished goods and services delivered to the client.
  • A Supply Chain is the portion of the Value Chain that focuses primarily on the physical movement of goods and transmission of information through the supply, production, and distribution processes.

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Supply Chains

  • A supply chain encompasses all the activities involved in supplying an end user with a product or service
  • Supply Chain Management encompasses all the links along the chain, so that savings (or increased value) in any part of the chain can be shared or leveraged by other companies along the chain

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Different supply chain configurations

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Consider the potential for disintermediation: using technology to reduce the number of links in the supply chain.

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Value “pull” through supply chains

  • The digital age has empowered customer buying decisions primarily through greater access to information.
  • Based on customer needs and wants, three broad approaches have evolved:

Fast supply chains that emphasize a speed and time component

Agile supply chains that focus on an organization’s ability to respond to changes in demand (volume and variety)

Lean supply chains focused on eliminating waste (including time)

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Supply chains in the digital age

  • Information technologies in the digital age focus on improving processes along the entire supply chain to achieve better performance at reduced cost. Examples include:
  • EDI (electronic data interchange) between organisations provides faster access to information, reduced paperwork, improved customer service, and better order tracking.
  • Bar coding and scanning
  • Radio frequency identification tags (RFIDs)
  • Point-of-sale (POS) terminals
  • Electronic funds transfer (EFT)

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Supply Chain Management (SCM)

  • The strategy for building an organization’s supply chain should focus on maximizing the value to its customers, where value can be considered to be benefits received for the price paid, or benefits/costs.
  • Strategic focus of SCM differs by industry/sector:
  • Basic commodities (food) = focus on lower cost
  • Fashion goods = focus on quick deliveries and inventory
  • Telecoms = reliability

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Digital supply chain

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Consider this …

  • “There are more than 7 billion mobile devices in the world, and more than 40 percent of all internet traffic is driven by these devices” *

  • Discussion Question: How is this changing the value chain and the supply chain?

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* Source: Digital HR (2016) Global Human Capital Trends, Deloitte. Cited in Innovation & Employee Engagement in the Digital Workspace. The ConferenceBoard, 2016 Webcast.

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Applied to HR …

  • “Fewer than 20 percent of companies deploy their HR and employee productivity solutions on mobile apps today … Only 7 percent use mobile technology for coaching, 10 percent for performance management, 8 percent for time scheduling, and 13 percent for recruiting and candidate management”. *

  • Discussion questions: Why do you think there is a low rate of adoption by organisations?

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* Source: Digital HR (2016) Global Human Capital Trends, Deloitte. Cited in Innovation & Employee Engagement in the Digital Workspace. The Conference Board, 2016 Webcast.

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Economy shapers

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Sharing concepts

Knowledge transfer

Network structures: which is best for your idea?

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Networks, Net Worth, and value creation?

  • Apple, Google, Facebook and Microsoft employ a little over 500,000 people and are worth $2.3trillion*
  • Expected dividends of the digital revolution – higher growth, more jobs and public services – have fallen short of expectations*
  • “Facebook exists to make the world more open and connected, and not just build a company. We expect everyone at Facebook to focus every day on how to build real value for the world in everything they do” Mark Zuckerberg**

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  • Source: Keen. A. Big Tech’s four horsemen of the Apocalypse have us entirely in their thrall. The Weekend Australian, April 7-8, 2018. Inquirer p.19

  • This is an edited extract from How to Fix the Future: Staying Human in the Digital Age by Andrew Keen, published on April 12 by Allen & Unwin ($29.99)

  • ** Source: Liubinskas, M & Morle, P. (2012). Startup Focus. The Messenger Group, Sydney

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Data and Privacy

  • “Apple believes privacy is a fundamental human right, so every Apple product is designed to minimize the collection and use of your data, use on-device processing whenever possible and provide transparency and control over your information” *

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* Source: Apple user agreement with IOS 11.3

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Consider the following …

http://www.abc.net.au/news/2018-04-11/location-and-voice-future-of-shopping/9641118

Discussion questions:

  • When does assisting the customer become stalking the customer?
  • How can the consumer control this?

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Facebook: Value Chain Integration

  • Facebook creates value by:
  • Creating a unique and proprietary incarnation of a communications network
  • Increasing the value in the network by encouraging different kinds of conversations (and storing them)
  • Offering the network as a distribution platform for third parties.*
  • Discuss the following perspectives:

http://ojiudezue.com/blog/index.php/p15/

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Is trust the synapses of digital capability?

  • “Trust is one of the key characteristics that has made Silicon Valley so productive and successful” Bjoern Herrman, Founder, Startup Genome

  • “The data of 87 million Facebook users – including 311,129 Australians – may have been improperly obtained by Cambridge Analytica”*

  • Discussion question: What aspects of value creation have been destroyed and for whom?

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  • Stewart, C. Dark side of social. The Weekend Australian, April 7-8, 2018. Inquirer p.19

  • Synapses: On the off chance that you aren’t a neurologist, here are a couple of definitions: Neurons are cells that make up your central nervous system — your brain and spinal column, and the nerves connected to them. Neurons talk to each other across synapses. 

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STARTUP CYCLE: ENACTING YOUR IDEA

  • Step 1: Idea generation
  • Step 2: Discovery
  • Step 3: Validation
  • Step 4: Efficiency
  • Step 5: Scale

Each of these will be covered through the next few weeks. We’ll cover Step 1 now.

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Step 1: Idea

  • With startups, it is helpful to establish a hypothesis about something that might be valuable and then test different versions of it until you can see and measure the value.
  • Does your idea:
  • Solve a problem or real pain point for a specific group of customers?
  • Deliver significant value to them?
  • Improve significantly on an existing/competitor’s product or service in the market?

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Step 1 cont’d

  • Disruptive ideas need to start small. Why?
  • The more elaborate the product idea the more tests you’ll have to run to make sure it’s viable.
  • It is easier to measure the value for a small set of customers
  • A small customer segment is likely to be invisible to established companies. This gives you time to establish whether further investment is warranted.
  • Investing only a small amount of money to get to a minimum viable (trimmed) product makes it easier to abandon the idea if it is only going to generate ‘a bit’ of benefit. It also makes it easier to pivot and trial a variant in another customer segment.

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Step 1 cont’d

  • To get to the heart of a consumer’s problem, ask ‘Why’ until the core benefit of your idea is revealed.
  • Will your idea:
  • Make them (significant) money?
  • Save them (significant) money?
  • Save their (valuable) time?
  • Make their lives (significantly) better?
  • Reduce their risk?
  • Be so amazing that they can’t wait to share this with their friends?

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