Applied Business Development IBCDP 6 – Matti Kaulio Royal Institute of Technology (KTH) Dept. of Industrial Economics and Management, KTH

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

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? Emerging Technology Adapted from Day and Schoemaker 2000 Industry How will the (emerging) competitive landscape look like? Infrastructure What infrastructure will be present in the future that supportes the emerging technology? Market How should we interpret the ambiguous market signals? Technology What 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 Operators End users (B2B and B2C) Telcom Vendors Subsystem and Component Manuf Hand set and Computer Manuf. Regulators and Standardization

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 Reflection Conclusions/ Implications Kolb, 1984)

Adapted from the Venture Cup handbook dbok/Handbook%20english.pdf

Application selection: PSO analysis Appendix Market analysis: Segmentation Market estimations 5-forces, PEST Service Design Customer Interaction Map Value Network Business Model Launch strategy Home work assignments Finance Lectures

The Bussiness Model

The Business Model I C O R Revenue model BS Costs Value Propositions Business Concept Customers Offering Business System Source: Based on SIAR Normann, 1977, & Dr. Tommy Bergkvist, Strategic Management Institute, modified

The Business Model II C O BS Customers Offering Business System Source: Based on SIAR Normann, 1977, & Dr. Tommy Bergkvist, Strategic Management Institute, modified Market = The Set of Actual and Potential Customers −Products −Services −Bundles Value Chain Value Co-creation (multi-actor) −Value Star −Value Network

The Business Model III C O BS Customers Offering Business System External Internal Source: Based on SIAR Normann, 1977, & Dr. Tommy Bergkvist, Strategic Management Institute, modified ”World of Business” ”World of Management” Transformation Process

The Business Model IV C O BS Customers Offering Business System 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 & packaged3 EUR/pkg One cup of coffe (Machine)1 EUR/cup ”Latte” in Stockholm city3,5 EUR Espresso Piazza San Marco, Venezia14 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 Passengers Fare Price6.00 SEK Infant Fee SEK Airport Check-in Fee SEK SEK Web Baggage Fe SEK Credit card fee SEK SEK Priority Board SEK SEK Web Baggage Fe SEK Taxes, Fees & Charges SEK Insurance Total Price 1, 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

Type of freeWhat’s freeFree for whomExample (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 marketContent, SW, services, etcEveryoneAdvertisers (3 rd party) pay for access to audience (consumer) through paying for products (producer) Ex: Google and Metro FreemiumAnything matched with a premium version Basic usersSpotify / Spotify Premium, Flickr / Flickr Pro, Multiple iStore apps Non-monetary markets Anything anybody wants to give away without expected payment EveryoneWikipedia, 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. Deliverables Hand 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” alternative How 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.

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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 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!