1. VALUING INNOVATIONS “The most important discoveries of the next 50 years are likely to be ones of which we cannot now even conceive.” - John Maddox

2. Importance of Innovation Innovation creates a competitive advantage in business. Can be the difference between success and failure.

3. Difficulties Short Lived Advantage Rapidly changing digital world Competitors can easily copy innovation Risky No guarantee technology will be successful VHS vs. Betamax Organizational Requirements Firms must work together in harmony Need many skilled workers to deploy new IS

4. Predicting Future Technology is Hard

5. Disruptive Innovations A product that surpasses the dominant technology to become the norm.

6. Innovation Process 1. Choose Emerging Technologies Create processes that are dedicated to discovering disruptive innovations 2. Match Technologies to Opportunities Determine the purpose served by the emerging technology

7. Innovation Process 3. Execute Business Innovation for Growth Select the emerging technology. Act on opportunity to increase customers and market share. 4. Asses Value Assess value of the technology used. Continuous.

8. e-Business Innovation Cycle

9. CANDY CANDY CANDY Hypothetical situation

10. Choose one : $.14$.01 @poll 337503@poll 337504

11. Hypothetical situation Choose one : $.13FREE @poll 500507@poll 500508

12. Background to experiment Conducted by MIT professor Dan Ariely The original study found that: 27% selected Hershey 73% selected Lindt

13. Background to experiment The second study found that: 69% selected Hershey 31% selected Lindt Why?

14. Understanding the power of free When Free is Dangerous

15. FREECONOMICS Online, there is such a thing as a free lunch.

16. HOW DO WE VALUE IT….. …when we increasingly give it away for free?

17. Gordon Moore Co-founder of Intel Published an article in Electronics magazine on April 19 th, 1965. This article became known as Moore’s law

18. Moore’s Law The number of transistors in a processor will roughly double every 18 to 24 months.

19. Moore’s law In 1961, a single transistor cost $10.00 In 2010, you can get 2 billion transistors for $1,100.00 or one transistor costs $0.00000055

20. Freeconomics as economics

21. What happens when the marginal cost is essentially $0.00?

22. Free! Why $0.00 is the future of business http://shar.es/gCAoJ [/twitter]

23. Different freeconomic models Type Advertising Cross Subsidies Zero marginal cost Gift economy Known example Google’s pay per click Comcast YouTube Videos Wikipedia

24. 1. Consumer Google’s something… 2. Consumer clicks on a sponsored link (an “ad”) 3. Consumer is redirected to advertiser’s website 4. Consumer gets advertiser’s product, and the advertiser pays Google.

25. Different freeconomic models Type Advertising Cross Subsidies Zero marginal cost Gift economy Known example Google’s pay per click Comcast YouTube Videos Wikipedia

26. A single DVR costs Comcast $250.00, and they give them away to each new customer. How does Comcast make their money back? 1. Subscription fees 2. Faster internet speeds 3. Pay-per-view movies

27. Different freeconomic models Type Advertising Cross Subsidies Zero marginal cost Gift economy Known example Google’s pay per click Comcast YouTube Wikipedia

28. How can you charge people effectively for watching YouTube? In 2010, it cost Google $0.25 to have someone stream HD video for one hour In 2011, it was $0.15 2012 projection – less than $0.10

29. Different freeconomic models Type Advertising Cross Subsidies Zero marginal cost Gift economy Known example Google’s pay per click Comcast YouTube Videos Wikipedia

30. All content is user generated with non-monetary returns for those who invest in it… How can this exist? Remember Chris Anderson’s video on Free!

31. FREEMIUM CASE STUDY

32. Background Founded in 2007 by Drew Houston, a forgetful MIT graduate. Dropbox has only received $7.2 million in venture capital What is the pricing structure of Dropbox?

33. Dropbox - The business model of free Dropbox rents users space in the cloud, similar to how students rent apartments or dorms from the Temple. However, unlike Temple dorms, one of Dropbox’s options is free, for everyone. Dropbox pricing scheme: 2 GB – Free 50 GB – $9.99 / month 100 GB - $19.99 / month 1000 GB – $100.00 / month

35. Dropbox news As of October 2011, Dropbox has over 50 million users. Over 96% of Dropbox’s users use their services for free. In 2009, Steve Jobs offered to buy Dropbox for a reported $800,000,000.00. Dropbox declined. Today, Dropbox is valued at over $1,000,000,000.00

36. So, what’s the secret? Moore’s law and freeconomics!

37. Freemium in a box Cost of adding a user to Dropbox is essentially zero. However, as users use the product, some will become paying users. The profit from paying customers, less than 4%, is enough to make Dropbox a wildly successful company. Dropbox can offer its product for free because of the marginal cost is essentially $0.00. Drop

38. Profitability of: