1. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Technology Ecosystems -- and – Packaging Software-Driven Capabilities High-Tech Product Innovation Robert Monroe April 15, 2008

2. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Overview For a given product P, P’s technology ecosystem encompasses the set of technologies and technology products (both existing and anticipated over P’s lifetime) with which P needs to co-exist, integrate, or build upon. - Bob Monroe The technology ecosystem concept provides additional context for refining a product idea.

3. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Understanding The Tech Ecosystem Is Important Almost all high-tech products rely on and leverage other technologies –A powers of 10 analysis is applicable here –Many software intensive products provide a substantial portion of their value through their interaction and integration with other software intensive products and systems Examples: –RFID, ERP, and enterprise logistics systems –iPod, iTunes, QuickTime, and personal computers (Mac or PC) –GPS receivers, satellite communications, atomic clocks, GIS –Web servers, web browsers, routers, DNS, firewalls, HTTP, …

4. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Static Analysis of Technology Ecosystems

5. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Technology Ecosystem Chart

6. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Static Analysis Framework (I) For each key stakeholder, identify: –How do I anticipate he or she will use the product? –What technologies are they likely to already have in place and use that are relevant to the operation of the new product P? To provide inputs to P? To use output from P? To use at the same time as, but independent from, P? That they will want to run P on? –Are these technologies: open or proprietary? easily extended or closed? freely available, licensable, or unavailable?

7. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Static Analysis Framework (II) Identify non-technical constraints that materially limit your ability to create or use technologies –patents, regulations, proprietary API’s, etc. Your answers to these questions should help you fill out the ecosystem chart –… and raise many questions, probably more than they answer

8. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Quick Technology Ecosystem Exercise Complete the static analysis framework for a navigation system that incorporates real-time traffic information to help drivers find their way and also avoid traffic jams, accidents (of other drivers), closed roadways, detours, speed traps, etc.

9. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Dynamic Analysis of Technology Ecosystems

10. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 The Technology Ecosystem is Dynamic Computational technologies change –Sometimes very quickly (consumer electronics, mash-ups) –Sometimes moderately quickly (video game consoles, cell phones, operating systems) –Sometimes very slowly (satellite-based systems, GPS, etc.) Static ecosystem analysis is a good starting point –… but not sufficient to make big bets Full ecosystem analysis requires making educated guesses about future technology directions

11. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Technology Adoption Curves: Moore’s Chasm Source: Scott Ambler, Crossing The Chasm Dr. Dobb’s Journal (online), May 4, 2006 http://www.ddj.com/dept/architect/187200223

12. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Technology Adoption Curves: Cumulative Penetration Source: Wikipedia media commons - Technology Diffusion

13. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Technology Adoption Curves: Gartner Hype Cycle Source: Gartner Corp., via AYE conference website: http://www.ayeconference.com/wiki/scribble.cgi?read=HypeCycle

14. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Technology Adoption Curves: Gartner Example (05) Source: Gartner Corp., via BBC website: http://news.bbc.co.uk/1/hi/technology/3577746.stm#graphic

15. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Technology Adoption Curves: Gartner Example (07) Source: Gartner Corp., via Guardian UK website: http://blogs.guardian.co.uk/technology/authors/bobbie_johnson/index.html

16. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Dynamic Analysis Will your product live in a fast, medium, or slow changing tech ecosystem? Identify the technologies in your static ecosystem that are: –Likely to change significantly during your product’s lifetime –Likely to change at a significantly different rate than your product –Going to be critical to the success of your product –At a significantly different point on the adoption or hype curves Determine whether you need to change your assumptions or strategy accordingly Dynamic analysis takes a lot more (educated) guesswork than static analysis

17. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Some Key Decisions Do I need to make big bets on specific platforms and complementary technologies? –Is there a more flexible approach that is cost and revenue- effective? Is there a single dominant player in the tech ecosystem that I need to ‘partner’ with or should I stay agnostic and try to work with everybody? Do I design for what is available today, or where I expect the market will be in the future? –Repeat this question for multiple time horizons

18. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Tech Ecosystem Exercise

19. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Quick Review: Product Opportunity Gap Over the past decade consumers have become more dependent on web-based retailers and service providers. To prevent fraud, web retailers and service providers need to authenticate that the customer making a purchase is who he or she claims to be. The standard way that web providers authenticate customers is requiring a userid and password to login. Consumers now need to manage many different passwords for many different sites, creating a hassle for consumers and a security problem for both consumers and web-based businesses.

20. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Early Conceptualization Example Provide a small keychain-sized device that stores userid and passwords for user-selected websites. –Device stores userid/password combos that it provides to the browser on the computer to which it is connected. –Device can connect to computer using bluetooth, IR, or USB. –Userid/Passwords stored in an encrypted format on the device –Fingerprint is required to decrypt device contents or send userid/password combo to browser

21. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Mid-Fidelity Conceptualization Example user scenario: Mary uses three different online financial services – credit card, checking, and brokerage. She uses different password/id combos at each one to improve security but she has a hard time remembering them. When she sits down to pay her bills and reconcile her accounts each month she sets her key-chain id next to her computer and presses her thumb on the thumbprint pad. Her thumbpress turns the device on, which sends a bluetooth signal to her pc. The software on her pc recognizes the signal and alerts her browser to query the device whenever a login screen pops-up. The device provides the userid/password for each of her online financial sites After 15 minutes without a query from the pc, the device turns itself off Example flowchart: Fingerprint unlocks device Login screen recognized Userid/pwd sent to browser Banking application accepts userid/pwd, access granted

22. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Today’s Exercise: Tech Ecosystem Analysis Complete an initial ecosystem analysis for the following product concept to address the password management opportunity identified previously –Static analysis initially –Dynamic analysis, time permitting For this exercise, these are high-level, broad assessments –Focus on understanding and identifying the key technologies that populate the ecosystem and their role in that ecosystem –Raising lots of questions is a good thing at this stage

23. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Packaging Software-Driven Capabilities

24. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Packaging High-Tech Innovations Is Not About… Selecting the box… Designing the hardware enclosure… Choosing colors… …

25. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Packaging High-Tech Innovations Is About Determining the best way to deliver your innovative solution to your target customers Understanding how to turn your innovative idea into a profitable, sustainable, and defensible business Fitting your solution smoothly into your customers’ technology ecosystems –… or creating a new and better ecosystem for them

26. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Basic Packaging Approaches Complete System Component Service Hybrid

27. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Packaging Innovation As A Complete System Provide a complete end-to-end solution for your customers Advantages: –Simplicity for customers –Holistic design opportunity Disadvantages –More expensive to design/produce –All-or-nothing purchase decision When is this approach likely to succeed? When is it unlikely to succeed?

28. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Packaging Innovation As A Component Package your solution as a component that needs to be incorporated into other products or systems to provide its value OEM-targeted components End-user components When is this approach likely to succeed? When is it unlikely to succeed?

29. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Packaging Innovation As A Service Provide your solution as a service –Generally over the web –Ubiquitous networking and web standards make this an increasingly attractive option Advantages: –Simplicity for customers –Smoother, more predictable revenue model Disadvantages –You need to provide the infrastructure –Customer security and privacy concerns When is this approach likely to succeed? When is it unlikely to succeed?

30. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 This Is Not A Discrete Decision A system at one power of ten is a component at the next The same software code base can be packaged as a standalone system, a component for integration with other systems, a service, or any combination of these –… but the cost to support multiple packaging models can be high –Why? What are some of the cost drivers in supporting multiple packaging models?

31. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Hybrid Models Many successful high-tech offerings are packaged as a hybrid of system, components, and services Benefits: –Broadens the market –Recurring revenue stream(s) –Multiple revenue streams –Hedges your bets Drawbacks –Added development cost and complexity –It is very difficult to create a business that is great both at creating products and providing services

32. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Discussion Questions Why are these packaging decisions so important to the success of a new offering? –Is this a fundamentally different decision than packaging decisions it is for products that are not high-tech? Why or why not? Which of the packaging approaches seem to be gaining in popularity? Holding steady? Declining? Can simply repackaging existing capabilities in a new delivery model (e.g. from system to service) result in a successful new offering? –Examples where this approach has worked? –Was simply changing the packaging enough for success? –Why might this be hard to pull off?

33. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Packaging Analysis in Phase I and Phase II Phase I: Think broadly –Look for broad technology shifts that might make a new packaging of an old idea an appealing offering (SET analysis) –Observe target customers tech ecosystem –No decisions at this point on packaging Phase II: Look, Listen, Learn –Understand target customers tech ecosystem –Understand technology need/savvy/ability of target customers –No decisions at this point on packaging but start to generate hypotheses about how you different packaging alternatives might work for target customers –No decisions at this point on packaging

34. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Key Packaging Decisions For Phase III Pick a path: System, Component, Service, or Hybrid? Work within customers technology ecosystem or create a new one? –If within an existing ecosystem: How will your solution fit in? With what will your solution need to interact? –If creating a new ecosystem Identify all the things you will need to make the ecosystem a success Evaluate whether this is really feasible

35. Carnegie Mellon University ©2006 - 2008 Robert T. Monroe 45- 827 Key Packaging Decisions For Phase IV Reaffirm system, component, service, or hybrid decision Prototype to confirm that your approach fits in target ecosystem Confirm that this packaging makes sense to your customers If building a new ecosystem, figure out: –What you will provide –What you will try to recruit others to provide –… and how you are going to get them to do so