Winning in Networks

Winning in Networks

Professor N. Venkat VenkatramanDavid J. McGrath Jr. Professor of Management

Boston University School of Managementvenkat@bu.edu

Twitter: NVenkatramanOctober 9, 2010

Insights 2010

2Overview

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Imagine life without……

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Towards Networked Era:A Brief History

1,920,000,000

4,900,000,000

*July 31, 2010

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A brief history… (continued):YouTube and Hulu generate 2X traffic than the entire Internet in 2000

Source: Cisco

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And Facebook….

500+ million

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And.. there are tweets…

*April 8, 2010

*October 8, 2010

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From 1995 till today..

• Developments in information technology have been dramatic and significant

• Shifts in management practices have been incremental and slow

• A new generation of people (employees, citizens, consumers) growing up with technology

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Yet.. there is an alignment problem

Business Strategy

ITStrategy

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Towards Global Digital Network Era….

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Information technology is impacting products..

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Products linked on all-IP infrastructure

Towards40-50 billion

devices

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IT’s impacting next generation business processes..

video

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Processes designed for the global All-IP infrastructure

Next-generationprocesses

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….and service delivery…

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Services delivered on the All-IP infrastructure

Next-generation

services

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And.. It is accelerating compared to other technologies in the past….

Source: IBM (2005)

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Mobile internet is accelerating even faster..

Source: Morgan Stanley

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… beyond phones

Source: Morgan Stanley

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…unleashing ‘apps’ at an unprecedented rate

Source: Morgan Stanley

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…With iPad setting a record..

Source: Morgan Stanley

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…Pervasiveness of IT.. (everywhere)

Source: Morgan Stanley

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The new global digital business infrastructure….

Live

WorkPlay

Learn

Connect

Innovate

Consume

Transact

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The World is ‘Flat’ but Connected…

And…connected

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Let us introduce three technology laws

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And take them together..

“Computer”

“Connectivity”“Cloud”

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A working framework to understand how IT impacts business…

TechnologyDomain

BusinessDomain

ProcessProduct Service

Moore’sLaw

Metcalfe’sLaw

BandwidthLaw

28Overview

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Computer industry [circa 1980]

Source: Bill Gates TestimonySource: Bill Gates Testimony

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Computer industry [circa 2002]

Source: Bill Gates Testimony

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Two Key ideas…

Vertical integration giving way to horizontal layers of specialized capabilities

– When and how do new layers emerge?– When do layers disappear or morph?– Can you disrupt an industry by introducing a new layer

where you hold an advantage?– Can new entrants disrupt by introducing a new layer?

1

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Two Key ideas…

Winning requires dominating one layer but linking across other layers

– What’s your pattern of connection across layers? – How does your competition connect across layers? – Who has the advantage now? – Is this advantage defensible?

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Setting 2: Automotive

Automobile– “computers on wheels”

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Lines of Software Code

‘Black Box’

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OnStar by GM OnStar

Ford (and Microsoft): Sync

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In-Car WiFi(2010)

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MyFord Touch

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Apps in the Automobile

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Future competition linked to IT architecture

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Transformations underway in the auto sector

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Setting 3: Music Mobile Phones & ?

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Music in the analog era….

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Key layers of capabilities in music (analog era)

Hardware Turntables, cassette players, tape decks, Sony Walkman etc.

Content(music)

Albums offered by record labelsin standard formats (33-45-78 rpm; & cassette tapes)

Channel Sold in Physical outlets (general and specialty) & Mail-order Catalogs

CustomerNetwork

Albums and tapes borrowed withinfriends communities.

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Hardware Digital audio players

Content(music)

Major lables plus rise of independent labels posting music online

Digital Rights Management Apple Fairplay; Windows Play For Sure

Channel Sold in stores (CDs); Rise of Onlinedownloads

CustomerNetwork

P2P file sharing; personal CD burning and sharing with friends

Software MP3; itunes; Windows Media; Quicktime; Realone etc.

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Precursor to today’s

social network?

Key layers of capabilities in music (digital era)

Music in the network era……

Hardware Multiple network-enabled devices

Content(music)

CDS offered by major labels; rise of independent labels;

Digital Rights Management

Apple Fairplay; Windows Play For Sure:Open Mobile Alliance (OMA)

Channel Sold in stores (CDs); Online downloads;downloaded to phones; Networked streaming

CustomerNetwork

P2P file sharing; personal CD burning; social and automated recommendations

Software MP3; Apple itunes; Windows Media; Quicktime; Realone etc.

MobileOperators

Mobile network for accessing music

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Network of linkages in music

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Hardware

Operating System

Applications

Content

Channel

Mobile Operators

Customer Network

Apple App Store: Extension of iTunes Store

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From iPod to iPhone

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From iPhone to iPad

Cross-network disruption @scaleIT-enabled business advantage

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From iPad to iad

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Then there’s the TV Space… with apps

52Overview

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Opportunities & Challenges

• Pervasiveness of IT (beyond processes)

• Disruption @ Scale • Power of data and insights• Dynamic co-creation and innovation• Shifts in creation and capture of value

Strategy

@

Nexus of Networks

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In closing……

“The difficulty lies not so much in developing new ideas as in escaping from old ones.”

John M. Keynes