2. They have a big impact on business success
◦ We discuss many examples of why some firms succeeded more
than others, using concept of business models
One reason they have big impact on business success
◦ Business models need constant modifications as changes in
technology etc. occur
◦ But many firms do not modify their business models
Changes in business models can also explain growing
success or failure of certain countries
The variety (and pace?) of technology change and thus
need for new business models may be accelerating
3. Computer-related, video game, mobile phones, other
consumer electronics
Internet content
Sharing economy
Semiconductor, Integrated Circuit (IC), MEMS, Bio-
electronics
Displays,
Lighting
Transport
Medical equipment
Materials, nano-technology, superconductivity
4. Nokia, Motorola, RIM Blackberry?
Tower Records?
Borders Books?
Blockbuster Movies?
Kodak?
Palm Pilot?
What about magazines, newspapers, travel
agencies, real estate agencies, stock brokers,
audio systems?
5. Top 100 Firms in Market Capitalization
◦ Google, Facebook, Tencent were founded
in the last 15 years
◦ Microsoft and Apple were founded in the
last 40 years
Recent changes:
http://www.economist.com/techfirms
Who will be next? Unicorns?
◦ http://graphics.wsj.com/billion-dollar-
club/ (see below slides)
6. They have a big impact on business success
◦ We discuss many examples of why some firms succeeded more
than others, using concept of business models
One reason they have big impact on business success
◦ Business models need constant modifications as changes in
technology etc. occur
◦ But many firms do not modify their business models
Changes in business models can also explain growing
success or failure of certain countries
The variety (and pace?) of technology change and thus
need for new business models may be accelerating
7. They need constant modifications particularly when
there are changes in
◦ Technology
◦ Customer needs
◦ Market segments
◦ Performance, price, and costs
◦ Levels of vertical (dis)integration
◦ Number of firms in industry
◦ Regulations and laws (e.g., deregulation)
◦ Scale (e.g., more or less economies of scale)
◦ Stage of industry lifecycle
8. For example, what changes in value capture,
customers, or value proposition were needed for
some of these firms or industries?
Nokia, Motorola, RIM Blackberry?
Borders Books?
Blockbuster Movies?
Tower Records? Kodak?
Palm Pilot?
What about magazines, newspapers, travel agencies,
real estate agencies, stock traders, audio systems?
9. Nokia and Motorola?
RIM Blackberry?
Borders Books? Blockbuster Movies?
Tower Records? Kodak?
Palm Pilot?
What about magazines, newspapers, travel agencies,
real estate agencies, stock traders, audio systems?
Many mental, organizational, and other barriers to
change, which we won’t address…..
Basically, change is hard
10. Clayton Christensen popularized “disruptive
technologies” in many books and papers
The popular press define disruptive technologies as
any technology that changes the leading firms
Christensen has a more specific definition
◦ Low-end innovation that displaces the dominant technology
◦ It enters at low-end
◦ Demand drives improvements
◦ It finally displaces the dominant technology
11. Many argue that low-end disruptive technologies are
a trivial technology that requires a new business
model (Andrew Grove, CEO of Intel)
Low-end innovations involve
◦ new value proposition (always, less on one dimension, more
on another dimension)
◦ new customer selection (always)
◦ often new method of value capture (sometimes, e.g., lower
gross margins)
◦ may have less scope of activities (because new entrants are
often vertically disintegrated)
◦ may involve new method of strategic control
12. They have a big impact on business success
◦ Many examples of why some firms succeeded more than others
can be explained in terms of business models
Business models need constant modifications as
changes in technology etc. occur
◦ But many firms do not modify their business models
Changes in business models can also explain growing
success or failure of certain countries
◦ The fall of Japan
◦ Challenges for Europe
The variety (and pace?) of technology change and thus
need for new business models may be accelerating
13. Success of Japanese firms partly came from new business
model that involved:
Value proposition
◦ emphasize quality including reliability, durability, and low
number of internal defects
◦ partly through close cooperation between design/engineering and
manufacturing
Scope of activities
◦ vertically integrated in firm or business group (keiretsu)
Method of strategic control
◦ high quality in both design/development and manufacturing
◦ low inventory (just-in time manufacturing)
◦ Kaizen, continuous improvement, fast product development
14. But many changes have occurred over the last 20
years
◦ U.S., Taiwanese, Singaporean and other firms have learned
about quality, inventory control, Kaizen, fast product
development
◦ These firms have used low-cost and relatively high-quality
manufacturing from China to reduce importance of Japan’s
advantages in manufacturing
◦ $10 to assemble iPhone in China
Result is products from other countries have quality
that is comparable to Japanese quality (and costs that
are much lower)
15. Other changes have occurred
◦ Emergence of vertical disintegration enabled entry of firms in
U.S., Taiwan, and Singapore that have lower scopes of activities
in computers, semiconductors, consumer electronics, etc.
◦ These new entrants often have lower development costs since
they use components from other firms
◦ Japanese firms have been slow to reduce their scopes of
activities partly because they don’t like to sell businesses
◦ Also few startups in Japan
Result is falling shares for Japanese firms in
◦ Computers
◦ Semiconductors
◦ Consumer electronics
16. Success of Amazon Kindle, Apple
iPhone, Apple iPod, Xiaomi Phone
Emergence of Barnes and Noble
Nook, Google phone, Google TV
17. Japanese are still good in industries where close
cooperation between design and manufacturing are
important
Automobiles
Many types of machinery
18. They have a big impact on business success
◦ Many examples of why some firms succeeded more than others
can be explained in terms of business models
Business models need constant modifications as
changes in technology etc. occur
◦ But many firms do not modify their business models
Changes in business models can also explain growing
success or failure of certain countries
◦ The fall of Japan
◦ Challenges for Europe
The variety (and pace?) of technology change and thus
need for new business models may be accelerating
19. Google, Facebook, Amazon, and other U.S.
firms face increased regulations in Europe
Why
◦ They may violate privacy, competition, and tax laws
Another reason
◦ Internet is becoming important to mechanical
products, Internet of Things
◦ Will this cause U.S. firms to dominate a new set of
industries?
◦ How can Europe prevent this?
◦ What are appropriate business models for Internet of
Things?
A Fearless Culture Fuels U.S. Tech Giants
http://www.nytimes.com/2015/06/19/business/the-american-way-of-tech-and-europes.html
20. They have a big impact on business success
◦ Many examples of why some firms succeeded more than
others can be explained in terms of business models
Business models need constant modifications as
changes in technology etc. occur
◦ But many firms do not modify their business models
◦ One example of how business models require change can be
found in so-called disruptive technologies
Changes in business models can also explain growing
success or failure of certain countries
The variety (and pace?) of technology change may be
accelerating
21. We can see the degree of technological change in
venture capital funding and in the number of
“discontinuities*” being considered by firms
These discontinuities often require changes in business
models
Understanding how and when changes in business
models are needed, is essential to business success
*Discussed next week
22. Software 5.1
Communications & Networking 3.0
Semiconductors 1.6
Other IT 2.2
Total IT 11.9
Biopharmaceutical 3.8
Medical devices 2.0
Other healthcare 1.0
Total healthcare 6.9
Other industries 3.5
Total all industries 22.3
Source: Dow Jones 2006 Venture Capital Industry Report
23. All Industries in 2010 26.45 Billion USD
Aerospace and defense 97
Agriculture and forestry 34
Biopharmaceuticals 3,246
Business support services (mostly Internet) 2,516
Communications and networking 1,027
Construction and civil engineering 141
Consumer information services 4,552
Electronics and computer hardware 1,282
Financial institutions and services 631
Food and beverage 100
Healthcare services (mostly Internet) 1,144
Household and office goods 71
Machinery and industrial goods 188
24. All Industries Billions of USD
Materials and chemicals 413
Media and content 343
Medical devices and equipment 2,249
Medical software and information services 478
Non-renewable energy 296
Personal goods 47
Renewable energy 2,118
Retailers 182
Semiconductors 764
Software 3,762
Travel and leisure 133
Utilities 141
Vehicles and parts 460
Wholesale trade and shipping 0
25.
26. Billion Dollar Startup Club (Unicorns)
◦ valuations over $1 Billion
◦ and are still private (no IPO yet)
95 firms as of June 2015
◦ With 19 other firms in list (total of 114), that exited in
recent years due to IPOs, acquisitions or decreasing
value
High valuations mean investors believe they are
offering something valuable, unique, hard to
copy
Some of them will eventually have
◦ 100 Billion plus market capitalizations in future, like
strongest hi-tech startups: Apple, Google, Amazon,
and Microsoft
27. The Billion Dollar Startup Club by Category
Software, Big Data, Cloud Computing (33)
e-commerce (25)
Consumer internet (22)
Financial services (11)
Hardware: phones, wearable computing (10)
Healthcare (5)
Energy (3)
Entertainment and Games (2)
Aerospace and defense (1)
Real Estate (1), Education (1)
Note: this includes
firms that exited
for total of 114 firms
28. Software (33)
◦ Cloud computing, big data, online ads, security, database, integration
platforms, many types of tools
e-commerce (25)
◦ Many (15) mobile sites including specialty sites for fashion, clothing,
interior design
Consumer internet (22)
◦ Taxi apps, social networking, food delivery, music, hotels, discount
coupons, other demand economy
Financial services (11)
◦ Peer-to peer lending, mobile payment, micro-financing
Hardware (10)
◦ Phones, drones, wearable computing, rugged cameras, vision-based driver
assistance, thermostats
Other (13)
29. Every new technology requires a new business model
◦ Many forms of value propositions can be implemented, which is
best?
◦ Many possible customers, which ones will be the first users?
◦ How will the firm make money? i.e., value capture
Finding the appropriate business model is difficult
This will cause incumbents and many new entrants to fail
This provides opportunities for firms with good business
models
30. Billion Dollar Startup Club suggests that many
new products, services, and startups will be
Internet related
Smart phones will become more important
Internet of things, wearable computing will
also become more important
But many other technologies will be
introduced by large incumbents
Each of these new technologies requires a
new business model
31. Everything is being connected – Internet of things
Falling costs of MEMs, sensors, transceivers, GPS,
and other electronic components
Many new forms of products and services
◦ Mobile phone based systems and wearable computing
◦ Point care diagnostic systems, smart pills
◦ Chips embedded in body, clothing, and other places to
monitor body and also help with prosthetic limbs
What forms of software, big data, cloud computing,
and data base service are needed to support these new
hardware?
32. 3D ICs – address specific types of ICs such as
memory, microprocessors or combinations of them
Replacements for flash memory: phase change
memory (PRAM) magnetic RAM (MRAM),
Ferroelectric RAM (FeRAM), and resistive RAM
(ReRAM)
Extreme ultra-violet photolithography
New types of transistors, e.g., new “FIN FET”
Molecular and atomic transistors
Transistors made from single atom-layer materials
(e.g., graphene and other materials)
33. New forms of lighting
◦ LEDs or OLEDs
◦ Smart lighting: combine ICs and LEDs/OLEDs to provide
more effective and aesthetic lighting
New forms of lasers and applications for them
◦ Scanners for different applications including those that involve
3D printer
◦ Autonomous vehicles, in particular for roads dedicated to them
34. New forms of displays
◦ Organic Light Emitting Diode (OLEDs) based displays
◦ Electronic paper such as that used in eBooks
◦ Flexible displays, holographic displays
New applications of displays
◦ Public displays
◦ Information displays
◦ Smart watches
Virtual Reality for games and other applications
35. Graphene
Carbon Nanotubes
Boron Nitride (can provide you with connection to
supplier)
Quantum Dots
Nanoparticles
Nanofibers,
Other forms of ultra-thin (single- or double atom)
materials that often combine graphene with other
materials
36. home entertainment systems (e.g., Internet TV)
better imaging systems for health care
Internet of Things for agriculture, fishing, mining, sheep
herding, oil drilling
Better logistics for materials and people (e.g., automate
airport check-in)
Biometrics
More efficient construction (e.g., DIRTT)
Drones for new applications, e.g., delivery
Sharing economy
37. Many have emerged including touch displays, gesture
interfaces, and augmented reality
◦ LEAP
◦ Kinect
◦ Google Glass
◦ Auresma
◦ Senseg
◦ Tactus
◦ AtracTable
What kinds of new ones are emerging?
38. DNA sequencers
DNA synthesizers
Services related to sequencers and synthesizers
◦ Drug discovery
◦ Health care services
39. For more ideas, see my slide share account
http://www.slideshare.net/Funk97/presentati
ons
Based on my MT5009 module (Analyzing Hi-
Tech Opportunities)
◦ Slides on when new technologies become
economically feasible
◦ Some slides by me, some by students
◦ Also see my slideshare account for this module
http://www.slideshare.net/Funk98/presentations
40. Every one of these new technologies requires a new
business model
◦ Many forms of value propositions can be implemented, which is
best?
◦ Many possible customers, which ones will be the first users?
◦ How will the firm make money?
Finding the appropriate business model is difficult
This will cause incumbents and many new entrants to fail
This provides opportunities for firms with good business
models
41. There are many changes driving a need for
new business models
Although technological changes are the most
obvious, there are others
Opportunities for new entrants and
incumbents continue to be created
The goal of MT5016 is to help you
◦ understand these opportunities
◦ their impact on business models
◦ create potentially successful business models
Notas del editor
Engineering textbooks don’t tell us about change. They tell us how to best design a product or service according to today’s situation. Should I ask students about this? Raising kids; people say something was good enough for them, so it’s good for their kids
Why do you think Japanese firms don’t like to sell businesses
Sylvania, Zenith, RCA, GE
Not interested in wireless electricity
The word strategy is often applied to everything: your job, education, sport, day’s activity, love life