Moving To The Edge 2007

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Information about Moving To The Edge 2007

Published on May 24, 2007

Author: NVA100

Source: slideshare.net

Description

A description of the Platform Enterprise

Extracting Value from Technology John C. Henderson Nalin Kulatilaka Moving to the Edge: Leveraging Business Platforms

Exploiting Intelligence at the Edge BP – Field of the Future Sears - Home Repair GE - Remote Monitoring of Engines US Army – Network Centric Progressive – Pay as you go … Is there an Emerging Business Model ?

BP – Field of the Future

Sears - Home Repair

GE - Remote Monitoring of Engines

US Army – Network Centric

Progressive – Pay as you go



Use Platform to Create Intelligence at the Edge Pervasive Connectivity Sensory Network Intelligence at the Edge

Moving to the edge: Three key challenges Leverage the network of customers, suppliers and third parties Invest in capabilities not technologies Earn and learn Time Earn learn

Leverage the network of customers, suppliers and third parties

Invest in capabilities not technologies

Earn and learn

Earn and Learn: A Business Platform Strategy In the context of a Business Network, you must navigate the uncertainty of a dynamic, global market Create value by the ability to explore and exploit Capture the value of good ideas Operate at scale in a highly networked environment

In the context of a Business Network, you must navigate the uncertainty of a dynamic, global market

Create value by the ability to explore and exploit

Capture the value of good ideas

Operate at scale in a highly networked environment

Cope with Uncertainty High Low Time Value Possible paths ? ?

Strategic Parity Depends on Competitive Conditions Time Value Strategic Parity ? ?

Navigate the Cone Time Value X X X X Learn and Adapt Reduce Downside Capture Upside

Drive Increasing Value Time Value X X X X Capture Upside

The Economics of a Business Platform A business platform is a set of capabilities that Has “options” value Creates Network Effects Has explicit Architectural Control Points

A business platform is a set of capabilities that

Has “options” value

Creates Network Effects

Has explicit Architectural Control Points

Business Capabilities Platforms A business capability is “ What not how” Value driven Measurable Action oriented Achieved by combining People Process Technology Governance (Organization)

A business capability is

“ What not how”

Value driven

Measurable

Action oriented

Achieved by combining

People

Process

Technology

Governance (Organization)

Network Systems: A User’s View Value to users increase as more users use the system. Reduced costs of search, transactions, synchronization …. Consumers derive an autarky value and a network value Direct (connected) network effects Telephone, Fax, email Excel, MS-Word, MP3 Indirect (complementary) network effects VCRs and content, cars and gas stations typewriters and skilled typists, Hardware and software, operating systems and applications, shared data and models Some networks have both types of network effects Roads and vehicles, The Internet

Value to users increase as more users use the system.

Reduced costs of search, transactions, synchronization ….

Consumers derive an autarky value and a network value

Direct (connected) network effects

Telephone, Fax, email

Excel, MS-Word, MP3

Indirect (complementary) network effects

VCRs and content, cars and gas stations typewriters and skilled typists, Hardware and software, operating systems and applications, shared data and models

Some networks have both types of network effects

Roads and vehicles, The Internet

Network Systems: A Producer’s View Scale and scope economies High fixed costs (R&D) and low (near zero) variable costs create falling average costs (e.g., Information goods) Network externalities result when the benefits of network effects can not be captured by the producers. Platform strategies strive to “internalize” these effected

Scale and scope economies

High fixed costs (R&D) and low (near zero) variable costs create falling average costs (e.g., Information goods)

Network externalities result when the benefits of network effects can not be captured by the producers.

Platform strategies strive to “internalize” these effected

Return on investment grows rapidly with scale Large up-front investment Value grows rapidly with scale Size of Network Value of Network Cost of Building Network

Large up-front investment

Value grows rapidly with scale

Business Platforms: Building on Existing Theory Design Theory: Product Platform Architectures Enhance Innovation/Manage Complexity Define interfaces (standards) Encapsulate functionality/specialize Enhance Productivity Core functionality (reuse) Independent/parallel work (ecosystem) Organization Theory: Capabilities Dynamic Capability (Teece) Function competency vs reconfigurability (Pavlou/El Sawy) Shared knowledge and learning organizations

Design Theory: Product Platform Architectures

Enhance Innovation/Manage Complexity

Define interfaces (standards)

Encapsulate functionality/specialize

Enhance Productivity

Core functionality (reuse)

Independent/parallel work (ecosystem)

Organization Theory: Capabilities

Dynamic Capability (Teece)

Function competency vs reconfigurability (Pavlou/El Sawy)

Shared knowledge and learning organizations

The Edge Organization Where is the edge of the organization ? Where is the edge of a school bus company? What would the business model look like if the bus was the true edge and what would it take to make it so? How would it alter the ability to Manage scale Grow Differentiate Proposition: A Business Platform Enables a shift to an Edge Organization

Where is the edge of the organization ?

Where is the edge of a school bus company?

What would the business model look like if the bus was the true edge and what would it take to make it so?

How would it alter the ability to

Manage scale

Grow

Differentiate

Moving to the Edge: Five Principles of a Business platforms Leverage our understanding of design Products Organizations Focus on the Economics of Platforms

Leverage our understanding of design

Products

Organizations

Focus on the Economics of Platforms

Five principles of a Business Capability Platform Integrity of Core Operations Define the core – focus Evolve the core Defend the core – ACP Observability Connectivity Information quality Technical Analytical Social Working at the Edge Leveraging distributed Cognition Knowledge sharing Shared awareness Leveraging distributed work Coordination Synchronization

Integrity of Core Operations

Define the core – focus

Evolve the core

Defend the core – ACP

Observability

Connectivity

Information quality

Technical

Analytical

Social

Working at the Edge

Leveraging distributed Cognition

Knowledge sharing

Shared awareness

Leveraging distributed work

Coordination

Synchronization

Five Principles of a Business Capability Platform 4. Contractual flexibility Responsibility Accountability Incentives 5. Coherence Share values Shared intent Strategic experimentation

4. Contractual flexibility

Responsibility

Accountability

Incentives

5. Coherence

Share values

Shared intent

Strategic experimentation

Leverage the Network : The Edge Organizations An organization form that Leverages the network through co evolution in both execution and innovation Effectively exploits peer to peer, self-synchronization relationships while sustaining and adapting a shared strategic intent Can create and capture the economic value of platforms

An organization form that

Leverages the network through co evolution in both execution and innovation

Effectively exploits peer to peer, self-synchronization relationships while sustaining and adapting a shared strategic intent

Can create and capture the economic value of platforms

Leadership Challanges Earn and Learn Evolve capabilities over time Connect Shared awareness Scale Grow Differentiate Leverage peer to peer Drive strategic learning Create the new performance measurement system

Earn and Learn

Evolve capabilities over time

Connect

Shared awareness

Scale

Grow

Differentiate

Leverage peer to peer

Drive strategic learning

Create the new performance measurement system

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