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What is Big Bang Disruption? A look at the history of Pinball.
Copyright © 2014 Accenture All rights reserved.
Pinball not only survived the early period of arcade video games, it thrived...
Pinball Units Sold(Hundreds of Thousands Per Year)
1989 19920
0.5
1.0
1.5
Pinball suffered a stealth invasion, not from arcades, but from an unexpected source: home consoles.
Pinball Units Sold(Hundreds of Thousands Per Year)
Playstation™ Units Sold(Millions Per Year)
0
0.5
1.0
1.5
0
10
20
30
1989 1992 1995 1998 2001 2004Copyright © 2014 Accenture All rights reserved. 3
4
Big Bang Disruption
Copyright © 2015 Accenture All rights reserved.
Innovators(2.5%)
Early Adopters (13.5%)
Early Majority (34%)
Late Majority (34%)
Laggards(16%)
BIG-BANG MARKET SEGMENTS
5
Competitive StrategiesStrategy gurus would say you must pick one.
Copyright © 2015 Accenture All rights reserved.
160
140
120
100
80
60
40
20
The Inevitable Reality for Kodak
Source: The Economist, Kodak annual reports, Google Finance
1970 1975 1980 1985 1990 1995 2000 201520102005
Number of Employees (thousands) Share Price (USD)
Copyright © 2014 Accenture All rights reserved.
BIG BANG DISRUPTORS ARE EVERYWHERE
Industry BigBang Disruptor
M aps & dedicated GPS devices
Taxi services
Hospitality–Hotels
PCs and Laptops
FinancialServices –Payments
Retail
Education
Travel agencies
Yellow pages
Film rentals
Low-end digital cameras
Unencumbered Development
BIG BANG DISRUPTION
Time
Mar
ket P
enet
ratio
n
TRADITIONALTECHNOLOGYADOPTION CURVE
Undisciplined Strategy
Unconstrained Growth
Driven By Moore’s Law
Copyright © 2015 Accenture All rights reserved. 8
9
Twice As GoodTwice as good as the flip phone was easy…
Copyright © 2015 Accenture All rights reserved.
Unconstrained Growth
NB: Garmin and TomTom data from available 10k filings and annual reports. Garmin’s year 0 = 1998 (StreetPilot debut); TomTom’s year 0 = 2002 (Navigator debut). Both Garmin and TomTom unit sales are inclusive of all GPS products. Google data from publicly available news sources; year 0 = 2007 (debut of Maps for Mobile 2.0)
* TomTom stops reporting unit sales per yearafter 2009
Google Maps mobile installsTomTom cumulative unit sales*Garmin cumulative unit sales
Copyright © 2015 Accenture All rights reserved. 11
Years since debut of first auto-GPS offering
Est
imat
ed u
sers
(mill
ions
)
0 2 4 6 8 10 12 14
200
180
160
140
120
100
80
60
40
20
Near perfect information means you can’t stop it.
12
Unencumbered Development Until the right combination occurs it is a series of failed experiments.
Copyright © 2015 Accenture All rights reserved.
1993 1996 1998 1999 2003
Napster
iTunes Music Store
Internet Underground Music Archive
Ritmoteca.com, eMusic
Cductive
1992 1998 2004 2006 2007
Kindle™
Expanded books
Rocket eBook, SoftBook
Librié
iLiad, Reader
Smartphone Network Cloud Infinite Processing
Capacity
13
Moore’s Law AppliedThree technologies have come together to forever, radically change the consumer landscape.
Copyright © 2015 Accenture All rights reserved.
+ + + =
We’ve Already Seen It
Source: Global approximation based on data from USPS, “Email Volume Estimates from 1978 to 2011,” International Center for Integrative Systems
1926 1936 1946 1956
Pieces of transaction mail (billions)Global email volume (trillions)
120
100
80
60
40
20
160
140
100
80
40
20
120
60
1966 20061976 1996
Copyright © 2015 Accenture All rights reserved. 14
15
Retail Trends – Shorter DistanceAmazon's global network of fulfillment centers
Copyright © 2015 Accenture All rights reserved.
16
Retail Trends – Free ShippingFree shipping is the number one decision factor for online purchases.
Copyright © 2015 Accenture All rights reserved.
Source: ComScore
Free Shipping
44%Customer
Pays Shipping Charge
56%
Q3 2013
Free Shipping
68%
Customer Pays
Shipping Charge
32%
Q3 2014
Percentage of U.S. E-commerce Purchases with Free ShippingQ3 2013 vs. Q3 2014
17
Retail Trends – SpeedRetailers are investing in speed and it is working.
Copyright © 2015 Accenture All rights reserved.
Source: Stella Service
0
1
2
3
4
5
6
7
Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dez 13
BestBuy.com Amazon.com
SFSLaunch
Store Warehousing vs. Centralized Fulfillment Centers2H 2013, Amazon.com vs. BestBuy.com Average Parcel Delivery Speed
18
Retail Trends – Online InventoryRetailers are investing in online inventory and proximity solutions.
Copyright © 2015 Accenture All rights reserved.
“How prepared are you to drive in-store sales from consumers’ digital interactions?”
We can identify online the stores that stock our merchandise
We can identify online the stores with current merchandise availability
We can collaborate with retailers on targeted incentives for consumers buying in-store
We can identify online the stores in the consumer’s proximity with current merchandise availability
48%
50%
50%
66%
19
Retail Trends – Click and CollectRetailers are betting on click and collect with 57% saying it is a top omnichannel priority.
Copyright © 2015 Accenture All rights reserved.
Percentage of Consumers who have Used Click & Collect Service by Country
19%12%
21%
32%
41%
51%
57%
60%
US
Germany
Italy
Netherlands
Belgium
UK
France
20
Retail Trends – New Delivery PlacesRetail and eCommerce are blending and investing in new delivery pts.
Copyright © 2015 Accenture All rights reserved.
21
Potential Big Bang Disruptors
Copyright © 2015 Accenture All rights reserved.
Drone Delivery
Analytics Driven Network Brokers
New Delivery Models
22
New Models Now PossibleNew entrants have an entirely different cost structure. It is no longer about density.
Copyright © 2015 Accenture All rights reserved.
Sourcing Spare Capacity
Rapid Scale (Up and Down)
Focused On Last Mile (For Now)
Technology Enabled
Total Funding in Sharing Economy Start-ups by Year ($M)
23
Significant Last Mile Investment
Copyright © 2015 Accenture All rights reserved.
Storage
Logistics
Stay
Transport
Personal Goods
Private Spaces
Food
Business Equipment
Total Sector Funding ($M) Top Funded Companies Top Investors
Source : Sharing Economy Landscape, 2015, Tracxn, Accenture Analysis
0
4
11
16
51
273
645
800 Airbnb ($776.4M), Wimdu ($90.0M)
Lyft ($333M), RelayRides($53.2M), Boatbound ($5.3M)
Chegg ($252M; IPO at $1.1B). Bag Borrow or Steal($20.0M)
LiquidSpace ($26.2M), PivotDesk($6.7M), Storefront($8.9M)
Getable($3.2M), Yard Club($1.6M)
EatWith ($9.2M), Suppershare
Friendshippr ($1.2M), WeDeliver($0.8M)
Roost ($160k), StowThat ($50k)
Sequoia, TPG Growth
Trinity Ventures, Shasta Ventures, Google Ventures, August Capital
N/A
Shasta Ventures, Roth Capital Partners, Lucas venture Group, Spark Capital
N/A
GreyLock
N/A
N/A
60 96 283 357 116
958
2009 2010 2011 2012 2013 2014
Local Deliveries
24
Significant Last Mile Investment
Copyright © 2015 Accenture All rights reserved.
StorageCrowd Shipping
25
Variable Cost Networks Change The Game
Copyright © 2015 Accenture All rights reserved.
Variable Cost Levels – Margin Impact
Operating MarginLoss Sensitivity Revenue Loss
1% 3% 5% 7% 10%
Variable Cost Ratio
10% 9% 27% 45% 63% 90%
20% 8% 24% 40% 56% 80%
30% 7% 21% 35% 49% 70%
40% 6% 18% 30% 42% 60%
50% 5% 15% 25% 35% 50%
60% 4% 12% 20% 28% 40%
70% 3% 9% 15% 21% 30%
80% 2% 6% 10% 14% 20%
90% 1% 3% 5% 7% 10%
Variablizing costs or being more captive in sustainable revenue streams would be important
Notes: Illustrative of a firm with a 10% operating margin in the original scenario Source: Accenture Analysis.
26
Better?
Copyright © 2015 Accenture All rights reserved.
ConvenienceIs King
New Value Added ServicesFaster Delivery
27
Cheaper?
Copyright © 2015 Accenture All rights reserved.
Estimated last mile delivery costs.
$5.00+
$2.00
$1.50
28
More Personal?
Copyright © 2015 Accenture All rights reserved.
When I Want It
Where I Want It
Fully Within Consumer Control
Completely Transparent
29
Analytics Driven Network BrokersThe emergence of multi-carrier domestic fulfillment solutions is following the models developed for cross-border solutions.
Copyright © 2015 Accenture All rights reserved.
Building Blocks
Significant Scale• Large contracts directly with retailer/etailer• Founded on price negotiation power
Analytics driven• Detailed data on price and performance• Becoming predictive
Multi-carrier first/last mile • Negotiated lanes connecting hubs
• Multi-carrier last mile strategies
End-to-End Visibility• Proprietary tracking systems knit networks• Customers see single network
30
CainiaoThe most advanced and aggressive of these networks is an emerging player in China called Cainiao.
Copyright © 2015 Accenture All rights reserved.
Company Details One China Network
Founded 2013
CEO Jack Ma (founder Alibaba)
Ownership • 40% Alibaba• 30% Real Estate Dev• 1% each – SF Express,
ZTO, Shentong Express, YTO, Yundan Express
Coverage 2,000 of largest cities in China
Network 9 processing centers across China
31
CainiaoThis new model may become the default shipping option for most content moving through China’s domestic networks.
Copyright © 2015 Accenture All rights reserved.
Building Blocks
Significant Scale • All Alibaba content• 96% of C2C• 45% B2B• 50% B2C
• Expanding to include other etailer/retailers
Analytics driven• Selecting on price and service responsiveness
• Detailed pricing by lane• Objective is D+1 across China
Multi-carrier first/last mile • Sourcing network from 5 largest CEP companies in China
• China Post for USO and warehousing• Large stake in KXTX logistics platform (ground tranport)
End-to-End Visibility• Tracking system called Logistics Pal• Captures tracking events across networks for every delivery
32
Better?
Copyright © 2015 Accenture All rights reserved.
Remote Locations
Focused on Speed
(next day everywhere)
Improved Service
Reliability
33
Cheaper?
Copyright © 2015 Accenture All rights reserved.
Currently focused on speed and reliability but price is next.
Minimal network investment
required
Leveraging spare capacity
Analytics driven pricing data
34
Drone DeliveryOne of a few truly transformative technologies, drones will soon become part of the consumer landscape.
Copyright © 2015 Accenture All rights reserved.
Cheaper.Faster.Smaller.
AccelerometersBarometersGyroscopes
Digital CompassesMicroprocessors
WiFi RadioBluetooth RadioCellular Radio
Near Field CommsBatteriesDisplays
• Flight controllers have dropped 100x in last 8 years• Fully autonomous for $150• Mission control: laptop, tablet or
smartphone
• Sensor costs dropping rapidly driven by smartphone investment• Cheaper, smaller and more
environment aware• Processing capacity and speed
exponential
• Hobby/consumer use becoming prevalent, cheap and easy• Even hobby models have
multiple onboard radios• Taking selfies to a new level
35
Drone DeliveryExperiments are just getting started.
Copyright © 2015 Accenture All rights reserved.
36
But We’re Not There Yet…Additional technology and regulatory advancement required before delivery will be a reality.
Copyright © 2015 Accenture All rights reserved.
Regulatory (not exhasutive)
Country Status Delivery Suitability
UK Clear regulationsand certification
Germany Clear regulation and certification
US Draft regulations until 2016
Australia Clear regulations and certification
India No regulation – local discretion
China No regulation – local discretion
Required Technology
Collision avoidance
Battery – the universal limiter
Longer lifeAutonomous swap
Autonomous package delivery/retrieval
Delivery base systems
App store model
37
Better?
Copyright © 2015 Accenture All rights reserved.
Remote LocationsAll HoursFaster Delivery
(less than hour)
38
Cheaper?
Copyright © 2015 Accenture All rights reserved.
Current experiments are too costly but models estimate delivery could be very cheap.
.24$2 kilograms25 kilometers
39
More Personal?
Copyright © 2015 Accenture All rights reserved.
When I Want It
Deliver To My Location
Smartphone Controlled
We Are In The Singularity
Copyright © 2014 Accenture All rights reserved. 40
The Singularity The BigBang
The Big Crunch Entropy
What should companies do about it
Copyright © 2014 Accenture All rights reserved. 41
The Singularity The BigBang
The BigCrunch
Entropy
Foresight
ScalingM anagement
Asset Freedom
End GameM astery
The Singularity The Big Bang The Big Crunch Entropy
EARLY ADOPTERS M UST BE REPLACED
1. Listen to your truthtellers
2. Time the pace of technology
3. Engage in seemingly random experiments
SHARKFIN M ODEL
RULES OF THE SINGULARITY
The Singularity The Big Bang The Big Crunch Entropy
ADVERTISING AND PROM OTION M UST BE SOCIAL
1. Deploy winner-takes-all strategy
2. Create bullet time
SHARKFIN M ODEL
RULES OF THE BIG BANG
The Singularity The Big Bang The Big Crunch Entropy
M ARKETING M UST CALL THE FIGHT
1. Anticipate saturation
2. Shed assets before they become liabilities
3. Quit while you’re ahead
SHARKFIN M ODEL
RULES OF THE BIG CRUNCH
The Singularity The Big Bang The Big Crunch Entropy
M ARKETING M UST LEAD THE ENDGAM E
1. Become someone else’s components
2. M ove to a new singularity
SHARKFIN M ODEL
RULES OF ENTROPY
Thank [email protected]: Brody BuhlerTwitter: @brodybuhler