Venkatraman_MasterClass@CanalPlus

Business Innova,on and Transforma,on: Opportuni,es and Challenges in the

Media Sector

Professor N. Venkat Venkatraman David J. McGrath Jr. Professor of Management

Boston University School of Management

[email protected]

Canal + France Master Class June 23, 2010

Overview

(c) N. Venkatraman [2010]

Emergence of Network Era

Illustra,ve Cases and Concepts

Implica,ons for the Media Sector

2

Imagine life without……

(c) N. Venkatraman [2010] 3

Towards Network Era: A Brief History


1,900,000,000

4,400,000,000

*March 31, 2010

A brief history… (con,nued): YouTube and Hulu generate 2X traffic than the en,re Internet in 2000


Source: Cisco

And there’s Facebook….


 400 million active users  70% outside USA  100 Million access using mobile devices  50% log on in any given day  500 billion minutes per month

But……Facebook in Media and Entertainment?


And.. there are tweets…


*June15, 2010

Tweets seem to be purpose-‐driven


Link

From 1995 ,ll today..

•  Developments in informa,on technology have been drama,c and significant

•  Shics in management prac,ces have been incremental and slow

•  A new business infrastructure is emerging – Global – Digital –  Connected –  Converged


Towards Global Digital Network Era….


Informa,on technology is impac,ng products..


Products linked on all-‐IP infrastructure

Products on IP-‐

network

Towards 40-‐50 billion

devices

13 (c) N. Venkatraman [2010]

Impac,ng next genera,on business processes..


video

Processes designed for the global All-‐IP infrastructure

Healthcare

Logis,cs

Energy

Media & entertainment

Financial Services

Next-‐genera,on processes


….and service delivery…


Services delivered on the All-‐IP infrastructure

Service Delivery

Next-‐genera,on services


The new business infrastructure….


Live

Work Play

Learn

Connect

Innovate

Consume

Transact

Let us introduce three technology laws

Bandwidth Law

Metcalfe’s Law

Moore’s Law (c) N. Venkatraman [2010] 19

And look at them together..

Moore’s Law

Metcalfe’s Law

Bandwidth Law


“Computer”

“Connec8vity” “Cloud”

20

A Working Framework on Business Innova,on


Technology Domain

Business Domain

Process Product Service

Moore’s Law

Metcalfe’s Law

Bandwidth Law

21

The Alignment Challenge: Balancing Innova,on and Implementa,on


Business Strategy

I/T Strategy

Implementa,on

Innova,on

Overview




Implica,ons

23

Seing 1: Computer Industry’s Evolu,on and Imapcts


Computer industry [circa 1980]

Source: Bill Gates Testimony Source: Bill Gates Testimony 25 (c) N. Venkatraman [2010]

Computer industry [circa 2002]

Source: Bill Gates Testimony 26 (c) N. Venkatraman [2010]

Two Key Ideas…

Ver,cal integra,on giving way to horizontal layers of specialized capabili,es

 When and how do new layers emerge?

 When do layers disappear or morph?  Can you disrupt by introducing a new layer where you hold an advantage?

 Can new entrants succeed by introducing a new layer?


1

Two Key Ideas…

Winning requires domina,ng a layer and connec,ng across layers

 What’s your panern of connec,ons across the layers?

 How do your compe,tors connect across the layers?

 Do you have an advantage in network connec,ons across layers?


2

Wealth Crea,on and Destruc,on Across Technology Cycles

Mainframe Compu,ng

Mini Compu,ng

Personal Compu,ng

Desktop Internet

Compu,ng

Mobile Internet


1960s 2010s

Source: Morgan Stanley (2009)

Each cycle required the leaders to ar,culate and architect different business ecosystems

The Computer (I/T) Industry Today..


The Computer (I/T) Industry Today..


Products

Plaporms

Services

Solu,ons

Evolu,on of the Computer Sector…


The Computer (I/T) Industry Impacts Media and Entertainment…….


The Poten,al Future Impact of the Computer Sector…

(c) N. Venkatraman [2010] 34 Source: Morgan Stanley (2010)

Seing 2: Apple’s Innova,on and Transforma,on


Music in the analog era….

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

Content (music)

Albums offered by record labels in standard formats (33-‐45-‐78 rpm; & cassene tapes)

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

Customer Network

Albums and tapes borrowed within friends communi,es.


Music in the digital era…..

Hardware Digital audio players

Content (music)

Major lables plus rise of independent labels pos,ng music online

Digital Rights Management

Apple Fairplay; Windows Play For Sure

Channel Sold in stores (CDs); Rise of Online downloads

Customer Network

P2P file sharing; personal CD burning and sharing with friends

Socware MP3; itunes; Windows Media; Quick,me; Realone etc.


Precursor to today’s social

network?

iTunes in the music ecosystem: Closed? Open?


iTunes History (relevant for architectural control point)

•  Versions 1 to 4.0.1 – Supported only Macintosh (,ll October 2003)

•  Version 4.1 – Windows 2000 Support (October 16, 2003); 1 million downloads

•  Subsequent versions support latest versions of both Mac and Windows OS


Apple’s orchestra,on of the music ecosystem


Content Availability

iPod Adop,on

Complementor Networks

Customer Networks

Direct

Indirect

Music in the network era……

Hardware Mul,ple 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

Customer Network

P2P file sharing; personal CD burning; social and automated recommenda,ons

Socware MP3; Apple itunes; Windows Media; Quick,me; Realone etc.

Mobile Operators

Mobile network for accessing music


Network of Linkages in Music


Hardware

Opera,ng System

Applica,ons

Content

Channel

Mobile Operators

Customer Network

Apple’s App Store: Extension of iTunes Store


From iPod to iPhone: Role of iTunes and App Store


From iPhone to iPad: Role of iTunes and App Store


iPad and Media Consump,on


iTunes and Apple TV.. S,ll not fully leveraged..


iTunes + iPhone have been cri,cal for Apple’s Innova,on and Transforma,on


And there’s the Google TV Ecosystem


Google TV Ecosystem


While Microsoc had an early lead…


Media 1.0 Media 2.0

What content to broadcast when? how?

How to ‘orchestrate’ the consump,on of media for different consumers?

What does this shic mean?

Ac8vi8es Media 1.0 Media 2.0

1. Search Printed guide or Electronic Program Guide (EPG)

Search engines, social networks. Links, tags etc.

2. Access Television sets Computers, Mobile Phones, Tablets, Televisions

3. Consume Watch and Record Watch, Pause, Rewind, Record, Comment etc.

4. Store Local or Networked DVRs

Cloud Services

5. Share Copied on Tapes and DVDs

Emailed, Embedded, Linked, Tagged


Two Key Ques,ons…

Who’s architec,ng the emerging media business architecture?   Content creators? Channels?

Aggregators? New entrants (Apple, Google and others?)

  Where’s the value created in the new architecture?

  Who’s likely to capture it?


1

Two Key Ques,ons…

Winning requires domina,ng a layer and connec,ng across layers in the new business landscape

 What’s your panern of connec,ons across the layers?

 How do your compe,tors connect across the layers?

 Do you have an advantage in network connec,ons across layers?


2

Overview




Implica,ons

56

Winning in Networks

•  Recogni,on of shics in locus of value crea,on and capture (‘cash register’)

•  Role of layers of capabili,es and connec,ons across layers (‘reconfigura,ons’)

•  Poten,al of cross-‐network disruptors @ scale (e.g., Apple, Google, Amazon, Microsoc and Facebook)

•  Winning in dynamic ecosystems through a porpolio of alliances


Five requirements to win

1.   Construct your strategy network 2.   Examine likely shics in your strategy network

3.   Evaluate possible connec,ons (and their governance)

4.   Assess your organiza,onal capability to compete in dynamic strategy networks

5.   Calibrate and monitor posi,ons on your network scorecard

In closing……


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

John M. Keynes

Documents

Venkatraman_MasterClass@CanalPlus