2: Lenses in general

Question 1

What are BM lenses?

Answer 1

Several theories, all needed to examine n understand BMs under different aspects(1 is not enough)

Question 2

13=4+3+3+3 SETS of BM lenses

Answer 2

IT:

1. Digitization lens = diff bw physical n digital world
2. Information Technology LENSES = new tech s as Internet of things (Nest), 3D printing
3. Digital BM Pattern lens = patterns profiting a lot from, or made possible by Digitization
4. Data n analytics
   * Econ:*
5. Transaction cost-driven LENSES = when IT lowers transact cost
6. Network economic-driven LENSES = IT network effects
7. economies of scope
   * StratMgmt:*
8. Competitive Strategy LENSES = research lit.
9. Technology Mgmt LENSES = research lit.
10. core comp
    * BMs:*
11. VP
12. revenue mechanics
13. BMP(attern)

Question 3

Razor n blade pattern

Answer 3

Created by Gillette 1904 (cheap razors to sell blades repeatedly)

Copied creatively by Apple iTunes, Amazon kindle, HP inkjet printers n ink cartridgesn Nespresso machines n capsules

Question 4

why “Long Tail” is especially interesting for digital companies?

Answer 4

Applying “Long Tail” is economically feasible for digital companies since marginal costs for additional storage are low

Question 5

Long Tail BM:

def=

Deviates from rule…

Amazon example:

Why digital?

Answer 5

selling less of more (selling little amounts of very many goods) …from 80/20 rule

More than 50% of products are only available online.

Digital you can afford it coz transaction, storage n distribution costs can be managed efficiently in digital.

Question 6

Freemium BM is only digital: why? costs vs revenues profile?

Answer 6

• Coz the marginal cost of 1 additional customer is ~zero.
• conversions to premium will bring you over breakeven later

Question 7

BM “User Designed” + Example

Answer 7

“Prosumers” motivated intrinsically (fun) n extrinsically (money rewards)
Eg Threadless > design t-shirts + vote + earning
They produce in batches
i.materialise > same w 3D designs

Question 8

BMPattern Crowd Sourcing W examples

Answer 8

> Source creativity, info 99designs: design competitions
atizo: brainstorming market
Wikipedia vs Britannica (fraud risk vs subscription)

Question 9

BMP Crowd Funding

Answer 9

> get min. Funding n idea validation
Kickstarter, Indie gogo

Question 10

Internet of things 5-layer model

Answer 10

DsACSaP
Digital service > digital value to customer
Analytics
Connectivity
Sensor / actor
Physical thing > physical value to customer

Question 11

Cloud markets:

• VA
• Range
• Predictions

Answer 11

• client foregoes capex for ongoing opex
• low 2 high: iPlaSerBizp
  infrastructure, platform, service, biz process
• exp. growth

Question 12

Gartner ‘hype cycle’ concept

Answer 12

New tech: hyped on appearance, then disappointment, then slower growth to actual potential

Question 13

Internet of things:

• Curr strength n weakness
• 3 Directions of expansion to…
• 4 typical gains provided

Answer 13

• Ss: chips getting ever cheaper n powerful
• Ws: they have ‘blurred’ vision so far
• 3Ds: time, place, data: to real world hiRes data
• extra info on world, machine learning, simplicity f use, better processes

Question 14

Smart light bulbs:

• function
• key Q

Answer 14

• • learns use patterns n repeats them on demand
• • what should it be sold as? Bulb or >alarm?

Question 15

5 Drivers of user adoption
+ Overarching theme

Answer 15

pri.c.r.a.c.:

• • price
• • cost reduction
• • risk reduction
• • accessibility
• • convenience/usability (apple touch screens, Spotify)

+ solve a PAINFUL problem for users

Question 16

‘How to create value’ 2x2 framework by Prof Fleisch

w 1 eg per cell

Answer 16

product (buy>own) service (recurr fees to use)

digital iTunes store cloud storage

physical dishwasher home rental

Question 17

Relationship bw physical product n digital service
2 way-benefit key concept:

Answer 17

• Free DS added to PP can increase price 5 times! Eg Philips hue
• cheap PPs can let you sell subscription DS! eg smart home sensors + service plan w minimum bundle
• > combinations (any) add value

Question 18

Lens cash flows - Product play cash flow scenario:
Def
Implications (2 strats)
Profitable if:

Answer 18

• Vendor monetizes just at beginning, w decreasing cash flows (maybe even negative in later years)
• vendors have interest to limit usage duration = planned obsolescence; or cost Mgmt
• margin on HW * discount rate > cost of service

Question 19

Lens cash flows - Service play cash flow scenario:
Def
Implications (2 strats)
Problem (only B2C, not B2B)

Answer 19

• initial loss then gains
• vendors want long term contracts; or customer retaining strats!
• consumers, unlike Cos, are STILL reluctant to pay for service

Question 20

Lens cash flows - Hybrid play
cash flow scenario:

assessment

Answer 20

• all CFs positive!
• best, but not always possible

Question 21

Lens Porter’s 5 forces

• lens goal
• 3 digital considerations

Answer 21

goal: to measure degree of rivalry in an industry

1. • ease of suppliers’ forward integration
2. • ease of customers’ backward integration
3. • ease transaction/substitution cost

Question 22

Lens competitive strategy
Def
Digital considerations:
- 3 overlapping roles

Answer 22

-Porter’s 3 generic strategies (don’t be stuck in middle)

unlike that, in the digital space we have 3 overlapping roles:

• HiDE*
• High Resolution Mgmt
• Digitally Charged Products
• Enabler of internet of things solutions