Page 0: Page 1: Web 2.0 Business Models CEO Teemu Arina / Dicole Oy 03.02.2008 Photo: Tracy O Page 2: 1. What is Web 2.0? Photo: Don J. McCrady Page 3: "The central principle behind the success of the giants born in the Web 1.0 era who have survived to lead the Web 2.0 era appears to be this, that they have embraced the power of the web to harness collective intelligence" - Tim O’Reilly, 2006 Page 4: “The Semantic Web is not a separate Web but an extension of the current one, in which information is given well-defined meaning, better enabling computers and people to work in cooperation” - Tim Berners-Lee, 2001 Page 5: Both are Ecosystems Semantic Web: interaction between machines Social Web: conversations between people Page 6: Integrated intelligence Individual intelligence Computer intelligence Integrated: Collective intelligence (networked)‫‏‬ Image: uscfan Page 7: Information Technology • Core is information Page 8: Interaction Technology • Core is interaction Ref: Esko Kilpi (2006) Page 9: Web 2.0 Page 10: Recipe for Web 2.0 eb W .0 2 Photo: ulterior epicure Page 11: Web as a platform Photo: Christopher Chan Page 12: Software above a single device Photo: *One* Page 13: Data as the new Intel inside Photo: _fabrizio_ Page 14: Harnessing collective intellgence Photo: Donna Cymek Page 15: Lightweight business models, e.g. SaaS (Software as a Service) Photo: ulterior epicure Page 16: Rich Internet Applications (RIA, AJAX) Page 17: Leveraging the Long Tail Head (20%) Sign al v s. n ois e equ R dfi ire erin lt g r we po Sales Tail (80%) Products Ref: Chris Anderson Page 18: 2. What are the new business models? Photo: Don J. McCrady Page 19: Page 20: Page 21: Typical business models ■ Create a large/focused niche user community ■ ■ ■ ■ ■ ■ ■ ■ Sell API access (Google) Sell services to a large group of SMEs (Salesforce.com) Sell data to partners (Facebook? :)) Get a revenue share from transactions (eBay) Sell advertisements (MySpace) Sell value-added platform (Amazon Web Services) Freemium - Sell premium memberships (Livejournal) Sell your company (Youtube) Page 22: Sell your company? Page 23: Get your feet on the ground Photo: Fernando A. Page 24: Get 2 million € in investment? Photo: Big-E-Mr-G Page 25: Wake up. Most Web 2.0 startups get to the market with 200k€ or less Photo: Big-E-Mr-G Page 26: How? Page 27: Expansion strategies 1. Create an API (Application Programming Interface) 2. Distribute source as Open Source (e.g. Sugar CRM) 3. Create developer ecosystem (e.g. Amazon) 4. Create browser plugins (e.g. del.icio.us) 5. Create plugins for other platforms (e.g. blogging) 6. Create embeddable widgets (e.g. Meebo) 7. Advertise on Google AdSense (e.g. everyone) 8. Utilize SEO (search engine optimization) Page 28: Even more importantly.... Give something valuable for free Page 29: Example revenue of X ■ ■ ■ ■ ■ 40% premium memberships 42% Google Adsense 10% selling one ad directly to advertiser 5% text link ads 3% referall money from amazon.com and linkshare Minimal self funded startup costs, focus on a specific community, value created to the user base through a clever combination of services driving repeat visits and premium subscription, viral growth, advertising revenues and eventually (hopefully juicy) sponsorships. Page 30: 3. How to position yourself? Photo: Don J. McCrady Page 31: Concept analysis Development Features Iterative Simplicity Content People Interaction Attention Extendability Automation Personal Immediate Social Emotional Practical Regular Occasional Long term Value Time Improved on A. Bäck, S. Vainikainen Page 32: Usage analysis Visibility Identity building Social networking Publicity Creation Contribution Aggregation / acquisition Participation Privacy Play Alone User-generated Team Community Loose network Associative Commercial / professional Hierarchical Activity Content Improved on A. Bäck, S. Vainikainen Page 33: Business analysis Market Large companies Public sector SMEs Advertising Value-added services Subscription / SAS Revenue Consumers Loss-leader Local installation Web services (APIs) Online service Freemium Offline version Plugins Source code Deep linking Availability Expansion Page 34: Typical Web 2.0 problems 1. Spam and scammers 2. Inability to scale business after reaching a certain number of users 3. Crowds flee to the next cool service 4. Many sites competing on user attention 5. House-of-cards business platform Photo: Mike9Alive Page 35: 4. How to drive users? Photo: Don J. McCrady Page 36: Top-down innovations Bottom-up innovations Source of ideas Drivers Interaction Strategy Processes Methods Management and your own organization Internal resources, products, positioning Structured and managed Go to the customer Linear and strictly defined Market research, surveys, focus groups Customers and users Deep understanding of customer needs Spontaneus and non-linear Invite customer to participate Emergent and serendipic Communities, crowdsourcing, peer-production and social media Photo: JJay Page 37: Social objects connect people Beat Hum Occasional Particle Videos Blog posts Photos Microblogging Presence Continuous Wave 1. 2. 3. 4. 5. Define your object Define key verb Make your objects discoverable Turn invitations into gifts Charge publishers, not spectators Ref: Jyri Engeström Page 38: Power Law of Participation Ownership Moderating Collaborating Reflecting Recommending Linking Commenting Tagging Rating High Engagement Subscribing Reading Collective Intelligence (implicit creation) Low Threshold Collaborative Intelligence (explicit creation) Ref: Teemu Arina, based on Ross Mayfield Page 39: Participation Inequality 1% creators 10% synthesizers 100% consumers Ref: Bradley Horowitz, Jacob Nielsen Page 40: Organize information with tags Page 41: Cognitive analysis of tagging Tags Stage 0 Object worth remembering Stage 1 Multiple concepts are activated Tag it! Write down activated concepts Categorization Stage 0 Object worth remembering Stage 1 Multiple concepts are activated Stage 2 Choose one of the activated concepts Categorize it! Note the chosen concept Analysis-Paralysis! Ref: Rashmi Sinha Page 42: Recommendations based on user behaviour Page 43: Broaden tags with user contributions Page 44: Get user-generated content that can be aggregated, not just comments Page 45: Target advertising based on user interests Page 46: 5. How to be innovative Photo: Don J. McCrady Page 47: Read these Page 48: Then start the engines, fellas Page 49: Virtually everything new seems to come from the 20 percent of their time engineers here are expected to spend on side projects. They certainly don't come out of the management team. Eric Schmidt Google CEO Kuva: GustavoG Page 50: Challenge ■ Globalization forces organizations to get into innovationbased competition and networking: ■ ■ ■ ■ ■ ■ Get products faster to market Increase ROI of R&D investments Increase transparency of product development Involve customers through open innovation Support continuous learning and knowledge sharing Get into networked collaboration (outsourcing etc.) Source: Manuel Castells Page 51: Ways to innovate Culture Organization Design Experience Product Service Business Models Technology Platforms Source: Pekka Himanen Page 52: Types of innovation ■ ■ Technological innovation Remixing old in new ways (mountain bikes) or inventing new technologies Business innovation Supply chains (Walmart), processes (Toyota), business models (Dell), brands (Nike) ■ ■ ■ Product/service innovation Products (Skype), marketing (Apple), services (Salesforce.com) Design innovation Look & feel (Apple), emotion & experience design (Idean) Cultural innovation Leadership (Linux), organization (Google), transparency (Seismic) Source: Pekka Himanen Page 53: Innovation through experience design Context Experience Stimulus Aha! Data (products) Information Knowledge Wisdom • • • • Presentation Information Parameters Comparison • • • • Testing Conversation Narratives Combination • • • • Research Retrospect Interpretation Remixing Page 54: 6. Where is the money? Photo: Don J. McCrady Page 55: New paradigm: Enterprise 2.0 “Enterprise 2.0 is the use of emergent social software platforms within companies, or between companies and their partners or customers." Andrew McAfee Kuva: GustavoG Page 56: Enterprise 1.0 Hierarchical organization Automation in the core Tree representation Bureaucracy Static and rigid IT driven technology Feature-driven value Top-down Centralized Hand-picked teams Silos Controlled communication Taxonomies Complexity Closed standards Enterprise 2.0 Flat organization Interaction in the core Associative representation Agility Dynamic and adaptive User driven technology User-driven value Bottom-up Distributed Self-organizing teams Open borders Transparency Folksonomies Simplicity Open standards Photo: JJay Page 57: Ultimate challenge In the future, organizations will compete on: Who can create a rich user community where users interact with each other to improve products Image: Felippe Torres Page 58: Crowdsourcing Taking a job traditionally performed by an employee or contractor, and outsourcing it to an undefined, generally large group of people Photo: Hugo* Page 59: Dell IdeaStorm Page 60: Innocentive Page 61: CASE Page 62: Anatomy of an Enterprise 2.0 Nervous system Feeds, Search, APIs Sharing, discovering and tapping into reflections Senses Blogs, Microblogs, Social bookmarking Reflection in and on action Skeleton Automation, Realtime processes, Operative technologies - Backbone for business processes Brain Wikis, tagging Connecting and remixing reflectons Blood system Social networking, Real-time communications, Network analysis Optimizing interaction flow Ref: Teemu Arina, Illustration: Lotta Viitaniemi Page 63: Command & Control becomes Collaboration and Communication Photo: tashland Page 64: Contact info CEO Teemu Arina Dicole Oy 050 – 555 7636 teemu@dicole.com Blogi: tarina.blogging.fi www.dicole.com Yritys 2.0 -kirja tulossa! http://www.yritys20.com Photo: Tanakawho Page 65: Reading • • • • • • • • • • • • • • • • • • Naked Conversations: How Blogs are Changing the Way Businesses Talk with Customers (Robert Scoble) The Medium is the Message (Marshall McLuhan) Complex Responsive Processes in Organizations: Learning and Knowledge Creation (Ralph Stacey) The World Is Flat: A Brief History of the Twenty-first Century (Thomas Friedman) Informal Learning: Rediscovering the Natural Pathways That Inspire Innovation and Performance (Jay Cross) Deschooling Society (Ivan Illich) The Innovator's Solution: Creating and Sustaining Successful Growth (Clayton Christensen) The Cluetrain Manifesto: The End of Business as Usual (Christopher Locke) Convergence Culture: Where Old and New Media Collide (Henry Jenkins) The Wealth of Networks: How Social Production Transforms Markets and Freedom (Yochai Benkler) Open Business Models: How to Thrive in the New Innovation Landscape (Henry Chesbrough) The Long Tail: Why the Future of Business is Selling Less of More (Chris Anderson) Wikinomics: How Mass Collaboration Changes Everything (Don Tapscott) Seeing What's Next: Using Theories of Innovation to Predict Industry Change (Clayton Christensen) Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages (Carlota Perez) The Social Life of Information (John Seely Brown) The Wisdom of Crowds (James Surowiecki) Complexity and Innovation in Organizations (Jose Fonseca) Photo: Tanakawho Page 66: