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DIGITAL ENTREPRENEURSHIP #2 (Digital Entrepreneurship (“Creating new…
DIGITAL ENTREPRENEURSHIP #2
Significant Involved Processes : Invention
Usually means
first
occurrence/discovery of an idea/design for a product/service
Invention must be novel, useful + worth patenting
Invention hasn't been commercialised yet, + has no direct economic contribution
If a discovery goes no further than a lab, it remains an invention
Significant Involved Processes : Innovation
“the creation, development + implementation of a new product, process or service, w/ the aim of improving efficiency, effectiveness or competitive advantage” [Government of New Zealand]
Incremental Innovation:
a continuous, iterative process of improving existing products, services + processes that cause industry standardisation over time
Iterative changes differentiate or revive a product
A short/medium term process
Delivers new features, benefits or improvements to the existing tech in the existing market
Always occurs at the micro-level + at all stages of the new development process
Is always continuous
E.g Windows/iPhone evolution
Radical Innovation:
Big-bang, new-to-market [or world] products or a major shift in how an existing product is used or perceived
Essentially, the creation of totally new discontinuous products, services or processes, causing a landmark shift in the competitive environment
Generates new markets or a different market to the current
Long-term process
Destroys old industries
Creates a new demand/market, not previously recognised
Enables the emergence of a new market
Macro or Micro level
E.g The Internet, Cloud Computing
Significant Involved Processes : Imitation
The conscious or unconscious behaviour of copying others
According to Harvard Business Review, 97% of the market value of innovations goes to imitators
Imitation isn't pure replication, + requires a high level of creativity
Business Models
A firm's business model is a plan/diagram for how it competes, uses its resources, structures its relationships, interacts w customers + creates value to sustain itself on the basis of the profits it generates
Business models show how organisations may adopt new tech + change their operations in response
A Business Model Canvas is a tool for developing new or documenting existing business models
Business Model Canvas : What's Included?
The Mission
Value Proposition
: what problems do we solve, + how do we solve them?
Things that Cost Money
Key Partners:
who do we need to work with in order to produce and deliver our solution?
Key Activities
: what do we need to do in order to produce, market + deliver our solution?
Key Resources:
what do we need to have in order to produce, market and deliver our solution?
Things that Make Money
Customer Relations:
how do we talk to our market about our solution? How do we get more customers?
Channels:
how do we deliver our solution to customers? Where will customers find our solution?
Market + Customer Segments:
who needs our solution? How many people need our solution right now? How many will eventually need it?
Cost Structure:
how much will our key resources, activities + partners cost us?
Revenue Streams + Pricing Model:
how will we get paid for the solution we provide?
Business Model Canvas: UBER Example
The Mission
Value Proposition:
Customers: minimum waiting time; lower prices than normal taxis; cashless ride; can see ETA + track driver on the map
Drivers: additional source of income; flexible working schedules; easy payment procedure; drivers get paid to be online even w/out cab requests
Things that Cost Money
Key Partners:
drivers w their cars; payment processors; map API providers; investors
Key Activities:
product development + management; marketing + customer acquisition; hiring drivers; managing driver payouts; customer support
Key Resources:
skilled drivers; technological platform
Things that Make Money
Customer Relationship:
social media; customer support; review, rating + feedback system
Channels:
websites; mobile apps for iOs/Android
Customer Segments:
Users: those who don't own a car; those who don't want to drive themselves to a party; people who like to travel in style; those who want a cost-efficient cab on their doorstep
Drivers: people who own a car + want to earn money; people who love to drive; those who wish to be called 'partners' instead of drivers
Cost Structure:
technological infrastructure; salaries to permanent employees; launch events + marketing expenditure
Revenue Streams + Pricing Model:
car rides on per km/mile basis; surge pricing; Uber Cargo/Uber Rideshare etc; UberX/UberTaxi/UberBlack/UberSUV
Start-Up's Business Model
A business model is important, but usually isn't the first concern of start-ups in an uncertain market [e.g AliBaBa, Facebook]
However, when a market is well-developed, start-ups must create viable business to guarantee stable cash flow [e.g bicycle sharing business]
Freemium business model is widely adopted by digital businesses. This is a strategy in which a business gives away a product/service for free to the consumer as a way to establish the foundation for future transactions
Allows people to use the basic features for free, but offers upgrades for additional features or services
Tends to work well for internet-based businesses w small customer-acquisition costs, but high lifetime value
E.g Skype allows users to make video or voice calls over the Internet for no charge. However, for more advanced services, like making a call to a landline or mobile phone, you have to pay, although it's a small amount
What are Digital Technologies?
Digital Artefact: any piece of digital product, component or service
Digital Platform: any electronic tool for communication e.g iOs, Android, PaaS
Digital Infrastructure: foundational services that are necessary to the information tech capabilities of a nation, region, city or organisation e.g cloud computing, big data analytics, 3D printing
Digital Entrepreneurship
“Creating new ventures + transforming existing businesses by developing novel digital technologies +/or novel usage of technologies" [European Commission, 2015]
Prior studies on innovation + entrepreneurship have, by and large, presupposed a stable or fixed + discrete set of boundaries for the new product/service idea that underly an entrepreneurial opportunity
However, such boundaries become more fluid bc digital artefacts are
~ Reprogrammable, recombinable + open
~ Incomplete + in a state of flux
~ Involving various participating actors
Traditional models + frameworks in entrepreneurship are relatively stable + there are fixed boundaries around an entrepreneurial opportunity
In contrast, each time digital platforms are upgraded, existing entrepreneurial opportunities are transformed + new opportunities are generated
The boundary of opportunities is therefore reshaped
Consequently, digital platforms provide more opportunities for innovation
For example, from the 1990s amazon.com was the 'world's biggest bookstore' but by 2006 it had become the amazon.com we know today, w all kinds of products. From 2009 to now, it has developed to also include Amazon Web Services [a secure cloud services platform] + Amazon Prime Video [an internet video on demand service] to name just a few developments
Digital technologies make entrepreneurial processes become less bounded, particularly in terms of their temporal structure
They enable business ideas + models to be formed, enacted, modified + reenacted quickly in repeated cycles
Digital technologies force entrepreneurs to keep reshaping their entrepreneurial processes across time + space