The Wide Lens

** Innovation risk framework

• Co-innovation
• Execution
• Adoption chain Case study: Michelin’s PAX system not adopted by garages, hence consumer could not service their tires. ** Co-innovation risk *** Risk is multiplied not averaged *** Case study: Nokia’s 3G phone required other innovation in providing digital services *** Case study: Philips HDTV affected by late arrival of high def cameras and transmission standard *** Not if it can be done, but when ** Adoption chain risk *** seeing all the customers before your end customer *** innovtor perspective vs consumer perspective supreabrasive grinding wheels has low relative benefit but high total cost *** bottleneck is link in the chain with minimum value adoption of digital cinema limited by studios, solved by virtual print fee solution allows studios to subsidise cost of new equipment ** Mapping the ecosystem *** construct a value blueprint
• identify your end customer
• identify your own project
• identify your suppliers
• identify your intermediares (between us and end customer)
• identify your complementors (needed by intermediary)
• identify the risks in the ecosystem (green yello red)
• for every partner that is not green, work to understand the problem and identify a solution
• update regularly *** case of the E-reader Sony had first mover advantage but could not pursuade publishers to adopt and did not have a proven platform to sell books. Amazon sold books directly to consumers, able to sell at lost (all e-books at 9.99) to increase relative benefit for publishers. *** case of inhalable insulin FDA requires patents to undergo lung function test. Trouble is that the endrocrinologist who prescribes the drug would have to refer the patient to anther doctor, then setup a second visit before treatment could begin. *** importance of value blueprint
• to be explicit about value proprosition
• exercise in communication to ensure a shared vision between various partners ** To lead
• is there a good reason that others would be willing to follow me?
• leading entails first making up-front investments and taking upfront risks to create the ecosystem
• leader has sufficient surplus to justify investing in the ecosystem
• effective leader creates the ecosystem’s structure, establishes fair standards and consistency, and convinces potential followers that there is value in it for them
• eg studios in digital cinema case, Amazon in ebooks case *** case study: Electronic health records
• Opportunity cost for admin. How else could that investment be spent?
• Opportunity lost for admin. EHR can be adopted later, possibly better and cheaper system
• Why take the first dopter disadvantage?
• Opportunity cost for doctor. Use the time to learn latest medical advancements?
• Need for an aggregator who can see the hugh surplus from lives saved - Veterans Health Administration
• Gov to allocate funding to incentivize doctors and hospitals ** To follow
• leader must manage ecosystem, follower only needs to manage his own execution
• follower’s investment is lower and more quickly recovered
• followership can quickly get crowded. Who am I competing with? ** First mover advantage in ecosystems
• low execution + low co-innovation = first in gets the win
• high execution + low co-innovation = winner takes more
• low execution + high co-innovation = hurry up and wait
• high execution + high co-innovation = depends on which challenge resolved first ** Smart-move advanatage
• MP3 players wouldn’t take off until user have easy access to mp3 files
• same for seminconductor lithography industry
• iPod won via a propprietary hardware-software combination ** Changing the game *** Better Place reconfigures the EV ecosystem
• EV is an ecosystem problem not a card problem
• consumers should not own battery
• range and convenience cannot be limited
• existing electric grid cannot be disturbed
• solution must be using current available tech *** Five levels of ecosystem reconfiguration
• what can be separated? separation of card from battery
• what can be combined? linking battery, charing infrastructure, and purchase of electricity through the grid
• what can be relocated? move burden of paying for electricity to Btter Place, consumer shift from kilowatt hours to miles driven
• what can be added? adds energy management
• what can be subtracted? eliminate need for smart-grid infra

** Winning the connected game *** Sequence which ecosystem will be build

• minimum viable ecosystem
• staged expansion
• ecosystem carryover *** M-PESA mobile banking
• MVE: money transfer service using Safaricom agents
• Expansion: adding more partners: retailers, atms, international remittances *** Ecosystem carryover
• Hasbro from toys to movies
• iPod, expansion with iTunes
• iPhone includes entire iPod history
• using the iPhone to reconfigure the mobile ecosystem
• expansion of iPhone with App store
• iPad is a conduit for non-Apple content
• publisher willing to take on higher risk on whether consumer after having bought an iPad will spend consistenly on their custom content ** Multiplying the odds of success *** the wide-lens toolbox
• create value blueprint
• reveal co-innovation risks and adoption chains risks
• leadership prism to assess distribution of surplus and how is the natural leader
• first mover matrix to help determine ideal timing
• explore alternative blueprints using five levers of ecosystem reconfiguration
• apply princple of minimum viable ecosystem, staged expansion, and ecosystem carryover *** multiplying the odds
• 10 percent success is industy norm
• wide lens helps us make better choices and figure out which initiative to purse
• by focusing on initiatives with viable ecosystems, we increase our odds of success
• each of us is an investor of our time and effort