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Turning Technology into Business
Commercialisation DEFINITION Matching the market need and the technology by disseminating the
novelty to users in the market and society
A cross functional process that captures the innovator firm’s efforts to realise the full benefits from the new product for the customer
TECHNOLOGY vs PRODUCT PHASE vs ACTIVITY
HARRI LÄNSIPURO
1. VALUE CREATION Through scientific research
2. COMPANY TARGETEDAcquire knowhow, sell IPR, lock strategic position.
3. COMMERCIALISATION vs PRODUCTISATIONProduct may be commercialised. Commercialisation states where you can gain revenues.
4. PRODUCT OFFERING (4)Competitive - Desirable - Feasible - Viable
AARIKKA-STENROOS,LEHTI
MÄKI (2014)COMMERCIALISING A RADICAL INNOVATION
1. STRATEGIC ZONEIdentifying stakeholders, CVP, market insightsCHALLENGES: (2) Feasible strategy - Understand customer perspective
2. MARKET ZONEInvolving stakeholders, creating credibility, market education CHALLENGES: (3) Creating credibility - involving stakeholders - overcoming adoption barriers
3. SALES ZONEMobilising stakeholders, creating sales, acquiring key customersCHALLENGES: (1) Creating sales in the early majority.
1. INTERLINKINGBetween sales and R&D
2. STRATEGIC DECISIONSpositioning, organising distribution, internationalisation
3. TACTIC DECISIONSimplementation; communication
4. PARALLEL PATHS 5. FEEDBACK LOOP
Interactive probing enables experimentation 6. EDUCATE THE MARKET! 7. STAKEHOLDERS 8. DISCONTINUITIES
Technology, customer, market,
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AARIKKA-STENROOS, SANDBERG,
LEHTIMÄKI (2014)NETWORKS FOR THE COMMERCIALIZATION
OF INNOVATIONS
1. MANAGE COM-Few firms have the capability to develop and manage innovations internally
2. NETWORKSindustrial networks, social networks, strategic networks, and entrepreneurship networks. Multidisciplinary links and interaction CREATE: strengthen markets of a particular industry or clusterFACILITATE: accelerate adoption by impacting attitudes and choicesPRACTICAL COMMERCIALISE: direct approach
3. INVENTION TO INNOVATIONto become an innovation an invention has to be commercially successful: DIFFUSION + COMMERCIALISATION
4. COMMERCIALISATIONHow firm can gather income from the product
5. LAUNCHHow firm can persuade early adopters to buy the product
6. R&D OVERLAP COMMERCIALISATION 7. INDIVIDUALS, GROUPS AND ORGANISATIONS
These entities were labeled network members, actors, players, stakeholders, partners, contributors, and supporters. INTERCONNECTED
8. 4 MODES OF CONTRIBUTION Partners (distributors), intentional promoters (non profit), unintentional promoters (opinion leader) and facilitators (regulators)DIRECT/INDIRECT or INTENTIONAL/UNINTENTIONAL
MARX, HSU (2015)STRATEGIC
SWTICHBACKS
While direct paths are most efficient for climbing gentle grades, sufficiently steep grades can only be scaled using switchbacks.
1. STRATEGIC SWITCHBACK Change the strategy for commercialisation.
2. DEVELOP ASSETSBoth by in-house developing or with cooperations. Assets may be dynamical
3. TEMPORARY COOPERATION SBACK Initially cooperating as to (3) develop assets, keep a bargaining power and lower costs
4. TEMPORARY COMPETITION SBACK Develop the innovation and attract partners as to (3) develop knowledge, keep bargaining power and lower costs.
5. DISCOURAGING FACTORS (3) Rivalry - Funding environment - Patent fragmentation
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Business Models
DEFINITION
EXTERNAL PRESSURE
BUSINESS MODEL CLASSIFICATION
• BUSINESS MODEL CONCEPT
Elements and definition of business model. • TAXONOMIES
This level consists of several types or meta-model types of business models that are generic but contain common characteristics
• INSTANCE LEVELThis level consist of either concrete real world business models or of conceptualisation, representations, and descriptions of real world business models.
The business model is the rationale of how an organisation creates, delivers and captures value
—Osteralder & Pigneur 2010
The essence of a business model is in defining the manner by which the enterprise delivers value to customers, entices customers to pay for value,
and converts those payments to profit. — Teece 2010
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APPROACHES 1. TYPOLOGY APPROACHDescribing business model as types and focusing on the revenue model in common. eg: SaaS
2. ACTIVITY SYSTEMDescribes the activities required to fulfil the customer value proposition
3. COMPONENT APPROACH Pre-determined components that describes the key aspects of how the firm fulfil customer value proposition in a profitable way.
COMPONENT BASE APPROACH
A business model is a conceptual tool containing a set of objects, concepts and their relationships with the objective to express the business logic of a
specific firm” START FROM THE CUSTOMER VALUE
• UNDERSTANDING & SHARING • ANALYSING • MANAGING • PROSPECTS • PATENTING OF BUSINESS MODEL
DESCRIPTION
UNDERSTANDING & SHARING
1. VISUALISEHumans are incapable of processing complex infos. Business model shows in one page all the information
2. UNDERSTANDSimplifying the concept as to make it understandable and underpin the most relevant parts
3. SHAREShort visuals means easier sharing
Eg: Business model canvas
ANALYSING 1. MEASUREBusiness model helps underling the relevant elements for good management
2. TRACK AND OBSERVEObserve external pressures that affect the business model
3. COMPAREWith similar firms and competitor as to understand the competitive position.
MANAGING 1. PLAN DO CHECK ACTBusiness model helps to visualise the transformation and guide the management.
2. TRIANGLEAligns the organisation, technology and strategy
PROSPECTS 1. COMPAREDifferent models underline different scenarios.
2. DISRUPTDisruptive BM often change the cost structure.
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VP CANVAS
LEAN STARTUP APPROACH
1. CREATIONValue proposition with resources.
2. SUSTAINING INNOVATION Processes and scaling the idea.
3. EFFICIENCYDeliver the profit formula
JOHNSON, CHRISTENSEN
AND KAGERMANN (2008)
REINVENTING YOUR BUSINESS MODEL
“Apple did something far smarter than take a good technology and wrap it in a snazzy design. It took a good technology and wrapped it in a great
business model. Apple’s true innovation was to make downloading digital music easy and convenient.the company built a groundbreaking business
model that combined hardware, software, and service. This approach worked like Gillette’s famous blades-and-razor model in reverse:”
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1. CVPA way to create value for customers—that is, a way to help customers get an important job done
2. PROFIT FORMULA (4)Revenue model + Cost Structure + Margin model + Resource velocity
3. KEY RESOURCESAre assets such as the people, technology, products, facilities, equipment, channels, and brand required to deliver the value
4. KEY PROCESSESAllow companies to deliver value in a way they can successfully repeat and increase in scale. METRICS: Financial, Operational or Others
5 Situations where a new business model is needed 1. DISRUPT NEW MARKETS 2. NEW TECHNOLOGY 3. JOB-TO-BE-DONE 4. DISRUPT LOW-ENDS 5. RESPOND TO COMPETITION
OSTERWALDER,PIGNEUR AND TUCCI (2005)
CLARIFYING YOUR BUSINESS MODEL
1. BUSINESS MODELS
can be seen as the conceptual link between strategy, business organisation, and systems.
2. 4 KEY MACRO-BLOCKSProduct, customer interface, infrastructure and financials.
3. MUTUAL REINFORCEMENTBetween business model and IS/IT
4. KNOWLEDGE MANAGEMENT Tacit knowledge into explicit knowledge
5. SEE ROLES IN PREVIOUS SECTION
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TEECE (2010) BUSINESS MODELS, BUSINESS STRATEGY
AND INNOVATION
The essence of a business model is in defining the manner by which the enterprise delivers value to customers, entices customers to pay for value,
and converts those payments to profit.
Designing a great business model is an art.
1. BM MAY LEAD TO CA 2. MORE CHOICES
Internet makes customers interconnected and more demanding 3. INNOVATION AND BM
Innovation without business model merely fails. 4. PATH TO CA 5. CREATE AND DELIVER VALUE 6. UNDERSTAND DEEP TRUTHS 7. EXAMLES
Gillete, Apple, Southwestern, Swift, Easyjet and Ryanair, GE, Nike 8. STRATEGIC ANALYSIS
Is required to design a BM 9. ARCHITECTURE AND EXTENSION PATH 10. INTERNET
many Internet services are simply provided for ‘free’ as a way to build brand and to indirectly promote value added service, and we have seen how a mixture of revenue approaches
11. IMITABILITY FOR COMPETITOR 12. INNOVATION AND BM
(3) Pathways: Lincensing, Embedded innovation or Hybrid. 13. TECHNOLOGY CHANGES BM 14. REFLECT MANAGEMENT HYPOTHESIS
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Tero Luoma - Funding TURNING TECH INTO BUSINESS
FOUNDING SOURCE
1. FOUNDER 2. CLIENTS 3. ESOP
Employee stock options plan 4. 3F
Family Friends and Fools 5. GRANTS 6. ANGELS 7. VENTURE CAPITAL 8. P2P PLATFORM 9. BANKS 10. PRIVATE EQUITY 11. IPO
“The key to investing is determining the competitive advantage of any given company and, above all, the durability of that
advantage. The products or services that have wide sustainable moats around them are the ones that deliver
rewards to investors” —Warren Buffet
The core issue of developing a business is solving a problem
DEVELOPING TECHNOLOGY
1. KNOW YOUR CLIENT 2. FAKE IT “UNTIL YOU MAKE IT” 3. REAL LIFE vs POWER POINTS 4. DON’T BE TOO MUCH ENGINEER
BUSINESS MODEL
1. DEFINE YOUR CORE BIZ 2. MASTER EXCEL 3. BUILD A WINNING TEAM
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Final remarks Some of the contents of this file are inspired and sourced freely from materials provided at Tampere University of Technology. This notes are elaborated as a complement for studying and are not meant to substitute in any way books and lessons from which are sourced. This notes have been written for the exam of Turning Technology into Business for the Fall 2017 Implementation. Professor(s): Leena Aarikka-Stenroos, Valtteri Ranta. Main sources:
• Leena Aarikka-Stenroos, Valtteri Ranta, Whiteboard slides and notes for the course • wikipedia.org
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