Transcript Execution Counts, Ideas are Not Enough

Nine Things that You Can Do for the
First Time In Recorded History
Because of the Internet
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Prepared for: IEEE/IET (Ottawa)
Date: Nov. 18, 2010
Professor Bruce M. Firestone, B. Eng. (Civil), M. EngSci., PhD.; Entrepreneur-in-Residence, Telfer School
of Management, University of Ottawa; Founder,
Ottawa Senators; Executive Director, Exploriem.org;
Real Estate and Mortgage Broker, Partners
Advantage GMAC Real Estate
http://twitter.com/ProfBruce
http://www.eqjournal.org
Nine Things that You Can Do for the
First Time In Recorded History
For 10,000 years humans have been trading on this
planet
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But they’ve been trapped between choices:
a.
Artisans (Suits of Armour/Consultants)
b.
Mass producers (Henry Ford: “You can have any
colour of car you want as long as its black.”)
-The Internet is the most important new invention of the last
40 years
-It is where electrification was at same stage, 20 yrs in
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Nine Things that You Can Do for the
First Time In Recorded History
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Now you can get custom outputs from standard inputs
Nine Things that You Can Do for the
First Time In Recorded History
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Virtual home builder:
-Tried in 2000 to get home builders to do this
-Very conservative industry
-Put lots available and designs online in a physics engine
together w/ all options/finishes/lots/designs
-Allow everyone to use physics engine
-Can get virtually infinite customization from standard
inputs
Nine Things that You Can Do for the
First Time In Recorded History
-Go online: choose lot, design, fit-up, finishes (carpet, tile,
kitchen cabinets, lighting package, plumbing fixtures,
etc.)
-Put cash register online too
-Consumer can see what granite or concrete counter tops
add to cost
-Can fool around for 30+ hours
-Then hit “submit” button
Nine Things that You Can Do for the
First Time In Recorded History
-Homebuilders fear putting prices online – their competitors
might find out!
-Ever heard of “Secret Shoppers?”
-Put CPM (schedules) online: let customers see where their
home is at and let suppliers see too when they’re
needed for Footing and Foundation, framing, roofing,
windows, electrical, plumbing, insulation, dry wall,
paint, carpet, cabinets,…
Nine Things that You Can Do for the
First Time In Recorded History
-As more options are available, more users will visit the site, as more
users visit the site, more suppliers come onboard and you have a
virtuous cycle
-Now “Best Homes 4 U” is enjoying network effects
-Suddenly, the flow of cash could reverse direction w/ suppliers
becoming advertisers and sponsors
Nine Things that You Can Do for the
First Time In Recorded History
-Allow lawyers access for e-closings
-Allow lenders access for e-funding
-Now if your WS attracts 10,000s of visitors, you can get
your suppliers and your suppliers’ suppliers to pay for
ads so more people will buy higher-end products
(chandeliers, beveled mirrors, granite, counter tops,
home theatre,…)
-More options => more people => more options => more
people…
Nine Things that You Can Do for the
First Time In Recorded History
-In a virtuous, self-reinforcing cycle (Google is also an
example of Network Effects)
-30+ hours in Design Centre with clients can become just
60 minutes
-Imagine the productivity increase for homebuilder sales
staff, lawyers, mortgage lenders, the GC, the foreman
(Worst problem? Homebuyer questions about when
this or that happens..), suppliers, trades, subs, …
Nine Things that You Can Do for the
First Time In Recorded History
Also, customer satisfaction increases since:
a)
they get EXACTLY what they want,
b)
they feel they had a hand-in its creation (like Aunt
Jemima Pancake Mix: just add eggs and milk).
Nine Things that You Can Do for the
First Time In Recorded History
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The folks who bring you this pancake mix famously
had an erroneous insight years ago—they thought that
by adding powdered eggs and milk to their mix and
eliminating the instructions “Just add eggs and milk”,
they could save the busy consumer time and sell more
product.
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It turned out that homemakers liked adding ‘real’ eggs
and milk: first, they thought it was healthier that
powdered eggs and milk and, second, they wanted to
be involved in ‘making’ their kids’ breakfasts.
Nine Things that You Can Do for the
First Time In Recorded History
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For most kids, you are what you do for them. By taking
this away, sales went down not up.
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Best Homes 4 U, by involving the consumer in the
design of their own home, are catering to a deep
seated need in humans to ‘buy-in’.
Nine Things that You Can Do for the
First Time In Recorded History
So what are those nine things?
1.
2.
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Create custom outputs from standard inputs/mass customize
products and services.
(http://www.dramatispersonae.org/CustomeOutputsFromStandardI
nputs.htm)
Reverse out the work to clients and suppliers.
(http://www.dramatispersonae.org/GTBR/GettingTheBusinessMod
elRight.htm)
Embed your enterprise in a networked business ecosystem made
up of your clients, your suppliers and yourself plus your clients’
clients and suppliers’ suppliers.
(http://www.eqjournalblog.com/?p=581)
Match making—directly connecting your clients to your suppliers
making service industries scalable for the first time ever.
(http://www.dramatispersonae.org/TheInternetIsEatingAHoleInThe
GlobalEconomy.htm)
Nine Things that You Can Do for the
First Time In Recorded History
5. Mass communicate planet-wide through social media and other
Internet tools at almost no cost
(http://www.dramatispersonae.org/EntrepreneurialistCulture/Futur
eVision.htm)
6. Crowd sourcing (using the Internet as intermediary) means
relying on the wisdom of the crowd to, for example, pick and vote
on stories for Digg.com or t-shirt designs for Threadless.com
(http://www.eqjournalblog.com/?p=1541)
7. Relational data base allows you to mine your customer (or
supplier) interactions so you can ask, if you are Amazon (for
example) questions such as: “Would you like to see what other
people who bought this book (CD, video, etc.) also bought?”
Increases average order size and volume of sales
(http://www.eqjournalblog.com/?p=1541)
Nine Things that You Can Do for the
First Time In Recorded History
8. User generated content, a form of reversing out the work to
customers or suppliers, underpins the business models of
YouTube.com, Reddit.com, Threadless.com, Facebook, Twitter,
Digg and many other Web 3.0 enterprises.
(http://www.eqjournalblog.com/?p=1541)
9. Network effects are created when, for example, a virtual
homebuilder’s website becomes the go-to place for design options
a client can choose from. As more visitors use the physics engine
of the site to calculate what the costs are for their new home and
all selected options, more suppliers of household goods (kitchen
cabinets, plumbing fixtures, lighting packages, counter tops, tile,
carpet, home theatre, etc.) will want to be on the site (and pay to
be on the site) which will encourage yet more visitors (i.e.,
prospective homebuyers) to use it in a virtuous cycle, each
reinforcing the other. Google is an example of this effect as well.
(http://www.eqjournalblog.com/?p=692)
Nine Things that You Can Do for the
First Time In Recorded History
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Reverse out the work to clients and suppliers
-GradeATechs.com reverses out the work to its
suppliers and clients
-match making is key
-GASnet is the “brain” of the biz, its back end system
(matches techies to clients, contract billing, orders,
supplies, software, hardware)
Nine Things that You Can Do for the
First Time In Recorded History
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Embed your enterprise in a networked
business ecosystem made up of your clients,
your suppliers and yourself plus your clients’
clients and suppliers’ suppliers (2-D, 3-D, …)
-Example– the Spa
-Who are your clients? Mostly females
-Who are the clients of your clients? Mostly
men
-What do they want?
Nine Things that You Can Do for the
First Time In Recorded History
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Gift certificates!
Sold $250,000 the first year
1-year to redeem
$80,000 not redeemed 46 weeks later
$60,000 never redeemed
Money for nothing!
See these relationships by examining the
ecosystem
Nine Things that You Can Do for the
First Time In Recorded History
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Who are the spas suppliers?
Manicurists/pedicurists/hairstylists/colorists/
massage therapists/facials/dieticians/yoga
instructors
Who are the suppliers to your suppliers?
Cutting tools, hair and makeup products,
massage oils, jewelry, perfumes, etc.
Can the direction of money reverse instead of
from you to your suppliers or suppliers’
suppliers from them to you?
Nine Things that You Can Do for the
First Time In Recorded History
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Yes!
If you buy enough volume, they will pay you
volume bonuses at year-end
Plus send your suppliers (formerly called
employees) on course and on junkets
Nine Things that You Can Do for the
First Time In Recorded History
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Your customers pay you, right?
Maybe there are times when you might pay
them
Huh?
Would you pay a local celebrity to come to your
Spa and promote her experience to her
followers?
Sure, you would
Nine Things that You Can Do for the
First Time In Recorded History
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Mass communicate planet-wide through
social media and other Internet tools at
almost no cost
Are you on Twitter?
If not, why not?
Imagine if the Internet was where it is today
when I was 28?
Imagine having 500, 5,000, 50,000,
5,000,000 followers on Twitter
And it’s FREE (www.Twitter.com/ProfBruce)
Nine Things that You Can Do for the
First Time In Recorded History
Crowd sourcing (using the Internet as
intermediary) means harnessing the wisdom of
the crowd
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But it’s more subtle than you might think
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Their use of their relational d-base saved
Amazon: “Would you like to see what other
people who bought this book/CD/video/etc also
bought?”
Increased order size, overall volume and profitability
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Nine Things that You Can Do for the
First Time In Recorded History
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Threadless.com: their community uses a voting
system to select winning designs for Tees
submitted by independent artists
Extensive social comment on whole process
More recently, other companies such as Dell and
Alpargatas use (and pay to use) Threadless’ voting
system and community to select winning entries
for the design of PC covers and sandals.
-Here is Threadless’ Biz Model, circa 2010:
Nine Things that You Can Do for the
First Time In Recorded History
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Threadless.com is reversing out the work to
suppliers (for the design of their Tees) and to
customers (to select which products will be put into
production)
It is also harnessing the wisdom of the crowd
(through their voting system)
It is also treating their biz model as a platform
Even some of their supply costs (for design
services) could turn into negative costs if artists
pay them to feature their work on Threadless.com
Nine Things that You Can Do for the
First Time In Recorded History
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In the modern economy, the answer to the
question of ‘Who pays whom?’ isn’t always
obvious.
Should a cable company pay ABC because
ABC has content, shows like Diane Sawyer
and Primetime News?
Or should ABC pay the cable company
because it has the feed and access into
millions of homes?
Nine Things that You Can Do for the
First Time In Recorded History
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Steve Jobs understood the importance of
this before he launched the iPhone
He insisted that AT&T give him a share of its
subscriber revenues– never before granted
He used Apple’s brand to leverage
unprecedented concessions from AT&T
AT&T feared losing exclusivity to Verizon
Nine Things that You Can Do for the
First Time In Recorded History
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Jobs told AT&T he ‘might’ give them a share of app
revenues.
So he revolutionized yet another industry’s biz
model
Cell phone manufacturers went from selling a
’shrink wrapped’ gadget for a one-time payment in
a brutally competitive market that was racing to the
bottom to an industry with multiple sources of
revenues, some of which are recurring: the holy
grail of techdom.
Nine Things that You Can Do for the
First Time In Recorded History
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Imagine how much harder Steve Jobs and Apple would have to
work and how much lower their productivity as measured in
revenue per employee would be without recurring revenues
from iPhone app sales and revenues, advertising revenues on
their mobile platform, downloads of paid content from iTunes
and a share of their carriers’ subscriber fees in addition to
revenues from the sale of the gadget itself?
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From a simple question and a tweaking of their business model
flowed great benefits. The harder they work, the more money
they make and, in Apple’s case, this relationship has become
geometric.
Nine Things that You Can Do for the
First Time In Recorded History
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Business models are powerful weapons in
the fight for market share and profitability
Intricating the Internet into your Business
Models is crucial too
Just as important for
Intrapreneurs/NGOs/Charities/Non-Profits
as for Entrepreneurs
BUT YOU ALSO NEED TO BE ABLE TO
EXECUTE!
Nine Things that You Can Do for the
First Time In Recorded History
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How did we win a NHL franchise v. Seattle, Portland, Hamilton,
Milwaukee, Tampa, St. Petersburg, Houston?
Only 21 voters and President of NHL
Political Campaign
Person to person, F2F meetings
Sell Ottawa and us to the NHL
Ste your goals then execute, expertly
120 people including Ottawa Fire Department Marching Band
in Palm Beach
Use humour
Bumper stickers (taxis, hotels, airport) “Bring Back the
Senators”
Hard work
Nine Things that You Can Do for the
First Time In Recorded History
Last thing they saw before making their
decision? Bruce’s Happy Face
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Night before: “You will never, ever, ever get a
franchise in… Ottawa”
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Norm Green
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Keep working/Phil Esposito
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Unanimous vote 21-0
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3 weeks later, a surprising
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phone call …
THANK YOU.
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