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Table of content
1 PREFACE X
2 ABSTRACT XI
3 THESIS STRUCTURE XIII
4 READING GUIDE XIV
CHAPTER I 1
5 INTRODUCTION 1
6 INTRODUCTION TO THE PROBLEM DOMAIN. 4
6.1 TECHNOLOGY EVOLUTION AND THE PACE OF INNOVATION 4
6.2 THE INTERNET’S EFFECT ON BUSINESS MODELS 7
7 PROBLEM DOMAIN 9
7.1 THE WEB 2.0 DILEMMA 10
7.2 THE ENTREPRENEURS DILEMMA 11
7.3 THE WEB 2.0 ENTREPRENEUR’S DILEMMA 12
8 CASE DESCRIPTION – QWIKI 13
8.1 ENTERING TECHCRUNCH DISRUPT AWARD 2010 13
8.2 INITIAL PRODUCT – THE REFERENCE SYSTEM 14
8.3 VENTURE CAPITAL AND ANGEL INVESTORS 14
8.4 QR FOR IPAD 15
8.5 SECOND PRODUCT – THE QWIKI CREATOR 15
8.6 THIRD PRODUCT –QWIKI CREATOR MOBILE 16
8.7 QWIKI’S PRESENT AND FUTURE? 17
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9 RESEARCH QUESTION 18
9.1 LIMITATION AND DELIMITATIONS 19
CHAPTER II 20
10 METHODOLOGY 20
10.1 METHODOLOGY APPROACH 20
10.1.1 OBJECTIVES 21
10.1.2 STAKEHOLDERS 21
10.1.3 RESOURCES 22
10.2 RESEARCH DESIGN 22
10.2.1 CASE STUDY 22
10.2.2 DATA COLLECTION 23
CHAPTER III 25
11 THEORY SECTION 25
11.1 EVOLUTION OF BUSINESS MODELS 25
11.2 THE BUSINESS MODEL GENERATION 26
11.2.1 BUSINESS MODEL FRAMEWORK 27
11.2.1.1 Customer interface 28
11.2.1.2 Product 31
11.2.1.3 Infrastructure management 32
11.2.1.4 Financial viability 33
11.3 BUSINESS MODEL ENVIRONMENT 34
11.4 THE NATURE OF TECHNOLOGY 35
11.5 MASTERING INNOVATIONS THROUGH HYPE CYCLES 38
11.5.1 BEHIND THE HYPE CYCLE 40
11.6 STREETPROCESS 43
11.6.1 SCOPE:ESTABLISHING THE CONTEXT FOR INNOVATION 44
11.6.2 TRACK:COLLECTING THE INNOVATION CANDIDATES 47
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11.6.3 RANK:PRIORITIZING THE CANDIDATES 48
11.6.4 EVALUATE:UNDERSTANDING RISKS AND REWARDS 50
11.6.5 EVANGELIZE AND TRANSFER: MAKING IT HAPPEN 51
CHAPTER IV 52
12 ANALYSIS PART I – QWIKI’S BUSINESS MODEL 52
12.1 INTRODUCTION 52
12.2 QWIKI’S ENVIRONMENT – THE EXTERNAL FACTORS 53
12.2.1 MARKET ANALYSIS –QWIKI’S INDUSTRY 53
12.2.2 KEY TRENDS 58
12.3 QWIKI’S BUSINESS MODEL 59
12.3.1 PRODUCTS 59
12.3.2 VALUE PROPOSITION 1:INFORMATION SEARCH AS AN EXPERIENCE, NOT A TEDIOUS PROCESS. 59
12.3.2.1 Reasoning 60
12.3.2.2 Value level 60
12.3.2.3 Price level 60
12.3.2.4 Life cycle 61
12.3.3 VALUE PROPOSITION 2: CREATING AND SHARING RICH AND PERSONALIZED STORYTELLING WITH A
SINGLE CLICK 61
12.3.3.1 Reasoning 62
12.3.3.2 Value level 62
12.3.3.3 Price level 63
12.3.3.4 Life cycle 63
12.4 CUSTOMER INTERFACE 64
12.4.1 CUSTOMER SEGMENT 64
12.4.1.1 Channels 64
12.4.1.2 Channels overview 67
12.4.1.3 Customer relationship 68
12.4.2 INFRASTRUCTURE MANAGEMENT 69
12.4.2.1 Key Resources 69
12.4.2.2 Key Activities 71
12.4.2.3 Key Partners 74
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12.4.3 FINANCIAL VIABILITY 74
12.4.3.1 Cost Structure 74
12.4.3.2 Revenue streams 74
12.5 SUMMARY OF QWIKI’S BUSINESS MODEL 75
13 ANALYSIS PART II – STREET PROCESS 76
13.1 SCOPE 77
13.1.1 QWIKI’S ENTERPRISE PERSONALITY PROFILE 77
13.1.2 BUSINESS VALUE CONTEXT 77
13.1.2.1 Value discipline 78
Core competences 80
13.1.2.2 Value curve 81
13.1.2.3 Persistent business needs 83
13.1.3 SUMMARY OF SCOPE 84
13.2 TRACK 84
13.3 RANK 86
13.3.1 CANDIDATE 1-AUGMENTED REALITY 87
13.3.2 CANDIDATE 2-SPEECH RECOGNITION 89
13.3.3 CANDIDATE 3-ACTIVITY STREAM 90
13.3.4 CANDIDATE 4-TABLET INDUSTRY 91
13.3.5 CANDIDATE 5-CLOUD SOLUTIONS 92
13.3.6 CANDIDATE 6-GPS-POSITIONING 93
13.3.7 CANDIDATE 7-APP PROGRAMMING LANGUAGE 94
13.3.8 CANDIDATE 8-MOBILE BROADBAND 96
14 ANALYSIS PART III – INNOVATION CANDIDATES IMPACT ON QWIKI’S BUSINESS
MODEL 98
14.1 CLOUD SOLUTION 99
14.2 TABLET INDUSTRY & APP PROGRAMMING LANGUAGES 102
14.3 ACTIVITY STREAMS 103
CHAPTER V 105
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15 CONCLUSION 105
16 DISCUSSION, REFLECTIONS AND FURTHER RESEARCH 110
16.1 DISCUSSION AND REFLECTIONS 110
16.2 FURTHER RESEARCH 111
17 RELIABILITY AND VALIDITY 112
18 BIBLIOGRAPHY 115
19 APPENDIX PART I – GENERAL DOCUMENTATION 123
19.1 CONTENT OF CD MATERIAL 123
19.2 INTERVIEW –NAVIN THUKKARAM AND DOUG IMBRUCE 123
19.3 DOCUMENTATION –BUSINESS MODEL APPROACH 125
19.4 DOCUMENTATION –QWIKI CREATOR FEEDBACK 126
19.5 DOCUMENTATION –QM FUNCTIONALITY OVERVIEW 127
20 FEEDBACK RAPPORT – QWIKI CREATOR 128
20.1 QWIKI CREATOR –CONSUMPTION CHAIN (OUR UNDERSTANDING) 128
20.2 CONTENT 129
20.2.1 STEP 1 129
20.2.2 STEP 1–USING THE 6“TRACKS” 131
20.3 STEP 2–ARRANGE CONTENT 133
20.3.1 STEP 3 134
20.3.2 STEP 4PUBLISH 135
20.4 OUT OF CATEGORY FEEDBACK 135
21 APPENDIX PART II – TRACKING ELABORATION 136
21.1 MOBILE BROADBAND 136
21.2 APP PROGRAMMING LANGUAGE 136
21.3 TABLET INDUSTRY 137
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21.4 SPEECH RECOGNITION 137
21.5 AUGMENTED REALITY 138
21.6 GPS-POSITIONING / LOCATION AWARE 138
21.7 CLOUD SOLUTIONS 138
21.8 ACTIVITY STREAMS 139
22 APPENDIX III – DATA SHEETS & CALCULATIONS 141
22.1 APP DATA – CALCULATION FOR VALUE CURVE 141
22.2 APP DATA –ESTIMATION FOR VALUE CURVE DATA 144
22.3 APP DATA –SELECTION OF APPS WITHIN THE PHOTO/VIDEO AREA 145
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Figure content
FIGURE 1 – EVOLUTION OF COMPUTATION POWER AND PARADIGMS – BASED ON MOORES LAW. 5
FIGURE 3 – EVOLUTION OF BUSINESS MODELS 25
FIGURE 4 - BUSINESS MODEL GENERATION CANVAS - OSTERWALDERS 2010 28
FIGURE 5 - CUSTOMER BUYING CYCLE - CBC 30
FIGURE 6 - THE HYPE CYCLE - FENN & RASKINO 2008 39
FIGURE 7 – INDICATORS OF THE HYPE CYCLE STAGES, FENN & RASKINO 2008. 42 FIGURE 9 – DECISIONS IN THE EVALUATION STAGE OF THE STREET PROCESS, FENN & RASKINO 2008. 44 FIGURE 10 - MOBILE PATENT LAW SUITS – SOURCE: THOMSONREUTERS (2012, A) 48 FIGURE 12 - RANKING INNOVATION AND CUTOFF THRESHOLD – FENN & RASKINO 2008. 50 FIGURE 14 - CORE FEATURES OF 46 APP WITHIN THE PHOTO AND VIDEO AREA 56
FIGURE 11 – CHANNEL OVERVIEW OF QWIKI 68
FIGURE 16 - QWIKI'S BUSINESS MODEL 75
FIGURE 13 - VALUE DISCIPLINE AND QWIKI POSITION 79
FIGURE 18 - VALUE CURVE 82
FIGURE 19 - HYPE CYCLE STAGE INDICATORS 87
FIGURE 16 - RANKING CANDIDATE 1 - AUGMENTED REALITY 88
FIGURE 17 - RANKING CANDIDATE 2 - SPEECH RECOGNITION 90
FIGURE 18 - RANKING CANDIDATE 3 - ACTIVITY STREAM 91
FIGURE 19 - RANKING CANDIDATE 4 - TABLET INDUSTRY 92
FIGURE 20 - RANKING CANDIDATE 5 - CLOUD SOLUTION 93
FIGURE 21 - RANKING CANDIDATE 6 - GPS-POSITIONING 94
FIGURE 22 - RANKING CANDIDATE 7 - APP PROGRAMMING LANGUAGE 95
FIGURE 23 - RANKING CANDIDATE 8 - MOBILE BROADBAND 97
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Table content
TABLE 1 - THE LAW OF ACCELERATING RETURN ACCORDING TO KURZWEIL (2001) 5 TABLE 3 – THE BUSINESS MODEL FRAMEWORK OVERALL KEY CONTRIBUTIONS 27 TABLE 4 - BUSINESS MODEL ENVIRONMENT, OSTERWALDER & PIGNEUR, 2010 35
TABLE 5 - OFFERINGS 63
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1 Preface
This thesis is developed in the time period between August 2012 and February 2013 as the final dissertation on the masters study program in Master of Science in Business Administration and Computer Science (Cand.merc (IT) – IMBE) from Copenhagen Business School and in preparation to the current compliance guidelines for master studies.
The thesis is developed as cooperation between Mikkel Landt and Michael Vantore Damstrup. Both authors have contributed equally in the making of this thesis and in great guidance from our supervisor Mogens Kühn Pedersen.
This thesis would not have been possible if not for our case company, Qwiki Inc., and our supervisor Mogens Kühn Pedersen, whom we send our most sincere gratitude. We would like to thank Mogens Kühn Pedersen for his contributions in discussing our research angels and for being a technological sparring partner. We would like to thank Qwiki for the opportunity to visit them and allowing us to gain insights into their business.
Last we want thank family and friends for they support, motivation and understanding throughout the thesis.
Mikkel Landt
&
Michael Vantore Damstrup
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2 Abstract
Try to imagine the amount of manual laborers required to operate a single bank branch without the use of ICT, but simultaneously maintain the same throughput as it would with the use of ICT. The widespread diffusion and adoption of ICT and Internet technology has greatly impacted and improved the way businesses operates by increasing productivity and efficiency. Process automation, transactions, queries, resources planners, inventory control systems, and point of sale etc. are all based on ICT systems in today’s world.
ICT entrepreneurs is an eager lot with many creative ideas and visions for delivering the ‘next big thing’ or ‘the next killer something’. They roam the realm of opportunities and perceptions of ‘fly-or- die’ without the slightest consideration of a core business component. Since the birth and proliferation of the Internet much have happened, the virtual and technological landscapes have been changing faster than ever. The rapid pace of new technologies development, emerging innovations, and increasing data generation, puts pressure on firms in high-tech industries to continuously innovate and reinvent themselves.
To describe the challenges of a changing technological and innovative landscape and the perspective of a core business understanding, we have defined two dilemmas; the web 2.0 dilemma & the entrepreneur’s dilemma. Changing these threats of continuous change into opportunities is essential to any business; to proactively seek and adopt innovations to stay competitive and increase value.
The purpose of the thesis is to examine innovations adoption’s effect on established business models as means to adjust to a rapid changing technological and innovative landscape and innovate a company’s business model. The thesis applies two different key theories, Business Model Generation (Osterwalder & Pigneur, 2010) based on the Business Model Ontology (Osterwalder, 2004) and the STREET process (Fenn & Raskino, 2008), on a case company called Qwiki, Inc. The concept of business models has been defined and explained by many scholars, but there is no consensus among the different scholars as to what constitutes and defines a business model. Due to this, we have conducted a literature review on the business model literature. To define and understand innovations and the phenomenon of technology we have used Hype Cycle (Fenn & Raskino, 2008) and Nature of Technology Arthur (2010) to clarify the terms.
Using a classic ICT-startup like Qwiki as our case company we had to establish their business model – since they had not formulated one – as it was a prerequisite in order to better understand Qwiki business and their environment. Based on their business model we analyze Qwiki’s business value
xii context for innovation adoption from the perspectives of Qwiki’s corporate core, current business objective and initiative, and enterprise personality profile. From analysis we identified eight different innovation candidates with relevance to Qwiki. By ranking the innovation candidates we found the four most relevant candidates based on an overall evaluation of the outcome (two innovations were combined due to interdependencies and similarities). These three most relevant innovation candidates we identified relevant for Qwiki to adopt showed the following business model impact:
Cloud solution – STaaS (storage as a service), low impact on the business model through an enhanced the value proposition through higher accessibility to content. SaaS (software as a service) high impact on; customer segment, value proposition, channels, key resource, and key partners.
Tablet industry and app programming language – low impact on the business model with changes to the targeted customer segment, which would need new key resources.
Activity stream – adopting this innovation complete transform their business model from a type of mobile application model to a social platform business model affecting all areas of the business model, especially the value configuration of activities.
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3 Thesis structure
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4 Reading guide
Throughout this thesis we will a use broad range of terms within the technological and business area.
But to build a better guidance for the reader, the broader terms that will be stated in this section:
- Qwiki with the capital “Q”, will be referred to as the company Qwiki Inc.
- qwiki without capital, will be referred to as a video streaming produced by the company’s products.
- QR, will be referred to as the product Qwiki Reference.
- QC, will be referred to as the product Qwiki Creator.
- QM, will be referred to as the product Qwiki Mobile, the new iPhone app.
- The use of Italic outside quotes will refer to theoretical terms.
- ICT, will be referred to as Information and Communication Technology.
- CRM, will be referred to as Customer Relationship Management - ERP, will be referred to as Enterprise Resource Planning.
- Firm, organization and company will throughout the thesis be used interchangeably
- Technological change, technology development, technology evolution and innovation will throughout the thesis be used somewhat interchangeably.
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CHAPTER I
5 Introduction
Information and communications technology, ICT, started with the invention of petroglyphs, or commonly referred to as rock engravings, and was the first known methods and techniques used to store and communicate information in the pre-mechanical age. It is unknown exactly when the petroglyphs were invented and by whom, but many are dated many thousand years BC (Wikipedia, 2012, A).
Throughout the 20th century, ICT has been under aggressive evolutions and innovation cycles. That century concluded the electromechanical age of technology and started our present age, the electronic age of technology around the 1940s, with the introduction of the very first electronic general-purpose computer using vacuum tubes, the ENIAC (Denstoredanske, 2009, A). During the electronic, age multi advancement and breakthrough innovations have paved the way to where we are today with PC, servers, smart devices and the like. Programma 101 was the first commercial desktop computer produced from the Italian manufacturer Olivetti. It was released to the general public in 1965 priced at $3,200, and was merely considered a printing and programmable calculator (Business Week, 1965). Who could have imagined that some 45 years later, the world would be complete and utterly dependent on computer technology? Thomas J. Watson, chairman and CEO of IBM, would not have in 1943, where he allegedly should have uttered the words;
“I think there is a world market for maybe five computers”
(Wikipedia, 2012, C)
The widespread diffusion and adoption of ICT and internet technology has greatly impacted and improved the way businesses operate by increasing productivity and efficiency. Process automation, transactions, queries, resources planners, inventory control systems, POS (Point Of Sales) etc., operates in real-time delivering acute means of inventory check, resource reallocation, data retrieval and so forth, often through a web based interface, enabling data acquisition and retrieval to be ubiquitous. Try to imagine the amount of manual laborers required to operate a single bank branch without the use of ICT, but simultaneously maintain the same throughput as it would with the use of ICT. Think of all the different transactions that occur each day with balance look up, monetary transactions, stock exchanges, deposits and withdrawals, loan requests etc., mind-blowing, right? Computer and internet technology
2 has thus become the nerve system in day-to-day company and societal operations today that without it the world as we know it would cease to exist:
Financial records and statements, assets, and customer data are stored in databases. Some companies might have a physical back up (never up-to-date) in archives, but conducting a
“query” in a physical paper achieve is a tedious and an extremely time-consuming task. The throughput of query per time interval possible would be gravely reduced and very expensive.
The financial system would break down.
Transactions between companies would also be a difficult task, especially if the transaction occurs between two or more companies scattered across regions and countries. B-2-B operations would not be possible in the manner known today and companies in value networks would collapse.
Global distribution (packages, letters, goods etc.) heavily relies on logistics and supply chain managements (SCM) systems - obviously implemented on computers/servers and communicates via the web - could not sustain the load and throughput as it does today. This would result in a critical survival factor, since supermarkets would deplete much faster than they could restock.
Without a seamless and “endless” supply of food and stocks, society will collapse and burst into chaos as seen in some movies.
In short, we could not uphold our present world where the market forces operate globally rather than locally without ICT. All developed countries use computer and internet technology as a fundamental part of their business model - it is difficult to imagine how any given company could be competitive and profitable without.
Since the birth and proliferation of the Internet much has happened to its usage possibilities and patterns. In the late 1990s with the first web version - web 1.0 - and during the dotcom bubble IT- startups had “gold-fever” in dominating the virtual market place through e-business and e-commerce solutions. Venture capital was practically growing on trees, and the market saw rapid run-ups in valuations and capital volumes for internet companies throughout the capital markets lifecycle. The market hype of internet companies generated investor hype and investment frenzy, but with the burst of the bubble the rapid run-ups were followed by an equally rapid collapse (Valliere & Peterson, 2004).
Another surge of IT-startups after the burst of the bubble came with the emergence of web 2.0 properties and features. Some of the web 2.0 features included user generated content, dynamic content, social networking sites, user created web sites, self-publishing platforms, tagging, and social bookmarking (Oreilly, 2012, A). The web became dynamic and interactive instead of static and “dead”.
3 Today, anyone with an idea, a computer, and a few programming skills can become an IT-entrepreneur.
The barriers to entry, according to Michael Porters “Porter five forces analysis”, are thus extremely low in the IT software market. Håkon Bertheussen, the Norwegian developer of the Wordfeud application for iOS, Android, and Windows Phone 7, is one of these IT-entrepreneurs. Wordfeud is based on the game Scrabble, and with the in-game advertisement it is estimated that Håkon makes around 100.000 DKK each day (Business, 2012, A). Håkon is just one among thousands to create a viable business based on a good idea, a little luck, and some IT-ingenuity. But Wordfeud is a fad and an example of a single-man firm with only a single product to offer, which will eventually fade out and lose its user base and thus advertisement revenues. According to recent studies, 59% of all apps do not break even and 80% of developers cannot sustain a business on apps alone (Arstechnica, 2012, A).
Today, the ICT literature does not credit ICT implementation alone as way to give a sustainable competitive advantage, since technological development, innovation, and diffusion can be extremely rapid in most sectors. An example of a technology breakthrough or innovation with a rapid diffusion was the “me-too” investment frenzy in CRM and ERP systems in late 1990s. These systems are today nothing but a basic necessity for most companies, which can be bought off-the-shelve or paid through a monthly subscription variation of per usage cloud solution. It is no longer enough to implement these systems - everyone else does – but the advantage can be gained through the way a company utilizes these systems, which is a very complex task since these systems have evolved to large and complex systems. The analog world is merging with the digital world, and as earlier stated, we are becoming increasingly depended on ICT to support our way of life and new technological breakthroughs and innovations occur at a continuingly increasing pace. Yet, despite this volatility and constant evolution in ICT and its impact on day-to-day business operations, much of the literature used to describe business context and strategies (internally and externally) are pre dotcom era, where changes occurred at a much slower pace and business had years or decades to adjust to new conditions.
We find it very interesting to examine what these constantly changing conditions in terms of technology evolution and innovation mean for an IT-startup, and how they will plan for the unknown future.
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6 Introduction to the problem domain.
In this section, we wish to present different perspectives related to the topics of which this thesis concerns and thus outline the parameters this thesis operates within. Each subsection, or topical area which the thesis addresses, depicts a historic overview of how technology evolution, changes in competition, and consumer behavior raises complexity in regard to the scope and problem domain of the thesis.
6.1 Technology evolution and the pace of innovation
Looking back at the past few centuries shows a clear acceleration in the pace of technological advancements. In 1965 Gordon Moore, co-founder of Intel Corporation, published an article in Electronics Magazine describing a trend where the number of transistors per square inch on integrated circuits had doubled every year since the integrated circuit was invented in 1958 (Moore, 1965). This proved to be uncannily correct for the first decade, thereafter the pace slowed down and Moore revised the doubling rate to two years in 1975. Today, Moore’s law is still very accurate (between 18-24 months doubling rate) and used to also describe trends in many technology capabilities that improve performance and cost-effectiveness at exponential rates. The law is applicable in many areas of information and computer technology and often used as R&D goals in firms.
Kurzweil (2001) examines the topic of accelerating change from a historic point of view with many examples of how different technologies, evolutionary processes and computational power (Moore’s Law) have increased exponential. Kurzweil’s research clearly depicts exponential growth in these areas, but the exponential growth itself is not linear, he argues, it is in itself exponential. As an experiment Kurzweil plotted the speed (calculations per second) per $1000 of 49 famous computers and calculators of the 20’Th century (Figure 1, page 5), and the result was not just an exponential growth, but the exponential growth itself was exponential. This (among other examples he demonstrated) shows that the time between evolutionary salient event and advancements grows shorter and shorter, which is the premise for what he calls “The Law of Accelerating Returns” (Table 1, page 5). Kurzweil describes that technological achievements, or paradigm shifts (i.e. the invention of and transition to transistors from vacuum tubes), are facilitated by the previous one, and become even more powerful and evolved at an increasingly faster pace each decade. This, he argues, is due to two positive feedback loops comprised of the order of information and the pursuit for technological efficiency. In the first loop he describes that the order information embedded into the evolutionary process (know-how) increases over time, as the technology is better understood. As a result, technological advancements in a paradigm become more efficient, which triggers the second feedback loop where greater resources are deployed to further the
5 progress of that process, until the technology has exhausted its potential. When this happens, the next stage of technological breakthrough will occur (a paradigm shift) enabling the exponential growth to continue, which resembles the technology life cycle and the so-called S-curve.
Ultimately (theoretically), accelerating change will result in technological singularity where technological paradigm shifts would occur within an extremely short period of time, perhaps in years, months, weeks, or even days.
Figure 1 – Evolution of computation power and paradigms – based on Moores law.
Table 1 - The Law of Accelerating Return according to Kurzweil (2001)
6 Due to the pace of technological breakthrough and advancements, we can see the impact on our own society today. In terms of technological literacy, society is colloquially said to be comprised of generation X, Y, and Z, where gen X (we include the Baby Boomers generation) where born prior to the (private) computer and Internet. The X generations are not among the most technology savvy, and were not raised with the same pace of technological evolution and diffusion. Gen Y, on the other hand, was raised with private technology gadgets as household items. They are incredible savvy technology wise and immune to most traditional marketing and sales pitches (Socialmarketing, 2012, A). Not much is known about gen Z except that they are likely to have more technological expertise than prior generations. Gen Y and Z (net generation) are brought up with instantaneous access to information, online entertainment (games, blogs, videos etc.), and social platforms via gadgets, computer, and Internet (Floridatechnet, 2012, A). As a result of the exposure to unlimited knowledge on the Internet, members of this group are more socially active, responsible, and discerning users of information, and they are preoccupied with free expression and have strong views (Tapscott D., 1998). The net generation’s information-seeking behavior and hungriness becomes a driving force for technological evolution and innovation. It is expected that technological progress occurs at a certain pace, new and better hardware, faster more capable software, better and more intelligent and intuitive search engines and such. Because of these expectation and demands, obviously a great opportunity and need exists and thus we have the supply.
These expectations of continual technological evolutions put an enormous pressure on the supplying companies to constantly reinvent themselves and their products/technologies. Manufacturers in high- technology consumer markets integrate a growing number of technologies and features to satisfy consumers’ preference for high-feature products. Yet, despite the more complex and high-featured the products become, companies report an increasing number of customer complaints and product returns, which is primarily due to usability problems and unmeet product expectations (Keijzers et al. 2008).
Keijzers et al. explains this phenomenon as the double-edged sword of high-feature products, which means that customers in consumer electronics require yet more sophisticated products, which the manufacturers deliver, but at the same time generate high number of complains due to expectations not being met. This could be an expression of unrealistic escalation of consumer expectations. Apple’s stock prices illustrated this unmet hype and expectation with the announcement of the iPhone 4S, where stock prices fell 5 percent initially (but recovered to a loss of 0.56 percent when stock exchange closed that day) (Tauw, 2011, A; Knowyourmobile, 2012, A). Company investors expected something bigger, better, and a more innovative product than a minor hardware upgrade from the previous model, iPhone 4.
7
"Expectations for Apple's product roll-outs have become really unrealistic."
(Boston, 2011, A)
Technological evolution and advancements is often a very good thing, making our lives easier and optimizing our livestock and food utilization. It is hard to imagine how we could maintain the number of people with for example the agricultural technology of the 16th century. Radical technological breakthroughs trigger excitement instead of fear and uncertainty, as it could have done maybe a century ago. Our society today is not only excited about radical innovation, it indeed expects it at an increasing pace. The byproduct of Moore’s law and Kurzweil’s law of accelerating return has rendered us utterly expectant and hard to please – technological greedy so to speak. Needless to stay, this pitfall of technological advancements and consumer behavior and expectedness has resulted in a market state of hyper-competition. Firms must innovate and differentiate fast and often if they want to survive.
Sustainable competitive advantage in the ICT industries, does that even exist anymore?
6.2 The Internet’s effect on business models
Originally, the Internet was developed for and funded by the Department of Defense in a way to transfer data between military and research projects. The Advanced Research Projects Agency Network, or ARPANET in short, was the first packet switching network and operational in the late 1960s. 20 years later the technologies behind ARPANET enabled the World Wide Web, known as “the Internet”
(Wikipedia, 2011, A). ICT has since the emergence of the Internet greatly influenced the way businesses conduct business. Internet and computer technologies enable reliable, synchronous, and real-time planning, coordination, communication, control, asset utilization, and inventory management (among many other options) for B-2-C and B-2-B in-between. The global is now local – everything is just a click away.
The concept and notation “business model” is a relatively young phenomenon. According to the literature, the business model concept was coined in an academic article from 1957 but did not receive any noteworthy attention until the mid-nineties. This coincides with the advances in, and diffusion of, the Internet, which revolutionized many companies’ productivity and growth very positively. According to Osterwalder et al. (2005), from the 90s and onwards, there was a direct correlation between the concept business model and the phrase Internet. From his research, a funny pattern emerged between the number of times the concept “Business Model” was referred to in the literature, and the NASDAQ market index for it-based companies. The number of times business models were referred to in the
8 literature resembles the shape and pattern of the NASDAQ market index (Osterwalder et al. 2005).
Based on this coherent logic, it is reasonable to assume that there is some relationship between the widespread diffusion and adoption of the Internet and the growing interest and focus on business models.
Despite the growing interest in business models, there are a myriad of different definitions and conceptualizations of what a business model is and should be. Scholars define various aspects of business models based on their interest, which are adapted to their studies. Today, there is not a single accepted model or definition, which means that each person has their own understanding of what a business model is comprised of and represents. However, most agree that a business model not only provides financial aspects but also value-based elements such as skills, process, and resource configurations (Zott et al. 2010). This diversity of definitions and conceptualizations hamper the ability to design, implement, innovate, and last but not least communicate business models. So what is a business model?
Generally speaking, a business model describes where and how a company creates and delivers value, implicitly, and explicitly, internally as well as externally. It also outlines the architecture behind the revenues, costs, and profits associated with the company that provides this value (Teece, 2010).
Teece (2010) explains that a business model must reflect management hypothesis about customer needs and wants, how and why they want it, what they will pay for, and how it should be organized to best meet customer needs. Chesbrough (2010) breaks it down into a number of features that business models must meet, and adds - among other parameters - competitive strategy and value networks:
1. Articulate a value proposition.
2. Identify market segments, revenue streams and mechanisms.
3. Define value chain structure to create and distribute "offerings" and complementary assets.
4. Estimate the cost structure and profit potential.
5. Describe the business position within the value network that connects customers and suppliers.
6. Formulate a competitive strategy to gain and maintain an advantage over competitors.
In spite of conceptual differences among researchers in business models, Zott et al. (2010) argue, on the basis of a comprehensive literature review, that there is widespread recognition that the business model concept is a new unit of analysis in addition to the product, business, industry, and network levels. Business models highlights a system-level and holistic approach to describe how companies do business, where organizational activities play a crucial role, and also to explain how a business “value create and value capture" (Zott et al., 2010).
9 A paradox with business models is that they are often described as a blueprint of business activities (Magretta, 2002), but the effects of ICT, globalization, liberalization, consumer expectations and such, increase risks and uncertainty that organizations have to face thus making the future more unpredictable (Osterwalder 2004). A business model can therefore not be seen as a static entity, a one-shot, that once created will endure and maintain viability for a long period of time. A business model needs to be in constant change and firms need to innovate and experiment with their business model since, first of all, the economic value of a technology is depended on the business models ability to commercialize the technology (Chesbrough, 2010). Secondly, the rapid change of a business’ external environment (users, customers, competitors, emergent technologies etc.), or ‘high velocity environment’, forces firms to reconfigure their existing business models to accommodate new and shifting user behavior, market forces, competitor forces, governmental and regulatory changes and technological progress (Wirtz et al., 2010). Obviously is it not an easy and “error and risk-free” task to adapt a firm’s business model, but not recognizing the need to revamp and adapt the business model can have fatal consequences;
“… being unable to adapt one’s business model in the face of significant environmental change has proven deadly for many
firms”
(Wirtz et al., 2010)
Despite the focus on business model innovation and dynamism in the literature, scholars generally agree on the need to experiment, adapt and innovation with one’s business models, but fail to explain how.
7 Problem domain
This thesis is based upon two different but very real dilemmas and problem domains in which many people struggle with on a daily basis. Separated, these dilemmas are on a daily basis combated through education, specialization, and sheer luck, but combining these dilemmas raises complexity to a whole new level. The first dilemma we dubbed “web 2.0 dilemma” and will be defined next, followed by the second dilemma, “entrepreneurial dilemma”. We will conclude this chapter with the combined dilemma, which we define as “web 2.0 entrepreneur’s dilemma”.
10 7.1 The web 2.0 dilemma
In the first iteration of the World Wide Web, web 1.0, communication was predominantly one sided.
Web surfers, as web 1.0 users were called, could ‘surf’ over to a website and information would be sent to their browser. As that information was consumed, the user would then surf to the next website as so forth. The user would be passively viewing information as two-way interactions rarely occurred. In the second iteration of the WWW (web 2.0), sometimes referred to the interactive and participatory web, the user could interact with webpages and interactively share and consume information. Photo, video, and textual information are typically shared, e.g. through YouTube (video), Flickr (photo), and Wikipedia (text) allowing people from near and far to collaborate online. Blog allows individuals to share ideas with a large audience, and social networking allows instantaneous interaction with people from all over the word.
Since the widespread adoption of computer and internet technology, the evolution of technologies is still increasing, rapidly, as Kurzweil (2001) demonstrates. As yet more people and devices get connected to the Internet they bring your own devices to work (BYOD). Since more and more software implement “one-click sharing” mechanisms (information sharing and distribution) and with the continuously increase in computational power, the amount of data and information generated, shared, and stored is explosive. In 2011 the amount of digital data created and replicated surpassed 1.8 zettabytes1, and has been growing by a factor 9 each year since 2006 according to an analytic report by International Data Corporation (IDC) (Emc, 2012, A). As an example, 72 hours of user-generated content are being uploaded each minute on YouTube. That’s 37.868.342 hours (or 4.320 years) of video uploaded each year as of 2012 (Youtube, 2012, A). YouTube is just one among many user-generated content sites made available after the emergent properties and features of web 2.0. Twitter, Facebook, and Instagram are yet other examples to name a few.
At an increasingly pace, software, platforms and devices are constantly integrated and automated.
Data from automated sensors are captured and stored, for later or real-time evaluation and analysis.
This, among many other factors, introduces challenges and problems with sorting, searching, indexing, categorizing, and assembling bits of data into information. At the extreme end of the scale, some companies must work with a phenomenon called Big Data, which are dataset of up to exabytes2 of data.
Navigating and utilizing these vast datasets can, if done properly, have a very strategic impact and give a competitive edge on one’s business, but also the opposite if not used properly (Wikipedia, 2012, B).
ICT-technology has enabled not just on-demand and real-time data, which can heavily influence
1 1.8 zettabyte = 1.98 x 1012 gigabytes
2 1 exabyte = 1.07 x 109 gigabytes
11 decision-making, but also the possibility to collect, store, and aggregate data for future forecasting. The challenge is thus to filter out irrelevant data and information used in decision-making scenarios, which becomes increasingly complex and difficult as the datasets and user-generated content increase in volume.
As discussed previously, the rapid pace of new technologies development and data generation puts pressure on firms in high-tech industries to continuously innovate and reinvent themselves, which undermines organizational bureaucracy and the implemented business processes and routines.
Companies, especially in the ICT-sector, have to be in constant change, if they are going to compete for tomorrow’s market shares.
We define these above outlined challenges; the web 2.0 dilemma, which in short represents challenges associated with ICT-automated processes, data gathering and processing, systems integration, changing consumer demands and expectations, hyper-competition or the like.
7.2 The entrepreneurs dilemma
Entrepreneurs are faced with a whole range of dilemmas, where uncertainty and battling with giants and incumbents for market share, while having very limited resources are very real. In this section, we will primarily discuss issues regarding the business model as this thesis addresses this issue.
Entrepreneurs are an eager lot with ideas they tend to get carried away with and they neglect to think about and formulate a model for their business. Moving from idea to venture is often a though task with more failures than successes. It is estimate through various sources that nearly 90% of all tech startups fail for one reason or another (Svgnetwork, 2011, A & Techli, 2012, A). Entrepreneurial literature is full of examples of business that started out with one idea but ended up with a business based on multiple revisions and different products. Skype is one good example on this. Originally Skype was Kazaa, but with imminent threat of pending lawsuits, the Kazaa team took the proprietary protocols and rewrote them into a VoIP, since Skype is a hybrid system based on peer-to-peer and client-server system. Not really knowing whether an idea is good and how to create a viable business model around the product and business are some of the challenges entrepreneurs face. Incumbents have had years to perfect their models and strategies, and many different products to spread out risks on, which are a luxury startups dream of. Funding and capital are also issues entrepreneurs struggle with. Established firms have, especially in the ICT-sector, huge R&D budgets whereas an entrepreneur has angel or venture capital at most, and if he or she is lucky. Albeit different departments in large organizations might have internal power struggles for resources and funding, entrepreneurs can only dream of the day this might happen.
Another issue relating venture capital is the risk of “selling your soul to the devil”, meaning the
12 entrepreneur must forfeit most of his “future” company ownership, and take the risk of being replaced by someone the VC deems fit to lead the project (Mullins & Komisar, 2009)
We define these above outlined challenges; the entrepreneur’s dilemma, which in short represents challenges, associated with building, testing, and experimenting with business models in order to become successful, while at the same time securing funding for the process and not succumb in the valley of death. The valley of death is a term used in the entrepreneurial literature to describe the gap between R&D spending and the time to positive cash flow. Start-ups that fall into the valley of death if they burn through whatever capital they have before their commercialized idea can generate a sustainable cash flow.
7.3 The web 2.0 entrepreneur’s dilemma
Prior to the digital age and dotcom boom era, ICT entrepreneurs had a lot of opportunities since competition and products availability were virtually non-existent. This gave them time to develop, experiment, and test their products in a slow pace. At that time many ICT-entrepreneurs were of the
“garage-boys” or “garage start-up” analogy. The timespan from idea to venture could have been years, which is not applicable today with a rapid changing environment and progress in the ICT domain.
Entrepreneurs in the ICT-sector need to be quick with their idea and create an innovative business model to compete with giants and other entrepreneurs. The web 2.0 entrepreneur’s dilemma is the combination of the previous two dilemmas. This entrepreneur needs to deal with the typical entrepreneurial challenges of testing and experimenting with different business model configurations and composition while avoiding the valley of death. But this challenge is only the first side of the coin, because the entrepreneur needs to deal with hyper-competition, constant changing consumer behaviors and environments, copycats, integration with other innovations and technologies and such. Each of these dilemmas can be seen somewhat static, but combining them complicates matters even more, as the web 2.0 dilemma constantly affects the business model (and in terms the entrepreneurial dilemma), and the business model dictates which areas innovation and environmental changes are relevant to the business.
As this challenge or dilemma is the scope of this thesis we have chosen an ICT-startup company, called Qwiki, as a case-company for our analysis. In the next section, we will describe our case company, Qwiki.
13
8 Case description – Qwiki
“Information as an experience you can watch” – The Qwiki mantra
Qwiki is a newly co-found company by entrepreneur Doug Imbruce and Internet search engine pioneer Dr. Louis Monier (founder of AltaVista). The idea for Qwiki started in 2009 when Doug took a trip to Buenos Aires. Prior to his visit there he browsed the Internet for information on the city but did not really find what he needed in a natural way, as he says:
“There were lists of links; spammy, dense blocks of text; and a hodgepodge of videos and advertising. It took so long to assemble
key facts about the city, I almost missed my flight. Amid this frustrating experience, however, I also had a moment I’ll never
forget. I realized that what the Web needs isn’t another search engine. It needs a story, a quintessentially human way to
experience information.”
(Qwiki, 2010, A)
Doug teamed up with a freelancer from NYC, Owen Bossola, and moved to Palo Alto to develop a prototype, which parsed Wikipedia into structured XML’s. They refined their prototypes and entered the TechCrunch Disrupt Award on September 27 2010.
8.1 Entering TechCrunch Disrupt Award 2010
TechCrunch, founded in 2005, is a leading technology media property dedicated to obsessively profiling startups, reviewing new Internet products, and breaking tech news. TechCrunch hosts major conferences and events, including the Disrupt series, The Crunchies Awards, and various meet-ups worldwide serving as community platforms for industry conversation and collaboration (Techcrunch, 2012, A). Each year TechCrunch hosts different 2-3 events, and Qwiki entered the second Disrupt event ever held and competed against 24 other start-ups out of thousands applicants (Techcrunch, 2012, B).
After gaining entrance to the event among thousands of applicants, Qwiki won the TechCrunch Disrupt Award with a cash prize of $50,000 and the TechCrunch Disrupt title “2010’s most disruptive company” on September the 29’th (Qwiki, 2012, A). This would soon turn out to be a stepping stone for Qwikis’ future and ability to secure investor capital.
14 8.2 Initial product – the reference system
On the 21st of October 2010, only a month after winning the TechCrunch Disrupt, the Qwiki team releases access to their first private alpha test phase, where an invited group gained access to the product demonstrated at the TechCrunch. After a few months of private alpha testing, Qwiki opened up for public alpha testing on the 24th of January 2011 (Qwiki, 2012, B).
Qwiki’s’ initial product, the reference system, is based on a unique concept of interactive video streams. It creates interactive, on-the-fly, multimedia presentations of information and topics. These presentations or “rich media narratives”, as Qwiki’s own team members call them, are generated from various sites like Wikipedia, Youtube, Google and such. Textual and visual information and data are combined from these sources into an interactive mash-up with text-to-speech technology. This technology redefines information gathering and searches processes - but it is still very limited to about 3 million topics (Mashable, 2010, A). Instead of getting pure textual topical information through Google and Wikipedia searches, where the consumer has to make an effort of reading, processing, and battling with motivation and relevance, Qwiki offers a short visual text-to-speech video presentation. The processing effort required to gain insight into a certain topic through the Qwiki Reference System (QR henceforth) is thus much lower increasing the relevance according to Wilson & Sperber (2002).
On June the 12th 2012 Qwiki partnered up with Microsoft Bing. The search engine Bing embeds qwikies within each search result linking to a Wikipedia website and producing the same result as a QR search would on Qwiki.com.
8.3 Venture capital and angel investors
With a successful private alpha launch and hundreds of thousands of user sign-ups, Qwiki closes an
$8 million in Series A funding on January 20th - four days prior to the public alpha launch – bringing the total raised capital up to $9.5 million including angel rounds. In the Series A funding several high- profile pioneers and successful entrepreneurs invested in Qwiki including Eduardo Saverin (co-founder of Facebook), Jawed Karin (co-founder of YouTube), and Pradeep Sindhu (co-founder of Juniper Networks). Eduardo Saverin stated that;
15 “Qwiki is a revolutionary new platform that will define the future
of information consumption globally. I’m particularly excited to support the Qwiki team as their initial product gains momentum. It
is always thrilling to be involved in the early stages of disruptive technology.”
(Qwiki, 2011, A)
Saverin and Pejman Nozad, an angel investor and founding partner of Amidzad, joined the Qwiki’s Board of Directors as observers.
On March 31st 2011, Qwiki announced an addition Series A investment of $1 million from Groupon co-founders Brad Keywell and Eric Lefkofsky, bringing the total raised capital to date up to $10.5 million (Qwiki, 2012, C).
8.4 QR for iPad
Early on Doug envisioned that Internet information consumption should be a ubiquitous experience.
"The Qwiki App allows users to fully experience qwiki's benefits:
dynamic information consumption that saves time and increases relevancy. The app is the first step towards fulfilling the company's
vision of creating a consistent information experience across multiple platforms."
(Qwiki, 2011, B)
This happened on the 20th of April 2011 with the Qwiki Reference for iPad release (Qwiki, 2011, B).
No new features were added, but it gave the opportunity for iPad users to access the QR, since the web- version is flash-based, which iOS doesn’t support. Qwiki exceeded 0.5 million downloads from App Store within the first 7 weeks (Qwiki, 2012, D). At the time of writing, no iPhone or other platform version is supported.
8.5 Second product – the Qwiki Creator
After securing a huge amount of investor capital in the light of their very successful and well-liked QR, the Qwiki team decided to renew themselves with a new product, which took their mantra to the next level. On May 23rd (Qwiki, 2012, E) Qwiki released their second product, the Qwiki Creator
16 System (QC henceforth). Doug Imbruce, Qwiki’s CEO, describes the QC as the next generation of video creation, representation, and publishing tool (Businessinsider, 2012, A), basically it is a platform to create own qwikies with own content, as the QR generates from the websites. The QC is very simple to use where ease of use and data compression has been top priorities in the early software development stage. Doug’s vision with data and information consumption have always been that it should be able to be consumed ubiquitously and also age and IT-literacy independently, thus making their products suitable for everyone and on every mobile platforms. Publishing has also received priority in the development stage, reducing the publishing process to a single click of the mouse button. With one click you can publish created content to your qwiki Channel, Facebook, Twitter, and/or YouTube account.
Qwiki also engaged in numerous collaborations with media sites and fashion bloggers.
The creator was in operation for about half a year and discontinued with the announcement of a mobile version, since Qwiki’s vision is to focus on mobile platforms. The ideas behind QR and QC paved the way for their lasted product, the Qwiki Creator Mobile.
8.6 Third product – Qwiki Creator Mobile
Ultimo 2012 Qwiki announced its new product; Qwiki Creator Mobile (QM henceforth). QM is an extension of the web-based QC feature new and unique feature like an automated content generator, that collects and generates qwikies from the phone’s photo library intelligently based on patterns and GPS positions (e.g. if you were on a holiday, it takes all of these photos and combines them into a qwiki). It is currently only available for iPhones. After the announcement of QM, Qwiki terminated the web-based solution. Doug Imbruce states that the idea with the iPhone app;
“… is to give users the ability to share their experiences in real time, whether in full moments or experiences, packaging them in
30-second mobile videos. Users can watch, comment on, and
“like” each piece of media individually, easily sharing those qwikis via Facebook and Twitter, as well as within Qwiki’s community”
(Techcrunch, 2012, D)
Since December 2012, users have been able to sign up for the alpha test phase for the new QM on Qwiki.com. Qwiki released its QM app to the general public the 6th of February 2013 and can be downloaded from Appstore.
17 The variety of functions makes it easy to create and share customized or auto generated qwikies within a minute. See appendix 19.5 for screen shots of the QM app. Upon downloading the app, Qwiki sends out an email stating that the QM app is still in its testing phase.
8.7 Qwiki’s present and future?
Currently, Qwiki only has two functional products available to the public, the QR and the QM.
Qwiki is characterized as a web-based and app service provider. Qwiki has 11 employees (Qwiki, 2012, F), and the company is classified as an ICT-entrepreneurial start-up company, which is being funded solely by venture capitalists and private investors. They have no revenue streams yet since their products are free services and not advertisement sponsored. They stated during an interview that they do not have any business model; they are just planning from day to day (appendix 19.2 - Interview – Navin Thukkaram). They also stated that they have no idea on how to commercialize their products, nor done any research as to how they can do it (appendix 19.2 - Interview – Navin Thukkaram). Their primary focus now is getting the QM dispersed on multiple platforms for multiple devices, and their secondary focus is to secure revenues to survive another day and continuously innovate the way people experience, create and share information.
18
9 Research question
“Today countless innovative business models are emerging.
Entirely new industries are forming as old ones crumble. Upstarts are challenging the old guard, some of whom are struggling
feverishly to reinvent themselves.”
(Osterwalder & Pigneur, 2010)
New ICT startups appear on a daily basis with new and innovative ideas yet only about 10 percentages of these start-ups succeed. It is very easy to become an ICT-entrepreneur, all one needs is an idea and a few programming skills, or know someone who has. Start-ups typically neglect formulating a business model, and thus do not know the consequences and effect their actions can have on their business model. Since the introduction of the web 2.0 the Internet has been in constant evolution into a dynamic and highly interactive entity with unlimited opportunities for businesses to create, capture and deliver value to their customers. The landscape surrounding companies in high technological industries is very turbulent due to technological progression and innovation happening at an increasing pace. In order to compete for tomorrow’s markets businesses need to reinvent themselves continuously because of changing customer behaviors, emerging innovations and hyper-competition.
Reinventing oneself can be done by adopting innovations in order to deliver is to adopt innovations which can give growth potential, enhance value to customers, increase competitive advantages etc.
Qwiki is a classical ICT-startup that has never formulated a business model and they are struggling to commercialize their ideas and products. They currently operate in a highly competitive market of information and content creation and sharing, not unlike social media sites. Based on the Qwiki case and our problem domain we wish to examine the following;
How can Qwiki’s business model be described and what does their current model look like?
How can Qwiki narrow their focus and search for adopting innovations based on their business value context, and which relevant innovation for Qwiki to adopt can be identified?
o Business value context is the context of what is valuable to a business.
What are the potential impacts these innovations pose to Qwiki’s business model, should they adopt the identified innovations?
19 9.1 Limitation and delimitations
When we began conducting our research we believed that we had full collaboration with our case company Qwiki Inc. As it turned out they terminated this collaboration right when we were ready to conduct empiric data collection. This decision prevented our opportunity for retrieving primary empirical data and limited us to be primarily dependent on secondary data.
This thesis is limited to contain a maximum of 120 standard pages and must be handed in within six months of signing the contract with our university. Due to these limitations and the limits on our available time our research will only focus on a single case study despite the possibility of multiple case studies could enhance the results we are trying to gain from our research question, and strengthen the verification or falsification of our hypothesis.
Osterwalder (2004) identifies four pillars in his overall business model framework, Product, Customer Interface, Infrastructure Management and Financial Viability. Due to our imposed limitation of access to primary data from Qwiki we delimit our research from the pillar of financial viability, since it strongly relies on primary data from Qwiki.
In the STREET process Fenn & Raskino (2008) describes the acronym for this phrase as scope, track, rank, evaluate, evangelize, and transfer. Where the three first scope, track, and rank refers to the process of narrowing the search for innovation candidates, the last three evaluate, evangelize and transfer refers to how the innovation should be adopted. Since we cannot engage with Qwiki directly it would be impossible to conclude how Qwiki would adopt certain innovation; these aspects address the overall complication of change management (Palmer, 2009). We therefore delimit our research from evaluate, evangelize and transfer and other constrains of social interference.
When we speak of the rapid changing environments surrounding firms we will only address aspects associated with the innovative technological landscape. We are aware that other factors than just emerging technologies and innovations create turbulence in firm’s environment, but our research objective is the focus on technological innovations.
20
CHAPTER II
10 Methodology
The perception of the digitized world in the 21st century is acknowledged as an indispensable tool for information storing and manipulation, and social encounters. If we talked about a digitalization just half a century ago, we could not perceive it as a replacement or alternative for information storage resources such as books, paper, and archives. Today digital media is the primary choice for informational storage.
It is easy, quick, cheap, and accessible from anywhere. Through time we have come to acknowledge and accept the digitalization of data and our lives as a contribution to our society, and thereby recognize it as part of the world we see today. This sociological realization is due to digitization’s response to meet every problem and expectation we choose to encounter it with. Until recently we have treated the digital and analog worlds as two different entities. Today however, the worlds have collided and merged due to the web 2.0 dilemma and introduction of social media, augmented reality and such.
In the acknowledgement of epistemology approach, we recognize the universe doctrine of the ‘being’
and ‘existing’, but with faster and more frequent technological development and evolution, the merging of the analog and digital, it is our own responsibility to shape ourselves and our perception within these technological scopes and phenomena. For businesses, which are enablers of the digitalized world, the realization of digitization and continuously changing technological worldviews, are key factors for businesses to comprehend in order to succeed in the competitive landscape.
In this thesis, we want to examine how businesses can comprehend and act on the fast pace of technological and innovational change.
10.1 Methodology approach
In our method approach, we want to create the framework for our ‘field of research’ to make it possible for ourselves and for the reader to understand our findings in regard to our approach. In our problem domain we depict the world as clear and unclear, tangible and intangible where we accept the present world as clear and tangible and the future as unclear and intangible. We can only forecast or estimate the future, we cannot predict the future. It is simply not possible to define what is correct, right, or best in the unclear and unpredictable future from presently verified and valid evidence and data. But through data and science-based theory, we can produce justified and approximate guesses that make the
