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Rewire your DNA
twitter: hvangrie mail: [email protected]
Hans van Grieken Fellow Center for the Edge
EMEA Technology Research Leader Executive Lecturer Nyenrode Business School
Supervisory Boardmember Priva Holding
Allow me to shortly introduce myself …
©Deloitte - h
2019-02-05 Family
Business Conference
Rewire your DNA
I have been a Supervisory Boardmember to Family businesses since 2007, currently at Priva ….
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
Priva is the world market Leader in Green-House Climate Controls …
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
The company - for instance - also delivered the Digital Building Management System Technology for St Paul’s Cathedral
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
During my tenure the company value shifted from Products to Services, Data and the Algorithms …
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
I am also the proud dad of 2 entrepreneurial “tech-nerds” that think that I represent the “old IT world” whereas they are “re-inventing the technology market” …
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
They think differently, they operate differently, they use technology differently. Their DNA = Digital …
• The Alliance will utilise Android, world’s most popular operating system, to offer customers a new array of services including Google Maps, the Google Assistant and the Google Play Store
• These services will be combined with Alliance Intelligent Cloud based remote software upgrades and vehicle diagnostics
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What Digital DNA Archetypes did we find based on 13 DNA characteristics?
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Characteristics of Fast Moving Experimenters
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Characteristics of Talent & Strategy Leaders
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
Digital Disruption is all over the place. Can you anticipate … ?
©Deloitte - h
2019-02-05 Family
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At Deloitte’s Center for the Edge we did some extensive research into Disruption …
©Deloitte - h
2019-02-05 Family
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… and we identified nine patters of disruption that - in most cases - are Digitally Enabled
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
The research takes 3 different perspectives on each of these 9 Patterns of Disruption
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
The research takes 3 different perspectives on each of these 9 Patterns of Disruption
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
Here’s a manifestation of a Digitally enabled Disruption taking place as we speak …
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
Software and Data Networks and Interactions
Assets and Physical Goods People and Services
Digital Devide
Industrials Hospitals
Hotels
1Consultants Financial Services Insurance
2
Biotechnology Software
Pharmaceuticals
4 Platforms Social Networks Stock Exchange
8
It is not by accident that a lot of our clients are (considering) entering the “Platform Play” …
©Deloitte - h
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Here’s what our Deloitte colleague William Ribaudo had to say about his Research …
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
Software and Data Platforms/Networks and Interactions
Assets and Physical Goods People and Services
Digital Devide
Industrials Hospitals
Hotels
Biotechnology Software
Pharmaceuticals
Consultants Financial Services Insurance
Credit Card Comp Social Networks Stock Exchange
1-2 2-4
4-8 8-15
Let that sink in for a moment: “The Value that Wall Street is willing to pay ranges from 8 to 15 times your Revenue … “
©Deloitte - h
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Decide on Where you want to Play and How you want to Win with “Digital” …
WH
ERE
TO P
LAY
(MAR
KETS
& C
UST
OM
ERS)
AD
JACE
NT
EXIS
TIN
GN
EW
EXISTING INCREMENTAL NEW HOW TO WIN (PRODUCTS & ASSETS)
TRANSFORMATIONAL Developing breakthroughs and inventing things for markets that don’t yet exist
ADJACENT Expanding from existing business into “new to the company” business
CORE Optimising existing products for existing customer©Deloitte
- hvangrieken@deloitte
.nl - 2019-02-05 Family
Business Conference
WH
ERE
TO P
LAY
(MAR
KETS
& C
UST
OM
ERS)
AD
JACE
NT
EXIS
TIN
GN
EW
EXISTING INCREMENTAL NEW HOW TO WIN (PRODUCTS & ASSETS)
ADJACENT
TRANSFORMATIONAL
CORE
Average activity in a
balanced portfolio
10%
20%
70%
TRANSFORMATIONAL
ADJACENT
CORE
Decide on Where you want to Play and How you want to Win with “Digital” …
©Deloitte - h
2019-02-05 Family
Business Conference
WH
ERE
TO P
LAY
(MAR
KETS
& C
UST
OM
ERS)
AD
JACE
NT
EXIS
TIN
GN
EW
EXISTING INCREMENTAL NEW HOW TO WIN (PRODUCTS & ASSETS)
ADJACENT
TRANSFORMATIONAL
CORE
Average return on a balanced
portfolio
10%
20%
70%
Average activity in a
balanced portfolio
10%
20%
70%
TRANSFORMATIONAL
ADJACENT
CORE
Decide on Where you want to Play and How you want to Win with “Digital” …
©Deloitte - h
2019-02-05 Family
Business Conference
There are Ten Types of Innovation, relating to Configuration, the Offering and the Experience
Network Connections with others to create value
Process Signature or superior methods for doing your work
Product System Complementary products and services
Channel How your offerings are delivered to customers and users
CustomerEngagement Distinctive interactions you foster
Profit Model The way in which you make money
Structure Alignment of your talent and assets
Product Performance Distinguishing features and functionality
Service Support and enhancements that surround your offerings
Brand Representation of your offeringsand business
©Deloitte - h
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Not surprisingly, the innovations that the average innovator tends to pursue are typically focused around products
Source: Deloitte Monitor/Doblin
100
0
Relative incidence
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Profit Model innovations convert offerings and other sources of value into cash. Here’s an inventory of proven area’s for innovation in the Profit Model …
Ad-Supported Provide content or services for free to one party
Auction Allow a market to set the price for goods and services
Bundled Pricing Sell in a single action two or more items & sold as standalone offering
Cost Leadership Keep value costs low and sell high volumes at low prices
Disaggregated Pricing Allow customers to buy exactly what they want
Financing Capture revenue from structured payment plans & after-sale interest
Flexible Pricing Vary prices for an offering based on demand
User-Defined Invite customers to set the price they wish to pay
Float Receive payment prior to building offering
Forced Scarcity Limit the supply of offerings available, by quantity time frame, or access
Freemium Offer basic services for free while charging e.g. a premium special features
Installed Base Offer a “core” product for slim margins to drive demand and loyalty
Licensing Grant permission to a group or individual
Membership Charge a time-based payment
Metered Use Allow customers to pay for what they use
Switchboard Connect multiple sellers with multiple buyers
Microtransactions Sell many items for as little as a dollar to drive impulse purchase
Premium Price at a higher margin than competitors usually e.g. for a superior product
Risk Sharing Waive standard fees or costs if certain metrics aren’t achieved
Scaled Transactions Maximize margins by pursuing high-volume, large-scale transactions
Subscription Create predictable cash flows by charging customers upfront
©Deloitte - h
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The average innovator tends to pursue no more than 1 or 2 types of innovation
Source: Deloitte Monitor/Doblin
Number of companies
Average number of types integrated:
1.8 types
175
0
140
105
70
35
12% 72% 15% 1%
0 Types 1-2 Types 3-4 Types 5+ Types
84%
0–2 Innovation Types
16 % 3–10 Innovation Types
Average number of types integrated:
1.8 types
©Deloitte - h
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Successful innovators find ways to integrate twice as many types of innovation
Source: Deloitte Monitor/Doblin
Number of companies175
0
140
105
70
35
0% 29% 45% 26%
0 Types 1-2 Types 3-4 Types 5+ Types
29 % 0–2 Innovation
Types
71% 3–10 Innovation Types
©Deloitte - h
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Uber innovates by integrating many known things, but with elegance and insight
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
As you increase in your level of ambition, you need to be more disruptive to existing business models and need to think about combining innovation types
FOR TRANSFORMATIONAL INNOVATION You will need coordinated innovation across multiple (4+), interdependent types. Classic example of a breakthrough is the iPhone
FOR ADJACENT INNOVATION You’ll need innovation within multiple types (3-4) around a new market offer. Classic example is Starbucks’ Frappucino
FOR CORE INNOVATION For innovation in the core, you will be innovating within independent innovation types around existing offers aimed at current customers. Classic example is new colors of Post-it Notes
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
Yet, in some cases the Family “Immune Systems” can be THE “killer-bug”, NOT the Market …
©Deloitte - h
2019-02-05 Family
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I II III
IV V VI
For years, a company runs a successful business, however returns are declining, and new players are entering the market, with business models based on new technology.
In order to create value from new business models and technology, a new entity (an “Edge”) is created on the edge of the core.
The Edge start experimenting, partnering in ecosystems. Experiments are small and get (too) far from the core business
After learning from experiments, the Edge “nails” the new business. To scale fast, a.o. corporate venturing is applied. Credible commitments are made by acquiring businesses closer to the core.
The Edge and the new acquired entities become one. The Edge pulls resources from the core and outside.
The Edge is no longer an Edge but a new “division”. The decreased old core has transformed towards the Edge, both together are a new (improved) core, scalable learning is applied.
Introducing Edge Plays …
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We call them Edge Plays or Nightmare Scenario Competitors …
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Anybody can start a Start-up … . But can you Scale It too …?
400.000 Startups from 24 countries
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1M+ 0,5M-1M 250K-0,5M <250K FAILED
Percent of all startups in USD revenue bandwidth Percent of all startups in revenue year
Revenue Year
Evolution of Revenue Distribution of All Startups
Source: Deloitte extensive startup dataset: team analyses
©Deloitte - h
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Percent of Surviving Startups
Revenue Contribution of Fast Growers Compared to Slow Growers 5th year of Revenue in Euro’s
Percent Total Revenue generated by Startups
Source: Deloitte extensive startup dataset: team analyses
<.25Mln .25-10Mln >10Mln0,25%
©Deloitte - h
2019-02-05 Family
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Main conclusions based on researching 400.000 Startups from 24 countries
Only 1 out of 200 becomes a Scale-up >10 million USD within 5 years
Most all Scale-Ups are Led by Experienced Entrepreneurs in their late thirties or early
forties
The founders of the majority of unicorns have twice as much work experience as
startup founders
More than half were founded by Teams
Only 25% of Startups were designed to Scale
Timing is everything: Market Entry is twice as long for Scale-ups as for Start-ups
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About Timing: % of Unicorns successfully “riding” a particular “wave” …
Think of Xiaomi riding the smartphone wave; Uber riding the sharing economy wave; Palantir riding the big data wave; SpaceX leveraging the discontinuation of the space-shuttle program.
No Wave Secondary Wave Primary Wave
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
Senior Generation to Children: “First prove you can run this Family Business, then we’ll talk about “Digital” …
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
Children to Senior Generation: “we need to EMBRACE the next Wave Digital Opportunity when it presents itself … and find out as we go …”
©Deloitte - h
2019-02-05 Family
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@ Deloitte we annually produce a number of Global “flagship Eminence Publications” geared at our clients to help them better understand the implications of Digital Transformation …
Global Technology Trends Digital DNA/MIT Sloan Global CIO Survey
Digital Technology Operating Models
Outsourcing Survey
©Deloitte - h
2019-02-05 Family
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Rewire your DNA
Feel Free to Reach out to me
twitter: hvangrie mail: [email protected]
Hans van Grieken Fellow Center for the Edge
EMEA Technology Research Leader Executive Lecturer Nyenrode Business School
Supervisory Boardmember Priva Holding
©Deloitte - h
2019-02-05 Family
Business Conference