MIST 2090 1st Edition Lecture 6 Outline of Last Lecture I. Business ModelingII. The CanvasOutline of Current Lecture IIII. Common Business ModelsIV. Generic Business Model: The Value ChainV. The Digital Revolution Complicated Business ModelsVI. Bait & Hook VII. FreemuimVIII. Two-Sided MarketIX. Three Trends in the digital ageCurrent LectureIII. Common Business Models- Common business models include: industrial manufacturing, product development, retail, distribution, services, subscription/ad revenue- In old days there was 1 permanent model for each industry- Manufactures all had same generic business model- Retailers followed the same 2 models – catalog retailers or store retailers- Depending on which industry you were in, only a few potential business models at your disposalIV. Generic Business Model: “The Value Chain”- Tradition organizations thought about their business models in terms of the “value chain” of an industrial/manufacturing company- Even random, non-manufacturing businesses like credit unions attempted to adoptthe traditional industrial “value chain” business modelThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.V. The Digital Revolution Complicated Business Models- Digital rev. disrupted traditional business models because digital technologies enable a variety of new opportunities that challenge and disrupt the traditional models and blue the lines b/w traditional industries- Ex: amazon supplanting the retail industry (like books) and then providing the backbone for it- Ex: apple getting the music industry to sell songs for $1 and creating the iphone/ipad/applestore digital platform- Ex: quicken loans deciding to sell loans without a physical retail buildingVI. Bait & Hook - Bait are hook are business ideas that gives to you that locks you in and the company gets revenue in return- A classic example is a razor and razorblade or printer and toner- Digital bait & hooks are even more compelling because the incremental cost of the bait approaches zero when you reach scaleVII. Freemuim- Freemium gives something free to most of the customers to get a subset of the customers using premium services- Although there are some examples of freemium in the non-digital world, freemiumis a particularly powerful business model in the digital age because the marginal cost of producing additional digital products are often zeroVIII. Two-Sided Market- 2 sided market requires network effects where neither group benefits unless both groups are involvedIX. Three Trends in the digital age- 1. Digitizing more of your customer’s experience- 2. Digital natives increasing- 3. Customer Voice- to address these you need a specifically digital business model- must distinguish b/w space and place- in non-digital wold, the place of physical objects matters, content moves with the medium of content- the digital world is about spaces where content is disaggregated from its medium and moves separately- digital business models of 3 components: (1) content (what is consumed); (2) experience (what its like to be a customer); (3) platform (coherent set of digitized business processes, data, and