Design Thinking Tech Strategies Innovation Rules CHAPTER ONE Name the founders Zappos Nick Swinmurn Youtube Steve Chen Chad Hurley Jawed Karim Amazon Jeff Bezos Microsoft Bill Gates Google Larry Page and Sergey Lin Yahoo Jerry Yang and David Filo DESIGN THINKING What is Design Thinking Design thinking is the ability to meet user s needs and drive business success combining empathy creativity and rationality What are elements of user experience User experiences is how the product works and how a person feels about using the product Elements include surface bringing everything together skeleton what components enable people to use the site structure gives a site shape scope and strategy What is design great design Design can change business more than just pretty pictures talk benefits not features doesn t make users think how to be a business designer What is brand Customer view of a business Usually based on customer service Customer Empathy Map STRATEGIES IN TECH Know the Information Systems Strategy Triangle Business Strategy drives all other strategies Organizational and Information Strategy are then dependent upon the Business Strategy IS Strategy is affected by the other strategies a firm uses IS Strategy always has consequences Organizational Strategy Types Overall low cost leadership strategy ex Walmart Focused low cost strategy ex Southwest Airlines Broad differentiation strategy ex Saks 5th avenue Focused differentiation strategy ex Apple Best cost provider strategy ex Target Porter s Five Forces Model Use Used to analyze competition within an industry Level of industry competitiveness based on 1 Rivalry among existing firms 2 Threat of new entrants 3 Bargaining power of buyers 4 Threat of substitutable products 5 Bargaining power of suppliers Value Chain Use Used by managers to identify opportunities for gaining competitive advantage where to invest Suppliers inbound channel YOU outbound channel Current customers Add Value by Operational effectiveness automating Business intelligence informating Strategizing strategizing RULES OF INNOVATION What is Disruptive Innovation Disruptive innovation creates a market where a market doesn t exist anywhere It brings a different value proposition to the market Initial underperformers establish mainstream markts What is sustaining innovation Makes a product better Precursors to innovation A core business that is in control A game plan targeting innovation portfolio Resource allocation Disrupts competitors not customers Test for disruptive ideas Is there a large enough population Is it good enough Does is disrupt everybody Key Idea Marketing cannot save bad technology but design can NETFLIX Know the company what they do Netflix is an online streaming DVD by mail service Long Tail Concept A long tail means you have an extremely large selection of content or product even though the majority of sales traffic happens with a few more popular items The selection attracts customers and the internet allows for the large selection Business Model Original All DVD by Mail 2nd DVD by mail or additional charge for online streaming 3rd Two separate businesses Quikster Now Primarily online streaming with additional charge for DVD by Mail Churn The churn rate is the rate at which a customer leaves a product or service The Netflix churn rate actually fell when Wal mart and Blockbuster released copycat efforts of the streaming service Marginal Costs Fixed Costs Fixed costs do not vary while marginal costs increase with each unit produced Marginal costs for Netflix include costs paid to telecommunications providers cost of running programs on the servers of other companies license fees and content provider charges Disintermediation Means removing an organization from a firm s distribution channel collapsing the path between suppliers and customer Benefits 1 No revenue sharing with third parties 2 Studios collect and keep a potentially valuable data asset