Future&of&Value&Creation:&Creating&New&
Markets&in&Context&&&New&Systemic&
Business&Models&
Minitrack'at'Hawaii'Conference'on'Systems'Science'
2013,'Kahului,'January'2013'
Irene%C%L%Ng%
What%I%consider%to%be%value%
(co4)creation%
Professor'of'Marketing'&'Service'Systems,'WMG'
Director,'International'Institute'of'Product'&'Service'
Innovation'
An%SDLogic%approach%
irene.ng@warwick.ac.uk'
'
@ireneclng'
'
http://uk.linkedin.com/in/ireneclng'
'
'bit.ly/vcssblog'
'
www.warwick.ac.uk/go/sswmg'
'
www.ireneng.com''
More than 200 years of Goods
dominant logic: Value as WORTH
But it wasn’t exchange that made us happy. It
was experiencing what we bought that gave us
the outcomes we wanted
We buy because of the service of the object,
even if it was an emotional ‘service’ i.e. things are
service avatars*
Mike Kuniavsky, 2010
8 January 2013
Copyright Irene Ng, 2012. All rights reserved.
But it wasn’t exchange that made us happy. It
was experiencing what we bought that gave us
the outcomes we wanted
8 January 2013
SD#Logic:#The#co-crea0on#of#value#
for#outcomes/benefits/value-in-use#
op
e
os
© Irene Ng 2011, all rights reserved
Peace%of%mind%
Entertainment%
Love%
Pr
%
%
%
%
%
%
%
%
%
%
%
RESOURCES%
To find ways of innovating, we need to understand valuein-use
Copyright Irene Ng, 2012. All rights reserved.
op
Pr
e
os
CO-CREATED
VALUE that is
higher than
proposed
%
%
%
%
%
%
%
%
%
Realise
%
%
%
Enhance
%
%
%
RESOURCES????%
1
Value#co-crea0on#is#mul0direc0onal#
Ge?ng#from#point#A#to#B#
Good#driving#experience#
Drive%
We%(co)%create%value%through%
‘use’%in%context*%
The%object%(firm)%
propose%value,%we%
create%it%through%use/
experience%
Car%
(Vargo & Lusch, 2004,2008; Ng & Smith, 2012)
Other%drivers%
Traffic%
Actual ‘outlays’ are
resources available to cocreate value
Ownership%was%the%only%way%to%get%
the%‘service’%of%an%object%
•  Previously,%the%only%route%to%service/
outcomes%was%through%ownership%
•  Marketing%have%talked,(promoted(and(sold(
on(the(basis(of%benefit%and%use%of%things%but%
benefit%(outcomes)%and%use%is%not%aligned%
to%revenues%–%we%still%only%buy%ownership%
and%not%outcomes%%
8 January 2013
Digitisation%makes%it%possible%to%
render%a%‘service’%without%
ownership%
E.G.%Music%
Copyright Irene Ng, 2012. All rights reserved.
Where%we%used%to%get%our%music%
Due%to%digitization,%acquiring%music%(exchange)%
and%use%of%music%(creating%value)%has%collapsed%
into%the%same%time%&%context%
Collapse%into%context%
creates%new%markets,%
expanding%existing%
ones%
But we needed to buy before use, we
needed to acquire, to know that we MIGHT
want it
8 January 2013
Copyright Irene Ng, 2012. All rights reserved.
© Irene Ng 2011, all rights reserved
2
But%to%bring%your%digitised%offering%
(content)%into%context,%you%need%a%
medium%(widget),%connectivity,%and%a%
social%space%%
The%New%Battleground%and%the%future%of%
value%(co4)creation%
Content%
Social%
CONTEXT%
Widget%
Connecti
vity%
VALUE IN
CONTEXT
This%camera%is%
available%so%it%is%
a%resource%in%
context%
This%
camera%is%
not%
Two functionally the SAME cameras but not the
same value for the user in context. Because one
camera is less competent in context, one is a
lesser service avatar (or is just simply not
around!)
Value created is Contextual. Resources are
therefore also Contextual.
Things become more valuable in context because they
enable resources for value creation
8 January 2013
Copyright Irene Ng, 2012. All rights reserved.
Mobile%phone%as%the%medium%to%
propose%digitised%offerings%in%context%
•  Why%is%the%mobile%phone%one%of%the%most%
popular%device%for%digitised%offerings%
today?%%
•  because%it%is%often%present%in%MANY%lived%
experiences%(contexts)%%
•  It%may%not%be%the%only%widget%in%the%future%
serving%multiple%contexts,%but%it%is%now%
8 January 2013
COMPETENCY OF OFFERING IN CONTEXT
IS KEY TO NEW MARKETS & FUTURE
WEALTH
8 January 2013
Copyright Irene Ng, 2012. All rights reserved.
Markets%are%forming%at%where%
service%creates%most%wealth%–%in%
context%
Digitisation%allows%new%
%
offerings%to%be%
resources%available,%
accessible%on%demand,%
in%context%
The%better%you%are%able%
to%serve%context,%the%
bigger%your%market%
Copyright Irene Ng, 2012. All rights reserved.
© Irene Ng 2011, all rights reserved
3
Who%is%digitising%to%serve%use%
context%next?%Tea?%;)%
Competitive%Dynamics%
•  Digitisation%enables%traditional%offerings%to%become%a%
resource%in%context,%reducing%time%between%acquiring%a%
resource%and%using%a%resource%4%expanding%demand%
•  Serving%Contexts%changes%the%nature%of%
competition%
•  Land%grab%creates%disruption,%enabled%by%
new%technologies.%How?%
Digitised%offering%in%
context%
In context
Digitisation+Data is the
new oil, Context is the new
oil-field
8 January 2013
Copyright Irene Ng, 2012. All rights reserved.
8 January 2013
Copyright Irene Ng, 2012. All rights reserved.
Future%of%Value%(co4)creation:%
New%Systemic%Business%Models%
Context%
Enjoying%music%
on%spotify%and%
seeing%other%
friends%choices%
of%music%while%
in%a%gym%
BUSINESS%MODEL%VS%ECONOMIC%
MODEL%
ECONOMIC MODEL
- Where exchanges come
from, what exchanges are
there, creating worth from
value creation
BUSINESS MODEL
Value%
Creation%
Value%
prop%
ENJOYING
MUSIC
WMG
© Irene Ng 2011, all rights reserved
Money fr access e.g.
last.fm
Money fr ownership
e.g. iTunes
Money fr medium
(e.g. CD)
MUSIC
EMI, Sony BMG
08/01/2013
person%
Value%capture%
person%
Value%capture%
Money fr access e.g.
spotify
Money fr ownership (e.g.
CD)
Money fr eyeballs (eg.
Google)
E.G.%MUSIC%4%CONTENT%
Value%
Creation%
Value%
prop%
ENJOYING
MUSIC
MUSIC
EMI, Sony BMG
08/01/2013
23
WMG
24
4
E.G.%MUSIC%4%WIDGET%
E.G.%MUSIC%4%CONNECTIVITY%
Money fr ownership
Value%
Creation%
person%
ENJOYING
MUSIC
Value%capture%
Value%capture%
person%
Money fr access
Value%
prop%
WIDGET
Apple, MP3 player, Computer
08/01/2013
WMG
25
person%
ENJOYING
MUSIC
Money fr access
Value%
prop%
Sharing
platform
Myspace, facebook,
google+, twitter,
spotify
27
08/01/2013
Value%
capture%
person%
person%
Value%
Creation%
Value%
Creation%
Value%
prop%
Value%
prop%
WMG
© Irene Ng 2011, all rights reserved
GYMS
SONY, EMI
(CONTENT)
29
APPLE,
CREATIVE
(WIDGET)
08/01/2013
Value%
prop%
Value%
Creation%
Value%
prop%
Value%
Creation%
SKY, VIRGIN
(CONNECTIVITY)
person%
person%
Many%persons%enjoying%
Person%enjoying%music%
music%in%context%
in%context%
person%
person%
Value%
Creation%
Value%
Creation%
Value%
prop%
Value%
prop%
WMG
Value%
capture%
person%
Value%capture%
person%
person%
FACEBOOK, MYSPACE
(SOCIAL)
Value%
Creation%
08/01/2013
Value%
Creation%
Value%
capture%
APPLE,
CREATIVE
(WIDGET)
Value%
Creation%
(CONNECTIVITY)
28
Value%Constellation%of%Music%in%Context%
Value%
prop%
person%
Value%
Creation%
Value%
prop%
GYMS
Value%
prop%
Sport &
fitness
environment
Value%
capture%
Value%capture%
Value%
prop%
Value%
capture%
Value%
capture%
Industries%propose%value%in%
context%
SKY, VIRGIN
FACEBOOK, MYSPACE
(SOCIAL)
Value%
prop%
ENJOYING
MUSIC &
SPORT
WMG
Value%
capture%
WMG
Value%
Creation%
GYMS
Value%
capture%
08/01/2013
26
E.G.%MUSIC%4%GYM%
Value%capture%
Value%capture%
Money fr eyeballs
(ads)
WIFI, 3G
WMG
person%
Value%
Creation%
Value%
prop%
ENJOYING
MUSIC
O2, Vodafone, Three, Orange
08/01/2013
E.G.%MUSIC%4%SOCIAL%
Value%
Creation%
SONY, EMI
(CONTENT)
30
5
WMG
31
Value%
prop%
PIE
Value%capture%
SONY, EMI
(CONTENT)
Value%
capture%
WMG
33
Value%Constellation%of%Music%in%
Context%
Value%
capture%
Many%persons%enjoying%
Person%enjoying%music%
music%in%context%
in%context%
I%just%want%to%make%sure%
person%
Value%
prop%
Value%
prop%
WMG
© Irene Ng 2011, all rights reserved
Value%
capture%
Value%
capture%
these%guys%can’t%do%it%
without%me%
APPLE,
CREATIVE
(WIDGET)
08/01/2013
SKY, VIRGIN
(CONNECTIVITY)
Value%
capture%
Value%
prop%
GYMS
Value%
prop%
PIE
Value%capture%
Value%
prop%
Value%
prop%
PIE
Many%persons%enjoying%
Person%enjoying%music%
I%want%to%play%
music%in%context%
in%context% there%because%
person%
widget%that%I%
control%will%secure%
my%connectivity%
business%%
GYMS
APPLE,
CREATIVE
(WIDGET)
08/01/2013
SKY, VIRGIN
(CONNECTIVITY)
Value%
prop%
Value%
prop%
WMG
SONY, EMI
(CONTENT)
34
Connectivity%&%Digitisation%
FACEBOOK, MYSPACE
(SOCIAL)
Value%
prop%
FACEBOOK, MYSPACE
(SOCIAL)
Value%
capture%
08/01/2013
Value%
prop%
Value%
capture%
Value%
prop%
32
Value%Constellation%of%Music%in%
Context%
Value%
prop%
Value%
prop%
GYMS
I%want%to%play%
there%because%
more%content%that%
I%control%will%drive%
my%connectivity%
business%%
SONY, EMI
(CONTENT)
WMG
Value%capture%
Many%persons%enjoying%
Person%enjoying%music%
music%in%context%
in%context%
person%
APPLE,
CREATIVE
(WIDGET)
SKY, VIRGIN
(CONNECTIVITY)
Value%
prop%
Value%
capture%
Value%
prop%
Value%
capture%
FACEBOOK, MYSPACE
(SOCIAL)
Value%
capture%
Value%Constellation%of%Music%in%
Context%
08/01/2013
Value%
capture%
SONY, EMI
(CONTENT)
Value%
prop%
•  The%Value% constellation% map% shows% you% which% industry% has% a%
stake% in% which% OTHER% industry% to% expand% their% market%
penetration,%driving%disruption,%convergence,%land%grab%
Value%
capture%
Value%
capture%
08/01/2013
Value%
prop%
Value%capture%
APPLE,
CREATIVE
(WIDGET)
Value%
capture%
Value%
prop%
Many%persons%enjoying%
Person%enjoying%music%in%
music%in%context%
context%
person%
GYMS
GYMS
APPLE,
CREATIVE
(WIDGET)
SKY, VIRGIN
(CONNECTIVITY)
Value%capture%
Value%
prop%
Many%persons%enjoying%
Person%enjoying%music%
music%in%context%
in%context%
person%
Value%
prop%
PIE
Value%capture%
Value%
prop%
PIE
Value%capture%
SKY, VIRGIN
(CONNECTIVITY)
Value%
prop%
Value%
capture%
Value%
prop%
FACEBOOK, MYSPACE
(SOCIAL)
Value%capture%
Value%
prop%
Value%Constellation%of%Music%in%Context%
Value%
capture%
FACEBOOK, MYSPACE
(SOCIAL)
Value%
capture%
Value%Constellation%of%Music%in%
Context%
•  TV%was%in%a%room%
•  Music%was%on%speakers%and%stereo%players%
•  Digitisation%&%Connectivity%is%changing%contexts%
of%use%
•  Changing%contexts%of%use%is%bringing%different%
industries%into%a%context%e.g.%Tesco%has%a%stake%in%
your%car%–%will%they%pay%insurance?%
•  Disruption%&%Convergence%comes%from%
understanding%value%constellation%of%the%context%
SONY, EMI
(CONTENT)
35
08/01/2013
WMG
36
6
Changing%Value%Constellations%
Designing%a%new%platform%to%
serve%context%
•  With%more%digital%connectivity,%there%are%
more%connected%contexts%
•  more%constellations%with%different%players%
will%emerge,%converging%stuff,%creating%
new%ways%to%capture%value,%generating%
new%business%models,%creating%disruptions%
•  Move%from%vertical%business%models%&%
revenues%to%systemic%business%models%&%
revenues%
•  The%Internet%of%Things%(IoT)%refers%to%uniquely%
identifiable%objects%(things)%and%virtual%
addressability%that%would%create%an%Internet4like%
structure%for%remote%locating,%sensing,%operating%
and/or%actuating%of%such%‘things’.%There%is%a%sense%
that%equipping%all%objects%in%the%world%with%the%
ability%to%be%animated%and%connected%could%
transform%lived%lives.%%
•  The%home%and%the%building%as%new%platforms%to%
serve%contexts%in%the%future%
8 January 2013
Hub4of4All4Things%–%tentative%platform%
architecture%for%multi4sided%markets%
resid
‘Thing 2’
Network
landlord
3D Printing/
Scanning
ent
Want%more?%
Building mgr
‘Thing Store’
Type1
Thing 1s
Type1
Standard
Data formats
and defined
protocols
M
‘App in-Store’
Private Info
Hub
App
App
Legacy
Type 1 Thing Interface
Thing 2s
Legacy
‘App out-Store’
TG%
= IoT Enabler
Data for developers
Private Info
Hub
= IoT Enabled
Public Info
Hub
App
‘Thing POD’
Thing Platform for
Open-source Design
Key
= IoT Enhancer
M
App
Applications
Developed
using opensource API
TG%= Trustgate
Use of Virtual Devices
External platforms
M
Actuating
Legacy
The H.A.T.
App
Copyright Irene Ng, 2012. All rights reserved.
Read%the%book!%
Value%&%Worth:%
Creating%New%Markets%
in%the%Digital%Economy%
4  out%now%on%Amazon%
Kindle%
*
www.innovorsa.com%%
* Tentative cover
8 January 2013
Copyright Irene Ng, 2012. All rights reserved.
Thank%you%
8 January 2013
Copyright Irene Ng, 2012. All rights reserved.
© Irene Ng 2011, all rights reserved
7