Tag: business innovation

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EU Projects FutureEnterprise Project

Building a successful, European multi-city team. Myth or opportunity?

Written for FutureEnterprise by Maria Logotheti.
When in business school, you have probably learned that face-to-face (F2F) communication is a more effective employee communication channel compared with computer-mediated communication (CMC). Looking at the European startup scene and talking with some of them (including Parquery, Darwin Insurance and Commit Software), a European, multi-city located appears to be a common trait and an enabler spurring further growth. Without the ambition of being an academic qualitative study, this post intends to unveil how this is possible even if the teams do not meet every day.
Pros of a dispersed team:

  • Complementary mentality. Team members coming from different backgrounds have the ability to tackle problems and opportunities from different points of view;
  • Open-mindedness. It is the ecosystem that surrounds us that provides both entrepreneurs as well as their colleagues stimuli and ideas;
  • Proximity to customers. When approaching more than one market, it is valuable to talk and understand customers from different countries, both because of language skills and experience.

How to overcome complexities:

  • Identify a common language everybody speaks seems obvious, but let us repeat it one more time. Whether English or any other, for a team to be successful they all shall master a language;
  • Make use of computer mediated communication is obviously key. It is important, for teleconferences and videoconferences to be successful to follow even with more care the golden rules of organizing meetings. In particular, talking with the startups who have often used a trial and error approach, it is definitely necessary to prepare telcos in advance with an appropriate agenda and material properly circulated. In addition, effectiveness of the moderator, time selection (within Europe rather simple, but when the team enlarges it is also a factor), focus and audio quality also play a key role. It may be old fashion to write minutes, but at least do ensure that one of the participants is in charge of summarizing the key takeaways to be circulated within the hours following the conference call;
  • Organize F2F meetings with frequency as appropriate to stage of development, travel budget and important events such as clients’ meetings, trade fairs, networking events.

Organizing a typical working week:

  • Have a clear identification of the team cumulative goals and allocate them with clear expected outputs;
  • Keep agenda synchronized with the tools that best suit your needs. Here there is no simple answer and you and your team may have to try different tools before selecting the most appropriate tool or often bundle of tools. Indeed a task management platform may be appropriate to visually map all the pending activities and collect information coming from different sources;
  • Assess outcome at the end of the week and define areas needing more focus.

Building a long lasting team:

  • Ownership/Tight-Strategic Partnership. All startups we have talked to either have one of the founders/entrepreneurs in every office on a daily basis or have exclusive partnership agreement with every key part of the team. This appears, particularly in early stage, important to build appropriate enterprise culture and outsourcing proved complicated to manage and control;
  • Teaching/Learning and Cross-fertilization. Without willingness to share and openness to learn, there is no point in working in a team, let alone a dispersed team;
  • Hiring carefully. Hiring is even more complex because, in addition to the technical/soft skills required for the job, it is important that the team is built on reliable, responsible colleagues. A strategy adopted by one of the interviewed companies included screening 150 resumes received, preselection of 15 candidates to attend a 3 months course paid by the enterprise and, after 1 month of internship, selection of the 5 new teammates.

How ecosystems could facilitate the blossoming of dispersed teams

  • Networking opportunities amongst entrepreneurs, featuring participation of those founders that had successfully built an effective dispersed team;
  • Universities and institutions can support the temporary co-location of the entire team to attend workshops, hackathons and the like leveraging on travel budget support and/or existing facilities during time of limited use (i.e. summer);
  • Associations and chambers could support partner identification and selection.

Entrepreneurs of today and tomorrow have the opportunity to gain additional effectiveness provided they are able to leverage on a dispersed, multi-city, European team.

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EU Projects FutureEnterprise Project

Business Model Innovation – Moving from Value Proposition to Value Extraction

Written for FutureEnterprise by Gigi Wang, Board Member & Chair Emeritus, MIT/Stanford Venture Lab. 

The first step in building a successful start-up is developing the Value Proposition or creating a product or service that provides significant value and benefits to a target customer in addressing the need that they have.  In order to build a successful business, the next step is to develop an approach for Value Extraction or making money, reducing costs and creating a profitable business.

When I was working on my MBA degree in the UC Berkeley Haas School of Business evening program, I used to take very neat and detailed notes in each class (good Asian student background).  Since my fellow students often missed class because of work obligations, I would make copies of my notes and share it with the absent ones with no thought of getting payment.  Years later, when I was listening to the COO of Webvan (well-funded Internet start-up that launched in late 1990’s), he talked about how he always had the entrepreneur spirit, and how he sold copies of his class notes while he was getting his MBA at UCLA.  Why didn’t I think of that when I was sharing my notes?  Because I was too focused on the Value Proposition, and didn’t think of Value Extraction.

One important factor in figuring the business model is identifying WHO THE CUSTOMER IS.  Customers can play different roles, they key ones being the USER, the BUYER, and the PARTNER.  Take for instance, home consumption beer in the United States.  The primary user is male, while the primary buyer is female (usually wife or girlfriend), and the partner is the retail outlet.  If any of these customers are not engaged in the business strategy, then beer sales don’t take place, and no revenue.  So it’s critical to understand who all the different customers are in your business, and to develop a strategy and tactics to provide value to each of the different customers.  So the beer producer’s advertising campaigns have to reach both the men and the women, and they also have to have a strategy to engage retail outlets to carry their product.

In developing a business model, the key equation to build upon is PROFITS = REVENUES – COSTS.  Anything that increases revenues, or decreases costs, thereby increasing the profits will improve the business model.  Creative new ways to increase revenues or decrease costs results in a more innovative business models.  Over time, new technologies and process emerge, enabling the emergence of new business models.  In the 1990’s, the Internet took hold of the world, and spawned new Internet-based businesses like Amazon, eBay, and more.  In the 2000’s, wireless devices became mainstream and mobile apps and content businesses like app-stores such as iTunes and Spotify emerged and thrived, while in the 2010’s, smart phones with even more capabilities like location based services resulted in companies like UBER and restaurant reservation apps.  Often, these new companies thrived because of their innovative business models versus because of innovative new technologies.  UBER leveraged existing mobile device trends and existing location based technologies to build a business which created new revenue streams for car owners with excess capacity and time and UBER getting a cut of that business.  Their business model was the innovation in utilizing excess capacity to generate revenues, not their technology.

With the rise of Internet enabled devices in the areas of consumer, enterprise, and industrial, a lot of data is being collected which can be analyzed and used to predict trends and outcomes or to run processes.  This has given rise to Data Monetization as a popular business model.  Google keeps offering free services, but is it really free?  In exchange for the free services, Google is collecting consumer behavior data from all of us users and monetizing by selling targeted advertising to companies trying to reach us.  Another historical example of creative business model innovation is how grocery stores initially installed bar code scanners as a way to manage inventory and bar code scanners resulted in being a cost center to the business.  Then the grocery stores figured out that the in addition to collecting data on inventory levels, they were collecting valuable data on consumer buying trends.  So the grocery stores packaged the data collected on buying trends and sold it to the consumer goods companies.  Amazing instance of transforming the bar code scanner from a cost center into a revenue center.

One of my favorite examples of an innovative business model transformation is the gaming broadcast service Twitch.  It spun out of Justin.tv, a “free” streaming video service struggling to survive because it hadn’t come up with a profitable business model.  One of Justin.tv’s executives then developed a concept to utilize Justin.tv’s streaming video technology for a service for gamers to go online to video broadcast their game-play where other gamers could login to watch them play.  Top gamers on Twitch easily have up to 10,000 viewers watching them play which provided a captive audience for targeted advertising.  Revenues skyrocketed and Twitch was acquired by Amazon in 2014 for close to $1 billion.  Such an amazing example of transforming an unprofitable business to a highly profitable one by innovating the business model and how to generate revenues.

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EU Projects FutureEnterprise Project

An Ideological-Technological Exploration of Blockchain

Written for FutureEnterprise by David L. Shrier, Managing Director, MIT Connection Science (connection.mit.edu)

In this Year of Blockchain, we see the technology attracting nearly 10% of fintech venture funding (fintech itself approaching $19 billion this year).  The bitcoin blockchain is only one flavor of a proliferation of coins (by one count over 700), and “colored coins” are only one flavor of blockchain.  It’s helpful to have a reliable taxonomy when seeking to classify these distributed cryptographic ledgers.  In this post, we will explore a new model for thinking about blockchain variations.

Most blockchain taxonomies focus on the functional architecture (Is it permissioned or permissionless?  Is it public or private?).  We are not going to dwell on these models here, and direct readers to the division proposed by ArthurB – although it has been pointed out that his statement “Applications which do not attempt to evade oppressive governments have little or no reasons to use decentralized systems” isn’t precisely true.  There are numerous examples of a need for trust technologies when absolute trust in a third party is absent, having nothing to do with governments – eBay selling is the most trivial example, but equities security trading would be another.

Instead, in our view, understanding implementation of blockchain requires understanding implementers, users, and their respective objectives.  This context-based analysis of blockchain provides a novel lens on selecting a platform and allocating resources to it.  Broadly speaking, when we incorporate ideology into the technological analysis, we see three categories:

  • Libertarians: A substantial number of bitcoiners believe that government has no role in regulating society, and bitcoin usage is an expression of political belief.  AML/KYC is anathema to their belief systems.  This isn’t to say that all bitcoin users and companies feel this way – to the contrary, a large number of bitcoin companies employ or developed policies based on the Windhover Principles that MIT helped shepherd.  Rather, a vocal segment of bitcoin miners and developers assert a proprietary ownership of the technology, and vigorously reject anything that compromises their idealized view of how it should be used.  To quote a recent post on Reddit: “if you aren’t working to make Bitcoin better (read: more private, more fungible, more scalable) than you should keep your dirty, groveling sycophant paws off of it.”[i]  It’s a vigorously-expressed point of view but one shared by a number of users who engage each other regularly in self-reinforcement.
  • Technocrats: A broad middle of technocrats don’t automatically assume either government regulation or total freedom from regulation, but rather see blockchain as a flexible technology without ideology.  Ethereum would fall clearly into this category.  A host of “smart contract” and other applications are being built on top of the Ethereum platform, which has a substantially shallower learning curve than the notoriously complex bitcoin blockchain.
  • Rules Followers: The industry-led consortia such as R3 and Hyperledger accept, a priori, that regulation applies to blockchain (for example with respect to AML/KYC as it applies to currency and other financial-related matters).  While perhaps not as passionate in espousing their views as the Libertarians, these Rules Followers are making an ideological choice embedded into the fabric of their chosen technology platform.  (Corda doesn’t technically use “blocks” but we are describing all distributed ledger technologies as blockchain for convenience).

Longer-term use of blockchain at scale will likely come from one of the latter two categories.  At same time, the passion that the libertarians feel has caused them to think “outside the box” and question assumptions, resulting in a new way of transacting that is transparent, open and decentralized.  In fact, blockchain as such would not exist with those passionate libertarians driving its creation and adoption.

Given the attitudes of some of the Libertarians, how can the creative energy of the innovators behind the bitcoin blockchain be accessed to support a broader technology revolution?

—

For additional insights on the blockchain impact on future markets, you may view my presentation in the FutureEnterprise webinar.

More on the blockchain revolution is also covered in the following white paper series:

  • Blockchain & Financial Services: 5th Horizon of Networked Innovation: May 3
  • Blockchain & Transactions, Markets & Marketplaces: May 10
  • Blockchain & Infrastructure (Identity, Data Security): May 17
  • Blockchain & Policy (with U.S. Treasury Office of Financial Research): May 24

Email [email protected] for a copy.

[i] /u/throw_awa5 posted 27 April 2016 https://www.reddit.com/r/Bitcoin/comments/4givro/upcoming_ama_mit_connection_science_team_will/d2jig1r accessed 30 April 2016.

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EU Projects FutureEnterprise Project

Collaborative Ecosystems – You are not alone

Written for FutureEnterprise by Stuart McRae (IBM).
It is one of the ironies of the age of digital business that the transformation it enables is more about interpersonal relationships than technology.
From the earliest days of disruptive businesses enabled by the Internet (with Amazon, and the way it used reviews) the social aspect of engaging customers with new services has been at the forefront – spreading their popularity, educating the market, providing insights and driving customer loyalty.
Social interaction soon became the core to review sites like TripAdvisor, crowdfunding platforms like Unbound, messaging services like Snapchat, and the new generation of businesses whose online presence is delivered only through social media sites. The watchword of the digital age has become “engagement“. Engaging prospects, engaging customers, engaging partners, engaging employees, engaging citizens – the Internet has become a platform for conversations.
This isn’t just about what we used to call “Web 2.0” and the way it enables generated content and social networking. The magic happened when that was combined with Smartphones, Cloud Computing, Big Data and Analytics, to create more effective ways to communicate and collaborate: a new way to work. The Internet of Things and Cognitive Computing will continue to build on this, creating even more transformational possibilities through new forms of engagement.
Which is all having a profound impact on business models and how organisations work. The impacts are clear everywhere, but the opportunities are greatest in the entrepreneurial sector. Traditional businesses find it hard to change and their legacy often stops them from taking advantage of new possibilities. A new business doesn’t have that problem.
But as the sudden blossoming of these new capabilities shows, timing is everything and nowhere is that more true than for the entrepreneurial start-up trying to get established. Align the potential of emerging technologies, an evolving business environment, appropriate changes in regulation and the right mood in the market, and the world can shift dramatically. Get the timing wrong, and all that is left is the fight without the success – plus, hopefully, valuable lessons that should encourage a true entrepreneur to try again until they get both the timing and strategy right.
Entrepreneurship is about both ideas and execution. Having an idea isn’t the same as innovation, which is a collaborative process that takes a spark and turns it into a fire by bringing together expertise and action. Good execution uses the skills of the experts not just to implement an idea, but create a business around it.
Incubators have become a proven way of bringing the necessary ingredients together, adding mentoring, resources and a supportive community to help turn ideas into businesses. Whether these are geographic (one study found 40 in London alone) or distributed (like the New Way To StartUp competition), a host of new businesses are getting started because people are being brought together to support and help one another.
However, in the digital age, if there is no incubator available locally, you can build your own. If your enthusiasm is visible, your vision is clear and your approach is open, you can engage with the expertise, mentoring and resources you need to create your own support system. Don’t stop at crowdfunding finance, but crowd-source the advice, mentoring and skills you need as well. All you need is an aptitude for and focus on networking (and few business leaders succeed without that). There are lots of people who will make connections for you, even if they can’t help themselves. After all, this is the sharing economy.
There are positives and negatives to building your own ecosystem: whist it might not be as easy as slotting into an existing, defined structure, or as motivating as having like minded people around you every day, creating a personalised ecosystem that is independent of location can bring in contacts that would not otherwise be available and create a support community around you that can help to differentiate you in the market. But don’t forget, your ecosystem is made up of relationships. Online social media is a great way to find people, coordinate activities and keep in touch, but face to face meetings build trust and better provide emotional support. Whether it is grabbing a coffee or getting your network together at a relevant event, meeting people is just as important in business as it ever was.
Conferences and seminars are happening all the time – but try to find the ones that aren’t just about sitting through PowerPoint presentations but offer workshops and unconference sessions that focus on opportunities to debate – and, of course, include lots of time for networking, enabling you to expand your ecosystem.
Or you can simply organise your own meet-up for your ecosystem (there are online services for that, too) – perhaps in the corner of a friendly coffee shop, tearoom or pub. Use your network to invite other start-up businesses – who knows the ways it might turn out that they can help you, or you can help them.
Being in a start-up is very different today to how it was when I was doing it 35 years ago. But the most transformational thing about being an entrepreneur in the digital age you no longer need to do it alone: you can build your own ecosystem. Just as you no longer need to build infrastructure but can source everything (from IT platforms to HR, programming to collaboration, a web site to marketing services) as services from the Cloud, learn how to use social media and social networking tools to create, nurture, grow and manage your own ecosystem.

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EU Projects FutureEnterprise Project

Identifying The Key Needs Of European Internet-based Enterprises

Written for FutureEnterprise by Maria Logotheti.

In our previous post we presented a recently published study of Europe’s entrepreneurial ecosystem.

In this follow-up post, we’d like to highlight a few key findings of the study that give useful insights on the current status and the future prospects of the European entrepreneurial ecosystem.

We’ll start by presenting a summary of the key inhibiting factors in the current European ecosystem for internet-based entrepreneurs, as identified by the FutureEnterprise Experts’ Panel  with the feedback of YES for Europe member organizations and associated entrepreneurs, along with a high level view of the required policy changes.

The first major issue identified is the need to foster business model, governance and market innovations (i.e. improvements within companies, among companies (suppliers and rivals) and between companies and government (input to policy and self-regulation) as well as between companies and customers, by providing the appropriate infrastructure and support for the development of new products and services and new ways of interaction between business and customers that increase the effectiveness of business processes.

To address this innovation mismatch, EU needs to accelerate the development and adoption of new technologies and smart infrastructures, capitalizing on Future Internet assets. EU also needs to provide or develop new legal forms for new types of enterprise and interaction (i.e. regulatory reform, including improved participation in policy processes by all sorts of enterprise).

The second major issue identified by the expert committee is that of a “business mismatch” between research developments and the commercial market.

This is a longstanding and multi-faceted issue, caused by lack of effective communication and co-ordination between universities and research organizations and enterprise needs. Academics lack a thorough knowledge of market needs and business trends that would help guide their research, while businesses don’t have the skills and resources to identify business opportunities that could leverage current research. Researchers are not always able to identify the most pressing or promising avenues of research or to couch their results in terms that stimulate business uptake, while businesses are not always able to articulate their needs and to identify and translate the most useful results.” Beyond this, one might note that the feedback from market experience to research is underdeveloped and argue for policy to support extended and different relations between research and application. Finally, it is worth recording (again) the different cultures of “the republic of science” and “the kingdom of industry” and the need to ‘federate’ them to handle differences in time-scale, methods and values and to encourage the free movement of people, ideas and capital between the two domains.

This gap can be bridged by encouraging multi-disciplinary teams to work on knowledge co-creation, and by bringing together the research and business worlds through EU co-funded research projects that follow market-oriented approaches. Not just research projects; also team-based public procurement and practical initiatives to tackle grand challenges. The point is that the architecture of these must be changed to give the two sides equal standing and appropriate power. Also, can note that researchers increasingly face (different) markets – both research and industry are already market-orientated, but many of the available mechanisms for linking them are not.

Another key issue European entrepreneur face is access to risk-tolerant capital sources and financing instruments, as those operating in Europe tend to favor more conservative approaches. The behaviour of European financial markets does not always properly choose which risks to take or how to manage them. Like many markets, it tends to prefer financial risks to ‘real’ risks, leaving many innovations unfunded or dependent on private investors or slow and cumbersome grant-based public funding that is ill-suited to the selection and support of risk-taking opportunities or poorly adapted to recognising and exploiting the most useful outputs.

Innovative financing instruments have to be created under the Horizon 2020 program that address this very basic need by going beyond supportive and coordinating actions to create new funding mechanisms and opportunities, including new forms of ownership and participation.

Last, but not least, European youth lacks entrepreneurial awareness, with the current anti-entrepreneurial culture at schools and universities hampering the development of internet entrepreneurs. In cases that this does not apply, there are problems of understanding; governments press for a form of entrepreneurism that uses start-ups as ao try. Therefore, the up-take and outcomes are suboptimal. But there is also widespread confusion as to what entrepreneurism and entrepren way to substitute for poor youth employment activities, and has given too little thought to sustaining the enthusiasm and welfare of those wheurial culture involve; how they differ from commerce and how to balance competition and cooperation.

Students should be encouraged to start their own businesses through entrepreneurship curricula and university start-up incubators, while high schools and primary education can use targeted education activities to create an entrepreneurial mentality

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EU Projects FutureEnterprise Project

Digital Enterprise #4: Digital Business Innovation (DBI) Framework

Written for FutureEnterprise by Panagiotis Kokkinakos.

In the process of identifying how important digital transformation is for enterprises and what is the progress made so far, it was recognised that it is rather difficult for entrepreneurs and managers to understand what digitisation actually means for their organisations. In order to answer this challenge and help such organisations understand the repercussions of being digital and evolving to a new form at all levels of their everyday operations, a clear Digital Business Evaluation (DBI) framework was defined.

In that direction, the first step was to define Digital Enterprise (v2.0), by analysing each component based on the relative research activity including (see also the previous blog post for more details):

  • Digital Workplace
  • Digital Operations
  • Digital Leadership
  • Digital Borders and Endpoints
  • Digital Ecosystem and
  • Digital Strategy

Having defined the main components of the Digital Enterpise (v2.0), coming up with a ranking mechanism, allowing to measure the digital readiness of an organisation, seemed the next logical step. The figure below provides an overview of the relevant attempt.

The main idea is that the user provides an assessment for all previously mentioned components, ranging from 0 to 14. The colour code implies levels with the same score, and the mean value of the score per category or in total can be used to measure the digital readiness of the organisation.

In case the lower levels have not completed, the organisation should not take a higher score. For example, if an enterprise buys an external system based on a plan it has conducted, with APIs available and based on standards, and training is not completed, then the organisation should drop below level 7, while if usability tests have not completed to measure added value on stakeholders, level 6 should not be even reached.

1

The reason for an organisation to undergo such an effort and to invest on digitisation and digital transformation is that it will then be easier to become a new form of enterprise and look for new business models, based on innovation and shared value. This process may take much time to be concluded if it is based on human intelligence, as people tend to be creative, but they are also biased in many cases.

Running it manually, or semi-automated based on data-driven techniques, might end up in desired situations or it may need an enterprise to roll back, which is why agile management methodologies are more popular. Having a fully digitised enterprise makes it easier to change business models by modifying different components of the digital enterprise.

Having modelled properly different components, and also knowing how new components should be integrated, the enterprise may turn over a new leaf in digital business innovation via simulations. Using genetic algorithms, new random forms of digital enterprises may come up, as mutants of the initial business model. These mutations may become part of evaluation under an evaluation criterion (e.g. minimising costs, maximising revenues, share price or other KPIs etc.) that the enterprise selects, and the strongest mutants are part of further generations of evolution. After multiple generations, the virtual model of a digital enterprise will be the ideal combination of different components. Such neural networking techniques may automate a new form of enterprise performs and evolves. This may be an interesting research direction for management studies, for the next 25 years.

2Trying to “translate” the DBI framework to all targeted stakeholders, providing them useful insights and helping them understand how they can innovate and pave their way towards becoming new forms of enterprises, in accordance with their unique needs and priorities, the Digital Business Innovation Playground was developed.

Via an intuitive and user-friendly application, the DBI Playground aims to aid stakeholders answer questions like:

  • What type of Digital Business are you?
  • What are the Digital Challenges that may be of interest to you?
  • Which are the technological trends that apply to your industry?

You may visit and experiment with the Digital Business Innovation Playground here.

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EU Projects FutureEnterprise Project

Back to the future – digitizing traditional businesses

Written for FutureEnterprise by Maria Logotheti.

The story of economic progress has constantly been the story of disruption.

Old ways and methods of production have been giving way to newer ones, ever since man’s prehistoric transition from hunter-gathering to agriculture.

The pattern is always the same too. The new methods are first met with some reluctance (think John Ludd), then they see a slow increase in adoption, until finally, after their expansion has crossed a certain threshold, it accelerates and encompasses all aspects of business.

The digital disruption

The intention of the digital computer, and even more so, the advent of the internet age, only accelerated this process. While the steam engine took several centuries to spread worldwide, and electricity many decades, we already cannot imagine our life without the web — and it’s been only since 1995 or so that we’ve had it.

For all its rapid progress through, the process is far from over, as many aspects of doing business have not yet been disrupted by the internet age. Some, because they belong to old industries or are tied to special interests that are resistant to change.

Others because we can’t yet imagine a way to digitize them, even though the opportunities are often right in front of us. It took until 2008, for example, for somebody to notice that those old magazine and newspaper coupons still have some (digital) life left on them, and create Groupon.

Other’s still, because the perfect combination of technology is not there yet. Digitizing taxi service and shared rides for example was an obvious application for an internet company. But it was only made viable for companies like Uber and Lyft to appear and thrive when enough people (a) had smartphones with (b) constant wireless access to the internet.

Thus, there are three major factors that will contribute to increased digitalization in the following years:

1) Public demand

The success of ventures such as Uber, Netflix and Groupon show that the public not only is not conservative, but is actually ready to adopt digital versions of traditional services at the drop of a hat provided they offer more convenience, a lower cost, or both compared to the old models.

This demand for digital services also increases as demographics change. Soon enough, a whole global generation of people will have grown up having never experienced a pre-web and pre-smartphone world (this is already the case for kids younger than 12-15 years old). When these kids finally enter the workforce, and become the dominant consumer group, they’ll view any pre-digital business model as an archaism.

2) Technological maturity

As web and mobile technologies mature, broadband speeds increase, and devices become ever smaller and more capable, business models that were previously unfeasible to digitize, suddenly become feasible.

We already gave the example of Uber and Lyft above, but also consider how it became possible for Netflix to replace the traditional VHS rental model. Late nineties internet access wasn’t there yet, as video files are relatively large. While people have already been downloading pirated movies (over many hours or even days), and have also been streaming short, low resolution, videos for several years, it was only after broadband access had become widespread enough, and better video compression were developed to make streaming easy on the network (and on the CPU), that a service like Netflix became viable and profitable.

As high-speed network backbones improve and reach billions of consumers worldwide, including people in the developing world without access to broadband internet yet, and as connected devices appear in low enough costs and small enough sizes (e.g. to be used in the “internet of things” type scenarios), whole new categories of digital business will become possible.

It won’t be a “winner takes all” scenario either, were a big player like Uber completely controls a particular market — the multiplicity of national and local needs, and the numerous available business opportunities, ensure business opportunities for thousands of inventive entrepreneurs (including established business who want to re-invent and digitize themselves).

3) Business sense

Digitization of old business models is inevitable not just because it offers convenience or cost savings, but most importantly because it makes total economic sense.

There are real, and very tangible, benefits for early players and pioneering entrepreneurs who first move to digitize a certain domain.

It’s also a great way to bypass the gatekeepers in traditional markets — instead of competing with them on their terms, you provide a digitized version of their service that (due to economies of scale and technological factors) has higher margins, lower cost, and is more convenient for the “always online” generation.

Teaching an old dog new digital tricks

Far from being over, digitization of the economy will only accelerate in the coming decades.  The successful entrepreneurs of tomorrow won’t be those that attempt to repeat the old success stories (e.g. building yet another social platform), but those that will swiftly and accurately identify opportunities for disrupting pre-digital businesses and processes.