Developing the eBusiness Model

St. Louis, MOFrom a Seminar by Arthur Andersen

eBusiness facilitates the conduct of business

• eBusiness transforms the exchange of goods, services, information, and knowledge through the use of network-enabled technology

eBusiness and the Challenge to Existing Business Models

• Hard assets

• Low risk tolerance

• Cost, control and process efficiency formed the basis of competition

• Manufacturing was the source of wealth

• Supplier driven

• New entrants lacked access

Emerging business Models

• Catalog

— Almost all (B2C), Chemdex (B2B)

• Auction

— eBay (B2C), PlasticsNet (B2B)

• Bid

— Priceline (B2C), FreeMarkets (B2B)

Community is the critical success factor in any eBusiness Model

TransactDraw vendorsto community

Capture HigherShare of Wallet

Understand

Gather informationabout members

Target advertisingand transaction

offerings

Educate, Entertain, and Inform

Draw members

to community

Generate member

based content

Building Successful

Online Businesses

Interact

Promote member-tomember interaction

Build member loyalty to community

Adapted from Hagel & Armstrong

Sears RoebuckEli Whitney Reuters

Henry Ford

The winners will be those that excel in business model innovation

Mp-3 Player

Mp-3 Format

Digitally encoded Music d-base for Instore sampling

Customizable Mp-3 compilations (legal) ?

Mp-3 Subscriptions-All you can download

Mp-3.com- Record Cds for Artists

Buy CDs online- CD Now, Amazon, Chapters

Music Samplers on the Web - HMV/Polygram

On-line Radio Broadcast

Buy CD in Store

SONY-CD Players

Buy 1 Cd -Get 10 Free-Columbia House

Radio Broadcasting

Content (Products and/or Services)

Legacy Content New e-Content

VirtualVirtual

(WWW)(WWW)

PhysicalPhysical

(Legacy)(Legacy)

Conte

xt

STATUS - QUO E - INNOVATION

BIZ.COM BREAKTHROUGH.COM

© 1999 Arthur Andersen. All rights reserved.

Accepting the Challenge

• Strategy

• Organization

• Design

• Build

Business LandscapeAnalysis

StrategicInnovation Workshop

Market & Customer Analysis

Market Offering Workshop

CriticalEnablers Analysis

Strategy SelectionWorkshop

StrategicActionPlan

•Industry

•Customer

•Competitors

•Internal

•Review and challenge current vision

•Brainstorm opportunities

•Articulate initial market offering hypotheses

•Market identification and analysis

•Target market selection

•Customer requirements

•Test initial market hypotheses

•Refine market offering hypotheses and vision

•Business processes

•Skills

•Brand positioning

•Alliances and joint ventures

•Organization structure

•Performance measures

•Competitive positioning

•Business model selection

•Future state strategy articulation

•Vision articulation

•Clear action plan of step deliverables

•Initiate Solution Design program

Phase One Phase Two

Strategy - the key is to generate then validate innovative market offerings

Organization - Build the right team

• Leadership

• Proven skills

• New business process

Design - Create Community

• Content

• Member Loyalty

• Gather Information

• Engage vendors

Build - Process and Technology

• Infrastructure

• Highly scaleable site

• Business processes

• Marketing

Example - yourPharmacy.com

• Strategy

• Organization

• Design

• Build

Directives

• Assemble team that can execute

• Accept partial/minimal org/func capabilities

• Keep your eye on the ball

• Deliver quickly

• Establish continuous improvement processes

• Time is your friend & enemy