© people & data | www.weigend.com Andreas S. Weigend, Ph.D. 韦思岸教授

The Networked Economy: Information Management, Strategy, and Innovation网络经济 : 信息管理 , 战略 , 和创新

(1) Overview:

From Enterprise Software to the Digital Networked

Economy 纵览：从企业软件到网络经济

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0 What is the Digital Networked Economy?

Digital: ConvergenceEverything digital: Universal, ubiquitous.

Storage free: Cost of finding /discovering dominates.

Networked: CommunicationEverything connected: Internet of Things.

Communication free: Cost of interrupt dominates.

Economy: Collaboration Classical economics (pricing of information goods, networks effects,…) Behavioral economics (incentive design,…)

Internet of People

New business models for the digital networked economy

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0 What is this course about?

•Enabler Communication and data revolution

•Impact With the quantitative and qualitative data sources now available,

companies have the potential to create unprecedented internal transparency and value for their customers.

Examples?Other groups?

•Implications For old and new business models For products For services

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0 What are some applications?

Personalization Recommendations Online marketing Collective intelligence Peer-production Enterprise 2.0

More examples?

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0 Course structure (2 days March 2008,

Tsinghua/INSEAD)•1) Enablers of the Digital Networked Economy

Discuss the mechanics and principles behind communication platforms, social networks and marketplaces of the digital networked economy, explaining how and why they have fundamentally shifted the dynamics of business. Focus on the evolving role of enterprise software and IT strategy in the context of these new information possibilities, including collective intelligence and enterprise 2.0.

Overview Themes of the course Enterprise software and IT Strategy Readings

Carr: IT Doesn’t Matter Ross & Weill: Six IT Decisions Your IT People Shouldn’t Make

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0 Course Structure (Day 1 Afternoon)

•2) Quantifying the business: Creating transparency “Don’t call me Jack Ma, call me Data Ma!” the CEO of Alibaba proclaimed at the 2004 Anniversary of the company, to emphasize the impact of quantifying and instrumenting the organization, as opposed to basing business decisions on beliefs and opinions. Present the underlying principles: first establish a set of metrics that reflect business goals, then create an experimental framework to evaluation innovative ideas with low risk.Discuss some implications on the structure of the organization.

Data and Metrics Experiments and Actions Getting it done in your organization

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0 Course Structure (Day 2 Morning)

•3) Pricing and Scarcity in the Digital Networked EconomyReview traditional pricing approaches and the properties of information goodsDiscuss pricing strategies for products and services with network effects and switching costs.

Pricing information goods Markets Attention Economy Discussion: Chris Anderson “FREE” (March 2008)

If in the future everything on the web is free, how will companies make money? It is not the economics of pricing that has changed, but that the initial concept of placing an artificial scarcity on digital goods was flawed. What will be the marketplaces of the attention economy with new monetization models.

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0 Course structure (Day 2 afternoon)

•4) Feedback Marketing: Truly engaging usersThe traditionally high development costs and long intrinsic time scales of research and testing lead to the four P’s of marketing (product, placement, pricing and promotion).The new ways of collecting consumer feedback and opinions are dramatically reducing cost while increasing effectiveness of marketing. This lead to the shift from traditional marketers pushing advertising, to modern consumers wanting to discover items they are genuinely interested in, often via other individuals.

From push advertising to serendipitous discovery Search engine optimization The New Consumer Data Revolution Group exercise

We are witnessing a New Consumer Data Revolution with widespread implications for both established companies and startups, individuals, and society. We will end the course by designing concrete first steps towards leveraging this revolution for your company

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0 Reflection paper topics

1. Should your company create an outward facing blog? Should you open up your website such that anybody can discuss your product and service?

2. Is it true that according to Chris Anderson’s March 2008 WIRED article everything will be free? If that is the case, how will people make money?

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0 Additional readings

Available online at http://weigend.com/files/teaching/tsinghua/readings/MaEconomist2008.doc (1 page) Outlook of the CEO of Alibaba for 2008OReillyWeb2DesignPatterns.doc (1 page) One-page summary of Web2.0DeightonKornfeldHBS2007.pdf (HBS) Discussion of consequences of digital interactivity for markets, marketing and

consumersWeigendFOCUS2004-en.pdf (5 pages) Background interview on the instructor

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0 Andreas S. WEIGEND, Ph.D.韦思岸博士

Education 教育背景

Undergraduate: Karlsruhe, Bonn, Cambridge (UK) 本科：卡尔斯鲁厄，波恩，剑桥（英国）Graduate: Stanford University (Physics Ph.D.) 博士：斯坦福大学（物理学）

Past full-time positions include 全职工作经历

New York University, Associate Professor of Information Systems (1997-2000)纽约大学，信息系统副教授Amazon.com, Chief Scientist (2002-2004) 亚马逊网站，首席科学家

In China since 1994Advising includes Alibaba, XiaoNei, Yobo, as well asworking with Venture CapitalTeaching: Tsinghua, CEIBS, Shanghai Jiao Tong University, Cheung Kong GSB

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0 Andreas S. WEIGEND, Ph.D.韦思岸博士

Consulting咨询

Clients: Large multinationals, small startups (US, Germany, China), venture capital客户：大公司，小型新兴企业（美国，德国，中国），风险投资

Teaching (2007-2008) 教职

Tsinghua EMBA and Tsinghua/INSEAD (Information Management)清华大学 EMBA 课程，清华大学与法国 INSEAD 管理学院联合课程（信息管理）Stanford University (Data Mining and E-Business)斯坦福大学（数据挖掘和电子商务 )

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0 The Production Team团队

Andreas S. WEIGEND, Ph.D.韦思岸博士

US 美国 +1 650 906-5906China 中国 +86 13818183800Germany 德国 +49 174 650 906-5906

Teaching AssistanceLI Hongyan李虹燕

InterpretationJessica GONG Haiyan龚海燕Jerry YU Xueqing于雪晴

OperationsZHANG Bocheng张博晨

Class managerLily JIA

DesignLIU Jun刘君

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0 E-business电子商务

Definition of e-business定义

Communicate and transact through the web and mobile devices利用网络和移动通信设备，完成沟通与交易

Enabler: Technology基础：技术

Internet: Network (connection between computers), and protocol互联网：网络（将电脑相连）和传输协议

Internet : Perhaps the largest infrastructure shift that has ever happened互联网可能是有史以来最重大的基础设施改造。 Ability to transport energy Industrial revolution传输能源 工业革命 Ability to transport information Information revolution 　传送信息 信息革命

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0 Decision making: Transparency through data决策：通过数据增加透明度

Measure, measure, measure.测量、测量、再测量

“You can’t manage what you don’t measure”无法测量则无法管理

“What gets measured gets results”只有测量才有效果

Making airlines arrival delays public航空公司误点记录Online marketing网络广告

Goal: Base decisions on transparency…目标：基于透明度做出决策

… not on blind faith or gut feeling而非盲从或感觉Pass transparency on to your customers向客户展示透明度

E.g. EMS providing access to information of location of package联邦快递让客户查询包裹递送位置

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0 Digital goods 　数字商品

Digital convergence 数字聚合

Economics: Positive feedback经济学：正反馈Scale: Opportunity and threat规模：机遇和威胁

Case: Reasons for Microsoft’s monopoly案例：微软如何垄断

Lock-in客户锁定Network effects网络效应

•Textbook (Information rules / Network economy): Chapter 1-3, 5-7教材《信息规则 / 网络经济》第 1-3 章，第 5-7章

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0 Overview: Markets纵览：市场

Build platform: Empower others to contribute构建平台：人人参与，一起作贡献

To be authors, reviewers, designers, buyers, sellers…人人成为作者、评论家、买家、卖家…

Discussion讨论

Pricing of goods商品的价格Pricing of the service服务的价格 Pay for participation, pay for listing, pay for successful transaction, additional services基于参与程度、列表位置、成功交易、或额外服务等付费

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0 Overview: Customers纵览：消费者

Imperative: Crave for feedback规则：反馈制胜

Close the feed-back loop, and learn from it. On internet time. Fast. Almost instantaneous.抓住反馈，并分析它。网络上的时间，几乎稍纵即逝。E.g., Market research如：市场调研

Technology (and economics) drives, society (and regulation) follows.技术（和经济学）领头，社会（法规）紧跟。

Global 　全球化 Dramatic changes in behavior and attitude of the customers消费者行为和态度的巨变

E.g., Attitude to information, (perceived) right of access to information如何看待信息、知情权 Attention关注

Trust信任

Advertising Network

User

Advertiser Publisher

Attention

Money

Information

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0 Business model广告网络的经营模式

Advertising Network

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0 Overview: Innovation纵览：创新

Ability to experiment. And rigorously verify.能够进行试验，并严格论证。

Example: A/B test.如： A/B 测试 Communication: Always-on society.

沟通无限：随时互联Communication is cheap. Storage is free: Creativity is a key ingredient of business. 通信便宜，存储免费：创意成为商务要素。Focus on actionability : Do the relevant things.付诸行动、更有针对。

Web 2.0: Read-write webWeb 2.0开创读写双向的网络时代

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0 Knock knock… who is it?敲敲…这是什么？

CookiePlace on computer’s hard drive by DoubleClick由 DoubleClick 公司存储在电脑硬盘上Example: 例如： andreas@doublecklick[1].txtid8000001037e7b9cdoubleclick.net/102440605529631593874232909326429461891*

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0 How does it all happen?具体步骤？

8 steps:分 8步：1. Browser comes to at a website (using browser)浏览者来到网站（用浏览器）2. Website tells advertising network about the visitor网站告诉广告网络哪个用户来了3. Advertising network checks whether computer has its cookie广告网络检查该电脑是否已有 cookie4. If yes, it looks it up in its database如有便查询数据库5. It then applies business rules to decide what ad to serve再根据商业规则决定让用户看到哪条广告6. It inserts this ad into slot on the website将此广告插入网站相应位置7. The ad appears on the computer….广告出现在用户电脑上8. …and hopefully has a positive influence on the user’s future purchasing behavior当然希望会积极影响该用户未来的购物行为

This needs to happen very quickly速度取胜

Requires significant infrastructure investments需要大力投资于基础技术

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0 Cookies: Value Propositions

Cookies 的价值所在 Advantage for company that puts cookie on user’s computer:

公司将 cookie储存在用户电脑上所带来的好处Know when this computer users returns to the web site知道何时同一用户又回到同一网站 Marketing etc营销等应用

Advantage for user:给用户带来的好处：

Convenience 使用方便 E.g., automatic log-in可自动登录网站 E.g., more useful ads看到更有针对的广告

Disadvantage for user: 给用户带来的坏处

Privacy can be jeopardized 隐私可能受到侵犯

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0 Trade-off: Privacy vs Convenience 　取舍：隐私还是便捷

Who owns the data?谁拥有数据？

Phone calls on phone用电话拨打电话Web searches在网站上搜索Purchases购买Movement (GPS, mobile)移动（全球定位系统，手机）…

等等

Note:注：

The trade-off between convenience and privacy is intrinsic, cannot be avoided使用便捷与隐私保护之间必然存在权衡取舍 More convenience, less privacy 方便增多，隐私减少 Less convenience, more privacy方便减少，隐私增多

1

Market capitalization 2007.03 (in parenthesis: 2006.05) 2007年 3月市值 (附带 2006年 5月市值）

M

SFT Microsoft: 272 (was 270)

G

OO

G Google: 140 (was 78)

EBAY eBay: 43 (was 51)

YH

OO Yahoo: 42 (was 50)

G

M General M

otors: 17 (was 20)

AM

ZN Amazon: 16 (was 14)

10

100in $ billion单位： 10亿美元

Physical products实物产品

P l a t f o r m s平台

Information products 信息产品