MIS Exam #2

Are network effects good for innovation?

While network effects limit competition against the dominant standard, innovation within a standard may actually blossom.

Valuation

analytical process of determining the current (or projected) worth of an asset or a company.

To foster improvement, warehouse movements

are continuously logged and productivity is tracked and plotted.

Most new blockchain technologies use software that exists

outside of bitcoin

Angel investors

person who invests in a new or small business venture, providing capital for start-up or expansion

Network doesn't refer to the

physical wires or wireless systems that connect pieces of electronics. It just refers to a common user base that is able to communicate and share with one another.

Agile is popular due to its

speed and flexibility

Sprint demo, review, retrospective

team demonstrates completed work to product owner and discusses what worked and what can be improved for the next sprint.

7 key variables managers should consider when making a make, buy, or rent decision:

1. Competitive advantage 2. Security 3. Legal and Compliance 4. Skill, Expertise, and Available Labor 5. Cost 6. Time 7. Vendor Issues

Affiliate Marketing Program

Marketing practice where a firm rewards partners (affiliates) who bring in new business, often with a percentage of any resulting sales.

Rent the Runway needed what in order for the model to work?

Needed to buy from designers in bulk, and at a discount But designers needed to be convinced it was worth taking a risk on two women with an unprofitable fledgling business and little direct domain experience Some designers were initially concerned that rental would dilute their brand. Many also feared that rental would cannibalize retail sales.

What's Amazon's CCC?

Negative --> sells goods and collects money from customers weeks before it has to pay its suppliers --> extra pool of cash to expand operations, make interest bearing investments

Chapter 8

Network Effects

What can also offer a leading software firm a degree of customer preference and lockin that can establish a firm as a standard?

Network effects and switching cost

Two sided market

Network market that comprises two distinct categories of participant, both of which are needed to deliver value for the network to work (e.g., video game console owners and developers of video games). ex: Apply pay

Two Pizza Teams

No team bigger than can be fed by 2 pizzas helps discourage group think that diminishes alternatives and helps ideas flourish

Amazon software enforces an additional rule when stocking shelves, known internally as "random stow":

No two similar products sit next to each other reduces the chances that a picker will confuse a size or color or otherwise grab the wrong thing.

Complementary Benefits

Products or services that add additional value to the primary product or service that makes up a network. p/s that encourage others to offer comp goods are sometimes called platforms

Chapter 12

Rent the Runway: Entrepreneurs Expanding an Industry by Blending Tech with Fashion

Cloud computing

Replacing computing resources—either an organization's or individual's hardware or software—with services provided over the Internet.

How was Amazon's success in the beginning?

Went 7 whole years without turning a profit

Micropayment

an e-commerce transaction involving a very small sum of money in exchange for something made available online, such as an application download, a service or Web-based content.

Blockchain technology has the potential to disrupt

all sorts of systems that rely on intermediaries, including the transfer of property, execution of contracts, and identity management

The co-founders have discovered that the model appeals not just to young, cash-strapped women, but to

all women who seek convenience and value and who are interested in more broadly sampling high-end fashion.

Amazon Web Services

allow anyone to rent industrial-strength computing capacity on an as-needed basis Services include computing capability, storage, and many operating systems, software development platforms, and enterprise-class applications. is now responsible for the majority of the firm's profits.

Advantages of using the cloud:

allowing organizations to rent server capacity as needed—scaling up during high demand periods or intensive but short-term projects without having to over-invest in hardware, software, and personnel. AWS and competing cloud services offer several advantages, including increased scalability, reliability, security, lower labor costs, lower hardware costs, and the ability to shift computing from large, fixed-cost investments to those with variable costs. Since Amazon also uses products developed by AWS, the firm's e-commerce and Kindle operations also benefit from the effort.

The best product or service doesn't

always win ex: PS2 had more users, which attracted more developers offering more games vs xbox

Thin Devices

have very little computing power in the device itself, and instead perform the bulk of computing and storage over the network, "in the cloud." ex: Fire TV and Alexa services

When sourcing product, data helps

helps uncover demand patterns can also gain a sense of how trends change over time by season, geography, and demographics

Why is understanding the layers impt?

helps you make better decisions on what options are important to your unique business needs can influence what you buy may have implications for everything from competitiveness to cost overruns to security breaches.

This feature has allowed many SaaS firms to address

highly specialized markets (sometimes called vertical niches)

Server Farm

houses a massive network of computers

Amazon is expanding into the university bookstore business, which provides a

hub for free textbook delivery and rental, and a link to customer acquisition and retention among college students.

Today, Amazon is clearly more than an online store and has even begun to

invest beyond clicks into bricks operating campus bookstores acquired Whole Foods

Amazon's cash is mainly used toward

investments in fulfillment center infrastructure and its higher margin cloud computing business

First step to exploring product market fit

involved running low-tech tests to prove that they were really on to something sharing PDFs with potential customers to see how women would respond to the prospect of renting without seeing and trying on a garment.

Venture Capital

is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.

CLV is often stated as the

net present value (NPV)

Network effects (Metcalfe's Law)

network externalities When the value of a product or service increases as its number of users expands. when present, they're among the most important reasons you'll pick one product or service over another

The idea from Rent the Runway came from

observing how an existing market was underserving a family member and other young women.

Amazon is

the world' most valuable retailer and the largest, most profitable provider of cloud computing services

If a company relies on unique processes or technologies that create vital, differentiating, competitive advantages,

those functions probably aren't strong candidates for outsourcing.

Chapter 13

Understanding Software

But SaaS requires a

level of engagement between a firm's technical staff and the groups that it serves that is deeper than that employed by any prior generation of technology workers

3 Roles:

1. Product owner 2. Scrum master 3. Team

Second layer of cake

Operating system

Chapter 14

Software in flux

Social proof

The positive influence created when someone finds out that others are doing something.

Top layer of cake

Users

Product vision

a business case for the task and value to be delivered

"Unicorn"

a privately held startup company valued at over $1 billion

Moore's Law has allowed Amazon to radically

drop the price of Kindle offerings while increasing device functionality.

Metaphor for software

layered cake

Amazon's scale allows it to

operate with thin margins and low prices

Tactics to navigate challenges:

1. A firm can build a portfolio of options on emerging technologies, investing in firms, startups, or internal efforts that can focus solely on what may or may not turn out to be the next big thing 2. Efforts are nurtured in a way that is sufficiently separate from the parent—geographical distance helps, and it's critical to offer staff working on the innovation a high degree of autonomy

The value derived from network effects comes from 3 sources:

1. Exchange 2. Staying power 3. Complementary Benefits

Challenges to face by cryptocurrenncies and blockchain technologies:

1. For cryptocurrencies, consumer benefit needs to be stronger --> While international remittance customers and those otherwise left out of the banking and credit card system can see immediate benefit from crypto cash replacements, most of the population isn't impacted by this market 2. Difficult to understand and difficult to use 3. Cryptocurrencies have a reputation problem --> embraced by drug dealers, extortion hackers, tax evaders, and fringe libertarians 4. Security concerns --> while bitcoin is considered to be solid, it's not a guarantee that other entities are secure 5. Ambiguous cloud of not knowing how they will be regulated and what legal issues apply to them 6. Volatility --> makes bitcoin and other cryptocurrencies less useful as dollar-like currencies, limiting its appeal to speculators, who often seem like get-rich-quick schemers, or the much smaller legitimate market that is looking for in-and-out transactions such as cross-border payments 7. Scalability --> early bitcoin technology couldn't handle increasing transaction volume 8. Blockchain technology is hurt by a lack of standards

Ways that RTR tries to be brand ambassadors for the designers

1. Landing pages dedicated to each designer, including photos and bios, which educate women about individual brands and convey product quality, especially important for the new customer who may be migrating from fast-fashion retailers like Zara to high quality couture 2. Stylists are also highly trained at effectively communicating garment quality and artistry. Shipped dresses arrive in customer homes nestled in a quality garment bag, not unlike if it were purchased in a store.

Strategies for Competing in Markets with Network Effects:

1. Move early 2. Subsidize production adoption 3. Leverage viral promotion 4. Expand by redefining the market to bring in new categories of users or through convergence 5. Form alliances and partnerships 6. Establish distribution channels 7. Seed the market with complements 8. Encourage the development of complementary goods—this can include offering resources, subsidies, reduced fees, market research, development kits, and training 9. Maintain backward compatibility 10. For rivals, be compatible with larger networks 11. For incumbents, constantly innovate to create a moving target and block rival efforts to access your network 12. For large firms with well-known followers, make pre-announcements

13 Types of Network Effects:

1. Physical 2. Protocol 3. Personal utility 4. Personal 5. Market network 6. Marketplace (2-sided) 7.Platform (2-sided) 8. Asymptotic Marketplace 9. Data 10. Tech performance 11. Language 12. Bandwagon 13. Belief

4 Artifacts

1. Product vision 2. Product backlog 2. Sprint backlog 4. Taskboard

Two separate categories of cloud computing

1. Software as a service (SaaS) 2. Utility computing

3 Ceremonies

1. Sprint planning 2. Daily Scrum 3. Spring demo and review and retrospective

At the heart are 3 pillars of Amazon's business:

1. large selection 2. customer experience (convenience) 3. lower prices

Most waterfall see project progress flowing in largely in one direction in what phases:

1. requirements identification (documenting what it will take and showing use cases) 2. design (what technologies should be used, who are the stakeholders impacted) 3. implementation (building the product) 4. verification (installation, testing, debugging) 5. maintenance (improving quality, fixing bugs).

Scrum has what 3 things

1. roles: job functions 2. artifacts: way of documenting work and its current state 3. ceremonies: meetings

Minimum Viable Product

A bare-bones offering that allows entrepreneurs and product developers to collect customer feedback and to validate concepts and assumptions that underlie a business idea.

Minimum Viable Product

A bare-bones offering that allows entrepreneurs and product developers to collect customer feedback and to validate concepts and assumptions that underlie a business idea. that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.

Collaborative Filtering

A classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience.

How does tech help RTR improve customer service over time?

A customer will browse and visit a website much more frequently than she'll visit a store, and this helps develop keen insights on her preferences. The firm also meets with each designer several times a year to learn concerns and share ideas.

Cryptocurrencies

A digital asset where a secure form of mathematics (cryptography) is used to handle transactions, control the creation of additional units, and verify the transfer of assets. usually take advantage of a technology known as a blockchain.

Blockchain

A distributed and decentralized ledger that records and verifies transactions and ownership, making it difficult to tamper with or shut down. a highly secure, decentralized, distributed transaction recording and verification mechanism that has been adapted for all sorts of uses, including stock sales and digital document signing

Utility Computing

A form of cloud computing where a firm develops its own software, and then runs it over the Internet on a service provider's computers can include variants such as platform as a service (PaaS) and infrastructure as a service (IaaS)

Software as a service (SaaS)

A form of cloud computing where a firm subscribes to a third-party software and receives a service that is delivered online. users access a vendor's software over the Internet, usu by simply starting up a Web browser --> don't need to own the program or install it on your own computer

Product market fit

A key concept in entrepreneurship and new product development that conveys the degree to which a product satisfies market demand Successful efforts should be desired by customers, and scale into large, profitable businesses.

Cookie

A line of identifying text assigned and retrieved by a given Web server and stored by your browser.

Oligopoly

A market dominated by a small number of powerful sellers

One sided market

A market that derives most of its value from a single class of users (e.g., instant messaging) the network effects derived from users attracting more users as being same-side exchange benefits

Monopoly

A market where there are many buyers but only one dominant seller

Adaptor

A product that allows a firm to tap into the complementary products, data, or user base of another product or service. ex: To ease the transition, Apple included a free software-based adaptorA product that allows a firm to tap into the complementary products, data, or user base of another product or service., called Rosetta, that automatically emulated the functionality of the old chip on all new Macs

Waterfall Method

A relatively linear sequential approach to software development (and other projects).

Rent the Runway also practices continuous deployment, which is

A software development approach where an organization's developers release products, features, and updates in shorter cycles, when ready, rather than wait for centrally managed delivery schedules. Helps RTR push out bug fixes and new features when they're ready for release Fosters more autonomy and collaboration in software development

Agile software development

A systems development method in which requirements and solutions rapidly and iteratively evolve through collaboration between self-organizing, cross-functional teams, rather than a top-down, centrally managed, schedule-driven approach.

Virtualization

A type of software that allows a single computer (or cluster of connected computers) to function as if it were several different computers, each running its own operating system and software. underpins most cloud computing efforts, and can make computing more efficient, cost-effective, and scalable.

What is used to continually refine the firm's approach through constant experimentation?

A/B testing

Many firms offer complementary goods by providing

APIs (application programming interfaces that allow third parties to integrate with their products and services) Allowing other firms to contribute to your platform can be a brilliant strategy because those firms will spend their time and money to enhance your offerings.

Pivot

Altering a product offering, business model, or target market in hopes that the change will lead to a viable business.

Chapter 7

Amazon

Amazon and digital advertising

Amazon will continue to invest in expanding its ad business beyond display ads on its e-commerce platform and mobile shopping app, yielding both powerful opportunities for brands and rising threats to incumbents.

More than half of shoppers start their product search on

Amazon—making the firm the leader in product-oriented search

Goodwill

An accounting term for an intangible asset above and beyond the operations value of the firm. Goodwill can include the perceived value of the company's brand name, customer base, and loyalty, positive employee relations, as well as proprietary technology and patents.

Long and Mid-Haul Trucking

An app as part of the system offers driving directions, truck stop recommendations, and suggested pick-up and drop-off routes to maximize capacity, shorten delivery time, and cut costs. Local delivery is coordinated in several ways, including Amazon's Uber-style recruitment of contract drivers.

Scrum

An approach to organizing and managing agile projects that breaks deliverables into "sprints" delivered in one to six week increments by teams of less than ten. defines functions (roles) for management and development, meetings (ceremonies), and how the process is documented and tracked (artifacts).

Blue Ocean Strategy

An approach where firms seek to create and compete in uncontested "blue ocean" market spaces, rather than competing in spaces and ways that have attracted many, similar rivals. often works best when combined with strategic positioning

Bitcoin

An open source, decentralized payment system (sometimes controversially referred to as a digital, virtual, or cryptocurrency) that operates in a peer-to-peer environment, without bank or central authority not backed by gold or govt wildly volatile no such physical representation of bitcoin—it exists only and entirely online

What further change the underlying economies and possibilities of the software industry?

App offerings catalyst for the birth of several innovative, billion dollar-plus industries which means that smaller firms have access to the kinds of sophisticated computing power that only giants had access to in the past

Third layer of cake

Applications

Security

Are there unacceptable risks associated with using the packaged software, OSS, cloud solution, or an outsourcing vendor?

Selling more goods gives what kind of bargaining power?

Bargaining power with suppliers can secure lower prices and longer payment terms

Same side exchange benefits

Benefits derived by interaction among members of a single class of participant (e.g., the exchange value when increasing numbers of IM users gain the ability to message each other).

At Amazon, what wins arguments?

Data --> employees can challenge the most senior managers ex: Greg Linden proposed that Amazon present "impulse buy" recommendations that match patterns associated with the consumer's shopping carts An A/B test demonstrated that recommendations would drive revenue

Customer Lifetime Value

CLV, CLTV, or LTV Refers to the current value of future profits that will accrue from acquired customers. CLV = NPV (net present value --> future customer profits).

What list of services is making it more common for a firm to move software out of its own IS shop so that it is run on someone else's hardware?

Cloud computing

Technological leapfrogging

Competing by offering a new technology that is so superior to existing offerings that the value overcomes the total resistance that older technologies might enjoy via exchange, switching cost, and complementary benefits. is hard

Bottom layer of cake

Computer hardware

What two things drive Amazon's interest in logistics?

Cost and control

What helps keep acquisition costs low?

Customer word-of-mouth and social media

Which of the following is NOT one of the special features unlocked when you format your data as an excel table?

Data validation and cell protection

Agile development

Developing work continually and iteratively, with a goal of more frequent product rollouts and constant improvement across smaller components of the larger project. has become a dominant software development methodology

Chapter 6

Disruptive Technologies: Understanding Giant Killers and Tactics to Avoid Extinction

Time

Do we have time to build, test, and deploy the system?

Network markets experience what kind of competition?

Early and fierce because the biggest networks become even bigger due to a positive feedback loop

Regulatory concerns about Bitcoin

Efficiency Fairness Stability

Channel Conflict

Exists when a firm's potential partners see that firm as a threat. This threat could come because it offers competing products or services via alternative channels or because the firm works closely with especially threatening competitors.

Massive implications of cloud computing

Financial future of hardware and software firms. Cost structure and innovativeness of adopting organizations. Skill sets likely to be most valued by employers. Decline of high-end server sales Lowers barriers to entry for start-ups with access to powerful computing without significant capital investment.

Prime Air

For items that need to travel farther and faster than trucks, FedEx and UPS jets might be involved in forwarding Amazon packages, but Amazon has realized that in some cases it can fly cargo jets more cheaply and efficiently than shipping partners. By running the numbers, Amazon software can decide when it makes sense to move products onto its own planes for delivery, and when products (likely fuel-burning heavier goods) are better sent through third-party shippers.

Software = a cake

Hardware Operating system that controls hardware and establishes standards Applications that execute instructions Users

Jeff Bezos and the long term

If you're willing to invest on a seven year time horizon, you're now competing against less people because few companies are willing to do that --> can engage in endeavors that you could never otherwise pursue

Subsidize adoption

In one admittedly risky strategy, firms may offer to subsidize initial adoption in hopes that network effects might kick in shortly after. Subsidies to adopters might include a price reduction, rebate, or other giveaways. ex: in the case of Gilt, the subsidy helped create viral promotion that in turn helped establish a new distribution channel.

Applications

Includes desktop applications, enterprise software, utilities, and other programs that perform specific tasks for users and organizations. ex: Microsoft Office, Apps

Legal and Compliance

Is our firm prohibited outright from using technologies? Are there specific legal and compliance requirements related to deploying our products or services?

Vendor Issues

Is the vendor reputable and in a sound financial position? Can the vendor guarantee the service levels and reliability we need? What provisions are in place in case the vendor fails or is acquired?

As much of the firm's media business (books, music, video) becomes digital, what businesses is a conduit for retaining existing businesses and for growing additional advantages?

Kindle

Amazon now offers advertisers the ability to advertise on

Kindles, on other Amazon-owned sites like IMDb, within mobile apps, and via Amazon-targeted ads on third-party websites.

Robots powering redesigned fulfillment centers come from

Kiva Systems, a Massachusetts-based firm that Amazon bought

Bitcoin and other cryptocurrencies are useless article:

It is barely used for its intended purpose. Users must wrestle with complicated software and give up all the consumer protections they are used to. Few vendors accept it. Security is poor. Other cryptocurrencies are used even less. With few uses to anchor their value, and little in the way of regulation, cryptocurrencies have instead become a focus for speculation. Lack of adoption and loads of volatility mean that cryptocurrencies satisfy none of the criteria of currency as something that can be at once a medium of exchange, a store of value and a unit of account. Just because blockchains have been overhyped does not mean they are useless. Their ability to bind their users into an agreed way of working may prove helpful in arenas where there is no central authority, such as international trade.

Goal for Amazon?

Keep inventory turn highs and pay suppliers later

Pre-announcements

Large firms that find new markets attractive but don't yet have products ready for delivery might preannounce efforts in order to cause potential adaptors to sit on the fence, delaying a purchasing decision until the new effort rolls out.

Account payable

Money owed for products and services purchased on credit. a bill that says when payment is due some time in the future

Criticisms of waterfall

Often criticized for being too rigid, slow, and demanding project forethought that's tough to completely identify early on.

What poses a direct challenge to the assets and advantages cultivated by market leaders?

Open source software offerings (how can you make money and fuel innovation with free?) and changes to how firms and users think about software

Cash Conversion Cycle (CCC)

Period between distributing cash and collecting funds associated with a given operation

Demand pricing

Pricing that shifts over time (also known as dynamic pricing), usually based on conditions that change demand (e.g., charging more for high-demand items with limited availability)

Dynamic pricing

Pricing that shifts over time, usually based on conditions that change demand (e.g., charging more for scarce items). sometimes customers can react angrily

Liquidity Problems

Problems that arise when organizations cannot easily convert assets to cash Cash is considered the most liquid asset—that is, the most widely accepted with a value understood by all.

Platforms

Products and services that allow for the development and integration of software products and other complementary goods, effectively creating an ecosystem of value-added offerings. Windows, iOS, the Kindle, and the standards that allow users to create Facebook apps are all platforms.

Rent the Runway Tests

Purchasing 100 dresses and setting up a popup rental shop for college students Later tests investigated how much customers were willing to pay, and verified that women were willing to rent from a photo even if they couldn't try the product on first

ADDD

STUFF FROM CLASS PPT

What requires the least and most amount of support and maintenance?

Saas = least IaaS = most since firms choose the tech they want to install, craft their own solution, and run it on what is largely blank canvas of cloud provided software

Steps SLAM

Scan Label Apply Manifest

What makes the magic of computing happen?

Software

Chapter 13.6

Software Development Methodologies: From Waning Waterfall to Ascending Agile, plus a Sprint through Scrum

Open source software

Software that is free and where anyone can look at and potentially modify the code.

What is perhaps the most fertile ground for disruptive innovation?

Tech industry --> market-creating price elasticity of fast/cheap technologies acts as a catalyst for the fall of giants

Backward compatibility

The ability to take advantage of complementary products developed for a prior generation of technology.

Customer acquisition costs

The amount of money a firm spends to convince a customer to buy (or in the case of free products, try or use) a product or service.

Cost

The costs to build, host, maintain, and support an ongoing effort involve labor (software development, quality assurance, ongoing support, training, and maintenance), consulting, security, operations, licensing, energy, and real estate (also whether these will vary over time)

Taskboard

The goal is to keep everyone on task to move "stories" from "to do" to "done" within a one-to-six-week timeline

Staying Power

The long-term viability of a product or service --> Users don't want to buy a product or sign up for a service that's likely to go away A user invests in learning how to use a system, buying and installing software, entering preferences or other data, creating files—all of which means that if a product isn't supported anymore, much of this investment is lost.

Net present value

The value of future cash flows discounted into today's dollars (it is discounted because a dollar today should be worth more in the future assuming inflation or the potential to earn money on the dollar if it is invested).

The Last Mile

Their sortation facilities are designed to take customer orders boxed up at the fulfillment centers and get them to customers as quickly as possible. movement of goods from a centralized hub to its final destination --> Amazon is interested bc it's one of the most challenging aspects of managing its logistics and delivery Amazon Key is the firm's service for providing the option of in-home delivery, even when customers are not present.

Encourage the development of complementary goods

These efforts often involve some form of developer subsidy or other free or discounted service. A firm may charge lower royalties or offer a period of royalty-free licensing. It can also offer free software development kits (SDKs), training programs, co-marketing dollars, or even startup capital to potential suppliers.

By Sea and Global Reach

To bulk up fulfillment centers with goods Amazon knows it will need, managing ocean freight is another way for Amazon to control another leg of its value chain, cleave costs, and potentially even enter the $350 billion ocean freight market.

As cloud use increases, what happens?

hardware and software sales may drop while service revenues will increase

Osborne Effect

When a firm preannounces a forthcoming product or service and experiences a sharp and detrimental drop in sales of current offerings as users wait for the new item.

Cross-side exchange benefit

When an increase in the number of users on one side of the market, creates a rise in the other side

Fork

When developers start with a copy of a project's program source code, but modify it, creating a distinct and separate product from the original base.

Congestion effects

When increasing numbers of users lower the value of a product or service a service can be so overwhelmed that it becomes unusable This most often happens when a key resource becomes increasingly scarce.

Envelopment

When one market attempts to conquer a new market by making it a subset, component, or feature of its primary offering.

Convergence

When two or more markets, once considered distinctly separate, begin to offer features and capabilities. As an example: the markets for mobile phones and media players are converging.

Job rotation

a management approach where employees are shifted between two or more assignments or jobs at regular intervals of time in order to expose them to all verticals of an organization.

Product backlog

a collection of user stories (product features described in natural language from the user's perspective)

Incubator

a company that helps new and startup companies to develop by providing services such as management training or office space

Daily Scrum

a daily stand-up team meeting (standing keeps things quick—often limited to, or "time boxed" to no more than 15 minutes), to discuss what was completed since the previous meeting, what individuals are working on, and raising things that are blocked and need help. keep people in sync and on track, and surface insights and expertise to help.

Flash sale

a discount or promotion offered by an ecommerce store for a short period of time

Preannouncements only work if

a firm is large enough to pose a credible threat to current market participants.

Marketplace allows Amazon to build

a long tail of product offerings without the costly risk of having to take ownership of unproven or slow-moving inventory, while the firm gets fat and happy in the middle of a two-sided network effect (more buyers attract more sellers, and more sellers attract more buyers)

Exchange

a network becomes more valuable because its users can potentially communicate with more people. And just about any standard that allows things to plug into one another, interconnect, or otherwise communicate will live or die based on its ability to snare network effects.

Amazon Books

a real-world bookstore chain that offers website prices to Prime members, and that also sells the firm's growing line of consumer electronics.

Sprint planning

a team planning meeting where stories (requirements defined from user perspective) are fleshed out, and the goal and scope of the sprint is determined.

Rather than cannibalizing sales, RTR is seen by many designers as

a vital partner: an experiential marketing channel that introduces high-end designer brands to new customers. With rental, women are more likely to experiment more heavily with different styles and colors.

The Amazon Associates program is the world's largest

affiliate marketing program

Rent the Runway is one of the many practitioners of

agile software development

A retailer wants CCC to be

as small as possible otherwise unsold inventory is sitting on shelves and doesn't generate any cash

If widely adopted, this technology has the potential to disrupt and improve operations among not only financial institutions but also

aspects of the legal system, government regulation, health care, and other sectors.

To automate profit-pushing hyperefficiency, Amazon warehouses are powered by

at least as much code as the firm's website—nearly all of it homegrown.

Civil libertarians also like the fact that

bitcoin transactions can happen without revealing the sorts of personal data that credit card companies and other financial institutions are gathering Since it's a peer-to-peer transaction, there is no central authority that can freeze accounts or impose other policies on users.

For operations, data exposes

bottom-line impacting variations such as, how long do certain materials last, how prone are they to needing repair, and how does this impact cost and any prep delay before certain types of dresses can be sent out again?

Acquisitions of other firms and the growth of new internal businesses has allowed Amazon to accomplish several things:

broadening the firm's product offerings to underscore Amazon as the "first choice" shopping destination absorbing potentially threatening competitors before they get too big experimenting with new product offerings and services integrating value-added businesses and technologies into the Amazon empire

What critical management concepts does examining Amazon's various businesses provide?

cash efficiency logistics advantages channel conflict ways in which tech-fueled operations can yield above-average profits far greater than offline players. illustrate advantages related to scale, the data asset, and the brand-building benefits of personalization and other customer service enhancements importance of mobile, multiscreen, and diverse-interface computing as a vehicle for media consumption

A delivery network also gives Amazon

cheaper shipping costs and more control over the customer experience could potentially offer deliveries for other businesses

Start up

company or project initiated by an entrepreneur to seek, effectively develop, and validate a scalable business model.

Firms using cloud providers lose

control of certain aspects of their infrastructure, and an error or crash caused by the cloud provider could shut off or scale back vital service availability. Amazon and other vendors have experienced outages that have negatively impacted clients. Despite these challenges, most firms believe they lack resources and scale to do a higher-quality or more cost-effective job than specialized cloud providers.

Scale advantages

cost advantages that enterprises obtain due to their scale of operation (typically measured by the amount of output produced), with cost per unit of output decreasing with increasing scale

Agile focuses on

customer needs and organizational goals Teams tackle smaller, targeted tasks with the hope of building products more quickly, with greater user input.

Putting its own brand on high volume products should allow Amazon to

cut out some of the costs that would otherwise go to a branded supplier, lowering prices and improving margins over conventional brands. Amazon can keep advertising spending down, as customers see the firm as the first and often only stop needed

Amazon's way to get packages to consumers

data that considers cost, fuel prices, routing, delivery time commitment, weather, traffic, fleet availability, and other factors, to dispatch packages to either UPS and FedEx, the US Postal Service (USPS), or for home delivery arranged by Amazon itself.

Core features of Bitcoin

diffusion automation adaptation

If concepts don't work out, the founders want to know

early so they can PIVOT in hope of crafting a more viable business

Any product that is compatible with the dominant network has to

exceed the value of the technical features of the leading player and the value of the incumbent's exchange, staying power and complementary product benefit

Feature creep

expansion of the scope of a project

The use of upfront documentation can help prevent

feature creep and helps provide strong documentation that can be helpful in future maintenance of the product

SaaS systems are often accused of being less

flexible than their installed software counterparts—mostly due to the more robust configuration and programming options available in traditional software packages fewer choices can mean less training, faster startup time, and lower costs associated with system use, but firms with unique needs may find SaaS restrictive

Running Software on someone else's hardware does what?

frees them from the burden of buying, managing, and maintaining the physical computing that programs need

Customer experience

fuels a strong brand that makes Amazon the first place most consumers shop online having more consumers allows the firm to provide more products, creating scale The larger the business, the easier it is for Amazon to justify vertically integrating to become its own shipper in some circumstances—keeping prices and other costs down while speeding delivery Amazon also opens its website up to third-party sellers—a dynamic where more customers attract more sellers, which attracts still more customers (two sided network effect) Each digital movement is logged, and the firm is constantly analyzing what users respond to in order to further fine-tune the customer experience, fine-tune demand predictions, squeeze out costs, and drive cash flow

The Amazon Go concept store shows how machine learning

influences computer vision, AI, and other techniques to eliminate cash registers. A shopping experience without lines is potentially far more attractive for consumers, and would offer any retailer benefits such as more shelf space, stores in a smaller real estate footprint, and perhaps even a smaller staff size.

Good will

intangible asset that is associated with the purchase of one company by another. Specifically, goodwill is the portion of the purchase price that is higher than the sum of the net fair value of all of the assets purchased in the acquisition and the liabilities assumed in the process.

Networks represent

interaction structures among sets of connected units

Biggest criticism of the waterfall approach

it is very rigid can take a long time to implement and requires precise forethought on all requirements needed at the end of the project

When suppliers ship new products to Amazon,

items are scanned and prepped so inventory is ready to fulfill customer orders as soon as possible.

If a traditional software company goes out of business, in most cases

its customers can still go on using its products

Amazon's shift from selling media atoms to selling media bits has led to

its expansion into consumer cloud-based offerings that store and serve up digital content over the Internet.

Analytics have helped inform the

length of a rental period expectations on turnaround time slack inventory needed to cover for any dresses not returned on time methods that can encourage on-time returns selection of optimal shipping partners the locations of the firm's warehouse and stores which e-mail campaigns are working how social media can drive traffic what sorts of other marketing campaigns are most effective

When incoming inventory shows up at most retailers, those firms don't buy suppliers right away and instead

log payment due for these goods as an account payable

Amazon Prime Subscription

make customers happy, and along the way, to create habit-changing behaviors that fuel sales growth.

Waterfall has largely fallen out of favor bc

many firms have found it restricts ongoing interaction and can take too much time, with needs in fast-changing industries shifting before a lengthy product can be completed even in military

Inventory Turns

measures the number of times inventory is sold or used in a strictly defined time period

About one-quarter of Amazon revenues come from the sale of

media businesses that are rapidly shifting from atoms to bits.

Software Development Methodologies or SLDC

methods to divide tasks related to software creation and deployment up into tasks targeted at building better products with stronger product management guidelines and techniques. seek to bring planning and structure to software development projects

Many of the customers who start with rental are

moving on to subscription Once a woman has signed up for and is satisfied by the subscription service, she's likely to remain a customer for a long time, sliding into an even more lucrative tier of customer lifetime value.

Team

often held to a small number of task-focused workers (three to nine is common) provides analysis, design, development, testing, documentation, and more.

Firms are very aggressive in the early stages of these industries because

once a leader becomes clear, BANDWAGONS form and tip the market in favor of a standard

The natural state of markets where strong network effects are present is for there to be

one major player can charge customers more substantial bargaining power

What efforts has Amazon pioneered for customer experience?

one-click ordering (which the firm patented), customer reviews, recommendations, bundles, look and search inside the book, where's my stuff, and free supersaver shipping.

Amazon's extensive portfolio of cloud based services:

personal cloud storage, data storage, operating systems, software development platforms, infrastructure, and other scalable computing resources.

Lean software

provides additional methods for improved efficiency while cutting waste and excess

The firm has expanded into subscription fashion, as well,

providing clothing and accessories for a monthly fee. Subscription is a continuous, predictable, reliable revenue stream yielding even stronger customer lifetime value, and the firm's rental business provides an acquisition channel for the subscription business.

Amazon has upended the

publishing value chain and significantly changed the cost structure of the industry. Amazon has also become a force in sponsoring original film and video series and creating video games, and has spent over $1 billion in the acquisition of the extremely popular Twitch video game broadcasting service.

The cost to acquire a customer must be less than

reasonably estimated customer lifetime value (i.e., it should cost you less to bring in a customer than the value that customer will eventually return to your business). The greater this gap, the more profitable the customer.

Amazon's moves are largely motivated by one thing:

relentless customer focus

Product owner

represents the "voice of the customer," advocates for the needs of the organization, helps in setting requirements, and is ultimately held accountable for deliverables.

Cloud computing is doing what?

reshaping software, hardware, and service markets and is impacting competitive dynamics across industries

At its core, blockchains are a standard for

securely exchanging value and recording ownership over a network without an intermediary

Amazon does not make money by selling Kindle hardware; instead, it

seeks to fuel media and e-commerce sales as well as side businesses such as on-Kindle and in-app advertising.

Scrum teams are

self-organizing and work cross-functionally, with managers, developers, designers, and users in regular contact

Scrum master

serves the team by running meetings, keeping teams on process, and acting as a buffer to external team distractions. may also coach the team, work with stakeholders, and partner with the product owner to manage task priority.

Amazon's scale has allowed it to create

several of its own branded product lines though its not well known for its own brands beyond Kindle

As for benefits, Kiva robots allow

shelves to be slotted closer together and can be queued up for rapid, never-colliding, constant round trips isn't a job-killer; in fact, Amazon has actually increased staff

Software identifies the optimal

size of smile-logoed Amazon cardboard box to use for a given order and how many air pillows to protect packed items, and even dispenses the right amount of packing tape. The entire order process involves only about a minute, total, of human contact.

Sprint backlog

the stories that are incorporated into the next sprint—e.g., what needs to be done in the next one to three weeks.

While you're shopping on Amazon, you're likely part of

some sort of experiment

Average RTR customer is

someone who can afford to buy the dress. Average customer income is around $100,000.

Increased transaction volume should help

stabilize the market, increase liquidity, and bring some stability to the currency Substantial volume means a network effect is present—the technology becomes valuable and useful because so many others are using it

Retargeting

started seeing the product pop up in ads as you surfed the Web

Firms that buy and install packaged software usually have the option of

sticking with the old stuff as long as it works

When methodologies are applied to projects that are framed with clear business goals and business metrics, and that engage committed executive leadership,

success rates can improve dramatically

Benefits of waterfall

surfacing requirements up front and creating a blueprint to follow throughout a project.

The concept of staying power is directly related to

switching costs The more friction available to prevent users from migrating to a rival, the greater the switching costs.

E-commerce

the buying and selling of goods or services using the internet

The firm's AWS (Amazon Web Services) business allows us to see how

the firm is building a powerhouse cloud provider, generating new competitive assets while engaging in competition where it sells services to firms that can also be considered rivals

The winner in channel conflict is

the firm or group that offers greater value to conflicted partners. As Amazon's scale grows to a seemingly insurmountable size and offers additional deal sweeteners like better author royalty rates, authors and providers of other goods may not care that working with Amazon will cut off other distribution channels.

Seed funding

the first official equity funding stage. It typically represents the first official money that a business venture or enterprise raise

Fulfillment Center

the physical location from which a third-party provider or fulfillment provider fulfills customer orders for ecommerce retailers

Disintermediation

the process of removing the middleman or intermediary from future transactions.

Burn rate

the rate at which a new company is spending its venture capital to finance overhead before generating positive cash flow from operations. It is a measure of negative cash flow.

The goal of the waterfall steps is

to clarify what needs to be done and unearth problems early, before the project is built and deployed (which, as discussed, should reduce costs)

The website and mobile app can

track online engagement and deliver a host of customer metrics

On Deck - Delivery by Drone

use copter-style drones to deliver small packages to consumers in thirty minutes or less Regulation may be more difficult than building the technology—the FAA currently does not allow commercial drones to travel beyond operator line-of-sight, or through heavily populated areas.

If a problem is spotted in the receiving area,

warehouse "problem solver" to swoop in, deal with the issue, and make sure additional items in the rest of the product supply can keep flowing in. Amazon is always looking to cut errors and identify areas for potential process improvement.

Bitzscaling

what you do when you need to grow really, really quickly Factors that enable it: cloud computing, smartphones, social media, and expectations of investors based on FAANG's exploitation of natural monopolies in massive emerging digital markets

Network markets are also often

winner take all or most, exhibiting monopolistic tendencies where one firm dominates all rivals

Challenges of potentially disruptive innovations

1. No guarantee that a potentially disruptive innovation will in fact become dominant 2. Trying to nurture new technology in-house is also a challenge 3. Top tech talent will often never be assigned to experimental products, or they may be pulled off emerging efforts to work on the firm's most lucrative offerings if the next version of a major product is delayed or in need of staff 4. As disruptive technologies emerge, by definition they will eventually take market share away from a firm's higher-margin incumbent offerings --> could contract corporate revenues, lower profits, and incur losses

Benefits of SaaS

1. Save big money by forgoing the large upfront costs of buying and installing software packages and cost for the IT staff 2. These systems become a variable operating expense and this flexibility helps mitigate the financial risks associated with making a large capital investment in information systems 3. not only looks good to large firms, it makes very sophisticated technology available to smaller firms that otherwise wouldn't be able to afford expensive systems 4. provides the advantage of being highly scalable, which is important because many organizations operate in environments prone to wide variance in usage 5. higher quality and service levels --> breadth of an SaaS vendor's customer base typically pushes the firm to evaluate and address new technologies as they emerge; often have data centers that are better designed to pool and efficiently manage computing resources, and they are often located in warehouse-style buildings designed for computers, not people

True disruptive technologies have two characteristics that make them so threatening

1. They come to market with a set of performance attributes that existing customers don't value 2. Over time, the performance attributes improve to the point where they invade established markets

8 Risks associated with SaaS

1. dependence on a single vendor 2. concern about the long-term viability of partner firms 3. users may be forced to migrate to new versions—possibly incurring unforeseen training costs and shifts in operating procedures 4. reliance on a network connection—which may be slower, less stable, and less secure 5. data asset stored off-site—with the potential for security and legal concerns 6. limited configuration, customization, and system integration options compared to packaged software or alternatives developed in-house 7. The user interface of Web-based software is often less sophisticated and lacks the richness of most desktop alternatives. 8. Ease of adoption may lead to pockets of unauthorized IT being used throughout an organization.

6 benefits vendors of SaaS products:

1. limiting development to a single platform, instead of having to create versions for different operating systems 2. tighter feedback loop with clients, helping fuel innovation and responsiveness 3. ability to instantly deploy bug fixes and product enhancements to all users 4. lower distribution costs 5. accessibility to anyone with an Internet connection 6. greatly reduced risk of software piracy

7 Benefits SaaS firms offer their clients:

1. lower costs by eliminating or reducing software, hardware, maintenance, and staff expenses 2. financial risk mitigation since startup costs are so low 3. potentially faster deployment times compared with installed packaged software or systems developed in-house 4. costs that are a variable operating expense rather than a large, fixed capital expense 5. scalable systems that make it easier for firms to ramp up during periods of unexpectedly high system use 6. higher quality and service levels through instantly available upgrades, vendor scale economies, and expertise gained across its entire client base 7. remote access and availability—most SaaS offerings are accessed through any Web browser, and often even by phone or other mobile device

Kodak Example

Crushed by the shift that occurred when photography went from being based on chemistry to being based on bits

Competitive Advantage

Do we rely on unique processes, procedures, or technologies that create vital, differentiating competitive advantage? If so, then these functions aren't good candidates to outsource or replace with a packaged software offering --> developed proprietary systems unique to the circumstances of each firm

Major Examples of Disruptive Technologies

PCs (disrupted mini computers) On-line Retailing Digital Textbook Publishing and Digital Printing Endoscopic Surgery Digital Computer Steamboats (disrupted sailing ships) Digital Camera (disrupted Kodak)

How can a firm recognize potentially disruptive innovations?

Paying attention to the trajectory of fast/cheap technology advancement and new and emerging technologies is critical by removing shortsighted, customer-focused, and bottom-line-obsessed blinders Having conversations with those on the experimental edge of advancements is key (scientific researchers and venture capitalists) Increasing conversations across product groups and between managers and technologists can also be helpful (rotate staff)

Vertical niches

Sometimes referred to as vertical markets Products and services designed to target a specific industry or specialized area (e.g., pharmaceutical, legal, apparel retail). many cloud vendors pursue this type of market

Skill, Expertise, and Available Labor

The firm may have skilled technologists, but they may not be sufficiently experienced with a new technology

Software

a computer program or collection of programs that is a precise set of instructions that tells hardware what to do is everywhere- in cell phones, cars, cameras, and many other technologies

Any time a firm allows employees to access a corporation's systems and data assets from a remote location,

a firm is potentially vulnerable to abuse and infiltration may be uncomfortable with critical data assets existing outside their own network or there may also be contractual or legal issues preventing data from being housed remotely, especially if an SaaS vendor's systems are in another country operating under different laws and regulations

IaaS offers an organization

a more bare-bones set of services that are an alternative to buying its own physical hardware— that is, computing, storage, and networking resources are instead allocated and made available over the Internet and are paid for based on the amount of resources used

Service Level Agreement (SLA)

a negotiated agreement between the customer and the vendor may specify the levels of availability, serviceability, performance, operation, or other commitment requirements.

While the ledger records transactions, no one can transfer the asset without

a special password (called a private key, which is often stored in what is referred to as a cryptocurrency wallet, which is really just an encrypted holding place).

Changes in software confront managers with

a whole new set of opportunities and challenges influence decisions managers make about products to select, firms to partner with, and firms to invest in

Cloud computing can

accelerate innovation and change the desired skills mix and job outlook for IS workers tech skills in data center operations, support, and maintenance may shrink as a smaller number of vendors consolidate these functions

Organizations adopting SaaS may find they are forced into

adopting new versions important because any radical changes in an SaaS system's user interface or system functionality might result in unforeseen training costs, or increase the chance that a user might make an error

Once a successful software product has been written, the economics for a category leading offering are

among the best you'll find in any industry

PaaS delivers tools (a platform) so

an organization can develop, test, and deploy software in the cloud include programming languages, database software, product testing, and deployment software, and an operating system

Benefits of cryptocurrencies:

asset ownership records are transferred from person to person like cash, rather than using an intermediary like banks or credit card companies if a cryptocurrency is used as a cash replacement getting rid of card companies cuts out transaction fees opens up the possibility of micropayments (or small digital payments) that are now impractical because of fees boon for international commerce, especially for cross-border remittance and in expanding e-commerce in emerging markets

Managers who understand software can

better understand the possibilities and impact of tech can make better decisions regarding the strategic value of IT and the potential for technology driven savings can appreciate the challenges, costs, security vulnerabilities, legal and compliance issues, and limitations involved in developing and deploying technology solutions can appreciate the key role that technology plays in partnerships, merger and acquisitions, and firm valuation

For most firms, technology decisions are not

binary options for the whole organization in all situations few businesses will opt for an IT configuration that is 100 percent in-house, packaged, or SaaS

Software development methodologies seek to

bring planning and structure to software development projects when they are applied to projects that are framed with clear business goals and metrics and that engage committed executive leadership, success rates can improve dramatically

Cloud computing's impact across industries is proving to be

broad and significant

Incentive for miners being involved:

can donate their computer power in exchange for the opportunity to earn additional tokens in the cryptocurrency

SaaS means a great

consumerization of technology can result in employees operating outside established firm guidelines and procedures, potentially introducing operational inconsistencies or even legal and security concerns BUT employee creativity can blossom with increased access to new technologies, costs might be lower than home-grown solutions, and staff could introduce the firm to new tools that might not otherwise be on the radar of the firm's IS department

While a packaged software company like SAP must support multiple versions of its software to accommodate operating systems like Windows, Linux, and various flavors of Unix, a SaaS provider

develops, tests, deploys, and supports just one version of the software executing on its own servers these firms have a tighter feedback loop in understanding how products are used (and why products may fail)—potentially accelerating their ability to enhance their offerings.

SaaS applications also impact

distribution costs and capacity Going direct to consumers can cut out the middleman so vendors can charge less or capture profits that they might otherwise share with a store or other distributor available anywhere someone has an Internet connection, making them truly global applications

Firms using SaaS products can

dramatically lower several costs associated with the care and feeding of their information systems, including software licenses, server hardware, system maintenance, and IT staff

The marginal cost to produce an additional copy of a software product is

effectively zero (just duplicate; no additional input required) --> dollar dollar bills yall

Using conventional software, an organization would have to buy ________ but in SaaS, ______________

enough computing capacity to ensure that it could handle its heaviest anticipated workload the vendor is responsible for ensuring that systems meet demand fluctuation

SaaS (and the other forms of cloud computing) are also thought to be better for the

environment, since cloud firms more efficiently pool resources and often host their technologies in warehouses designed for cooling and energy efficiency.

Managers fail to respond to the threat of disruptive technologies, because

existing customers aren't requesting these innovations and the new innovations would often deliver worse financial performance (lower margins, smaller revenues).

Bitcoins and other cryptocurrencies are transferred

from person to person like cash but instead of a bank as a middleman, transactions are recorded in a distributed, decentralized public ledger (known as a blockchain)

Software industry powers everything from

media consumption to appliances, drives modern farming, scientific discovery, and even the driving

Verification and time-stamping of transactions in the blockchain is performed across the network by a pool of users known as

miners

SaaS systems are also reliant on a

network connection if a firm's link to the Internet goes down, its link to its SaaS vendor is also severed also means that data is transferred to and from an SaaS firm at Internet speeds, rather than the potentially higher speeds of a firm's internal network but many of these issues are evolving as internet speeds become faster and internet service providers become more reliable and many SaaS offerings also allow for offline use of data that is typically stored in SaaS systems

Factors must be evaluated

over the lifetime of a project, not at a single point in time.

Disruptive innovations don't need to perform better than incumbents but simply need to

perform well enough to appeal to the customers of the incumbents (and often do so at a lower price)

Managers have numerous options available when determining how to satisfy the software needs of their companies:

purchase packaged software from a vendor use OSS use SaaS or utility computing outsource development or develop all or part of the effort themselves.

The flexibility of these layers gives computers

the customization options that managers and businesses demand

Disruptive technologies often occurs when

the forces of fast/cheap technology enable new offerings from new competitors.

Because of the first characteristic mentioned, the majority of a firm's current customers don't want

the initially poor-performing new technology Since these markets don't look attractive, big firms don't dedicate resources to developing the potential technology or nurturing the needs of a new customer base By the time the new market demonstrates itself, startups have been at it for quite some time. They have amassed expertise and often benefit from increasing scale and a growing customer base. The brands of firms leading in developing disruptive innovations may also now be synonymous with the new tech. If this happens, big firms are forced to play catch-up, and few ever close the gap with the new leaders.

With IaaS, firms get

the most basic offerings but the most customization, putting their own tools on top

Computing hardware

the physical components of information technology, which can include the computer itself plus peripherals such as storage devices, input devices like the mouse and keyboard, output devices like monitors and printers, networking equipment, etc

Options give the firm

the right (but not the obligation) to continue and increase funding as a technology shows promise.

Operating system

the software that controls the computer's hardware and establishes standards for developing and executing applications ex: Windows, Mac OS X, iOS, Linux

SaaS also allows a vendor to counter

the vexing and costly problem of software piracy about impossible to make an executable, illegal copy of a subscription service that runs on an SaaS provider's hardware

SaaS is another direct assault on

traditional software firms and is also taking on desktop applications

Blockchain technologies straddle the line between

transparency and privacy. All transactions are recorded in the open, via the blockchain, but individuals can be anonymous This also means that these distributed, decentralized blockchains have no single controlling entity where fraud, corruption, damage, hacking, or government shutdown could occur

Largest concerns with SaaS involve the

tremendous dependence a firm develops with its SaaS vendor having all of your eggs in one basket can leave a firm particularly vulnerable --> if it goes out of business, they've got all your data, and even if firms could get their data out, most organizations don't have the hardware, software, staff, or expertise to quickly absorb an abandoned function

If a company relies on what, the functions probably aren't a good candidate to outsource?

unique processes, procedures, or technologies that create vital, differentiating, competitive advantages

Most SaaS firms can earn money via a

usage-based pricing model and others offer free services supported by advertising while others promote the sale of upgraded or premium versions for additional fees

There is no single blockchain software

used by all efforts other cryptocurrencies have their own versions, often involving different software