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Monday, 28 November 2011

Dematerialisation and Density: New Business Models

So I spent my last post on things in context which will now lead me to talk about how we create value in context. This is quite a complex post so bear with me.

Value is created through interactions, through acting on someone or something. We integrate resources available to us, available in context and available through the thing. These resources available in context allow us to enact out the value creating practices. These practices could be to realise what the thing is for (e.g. watch TV) or even to manipulate the thing itself and modifying it, not physically, but in terms of altering its function to what it can afford (enable) in context. A simple example would be to put a few books under the overhead projector to get it to project at the appropriate location (functional affordance) so the individual harnesses the book's material agency to achieve his outcomes. Another more complex example is the social and subtle battle between managers to locate the photocopying machine as far away as possible from their offices not because of noise etc. but the lowered social status associated with the office being closest to the photocopying machine (we've all been there before?)... you can read all about sociomateriality from Wanda Orlikowski's work.

So back to the point. We can harness the thing and people around us for resources to be integrated to create value but what is the value? In my earlier posts, I talked about emotional, practical and logical dimensions of value but value, to me, is some form of 'goodness'. We co-create value in use because it's good for us and we are better off because of it right? But being good for us may not just be functionally good, it could be some emotional good. So let me give you a very concrete example around a project we are in the middle of. This project can be seen here (EPSRC Co-production of Physical Products and Value Co-creation - Scalability in the Wild). The topic..... CHOCOLATE .......the BBC coverage of our work is here, the Telegraph coverage is here. Essentially, Exeter engineers have developed a chocolate 3-D printer which allows design and printing of chocolates as gifts. This is great. My job - what's the business model?

The answer is tricky because business model has to think about demand (i.e. what is the need fulfilled) as well as supply (how do we scale that fulfilment). The 3D printer isn't very scalable so if suddenly a million people wanted chocolates printed in their own customized way, there is no way that printer can do that. Also, chocolate is a complex product - hedonistic in many ways.

So what did we do? Before I tell you that, let me give you description of the thinking behind our chocolate project and explain dematerialization and density.

Dematerialization and density are the concepts introduced by Normann (2001) to illustrate the possibilities and opportunities to rethink the logic of value creation through reconfiguring value constellations. Technological development liberates us from constraints of time, place, actor and constellation in terms of value creation. We can separate information in terms of activities from physical world and assets and allow it to be easily moved about. This is one mechanism referred to as ‘liquification’. We can also separate activities from the well-defined existing time/space/actor units and assets (unbundleability) and then relink these activities, new time/space/actor units and assets (rebundleability) to create new value configuration. This is another mechanism of ‘dematerialization’ termed as ‘unbundeability’. Thus, dematerialization refers to the two mechanisms (liquification and unbundleability) to further promote rebundleability to create new densities (Normann, 2001). ‘Density’ is described as the best combination of resources mobilised for a particular context such as a particular customer at a given time and place. (summary above thanks to my postdoc Susan Wakenshaw. Tks Susan!)

With that description, here is what we did.

We went and conducted a series of interviews about what is so good about chocolate (consumption practices, ethnographical study). We found 10 major practices of chocolate and we also deconstructed the meaning and value of chocolate in these practices. Then we separated out the physical from the information. What does that mean? Out of the 10 practices, only 3 really needed the actual physical chocolate. The other 7 were practices that didn't really require the physical chocolate as a resource e.g. nostalgia, sharing - they required emotional, past memories to co-create some of the meanings but not the actual physical chocolate.

What we did next. We then separated the information of the chocolate (the 7) and are now creating a new website as a chocolate co-creation platform for individuals to co-create the meaning of chocolate. In other words, we are translating the physical practices of chocolate into virtual practices of chocolate. However, there are still 3 that need the physical so we have to ensure that the platform that enacts the 7 physical-to-virtual practices (pvp) interact with the 3 physical practices by having the chocolates designed and printed out on 3D and sent/eaten. But the business model has to make sure that the 7 pvps platform can be fully scalable while rationing demand for the 3 physical value practices (not so scalable). Not going to give you the gory details but it's really interesting for me who works in understanding value and using it to derive new business models. It is also interesting as we start moving towards greater connectivity and technology how we need to understand value creating systems and what value is created where, with whom and how, and more generic frameworks around it. We also have to think about recreating contexts, and resources that can be enabled in context by the platform. Fun stuff!

By the way, I need a whole community of beta testers so keep in touch on twitter and we'll let you know when it's up!

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