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Lead to Win
Lead to WinHow to lever open APIs
May 2009
Michael Weiss and Peter Carbone
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Lead to Win
Objective
• Upon completion of this module, you will know:– difference between APIs and open APIs– how to lever user participation and benefit from
exposing data and functionality– lever mashups and issues to be aware of
• And you will be able to:– determine how to use open APIs as part of your offer
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Lead to Win
Agenda
• How to lever user contributions• Using open APIs to your advantage• Adding mashups to your toolbox
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Lead to Win
Value creation in Web 2.0
• Web 2.0 as basis for business models centered around decentralized value creation
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which one of your customer’s problems are
you solving and which needs are we satisfying?
through which means does your customer want
to be reached and addressed by you?
what type of relationships does your customer
expect you to establish and maintain with him?
what are your customer’s needs, problems, desires
and ambitions?
what value are your customers really willing to pay for and how would
they prefer to pay for it?
what is the cost structure of your business model and is it in harmony with the core idea of your business
model?
what key activities do you need to perform in your
business model and how easily can?
what can partners do better than you or at a lower cost (and thus
leverage your business model)?
what key resources does your business model
require?
value proposition
customer relationship
customer segment
key activities
key partners
key resources
distribution channels
revenue streams
cost structure
the business model canvas wall poster
Company
Customer
Product
Extract and
create value
Create value Locus of value
(Relations)
Locus of value
Briggs (2009)
Lead to Win
User participation
• Value co-creation is a foundation for Web 2.0• Users contribute most of your content• You provide a context for interaction: eg tools
for sharing and organizing content • Contributions can be active (uploads, resources)
and passive (clickstreams, transactions)• Examples: Flickr (photos), YouTube (videos),
Skype (resources), InnoCentive (R&D)
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Lead to Win
Flickr
• Users can upload photos and add metadata, organize photos, link to maps, print
• Freemium business model: free + premium• Low marketing costs, low operating cost + ad
revenue, revenue from premium services• Network: number of users (amateurs, bloggers,
editors, professionals), traffic, and feedback• API turns Flickr into a platform: users can create
mashups, third parties build applications
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Lead to Win
Flickr's value proposition
• Public sharing as default norm (CC-BY)• Users can share photos and knowledge: enables
community members to learn from each other• Users create categories, events, and groups• Flickr meets needs of underserved users (photo
storage, knowledge pool, ...)• Value increase is natural by-product of use• Value proposition evolved: introduce open API,
add mapping feature, enable mobile use
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Lead to Win
Create a user contribution system
• Participate in user contribution systems• Communicate value through small experiments• Let enthusiasts lead the effort• Provide a sandbox for experimenters• Inhibit your natural control instincts (letting
outsiders contribute can be scary)• Use your existing customer base to jump-start• Let users vote, early and often
8Cook (2008)
Lead to Win
More examples
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Company Value creation activities
Twitter Provides API that allows external developers to invoke functionality and contribute data
SalesForce Provides API that allows external developers to build applications within the platform
Digg Allows users to create and annotate content
Threadless Allows users to design products
Briggs (2009)
Lead to Win
Open APIs
• Range of API motivations and implementation– Extend product: plug-ins, application API, and SDK– Externalize capabilities: web services, and open APIs– Unrestricted use or pre-approved only
• These are all different and require different business approach (eg Google loosely coupled APIs intended to attract users to monetize via distinct business model vs Apple App Store)
• An open API allows anybody to access the data or services of a platform (eg Google Maps)
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Lead to Win
Benefits and risks of open APIs
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Benefits RisksCreates opportunities to benefit from the creativity of others (large design space)Allow users to meet their own needs since your resources are limited (long tail of needs)Drive traffic to your site or application and create ways of monetizing your dataUsers expect to get access to their data (no lock-in)
Somebody could obtain your data and replicate the service (make it hard to replicate)Aggregators become primary interface to users (incent users to come back for more)You do not generate revenue from free services (charge for finite resources, eg scale)Legal grey zone around how service/data can be used (state terms of use in a license)
Lead to Win
Design principles for open APIs
• Learn from other APIs (consider mimicking a big API, as this makes it simpler for consumers)
• Make the API easy to learn (documentation, toolkits for different languages)
• Use your own API on your application• Don’t try to control your API• Consider open sourcing your application• Embrace REST as it lowers barriers to entry for
developers and leverages web’s scalability
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Lead to Win
Unbundling and recombination
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PJCICommunications + ITGreater than the Sum of the Parts
Communications Building Blocks IT Applications
Billing
Location
Video
Presence
Voice
SubscriberProfile
SharingWeb
Comms
CallHistory
Click-to-Call
Conf-erencing
Text-Chat
Purchasing E-Mail Fulfillment
OrderEntry
SAPImaging
HealthcareEnergy Mgmt
AnyVertical
New Tools to create new value
Global Competitors New Values Technology New Tools 20Carbone (2009)
Lead to Win
Ways to lever open APIs
• Open APIs allow unrestricted experimentation• Open APIs can be used by anyone for any
purpose (inhibit your desire to control)• Open API providers appropriate value through
complementary offers (eg scale)• Open API lower the barrier for composition and
integration with other APIs
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Lead to Win
Mashups
• A mashup is an application that combines data or services obtained from multiple open APIs
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Harvest
ManageEnrich Manage
Assemble
Manage
Lead to Win
Mashup development model
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Role Create Search Maintenance
Component developer
Chooses data source & formatsDesigns API
Writes descriptionPublishes
Adds featuresStable interfaceMeets SLAs
Mashupcomposer
Mashes up components (tool or manual)
Discovers and selects
FollowsMonitors SLAs
Mashup user
Uses mashup Specifies need or discovers
Daniel, Matera, & Weiss (2009)
Lead to Win
How mashups can be used
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Use DescriptionIntegration Wrapping around legacy components, extract
APIs from components without oneSituated applications
Create one-off applications for a particular user and purpose (new spreadsheet)
Quick prototype Prove a concept to justify investment
Collaboration Connect people who need information with ones who have it through ad hoc communities
Sensemaking Uncover patterns in observations
Ogrinz (2009)
Lead to Win18
Lead to Win
Issues to watch out for
• Maintenance (adjust to changes in APIs)• Dependencies on APIs (service level, availability)• Licensing (use compatible with API licenses)
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Lead to Win
Key lessons
• Create value outside your core product by exposing your data or functionality
• Don’t try to do everything yourself by allowing customers and partners to create value
• Capture value by giving away infinite resources for free, and charging for finite resources
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Lead to Win
Further readings
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Lead to Win
References
• Briggs, C. (2009), Web 2.0 business models as decentralized value creation systems, chapter 3, 37-52, in Lytras et al. (2009)
• Daniel, F., Matera, M., & Weiss, M. (2009), Web mashups: towards user-generated applications for the Web on the Web, submitted to IEEE Computer (posted on wiki)
• Cook, S. (2008), The contribution revolution: let volunteers build your business, Harvard Business Review, October, 60-69
• Lytras, M. et al. (2009), Web 2.0: The Business Model, Springer• OSBR.ca, special issue on open APIs, April 2009
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