1. The document compares the business models of Nokia/Navteq and Waze for traffic monitoring. Nokia focused on developing a physical sensor infrastructure while Waze leveraged existing GPS sensors on smartphones. 2. The release of the iPhone disrupted Nokia's strategy of competing against smartphone developers. In contrast, Waze benefited from exponential growth by accessing data from user phones without needing to build new infrastructure. 3. Waze's founder showed innovative skills like associative thinking by integrating user data and networking to create an interactive social mapping application that crowdsourced real-time traffic information.

1. Contents
Introduction
1. Differences in businesses models
2. Nokia’s turning point
3. Design of Interview & Analysis of solutions
4. Innovation elements in Waze’s business model & Levine’s Innovator skills
5. Analog case in entertainment industry
Conclusion
Linear and Exponential Thinking in Business Models
2.2.4 Peer-assessed individual project
TecdeMonterreyX IEDI.3x
By J. Andrés Chama Avilés
México, February 2022
Introduction
Linear and exponential thinking in an organization are capapble to change not only bussiness
models and value creation, but an entire industry approach. In this report is shown the case of
Navteq and Waze as pioneers of the traffic monitoring and real-time data analysis industries, their
similitudes and differences, and how because of a wrong and limited focus, the future of a company
can be threaten. Also is proposed a question-based route to be able to read the environment where
a project is developed.
1. Differences in businesses models
Through the analysis of the story told in "Exponential Organizations", chapter 2, about Nokia and
Waze, and the summary presented in the Business Model Design and Innovation course, Topic 2,
Sub-topic 2.2, activity 4, both models are studied. of business as presented in Figures 1 and 2.
Similarities can be seen in both models, such as the creation of value through real-time data
monitoring on the roads, to develop constantly updated databases and translate said information
to monetize it in various sectors.
In contrast, differences can be seen between various factors of business models; Starting with
Nokia/Navteq, they focused strategic efforts and resources on the development of a broad and
specialized physical infrastructure composed of a network of sensors on the road, which would
feed constantly updated databases to monetize them or even implement them in their future
phone. Technologies, listed as an exclusive data provider for Nokia to compete against developing
smartphones. On the other hand, Waze focused on exploiting the GPS technology of emerging
smartphones instead of competing against them, using them as access to digital infrastructure
and reinterpreting the information already available from phone users, they created a model and an
interface where users benefited from the data. collection through the same data providers, their
phones, and at the same time a cheaper and more scalable infrastructure.

2. Customer Segment
Customer relationships
Value propositions
Key activities
Channels
Key resources
Revenue streams
Cost structure
Key partners
Fig. 1 Navteq’s Bussiness model
Fig. 2 Waze’s Bussiness model
Crowdsource location
information by smartpho-
nes’ GPS sensors.
Mobile phone designers
Smartphone users
Customer Segment
Customer relationships
Value propositions
Key activities
Channels
Key resources
Revenue streams
Cost structure
Key partners
In-road traffic sensor
mapping through mobile
and online information.
Global, sensor-powered,
real time traffic monitoring
(real time data segment) in
the palm of your hand
Digital application for
smartphones
$$$ (construction of Road sensor infraestrucutre across countries)
$$ (upgrade of information bases)
Sale of data bases and segmented information
-Public administration contracts
-Company contracts with logistics and automobile sectors
Sale of data bases and segmented information to companies and
governments
In-app advertising from mobility industry to user
Almost nothing (adding of new sources of information collection)
Almost nothing (upgrade of information bases)
Road sensor
infraestrucutre across
phisical roads
Info interpretation and
traduction team
Access and re-interpret
information already
available on user-owned
technology
Develop a multi-billion
dollar physical
infraestructure
network
Sensor producers
Public administrations
Every smartphone user
with the need of in-road
information.
Deliver real time traffic
analysis in phones
Helping center thorugh
application
Online community
Organizations/compa-
nies with the need of
accurate information
from a mapping area.
Untold.
Probably, purchase of
data bases through
internet.
Untold.
Websites
Nokia phones

3. 2. Nokia’s turning point
With the announcement of the Apple Iphone, a singularity event, everything in high tech changed
that day, all existing strategies in consumer electronics were instantly rendered obsolete. At that
moment, the entire future of the digital world had to be reconsidered.
Nokia pursued Navteq because the latter dominated the in-road traffic sensor industry. Nokia
conluded that control of those sensors would enable it to dominate mapping and mobile and online
local information—assets that would act as a defensive barrier against the increasing market
predations of Google and Apple, owning the near-monopoly of the road sensor industry.
Nokia was convinced that global, real-time traffic monitoring would enable it to both compete with
Google’s growing presence in real-time data and fend off Apple’s revolutionary new product.
3. Design of Interview & Analysis of solutions
Nokia followed the old linear rules and bought physical infrastructure, hoping it would prove , to be
a competitive barrier. It was, of course, but only for in-road sensor users, not against
information-enabled mobile phone application designers. Also, Nokia assumed that people would
remain static on smartphone ownership and wait until new development from Nokia. Here, I
propose the following route to meet consumer needs and create a business model that can exploit
emerging external technologies.
- What infrastructure do I need to grow the size of my market?
- What logistical capacity is necessary to operate it?
- What are the higher costs and what alternatives can make them lower?
- What technology exists capable of creating the infrastructure I need?
- What active role will each actor have in the equation?
- What technology does each actor have access to?
- What is the current trend in technology adoption for each actor?
- What technological habits does my user have?
- What needs does my user have in consulting information?
- How to create a user interaction that contributes to my infrastructure?
One of the main problems was the misreading of future trends, it is necessary to scan the current
technological environment to be able to make use of it instead of trying to compete with it.
Furthermore, keeping the end user in mind not only allows you to make the right decisions, but also
to turn them into assets for feedback, networking, even functionality and dissemination of the
project.
4. Innovation elements in Waze’s business model & Levine’s Innovator skills
Instead of making a massive capital investment in inroad sensor hardware, the founders of Waze
chose instead to crowdsource location information by leveraging the GPS sensors on its users’
phones to capture traffic information. Also, the cost of adding each new source was essentially
zero, not to mention that Waze’s users regularly upgraded their phones—and thus Waze’s
information base.

4. Waze leapfrogged the world of physical sensors simply by piggybacking on its users’ smart phones
and simply accessed information already available on userowned technology. Waze benefited from
the exponentially faster speed at which information can be accessed and shared.
Waze’s co-founder, Uri Levine, showed trough the inictial years some characteristics as
entrepreneur that enhanced the company’s probabilities of success and innovation.
- Associative thinking: Programation and integration of information, interpretation of user
data and output in an interactive graphic interface. Integration of smartphones technology to
mapping systems.
- Question: Develop of an innovative interface to collect, interpretate, and actualize strategic
data about mobility, logistics, traffic and drivers interactions, exploit of external
infraestructure as an accesible active.
- Observe: Identification of emerging technologies, user needs and market voids,
identification of limitants in the development of a network, also the creation of a monopoly in
an emergin market.
- Networking: The creation of a social mobile application to interchange crowdsource
real-time information in an interactive and practical way, the relationship with mobile
developers and market apps.
- Experiment: Testing in a continous way of the application, with network feeding
improvements.
5. Analog case in entertainment industry
The book Exponential Organizations shows this case as an example of linear thinking and exponen-
tial thinking, which tells us that technology came to alter the notion of management capacity and
resource efficiency in a lean way, instead of measuring and managing us. themselves on a linear
scale.
The analog case of Entertainment is about the streaming industry, which revolutionized the music,
film and television series industries. A good example is the business model of Spotify, which strives
to create a platform where users can play licensed, high-catalogue, and highly diverse music
without the need to purchase a music product. Even the way music is created changed, streaming
platforms made artists upload their music to the app instead of continuing to sell entire albums in
physical stores.
Platforms like Spotify offer tight rental plans with unlimited access to a huge library of files, with
the novelty of making music a social object through interaction with other social media applica-
tions. In addition, these types of apps have different business plans to operate with different sec-
tors: content creators, content consumers and record companies.