Saturday, 30 November 2019

What are the Basic Accounting Principles of eCommerce Businesses?

          We can classify the eCommerce business websites on the basis of Business and Consumer.  On the Business, We can further classify into B2B or B2C eCommerce websites. Similarly, Based on the Consumer, We can further classify into C2B or C2C eCommerce websites. B2B eCommerce websites links different businesses or parts of the businesses. The transaction is taking place between the wholesalers, retailers, industrial manufacturer etc., B2B has a feature of high volume of sales per customer even the lesser number of customers. It has a secured payment system and privacy of information. B2C websites are the sites directly selling the products and services to the Customers. Generally, B2C has low volume per consumer and large number of consumers.
               C2B eCommerce websites are the sites where the consumer will set the prices. then the business enterprises bid to offer products and services. The consumers bond together as a buyer group and make the C2B relationship. These groups are economically motivated groups like demand aggregators or socially oriented group of cost related groups. Similarly, C2C ecommerce websites will enable the consumers to sell or buy each other through auction process. It exchange between and among consumers that includes the third party involvement. Ecommerce operators will conduct the specific event or promotions. In such cases, the planned liability on the account of sale of merchandise or service will be communicated to the vendor. The decision on shared liability will be taken on case to case basis. It will be communicated and debited to the vendors account from time to time.

Revenue for Ecommerce Companies:
        Revenue is the Gross inflow of cash or Receivable arising by ordinary activities due to the sales of goods and rendering services. Revenue can be generated from enterprise resources that yielding the interest, dividends and Royalties etc., The eCommerce companies main revenue are subscription, membership, web hosting, content selling, merchandising and advertising activities. The revenue can be recognized when the goods are sold and services are rendered. It is mainly related to the performance which can be achieved and certain conditions are fulfilled like,
   1. The seller of goods should transfer the property ownership in goods to the buyer for a price
   2. The significant risk and rewards of ownership transfer to the buyer. The seller has no effective control of goods transferred that are associated with ownership.
   3. Once you sold the goods, there should not be any significant uncertainty exists on the sale of goods.
      In the services, the revenue can be generated through the complete service of contract or proportionate completion of contract whichever relates to the revenue of the work can be accomplished. The performance will be considered to be achieved when there is no significant uncertainty derived from rendering of services.
Revenue by Merchandising:  In merchandising services, the significant issue is to recognize the revenue as Gross Amount(related to cost of sales) or Net Amount(similar to commission) of revenue. It is happening in the ecommerce companies which are in the business of distribution, reselling to the 3rd party of products and services. It is mainly in the B2C websites.
       If a ecommerce company acting as a principal means it is assuming as a risk on the account of collection, delivery, returns and reward of ownership,  then that ecommerce company should recognize the revenue on cost of Gross Basis only. If an ecommerce company acting as an agent or broker, It means that they sell goods and services, but they do not assume risk and reward of ownership. So, the compensation is in the form of fee and commission. It is an engaged service bringing purchaser and seller together. In such cases, they receive only the service charges. They do not go for the Gross Basis.

Auction Revenue: Some eCommerce companies host auction sites so that users can purchase or sell the goods and services. This auction income is divided into listing fee and transaction fee. Listing fee is a upfront fee received when a seller or purchaser register and maintained over the specific period. This listing fee can be recognized over the period of contract or there is no significant outstanding vendor obligations and the collection should be reasonably certain. So, it is not recognized revenue on the day 1 itself. For ex, OLX provides the auction site where goods and services can be listed. They will collect the upfront fee and accounting entry will be passed as differed revenue. The subscription period amount of 1 month will be considered as revenue of that month and will recognized as revenue over the period of contract. The second auction revenue is transaction fee. It is for facilitating the transaction and in the form of % of revenue earned by the seller. This revenue can be recognized when the transaction is completed and confirmed that no further vendor obligations. For ex, the product sold on OLX for the transaction charge of 2% of sale value will be considered as a direct revenue.

Ecommerce Accounting Principles:  The measurement of cost related to website can be recognized as intangible item. It is to decide and treat as asset to capitalize it or expense. So, We need to classify into research phase and development phase. The expenditure incurred during the research phase are expense(P&L). The expenditure incurred on the development phase of the website and make sure that the future economic benefits can be generated that expenditure are capitalized. The cost incurred in developing the new websites after the 1st website open to the user will be expensed in the period in which it incurred. There are other expenditure in eCommerce companies like acquiring the tangible assets, land and building, computer hardware and software etc.,
    Ecommerce companies sells the content for a price through download facility. The revenue can be recognized when it considered as a sale and delivered to the purchaser. For ex, In online classes, the website content can be provided through username and password. So, it is considered as delivered when userid and password made available to the students. Ecommerce companies provides the webhosting and maintenance services. It recognize the revenue over the period for which the hosting and maintenance service is provided. But, there is a condition that this service should be provided on continuous basis. There is an other method when you come across more systematic and rational.
      In the sales return, the option given to the customer to return the goods are sold. In some cases, the customer has the right to return the goods. There is an uncertainty of possibility of return. So, you can not recognize the revenue till the goods accepted by the customer or till the time period of rejection is elapsed. In some other cases, the eCommerce companies based on the past experience, they can make reliable estimate on amount of goods will return. So, they can recognize the revenue only for the items that are not expected to be returned.

Equity Based Ecommerce Consideration of Accounting: Ecommerce companies will be funding the expenditure through the issue of equity shares when the cash is not available as alternative to attract new business relationships, alliances and supplier agreements. If the products, services and assets are acquired in exchange of equity shares, you need to check the transaction between the related parties or unrelated parties. The transaction is between the unrelated parties, they are acquiring the product, service and asset in exchange of shares. In this case, the value placed is FAIR value will be recognized as revenue.
      If the transaction between the related parties, the value has not been placed on the product, service or asset. Now, we have to see the fair value of product, service, asset is available. If it available, we have to recognize as fair value. If it is not available, we need to see the fair value of the equity transferred available and recognize as fair value of equity.

Points and Loyalty Program in Accounting: This will be given in different structures where the ecommerce companies selling the points to business partners who will in turn issue to the customers based on the purchases and actions of the customer. For ex, the ecommerce company in arrangement with book store will issue the reward points to the customers who will make minimum volume of purchase. The customer will exchange the reward points for using the ecommerce website. In other case, the ecommerce company selling directly to the customer so that it will encourage members to take action which will in turn generate payment from the business partner. The costs are associated with the incentives. If the incentive with reference to the particular customer only, it will be shown as deduction from turnover value. So, the appropriate estimate of cost is required. If the loyalty points are general in nature,  it will go for the general provision and will be treat it as expense(P&L) instead of showing the deduction in turnover.

Risk & Rewards to the Customer: The revenue is an important metric in eCommerce Companies. If you look at the valuation of eCommerce companies that are all revenue multiples. The accounting issue is to determine the revenue presentation are Gross or Net. Ecommerce companies accept the payments through credit cards, debit cards, internet banking and cash on delivery.  The delivery responsibility of the ecommerce company is the risk and rewards transferred to the customer in B2B or B2C. It is important to take into consideration that the insurance and sales return on accounting. The eCommere companies tie up with logistic providers to bear the insurance risk and cost so that the ecommerce companies can recognize the revenue when they dispatch the goods from the warehouse. There is another scenario that the cost of delivery through transport borne by the ecommerce Entity. So, the risk of delivery and risk of loss are still with the ecommerce companies. They can recognize the revenue only when the product is delivered to the customer.
Membership & Subscription Fees : The membership and subscription fees can be collected in 3 ways. Those are,
    * Non-Refundable Fee
    * Refundable Fee
    * Periodic Fee
     Non-Refundable fee for use of all services in website by one time payment of indefinite use of services of website or a specified time period. There are two elements involved. Those are
    * Initial Membership
    * Revenue
       The initial membership fees or entrance fees that should be capitalized. The revenue that can arise by rendering of services of supply of products. For ex, the amazon prime is a paid service. During the seasonal sale, the subscriber is given access to their website prior to other customers and it does not include any products purchased.
      For the Non-refundable fee of the use of all services of website indefinitely will collect only the initial fee. Here, the products and services will be provided in future by partly or wholly for the advance payment. It implies that the service on continuous basis after the upfront fee. But, there is uncertainty involved in the usage of service. You should recognize the revenue not less than 5 years  or below 5 years in a systematic and rational basis of more representative of service rendered.
      The refundable fee are subject to certain conditions stipulated by subscription agreement. In such cases, the revenue can not be recognized by the membership fees. You can recognize that fee as a revenue only the reasonably certain conditions will not be fulfilled by the subscriber. Till that time, the amount received will be retained by the customer refundable fees account.
      The subscription and periodic membership fees can be collected on monthly, quarterly and annually. You can recognize as a revenue over the period of subscription. For ex, Our company sells the online inventory tracking software, the customer pays the subscription fees of Rs.5000/- monthly. At the start of each month the sign up fee of Rs.5000/- will be charged. This sign up fee will be used for providing the service in the first month and the beginning of every month the fee will be collected. We can not recognize as a service on day 1 and we need to provide the service for next 30 days. So, this will be retained as a deferred revenue(means money received, service not provided)  account of Rs.5000/-. At the end of the month, once we provide all the services, we can recognize as revenue. Now, it will be credited to revenue account.

Friday, 15 November 2019

How to Build Django eCommerce Web Application?

          Django is a web application that comprises bunch of apps. It is a web application has a sub apps of bigger things and has a bunch of components to make the app itself. Django is a tool written in python that used to develop a website. If you look at the  Django website, it describes Django is a high level Python web framework that encourages rapid development in clean and pragmetic design. Web framework is a collection of tools to build a website. Django comes with Object Relational Mapper (ORM) which helps to make a database queries. It has a URL routing which helps to determine what logic to follow depending on the URL of a web request. Another feature is HTML templating which allows us to have presentation logic and insert data into our HTML. It contains a built-in web server for convenience but it is not used outside of the context. When we deploy Django on live website, it works in tandem with web server.
             In order to develop with Django, you need to install the latest version of python3. Once the installation is finished, you can install Django. When you installed python3, it is also installed a script called pip that installs python libraries and tools. You can install django by just typing the command of pip install django==2.2.7. Once you get successfully installed with pytz library which offers timezone support, you are ready to develop a Django project.
Django Files Overview:
           To create a project, just type startproject (projectname), then open that folder in the sublime or Atom text editor and you can see the files and the scripts generated. The file helps to run various commands for your project. The _init_ file tells python that this folder contains python files. The wsgi or wuzgi file provides a hook for web server. The settings file configure django and url file routes request based on the URL. With these files, you can run the project for the first time. So, just type python runserver in the terminal and open the browser to see the results. Now, you can see the default screen that Django makes when you create a new project and ready to build completely.

Developing Django App: Django app is a component within an overall Django project or folder with python files. Each Django app has a set of features for a specific purpose. Django app has the features related to forum, wiki, or blog etc., In order to create the app, type the command python startapp adoptions which will create an adoption app in the terminal.  In the adoptions, there are several files with migration folder. Now, you need to add the Django app to the project. Inside the settings file, you need to add the string of adoptions it installed. The Django has the following types of files and folder that plays an specific role in that application,
   * - it controls the settings specific to the app
   * - it provides the data layer which the Django uses to construct our database schema and queries.
   * - it defines the logic and control flow for handling request and defines the HTTP responses that are returned.
   * - it defines the administrative interface of the app. This will allow to see and edit the data
   * - this will be used for URL routing of the app
   * - it is used for writing the unit test for the functionality of the app.
   * migrations - this folder uses to migrate the database when you create and change our database schema.

Django Models & Views:
        Django uses a Model View Controller(MVC) architecture. It uses URL patterns, views, models and templates. When Django application receives web request, it uses the URL patterns to decide the views to pass the request for handling. Views provide the logic of the project. It works as a function that takes HTTP request and HTTP response. Each views leverage Django models to perform queries against the database. A Django model is a class with attributes that define the schema or underlying structure of the database table. It has built-in methods for making queries in the tables .Each view leverage templates which help with the presentation layer of the HTML response look like. The template is a separate file consists of HTML along with variables, loops and logic.
        URL Patterns   ----------->   Views -----------------> Templates
           (                           (                   (adoptions/templates)                 
         If the request comes into Django with root path of just a slash, it first looks URL patterns to find the view and route the path to functions in adoption/ called home. The home function will take the request and make any database calls needed in adoptions/ For ex, htttp:// will be processed as,
       /    --------------------->   home ------------------->  adoptions/home.html
(Root Path)
         Models create data layer that create the database structure and query the database. contains set of models for the django app. Model is a class inheriting from django.db.models. It is used to define fields as class attributes. Model is similar to table in the spreadsheet. Each field of that model is the column for the spreadsheet table and each record in the database is a row in the spreadsheet. To define models fields, you need to define the attributes inside the model by using the fieldClasses with Charfield, or textfield, or integerfield. For each field, you can define the attributes of max_length or blank. To implement the models, open the in the adoptions app. It contains the baseline as from django.db import models. Then, define the class as,

class Dream(models.Model):

   website = models.CharField(max_length = 100)
   mail = models.CharField(max_length = 100)
   name = models.CharField(max_length = 100)
   phonenumber = models.IntegerField()

   class Meta:
      db_table = "dream"

Django Migrations:
        The models define the structure of the database tables. Migrations generate the scripts to change the database structure when we update our code and models. When a new model is defined, the initial migration will create the corresponding database table. Also, the migration is needed when the field is added or removed from an existing model or attributes of the field has changed. The commands in migration are makemigration, showmigration and migrate. Makemigration reads the current model file and inspects the current state of the database to determine the changes need to make the database structure that match the models file. These files are placed in migration folder and numbered starting with one. We can run the migration for the specific app to specific number of migration by,
            Migrate  (appname) number
    Navigate to the folder of file in the terminal. To make your migration, type python makemigrations. You can see the output that the adoptions app created the migrations for the models. It is a initial migration, because it does not have the table for these models yet.  You can see the existing migration file by the command of python showmigrations. To apply the migration, type the command of pyhton migrate.  You can see the output that the migration applied successfully. The db.sqlite file which helps the database to work. Now, we can see the structure of the database in SQLLite that looks like. Also, you need to run the command of "python migrate --run-syncdb".  After running the migrations and confirmed that they are applied successfully and ready to use our database.

Django Admin:  It creates an adminstrative interface for our project. In, you need to import the models by "from .models import ". In order to make an admin interface of this model, you need to inherit the class from admin.modelAdmin. Pass keyword will be used for the valid python class. Then, you need to register this class with the admin to associate the model in it. For ex,

Now, you can see the results in the terminal. Before that, you have to create superuser. So, Just type the command of python
createsuperuser, set the superuser and password. Once you created the superuser successfully, you can run the project on browser(python runserver). This will navigate to the admin interface. Now, you can use the superusername and password to the Django admin portal. It lists all the models registered in Django admin.

URL Handlers and Views:  Open the adoptions folder and click on the views file. First, you need to  display the home view. Then, we can display the detail view. To accomplish this, the body of the home view needs to fetch all of the model information. So, we need to import the models and can make query to that models. The HTTP response function will take the responsibility of rendering the HTML on to the template. Also, you can make your view to be concerned with necessary database queries and passing the data to that template.  For ex, the can be defined as,

from django.shortcuts import render
from django.http import HttpResponse

from models import dream

def home(request):
return render(request, 'home.html', {})

Now, we need to create a template folder inside the adoption folder. Inside the folder, we need to create a files for each of our template like home.html, detail.html etc., You may noticed that, if you started the development server, it displays the default welcome page. In order to use your new view, you need to tell the Django to display this view when someone navigates to the home page.  So, update the as,

from django.conf.urls import url
from django.contrib import admin

urlpatterns = [

Now, we are ready to test our views which will work.


Thursday, 31 October 2019

How to do a Brand Practices and Brand Engagement in an Organization?


      Brand Portfolio: The mono brands are only one customer type. But, the house of brands that not only serve the different customers and has the architecture serving the different bands in each segments. All brands or the portfolio of products that can not all be delivered in same way and has lot of complexity in the organizations. So, how do you conceive portfolio of brands and deliver to the brand in internal focus. There is different value proposition for the same group of customer. Brands face different competitors in each segment( eg., refreshment, fun, value, gap fill energy, treat, socialization, indulgence etc.,). If you think about the refreshment segment in Icecream, We might bought the Magnum brand and now looking to refresh with the brand Solero in that segment. So, If you think about the brand architecture, the master brand that enters the sub brands which needs the segments that they service.
      In an organizational perspective, there could be mono culture or multiple culture that drives the different brands. You need to drive the culture of innovation for small improvements in packaging and quality. It includes the systems, KPIs, HR that needs to suits all of the products. There are different brand name, different offerings, different promise to the customer. Then, the customer ultimately accepted your offering. For the mapping your brand inside the organization, you need to think about what role to be played strategically to different customers or same customer, the nature of promise,  and profit driver etc., The brand architecture will overlay on that promise and create the clarity within the organization so that you can adopt systems and processes.
       Synchronized Organization:  Customer journey is the brand differentiation. The consumer journey cuts across all business silos. The organizational complexity is the discrete functions exists as organizational silos that serve those touch points. The command and control structure resulted to silos driven approach to the market place. But, the Customer Experiences are the touch points. For ex, the KPI of the call center is number of calls handled per hour. There is real misalignment in functional, silos or geographic footprint of the organization. So, We need to manage the brand across the different geographic silos in order to give a consistent customer experience.
         In B2B, there is key account management structure for managing the best clients.The Enabling functions in the organization are supporting in the frontline. It is all about enabling, engaging and empowering the employees. The CEO led organizations change these processes and it is his primary focus. This creates value zone in the customer interface with the front-line employees at the top and this 360 degree feedback is essential for thinking about the collaboration across functional silos. They need to understand how well to collaborate with all the touch points at customers. Because, all of them involved in providing the solutions and this becomes the open communication channel across the organization.

Global Alignment:  The research shows that 65% of global company wants to execute the global strategy. We are thinking about building the global strategy because economies are scaled or scoped in order to reduce the cost across the world in terms of media buying. In B2B, the customers are many locations, executive travelers or tourists(B2C) are really need a consistent approach across the world. One thing to remember is that the optimal global strategy is not equal to sum of optimal local strategies. In the internal perspective, you really have to adopt the mindset, change approach to get the trust of the local management, cultural competence, time orientation to work etc., First, you need to build the global brand before to deliver the global brand. It is the delivery of the organization and not the design.
Do's of Global Alignment:
   * Launch based on customer insights or universal truth, that is really the starting point in the global brand (Global Mindset)
   * To get the team on board, the brand purpose will connect the relevant customer. If the brand purpose inspires your customer, it will motivates or inspires your own people.
   * Cross Cultural Competencies - It helps to win trust and inspire, support, learn and share them. It is not a command and control.
   * Global Capability, Structure and Process - You need to have a simple and clear message of what the brand is about. For ex, the global brand benchmark study, global brand team, workshops etc.,

Brand Practices:  Brand practices is an organizational level to internal process especially HR. Brand engagement is at individual level to deliver the brand promise. The customer satisfaction can be defined as the expectations (the traditional branding tends to raise these via brand promise) minus experiences (the people across the organization deliver these directly or indirectly across moments that matter). Satisfaction may go down when the delivery or customer experience is same and raising the expectation. There is a process that a broad concept of the brand to be cheerful is thinking about the key touch points and the key behaviors. HR has numerous processes like attracting the talents, developing, accessing, rewarding, redeploying and exiting. Each and every aspect of the HR processes has been fine tuned to deliver the brand to make and reward people more cheerful. Here, We are not making the promise to the customer. But, we are making promise to the employees. There are lot of companies makes the great place to work by flexible hours, benefits, etc., It is all about the efficiency. The 4 P's of marketing are Product, Price, Place, Promotion. It is to see how the values are linked to the brand promise.

Brand Engagement: When you think about executing the strategy, we can't pay same kind of attention in design, implementation and execution. Strategy is the outcome of the thousands of actions. if you improve those actions, ultimately, you improve the strategy. Brand Engagement is almost same as sales funnel(awareness, desire and action). The internal brand engagement is thinking about own employees in terms of will they pay attention to the brand? are they aware of what we trying to achieve? will they accept our strategy? will they become advocate or motivate them? do they know what kind of action they actually engage? then to perform the behavior of adherence that actually supports the action and become the habits. Brand engagement focuses on the delivery side and doing things right.
        Attention is about the problem and opportunity. The brand is more about the solutions of the problems and opportunity it represents. The CEO will address the entire company at once in a cement with passion. Awareness is that you are trying to achieve. Brand is the articulation of business strategy that gives the direction to go. It is about the clarity of understanding where the brand is going and engage people through workshops where they broaden the customers before the brand is launched. If you think about the acceptance in a situation to bring the third party from outside, there is often a leaning back of resistance. But, the Brand ambassadors in the organization are not only the believers of the message and personally motivated by it. If you design a better
strategy, immediately, you may buy-in to the message. Across the organization, there is pocket of resistance and support as signal light. Advocacy is your engagement in the organization(eg., Gallup Q12 survey). They will ask the bunch of 12 questions and trying to find your engagement with the organization. This will be useful to decide which way to go. For ex, In the love-respect axis, First you need to gain the respect. If you don't have the respect or quality of the product, it is very hard to love your product even if you are doing best for your customer(brand purpose), it is very hard to get the advocacy of your brand. Actually, the brand purpose motivates the people. Action is knowing about how to bring the brand to life. It is the habit in the long-term. Habits are replicated. It means the same type of actions can be performed in different domains. The key habits will create the organizational change of going forward. Adherence is the rewards that you get or consequences or feedback. The feedback could be the customer satisfaction or the brand image that we build. So, What are my actions that add up to the feedback. For ex, In the call center, how are the peoples are rewarded? How many calls resolved first time by the customer calls? There is specific metric for different functions. So, it is aligning to incentives. Here, We want to reward the behavior and not the outcome. The simple mantra in the organization is better for customer, simpler for employees and cheaper for operation are all important when the customer comes first.

Brand Valuation: You need to value the brand for driving the business and managerial decision making. So, you need to understand where does the brand provides leverage within that business model. Then, you need to allocate the effort. There is no such thing of 'A' value for the brand. The value has different brands, different contexts, and different players in the industry. It is to understand how much value the brand brings the business overall or rest of the world so that you can recognize the value creation in that domain. The brand can be valued as intangible asset in the acquisition or merger (the value can be recognized on the balance sheet, not if developed in-house) or the purpose of licensing and taxation.
    One of the valuation approach is income-based approach. Basically, it is the price premium or volume premium. The another approach is cost-based approach. If you are startup company, Think about how much you need to invest in marketing to build this brand or to think about the license to the brand and pay royalties for owning the brand. Finally, the market-based approach, it is to look at the comparable transactions in the past. It is a kind of guidelines or benchmark to adhere. The value of the brand to the business happens in many different ways across different parts of the enterprise. Strong brands tend to increase revenue and lower the costs across business stakeholder. The power of the Brand depends on the business model where it provides value and the period of time.

Tuesday, 15 October 2019

How to Design a Best Branding Experiences to the Consumer?


       The idea behind building the business is to create value for the customer. The basic starting point of any business will costs you more to create more value for the customer. But, the role of business is to continuously create the customer. The brand is an extrinsic to the product or service. It is something extra that you are giving to the consumer and that Brand image lives in the minds of the customer. It is the traditional approach of doing our business. But, In the modern environment, the consumer is not a static recipient of your offering. It is a dynamic journey that includes learning about your offering, buying, using and disposing of it. These are all the stages in business. If you think about the behaviors of the organization, it is really about designing and delivering differentiated experiences. These experiences include all the different processes like IT operations, services, and communication etc., Brand is the engagement and motivates to buy into it. So, it is really about all the people in the organization working together to deliver the value.
Brand Identity: Brand identity or Brand image is the identity means to you that are important to the target customer. If you think about the brand, it is the visual identity (logo) which is a set of resocialization attached to the brand. So, the marketer's job is to enhance the brand image by negating the negative re-socialization and elevating the positive one and protect the visual identity of the brand. The competitor Benchmarking and competition can be commoditized in the industries. So, it is difficult to differentiate your B2B product from each other and the customer is driving the commoditization. In Businesses, there is a strategic function of procurement and making the product very similar because they want to compete on price. So, what role the brand play in the environment? The brand is not just a product or service. It is an experience that happens over a prolonged period of time. The gap between the brand promise which the marketing communication creating the promises or creating the expectations and delivering of that promise. Brand Identity is inside the organization, fuels innovation, drives the people's behavior who will deliver the customer experience.

Brand Purpose: The Brand's communicate to things like Slogans. It is the Brand positioning, Brand DNA and Brand essence. People want to know what the brand stands for and how to react. The brand is about solving business problems. The product attribute gives the consumer benefit that leads to the transformational purpose of the consumer. For ex, the baby product like pampers has the product attribute of dryness which gives better sleep to the child that develops baby mind & muscle. It is the foundation of the brand. Also, the brand should align with social responsibility which is the fundamental and core purpose of the brand.
      The core purpose of a brand means to understand the core driver of the customer's behavior. To get the core purpose of the brand, you need to get into the emotional side of the customer. They simply ask themselves to keep on projecting to the future. Then, they will realize the customer needs like starting the business, want to work in society(philanthropy), travel to the world etc., These are the deep customer insights that change their products. So, the financial wealth planner interacted with the customer and created the things called dream book so that customers will fill out the future which is the basis for a financial planner to engage. They were not used to speaking about their customer dreams.
         In B2B, the customers are not just buying the products. They are buying the solutions which are deeper and more purposeful value to the consumer. The Brand purpose is deep customer insights and building the business around their insights that provide better value. It is to connect the brand and connects the employee to the customer through the brand.

Customer Value Creation:  There are 3E's of your customer experience in order to run a successful business or enterprise. Those are,
   1. Efficiency
   2. Effectiveness
   3. Experience
           The whole idea of the business is efficiency.  It is not just the product in which we create value and it is not the same value if we put it into a different place. The efficiency aspect is the level of output that we can do it with less input. It is basically the challenge of that time and all about reducing waste. By reducing the waste and keep the value same that's how you can increase the value. Efficiency can be described in a variety of languages like SixSigma which is a cost-saving lean initiative into practice, Kaizen, TQM(TotalQualityManagement) etc., When it comes to cost-cutting, it is good to cut the bad costs and not cut the good costs.
       Effectiveness can be understood as the concept of Value Creation by Value Chain. It means for the given inputs generating more output. For ex, Can I get the same output with fewer people? For the value perceptiveness, Can I train and develop to get more out of them?
       If you think of purchasing the product, check out the value chain. There is no value created outside of the customer experience. Values are created entirely on the production side of things. The customer paying the money for the value which we created. The value could be something functional, or something measure easily or actually measure customer experiences. But, the value is created within the consumer and not in the product. The product allows you to release the value. The value creation in the industry can be defined as the cost for the consumer until the value is released to use.

Advantage of Digital Branding Experiences: The Internet is the greatest force of shifting value creation from experience and effectiveness to efficiency. There is a vast difference between digital and physical experiences. Efficiency has a great benefit to the organization. The average cost of transaction through face-to-face is much higher than online digital transactions. Also, the digital aspects will enhance our brand by what the brand actually tries to deliver or the brand purpose apart from the logo.

Designing Brand Experiences: It is going from the various attributes that your products and services to the consumer benefits. For the consumer benefits, you might think of how reliable and affordable to the customers. So, you need to visualize the value that we provide. How to align up the competition and looking at those points of difference?  These tend to be measurable components of your offering that tends to quite functional as a result. In the service, it is to think about all the touchpoints we have and turn them into the voice of the customer. Learn from the customer and enhance the services of customer experiences. There are 7 stages in designing and delivering the customer experiences on the brand.  Those are,
      1. Brand Purpose - inging
      2. Customer Journey Mapping
      3. Brand TouchPoint Matching
      4. Brand acts at "moments that matter"
      5. Brand Leadership & Alignment
      6. Brand Practices & Engagement
      7. Brand Metrics & Returns

"Inging" means understanding the purpose of doing that already puts into the customer experiences. It is often a creative way to look deeper into our customer. In engineering and problem solving, we use 5 why's because it is deeper and deeper to understand the emotional level of customer experiences. For ex, People go to the gym to exercise is an Ing. But, they are exercising for different reasons like some people want to look good(attractiveness) is the emotional goal or competing for the task(Fitness) or to lose weight(Health Maintenance) etc., These are all different segments to serve to your customer. So, you might thing to serve all or one of those segments effectively. The better you serve to the segment, the customer will look more value for that benefit.
          The customer journey is the mapping of all the ingings that your customers doing like learning, navigating the information, buying, using and disposing of the product. These are all different events to be mapped out. The sales funnel(Aware, Consider, Try, Adopt) is an important tool to be used for customer mapping.
         In order to deliver value, you need to match the touchpoints of the organization against those moments that match the customer journey. For ex, making the payment, complaint handling, renewal etc., From a customer touchpoint perspective, which touch-point delight the customer or bring the brand to life. Then, think about what can we do differently to improve the customer experience or deliver the brand.
         The 4th step is to find out how to go from generic or poor experience to create meaningful and rich on brand. How to express the brand exponentially? For ex, In the supermarket, when the customer looks for something and confused, you need to approach them and ask them that "May I help you" and take them, but not to point to them.
         Brand leadership and alignment is to gear up organizationally and allow seamless customer experience. It is to align the different silos in the organization and deliver a consistent and smooth experience. This emphasizes the brand promise and delivers it through many small gestures over time.
        On the individual level, how to create the brand practices through HR and What to deliver with a passion so that the experience is authentic to the customer is a Brand Engagement.
        Finally, the returns and measurements that you might want to employ in order to drive these over time and do well. For ex, In the commodity, you are charging for the cost and margins. In the products, you are trying to point those of differences like premium, essentials etc., In the service, you are charging for activities. In Experiences, you are really charging for time and impact on your customer.

Monday, 30 September 2019

What do you mean by Design Thinking Business Strategy?

        Design thinking is a great framework for synthesizing the collective expertise to develop a realistic solution and focuses on end-user engagement. It is a methodology that provides a solution-based approach to solving the problems. The problems can be the human needs, human-centric problem framing, creative brainstorming and prototyping into testing. It is unique compared to other problem-solving and non-linear process focused on outcome and delivery. There are 2 modes of thinking,
   *  Divergent Thinking
   *  Convergent Thinking
            Divergent thinking refers to many possible solutions to the given problems or issues. It is demonstrated in the idealization phase. Convergent Thinking is coming up with the single best solutions to the given problem. Design Thinking has a strong focus on human-centric solutions for understanding customer motivation and empathy. It minimizes the risk of uncertainty and failures. In the Wicked problem, the solutions working in this market today may not be working tomorrow in that market. These problems are common in the business environment. Climate Change is a great example of wicket problems. So, When thinking about business solutions to respond to climate change, it is essential to use design thinking principles. This will enable the business to build consensus around clarifying the problems and solutions.

Prototyping: It is critical to test early and often to spend time and money getting something that no one wants in the market first place. To kick it off, you need to know the prototype. Prototyping is all about the representation of your solution to test and play around the solution. It is not necessarily functional. But, it does generate much feedback and validate from your user assumptions. It is focused to develop on usability and tests the solution that actually makes the need and identify the problem definition statement. It is usually developed to validates the assumption before the Minimum Viable Product(MVP). There are high fidelity and low fidelity prototypes. High fidelity is a realistic example of the end product and the user can interact with whereas low fidelity prototypes are a visual representation of the end product.

 Product Ideation: Ideation is part of the design strategy framework. It is to come up with an inspirational problem definition statement and synthesize the ideas to innovative practical solutions in advance. The ideation process is generating the ideas and form the roadmap to address the problem definition statement. Ideation occurs before developing the MVP. Each ideation process is likely its own prototype or modified prototype. A prototype is designed for the feasibility of the solution or part of the solution. It focuses on end-user need. Ideation requires participants purposefully engage some specific behaviors and characteristics. For ex, you may need to think barriers and obstacles as opportunities or explore the new experiences and put yourself out of your comfort zone to learn something new or visualize a new way to turn the abstract ideas into real and achievable possibilities etc.,
    Ideation process can be grouped as follows,
     - Problem to Solution: This is common form of ideation. It is simply to identify the problem and matching the logical solution.
     - Revolutionary: It is taking the existing idea or solution to a completely new perspective framework
     - Derivation: It is more adapting to the existing solution of an existing problem. But, improving the solution.
     - Targeted Discovery: It is deliberate and iterative process when solution is clear, but a pathway to achieving the solution is unclear.
     - Serendipitous Discovery: It is when you have an unintended solution into one problem was searching a solution to the other problem.
    - Artistic Innovation: It completely disregards all manner of practicality and innovate and iterate without constraints or boundaries.   

Minimum Viable Product(MVP): MVP is the most basic and rudimentary version of the product or service. It is an effective version of idea with minimum functionality in order to test your hypothesis. Prototype is a tool to test the feasibility of your entire or part of the solution and it is not market-ready and adopted the early adopters. MVP has the valuable purpose that people who purchase the product and services. Also, you can retain the early adopters. MVP uses the early adopters to gain product feedback and add additional features in a modular manner until you reach a full product offering. The types of MVPs are,
   * Wireframes
   * Mockups
   * Explainer Videos
   * Landing Pages
   Wireframes are visual outlines of your products. They generally used to articulate the idea like layouts, navigational systems. But, it does not include color or significant design work. Mockups are an extension of the wireframe. It may be basic branding or colors added that are more interactive. Explainer videos are the ones to show on how the solutions work. The idea behind the solutions and the benefits of the solutions to the users. It is a cost-effective way of getting your potential customers, users, consumers, and stakeholders. Landing Page is the website placeholder that can inform people about your solution. It contains the product and services of the key benefits and features. You can use a landing page to host your Explainer Videos or Mockups too.

Scope of MVP: Before committing to the development of MVP, you need to work out for what you want in the product like the product features, importance of each feature etc., It is the feature set of your product and need to prioritize for the Must-have features. Also, you need to decide on what type of MVP to create in order to test these key features.

Design Strategy: It is the term used to describe the mix between corporate strategy and design thinking. Design thinking is a solution-based approach to solving problems by engaging end-users. It is a process or approach that can be applied to many different circumstances and used to create a product. There are 5 steps in design thinking. Those are
1. Empathize
2. Define
3. Ideate
4. Prototype
5. Testing
Often, people and organizations apply these principles to develop the product. The important element of the corporate strategy is to create the request for the feedback from the customer. It is how the executive get to understand what the customer really experience in order to communicate directly and authentically?

Design Strategy Framework: The business model canvas is the globally recognized tool for developing a new business model for segmenting and understanding the existing business. This visual tool allows the firm to segment as input, output, and stakeholders. It converts the boring business plan to one-page overview and explores the key elements of the business.

Business Model canvas comprises of 9 sections of boxes. It can be described business as a whole, or business strategic plan, or the specific product the firm is trying to sell. So, you should methodologically fill in the boxes that are relevant to the strategic plan or product that you want to segment. The key partners are the 3rd party people in order to deliver value to the customer or solutions. It is to think about you need to work with to deliver the solutions.  Key Activities are the actions that you must take to deliver value to the customer. So, what activities do you need to undertake to deliver value? Do you need to develop a new product or service? Key Resources are the things that your organizations need in order to deliver value to the customer. What physical (ex, equipment, infrastructure, tools, materials), non-physical(ex, technology, people, customer relation distribution channel)resources do you need to deliver value? Value Propositions is the benefit that you are going to deliver to your customers and the pain points that you are going to resolve. It could be qualitative like improving the customer experience or quantitative like process optimization, time-savings etc., Customer Relationships is the relationships that you want to have with your customer, what the customer expects of you and costs (ex. marketing, distribution etc., )associated with the relationships. Actually, the customer(ex, user, employee) will be internal to your organization. Channels are the way to service your customer. So, you may have different channels and map each channel with the appropriate segment. Different products and services appeal to different customers. In order to run the business effectively, you must understand the Customer Segments that your products and services appeal to. There are many ways organizations generate Revenue. For instance, they can charge a one-off fee for products or services, monthly or annual subscriptions, commissions etc., The Revenue Generation depends on the customer segments that you are servicing. Their needs and preferences in areas of business. All businesses incur a Cost to deliver value. In order for the business to be profitable, it must cost more than generating value. Businesses can be Cost-Driven where the organizations focus on reducing the cost as much as possible or Value-Driven where firms focused on delivering the value.
      Using the business model canvas, you can understand the organization strategic plan and parts of the organization fit together and deliver value to the customer segments. You can set your company's strategy to address this gap and design strategy to generate effective solutions around it.

Corporate Strategy: It is a method that businesses and similar entities used to identify a plan and achieve long-term objectives or goals. It includes different modes and strategies. There are some important components of corporate strategy. Those are,
   * Risk Management
   * Financial Strategy
   * People & Culture
   * Customer Acquisition & Sales
     There is a level of risk with every business decisions are made and many risks in business space like opportunity risk, uncertainty risk, and hazard risk. Risk management Strategy identifies and mitigates the known risk. The corporate financial strategy includes the historical review of entities financial position like balance sheet, income statement, cash flow, and financial projections. People and culture strategy includes the road map to the desired workplace culture. Remember, you need a great team to build a great product &Services. The Customer Acquisition strategy is the stronger alignment to marketing and communications. It is ultimately bring the sales through brand recognition, community identity or website traffic etc.,
     Integrated strategic planning is the methodology that suggests each of the corporate planning developed in a collaborative manner and each document should be live, but not simply updated. It recommends the planning process to be an outward focus that includes stakeholders, partners, customers.

Sunday, 15 September 2019

How does BlockChain works for the Business?


       Blockchain is a distributed database, and unchangeable record of asset Ownership. It is primarily defined as a shared immutable ledger. It is global, peer-to-peer and distributed immutable record of transactions. It is used to transfer and permanently record any changes of assets between two or more parties without intermediaries. We can manage any types of assets like tangible and intangible assets in blockchain. Assets are defined as anything of value that requires accountability of ownership. ie, crytpocurrency, money, identity, personal property, real estate etc., Blockchain extensively uses the Ledger which is 7000 year old technology to document important events. The development and implementation of ledgers allowed human societies to grow and expand beyond simple village. We simply add a new record to the end of the ledger indicating that the previous data point is no longer in the current status or situation. In order to update this ledger and to keep in sync across all nodes across the network, the network needs to compare all the different ledger copies and determine the version of participants have in common. This is known as group consensus. Blockchain uses the cryptography which is the study of how to encrypt or encode messages so that two people communicate safely and securely in the presence of adversary bad actor. Blockchain uses the cryptographic hashes that are unique identifiers for piece of data and compelling solutions architecture using peer-to-peer format. Whatever the data we commit is that the participants are nodes on the network must agree upon.
        Blockchain is a record keeping system to record or keep records regarding the transfer of digital assets of cryptocurrencies of items. It can be used to store medical data on updating medical record, to record ownership of non-monetary assets like house or car. It is widely used to document the fact that you have achieved certain things like certification, test results meeting certain standards etc. Blockchain is an event tracking system that we can record when significant event occur and then take action on those events. Smart Contract that we can write on the blockchain gets invoked and executed anytime a certain type of event is recorded.

Benefits of Blockchain: In Blockchain, you have the data which can be publically verifiable. If you need to build a solution where you are accountable to large audiences or customers or end users, the blockchain is a attractive platform to build that solution. It is incredibly secure platform. This is an essential solution when you compare the traditional database where the data only exists in one place and if that data hacked or corrupted or altered. In Blockchain, we have so many copies of data floating around on that network. Also, it is a great platform for tracking origin of items and ensuring certain level of quality exists. The blockchain is the good platform when you need to build a solution for your customers, stakeholders, vendors, partners etc., to uphold a certain standard of quality and allows businesses to operate faster. When you use blockchain, you get a solution which is fully distributed that means it has a unlimited fault tolerance as long as two nodes on the blockchain network that are able to communicate and transact anybody on the planet.
      If you are running a blockchain node or miner or if you have a node on the network then you need to keep the copy of the ledger every time a transaction is announced. That transaction gets broadcasted to all participant of nodes on that network. Each participant updates the copy of the ledger they add in that new transaction. It means once we reach group consensus and set of data that is shared by majority of participants then we can query that data from any node on the network and get the same answer. If different nodes on the network gave different answers, then we wouldn't reach consensus. These consensus can be achieved through proof of work or proof of stake.

Types of Blockchain: We can simply read the data in the blockchain which has already been committed and add new data. We chain all of these blocks of data together by including a hash or digital thumbprint of data of the previous block inside the header of the current one. As you get into the blockchain, there are,
    *  Public Vs Private  (Who can Write data to the Blockchain?) and
    *  Open Vs Closed (Who can Read data from the blockchain?)
       It is helpful for you and your stakeholders to think about where it is the bulk of the solution lie. In public blockchain, everyone or large audiences have the ability to WRITE data to the blockchain. It doesn't have no native sense of identity and don't know who our users are. So, there are
two choice that we can elect to show none of the data to anybody at anytime. The second approach doesn't add a value of open public platform like ethereum have opted to show all participants at all times in the world. For ex., shows the real time transactions against the ethereum blockchain and who is trading back and forth, particular wallet of transactions that gone through the account and the account interacted with. In real world, the usecases like music, and content distribution where you want to sell your work directly to your fans and consumers rather than going through a publishing company to publish a new chapter of book in every 2 weeks. Your fans subscribe your work on a chapter by chapter basis. This also removes much of time delay in traditional content publishing.
       In Blockchain solution, you must first know the identity of the users. If you don't the know the identity of the user, it is impossible to determine what permissions or abilities should applied to that user. In the private blockchain, certain participants or small audiences have the ability to create new record. Hyper ledger is  an example for private closed permission platform. In Open Blockchain platform, where everybody consumes or extremely large audiences are able to consume or read data of the ledger whereas closed platforms allows small populations or groups consume that ledger data. In private closed platforms like hyper ledger which aim for blockchain enterprise solutions. It gets lot of attention in inventory management. How do manufactures and suppliers share inventory data and consumption rates on truly shared infrastructures and How do we allow manufactures to operate even more on lean than they currently are etc.,

Block Creations in Blockchain: We can think of block as a sheet of paper with 25 recorded transactions. Now, we are going to document transactions that occur as they're announced to us. If we are all staying in sync, every 25 transactions we will have a filled up a page. If the data recorded on our page is shared by the majority(ex. >51% of participants) then that version represents the truth. If any participant has different version of data, it will discard their version and get a copy of our most recent sheet of paper. Blocks in the Blockchain are numbered in ascending order, 0 is the first and oldest. The number is the height of the block. When we create a new block, we cryptographically link each new block to the one that came before it. So, there is traceable and unbreakable link from most recent block all the way back to the very first block where the genesis block it is known. Once we validated a block and we seal it and add it to the blockchain which are read only it gets committed to the permanent ledger where it never be updated or deleted. Blocks are created against a schedule. For ex, In bitcoin, we strive to create a block in every 10 minutes and ethereum aiming to create a new block every 14 sec as possible. We store a hash of all the block data a digital thumb print of a unique identifier which can be generated by the data contained on that block. The blocks are chained together on the blockchain by the hash stored inside the header. Meta data is the version number of the software protocol that is being used. Merkle Trees and Merkle roots simply gives the index that we can access the data in a consistent time. It is like an index in textbook which is easy to find a piece of data. The block header contains the timestamp when the block gets created. It contains a piece of data called the nonce which is the proof of consensus.

Blockchain and Web 3.0: It is a 3rd generation of internet of value communication for the smart devices and programmable money. It removes the intermediaries that we were needed to gain access to the financial services in order to do things that large organizations can do. This new business model opens up in web 3.0 are going to see individual consumers being able to do things that are traditionally reserved by richest organizations. The area that is getting lot of focus is identity management. Having a reputable identity management solution is a cross cutting concern to so many interesting and compelling blockchain usecases. Blockchain is safe, secure and reliable identity management store.
        Blockchain provides single shared infrastructure and one source of truth to design a solution. We need the blockchain technology when we could not use the traditional database to meet your needs. It is a powerful platform and enables to solve many types of problem as well as existing problems. Blockchain is a tool which you need at secure network transfers that has high degree of value or assets expressed as digital objects. It is great platform to automate the business process to build a solution around QA/Compliance/Audit might use to review your activities and your business. Hyper Ledger will be used when you need to share different parts of your data with different participants in the network at different times under different conditions. Ethereum built-in architecture provides fractional asset ownership of token or digital coin that represent the platform utility.

Saturday, 31 August 2019

How to implement Blockchain Technology & Smart Contract in an Organization?

     Smart Contracts facilitates the exchanges of value on the internet without the need of middleman or escrow service. Actually, Blockchain itself acts as a witness of contract. For ex, When two parties involved in the contract and agreed to draw a smart contract, the information in the contract turns into a block in the blockchain network which is visible to all nodes on the network. But, the identity and private information are anonymous. When one party sells and the other party wants to buy it, both parties draw a smart contract with sign and date. Now, One party puts all the information to transfer the ownership of the product and the other party deposit the money. When the date of the contract arrives, the ownership of the product will be transferred and money is automatically paid to another party. This smart contract paves the way to Ethereum. 
       Smart Contracts are programs which run on the blockchain. The contract is a set of rules that parties agree to govern the relationship between them. So, you have to define rules in programming. Smart contracts are coded in the blockchain. Solidity is a Turing-complete programming language which means you can code any logic into that language. Bitcoin script is missing one important component, that is loops(eg., for, while etc.,). Basically, loops tell the programs or certain piece of code in many iterations until the certain conditions are met. Smart contracts run on every single node in the chain. Each node has a history of all smart contracts, transactions and the current state of the smart contract. For ex, the provenance whitepaper discusses the blockchains to add transparency in supply chains. It talks about how the certificates are issued. All these certificates are sits in the blockchain. To facilitate the supply chain, they would use smart contracts. For ex.,when the product is sourced(eg, US, China) puts into the checkbox. Smart Contracts have the logic coded into it and the certificates are issued. You can see all the information about the product that you purchased and what was happening along the way. Then, you will be satisfied or dissatisfied of your product.     

Blockchain for Developers: Blockchain has some powerful qualities that enables the settlement of state transitions and forms the foundations for Decentralized Finance. It is important to understand the key technical details of how blockchain applied to different solutions. The issue is that we don't know the status of the node's distributed out on our network. Then, How can we protect our network when we have the nodes and don't know what's really happening with them?  The Byzantine Fault Tolerance algorithm identify and enforce good network players on our network. Also, there is proof of work which is used by the Bitcoin network and proof of stake algorithms. Proof of stake is like a voting system. These systems have different entities called validators. Any participant might be a validator and might post some of the stakes in that network coin as a bond in escrow on a network. Different nodes communicate in the method called Consensuses and Consensus algorithms update the true states.  Consensus means how to come to a new true state of affairs in our network and update on nodes. Blockchain is state change machine. It maintains the state of ledger balances until something happens and that true state needs to be updated to the new true state. It is the way for the system to reach consensuses about the transactions. Consensus Mechanism is a set of rules to check the validity of the transactions. It represents a way to elect the leader who proposes the transaction to process and for all participants to agree on the final state. For ex, When I bought a cup of coffee and my wallet balance is lower and the vendor is higher. That is the new true state of network and this information propagated and updated by all nodes.
    Blockchain has two accounts like Externally Owned Account and Contract Account and it has an own address attached to each account. Contract account accessible through invoking transitions stated in the contract code. It includes permission-based transitions and this act as a medium to call another contract transitions. It works like the contract owner to invoke the transition. Then, the code is processed and verified state transitions from the initial state to a final state.

BlockChain and Web 3.0:   In Web2.0, the front-end requesting the information from the central server. In Web 3.0 onwards, Blockchain plays a huge role. The back-end changes from the centralised web to decentralized web. For ex, When we interact with each other through facebook, it allows us interacting without the middleman. Still, the Facebook has a centralised server to control the data and privacy. If they want to charge for our ad, they can do so. In Web3.0, multiple blockchains run the application and copy of the blockchain will be stored in every single computer. The smart contracts govern how these applications will work. The code behind that social media will be stored in the blockchain and the blockchain will be running. The main advantage is that it control over the private key on the blockchain. Only, You have the control over data rather than a centralized server.

 Decentralized Applications(DApp): It is an interface for people to connect with applications. It contains an interface for people to interact with something on the blockchain. DApp consists of front-end and back-end which is a smart contract. When you participate in the network, actually, you get an Ethereum Virtual Machine(EVM). EVM is running on your computer and it encapsulates the transfer. Anything happens on the virtual machine stays on the machine. If something goes wrong, it will never spread on the rest of the hard drive and will never have access to private files that are safer from viruses.
        Any computation that runs on the blockchain, the developers of the smart contract needs to pay. So, you need to use the gas for any calculation that needs to run. It is like to pay for fuel for the car need to run. EthGasStation provides estimates on how much gas to pay and so on. In Ethereum,  ether is the currency to pay for the code. So, if you are a developer, you need to check out the gas estimates for your code.

Concept of Decentralized Autonomous Organizations(DAO): DAO is a business or organization whose decisions are made electronically by written computer code or through the vote of its members. It is a system of hard-coded rules that defines which actions an organization will take. Blockchain technologies introduced the concept of secure digital ledger, which could track the interaction of all the members across the internet and provide a safe and secure environment to build a decentralized autonomous organization. Blockchain technology uses the technique called trusted timestamping to combat against counterfeit transactions. Theoretically, the DAO company could run completely autonomous if the platform provided sufficient rules and flexibility.
      DAO was created Vitalik Buterin at 2016 on ethereum. It creates a venture capital fund which will help the development of decentralized applications to run on ethereum blockchain. The purpose of DAO is to provide an autonomous vehicle for fund management without traditional fund managers.With the emergence of Ethereum network, DAO moved up the technology stack from blockchain protocol to the smart contract.  DAO organization is stateless that means, it does not belongs to any country. DAO was crowdfunded through a token sale. If the organization is designed on the blockchain, it is a decentralized organization. Decentralized Organization means the server does not belong to one specific company. Because the contracts are written on the blockchain, it doesn't need human intervention. All the works happen on its own on the blockchain. This is the concept of DAO. For ex, the organization provides the computational service from the cloud to its customers. It is like a proprietary machine predicts certain things about marketing going to succeed or fail. With the power of blockchain, we can make them decentralized. It means the logic doesn't have to live on the silos of the organization. But, it lives on the blockchain. Therefore, if the organization is profitable and growing, then they can keep running even the people don't interested in it. So, it can survive on its own. Keep running and keep serving to the community is the notion of blockchain.
InitialCoinOffering(ICO):  ICO happens on the token layer of the Ehtereum, Neo or Waves protocol layer. If somebody creates a new idea of how to use the blockchain in an industry, then they use the ICO to fund this idea in a token layer. At the same time, ICO happens on the protocol layer that they can create and issue the coin in ICO.  In an ICO, they put the products and services in a closed environment and create the coins in the 3rd layer. Now, you can use the tokens to buy the products and get services so on. The public already knows that the company is successful and the ideas are great. Then, the people invest money in ICO as soon as coins are initially offered. The founders of the company keep control of all the tokens and profits. ICO is another way to raise money in order to fund its operations. There is no mining of tokens. Because minings are associated with coins in the 2nd layer.  Any startup's blockchain startup whitepaper contains information about how the project will work and mention the need for tokens. Also, why they need blockchain and the purpose of tokens.