Digital Business Transformation Strategies

Session 3: Strategy Approaches and Ambidexterity Strategy

• Nabila BOUKEF, Ph.D., Associate Professor at SKEMA Business School, coordinated the session, focusing on digital business transformation.
• The session's objective was to discuss strategy approaches and ambidexterity in the digital age.

Digital Journey

• Businesses need to define their digital strategies within the changing rules of the digital era.
• Companies must remain competitive by understanding digital growth.
• Strategic approaches vary depending on environmental constraints.
• Several methods exist for building a competitive advantage with digital technologies.

Revise and Discuss (1)

• Fujifilm's traditional business models were impacted by the rise of digital photography and smart phones.
• Fujifilm had to adapt, leveraging its chemical expertise in new areas like cosmetics and traditional film.
• Options for Fujifilm's response included creating customer intimacy, reinventing its business model to include new digital offerings, focusing on operational excellence, and substituting existing products.

Revise and Discuss (2)

• When products face digital threats, companies need to consider various strategies.
• Ignoring the threat and investing more could be ineffective.
• The "wait and see" approach might be too late.
• Replacing or partnering with other companies are potential avenues for companies undergoing such challenges.

Revise and Discuss (3)

• A business model reinvention strategy, aimed at strengthening the company's presence in its current market, can be described in several ways.
• Rethinking a value proposition to meet new market demands is one option.
• Ambidexterity is another approach.
• Network effects and learning experiences are also possible outcomes.

Revise and Discuss (4)

• Scale, transactional costs, and vertical integration can constitute classic sources of competitive advantage.

Revise and Discuss (5)

• Current customers are typically connected and active.
• They can contribute to the innovation process.
• Customer loyalty is also an important factor.

Revise and Discuss (6)

• The ability of companies to test new features quickly in the digital era, which can be observed through experimentation.

Course Schedule

• A series of sessions on digital strategy, starting with rethinking strategy in the digital era, then digital strategy formulation, proceeding with strategy approaches and ambidexterity, digital platforms strategies, and differentiation strategies, among other topics.

Questions Addressed in the Session

• Strategy relevance in the digital age.
• Methods for ensuring digital growth.
• The concluding remarks of the session.

Digital Transformation Drivers

• Framework outlining digital technologies' impact on business environments.
• Emphasizes the analysis of new rules, opportunities, data, customer behavior, value creation, business models, and innovation in response to digital competition.

Outline of the Session

• Different strategy approaches.
• Ambidexterity strategy.
• Achieving ambidexterity.
• Conclusion.

Strategy in a Digital Age of Disruption

• A framework illustrating factors defining the changing business environments in relation to unpredictability, the ability to predict the environment, the possibility to reshaping the environment, and the capacity to ensure the survival of companies facing disruption.

Five Strategy Approaches

• A discussion of various approaches needed for deploying different strategies in response to diverse business environments, like classical, adaptive, visionary, shaping, and survival.

Classical Approach

• This approach is most efficient for stable, predictable markets with strong brands, high regulation, and limited technology changes.
• This approach focuses on industries where the return on investment is high and there is a lower risk of disruption.
• Companies that successfully follow this model include well-established brands like Coca-Cola and Shell.

Adaptive Approach

• Adaptable approach is necessary when the business environment is unpredictable and hard to shape.
• Adaptability is needed in the face of technological disruption.
• Key characteristics include flexibility and an experimental mindset.
• Brands that apply this approach include Zara.

Visionary Approach

• This method helps companies find and exploit opportunities.
• It is particularly beneficial for organizations operating in predictable markets where an opportunity exists to create or reinvent an industry.
• Technological advancements can be used to reshape industries and manage customer dissatisfaction.
• Examples of application include IKEA or UPS.

Shaping Approach

• This is adopted in unpredictable marketplaces with dynamic and varied environments.
• It involves a collective effort to transform industries in reaction to company-specific pressures.
• Facebook is an illustrative example.

Renewal Approach

• This is used when the company faces threat to its survival.
• The strategy aims to ensure survival through restructuring to free up and redistribute resources to maintain or adapt.

Strategy Making Processes

• A progression involving the analysis and design phases to achieve execution.

Ambidexterity

• Finding a balance between exploitation (using existing knowledge) and exploration (seeking new knowledge) for superior performance.
• This approach to innovation aims to introduce incremental and radical changes.
• Companies like Nokia are often considered examples of enterprises that encountered failure due to not adapting to market demands.

Digital Growth (Ambidexterity)

• Companies must find balance in digital growth.
• Integration (switching or self-organization).
• Separation (creating a separate business unit).
• Ecosystem (acquisition, partnerships, incubators).

Separation

• The most common technique involves separating teams to find alternative growth strategies.

Switching (Integration)

• Companies requiring adaptability in dynamic environments need to employ this approach.
• Companies such as Corning have successfully utilized this technique.

Self-Organizing (Integration)

• Useful for groups requiring adaptability and responsiveness.
• Organizations such as Haier have successfully implemented this approach.

Ecosystem (Digital Growth)

• Strategies to acquire, partner and incubate resources in dynamic and diverse environments.
• Specific examples include Leboncoin, Uber, and BNP Parisbas.

Business Intelligence and Analytics (BI & A)

• Using information systems to gather and analyze data from both internal and external sources for better decision-making.
• Timely and precise BI supports organizations in tracking and analyzing business operations, which facilitates adjustments and responsiveness to external influences.

Data and Knowledge

• Data and knowledge conversion into information provides the foundation for decision-making in a company.
• Crucial assets for organizations in a dynamic world.

BI & A and Ambidexterity

• Businesses leverage BI and A tools to improve insight, acquire knowledge, and enhance decision-making in an ambidextrous strategy.
• This synergistic relationship between BI and A with a successful ambidexterity strategy is a crucial factor for businesses to compete and grow.

Teamwork: Case Study – Ford

• The study aims for students to correctly define Ford's strategic approach using the Five Strategy Palette, with justified answers.

Teamwork: Case Study - Lego

• The case study analyzes Lego's strategy.

Illustration: BBVA case study

• The case emphasizes using analytics to create valuable features and enhance customer experiences.

Conclusion

• Summary of findings and takeaways from the session.
• Emphasize the need for anticipatory behavior and avoidance of traps to enhance digital development.
• The necessity of adjusting resource allocation based on evolving business environments.

Takeaways

• Companies should anticipate digital disruption and create new growth strategies.
• avoid perpetual search and success traps.
• Companies must be ambidextrous.
• The need for continuous resource allocation adjustments based on business environment changes.

What's coming up next

• Session schedule summary.

SKEMA Business School

• A summary of information regarding the institution.