Digital Strategy Approaches and Ambidexterity Session 3

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Questions and Answers

What is essential for companies to consider for effective digital growth?

Evaluating different strategies based on environmental constraints (correct)

Thinking solely about past successes

Maintaining traditional business models

Focusing only on operational efficiency

What does ambidexterity in a company's strategy refer to?

Using only one business model across all products

Reinforcing presence in the current market while exploring new opportunities (correct)

Focusing exclusively on either exploitation or exploration

Ignoring market changes and maintaining the status quo

What might a company face if it falls into a success trap?

An increase in market share due to innovation

An inability to adapt due to reliance on past successes (correct)

Significant improvement in product development processes

Enhanced customer intimacy and engagement

Which of the following best represents a strategy for companies under digital threat?

Considering replacement of products potentially at risk Signup and view all the answers

Which approach is commonly associated with ecosystem creation in digital business strategies?

Building partnerships to enhance value for stakeholders Signup and view all the answers

What is the primary goal in seeking ambidexterity within a company?

To achieve a balance between exploration and exploitation Signup and view all the answers

Which of the following strategies is categorized under the classical approach to digital growth?

Creating a competitive strategy through digital innovation Signup and view all the answers

What does the success trap refer to in the context of digital transformation?

An inability to adapt to digital disruptions Signup and view all the answers

In the framework of D. Rogers, which element emphasizes the importance of customer needs?

Value Signup and view all the answers

What is a key characteristic of the shaping approach to digital growth?

Building an ecosystem through partnerships and incubators Signup and view all the answers

What does self-disruption entail for a company?

Deliberately changing processes to adapt to digital trends Signup and view all the answers

What is a consequence of not continuously adjusting resource allocation in response to a changing business environment?

Potential business stagnation or decline Signup and view all the answers

Which type of approach combines both adaptive and classical strategies for digital transformation?

Ambidextrous approach Signup and view all the answers

What aspect reflects the change in customer characteristics in the digital era?

Ability to co-create brands Signup and view all the answers

Which factor primarily drives companies to test new features rapidly in the digital landscape?

A culture of experimentation Signup and view all the answers

What is a major challenge for companies pursuing digital growth strategies?

Resistance to process transformation Signup and view all the answers

Which strategy focuses on creating a sustainable competitive advantage using digital technologies?

Developing a digital strategy approach Signup and view all the answers

What is NOT a benefit of engaging customers in the digital transformation process?

Potential for greater customer alienation Signup and view all the answers

What best exemplifies the concept of exploitation in the context of digital strategies?

Focusing on optimizing current processes and resources Signup and view all the answers

How does competition influence the digital transformation of companies?

Drives continuous adaptation to market trends Signup and view all the answers

In the context of ecosystem creation, what is a significant advantage for companies leveraging digital technologies?

Enhanced partnership opportunities Signup and view all the answers

What is a characteristic of companies that fall into the success trap in terms of digital strategies?

Inability to adapt to disruptive technologies Signup and view all the answers

What defines the concept of exploration within digital growth strategies?

Investing in radical new ideas and opportunities Signup and view all the answers

Which strategy approach is characterized by being employed in stable and predictable markets?

Classical approach Signup and view all the answers

What is the primary focus of the adaptive strategy approach?

Flexibility and experimentation Signup and view all the answers

In which scenario is a renewal strategy most likely to be required?

The survival of the firm is under threat Signup and view all the answers

What does the shaping approach allow companies to do?

Reshape their environment and industry Signup and view all the answers

What is a key characteristic of a visionary strategy approach?

Focuses on creating or recreating an industry Signup and view all the answers

What is the main danger of the success trap in digital growth strategies?

Failure to adapt to new market conditions Signup and view all the answers

How does the exploitation vs exploration concept relate to digital strategies?

Balancing both is crucial for sustainable growth Signup and view all the answers

What is the optimal context for utilizing the shaping strategy approach?

When there is significant room for change Signup and view all the answers

What is a core goal of digital leadership in managing the ecosystem?

Foster collaborative relationships with other entities Signup and view all the answers

Which approach emphasizes rapid response and flexibility in an unstable environment?

Adaptive approach Signup and view all the answers

Study Notes

Session 3: Strategy Approaches and Ambidexterity Strategy

Session focuses on strategy approaches in the digital era
Course coordinator: Nabila BOUKEF, Ph.D., Associate Professor in Information Systems and digital transformation at SKEMA Business School
Key question: How should companies define their digital strategy given the new rules of the game?
Focus: To remain competitive, companies need to think about digital growth
Different approaches to creating a competitive advantage with digital technologies exist, these depend on the environment's constraints
Four case studies (with possible approaches):
- Fujifilm: Creating customer intimacy, reinventing its model with new digital business, focusing on operational excellence, or reinventing its business by substituting its products
- The need to respond to products under digital threat
- Reinventing business models by reinforcing the presence in current market
- Old sources of competitive advantage (scale, transactional costs, vertical integration)
Customer characteristics: Connected, active, involved in innovation process, and potentially more loyal; brand co-creation by customers is not a characteristic
Digital transformation drivers: Experimentation (rapid feature testing).

Course Schedule

Session 1: Rethinking strategy in the digital era
Session 2: Digital strategy formulation
Session 3: Strategy approaches and ambidexterity strategy
Session 4: Digital platforms strategies
Session 5: Differentiation strategies and competition in the sharing economy
Session 6: Digital strategy and Business process transformation
Session 7: Building digital capabilities and creating digital leadership
Session 8: Digital strategy execution in practice: Fostering innovation in the digital era

Questions Addressed

Does strategy still matter in the age of digital disruption?
How to ensure digital growth?

Strategy in the Digital Age of Disruption

The extent to which companies can predict or change their business environment has evolved over time.

Five Strategy Approaches

Traditional strategy approaches are no longer sufficient due to technological changes.
Different approaches are needed depending on the environment
Classical Approach: Used in stable markets with established brands, limited technology changes, and high regulatory environments. Example: Coca-cola
Adaptive Approach: Used in dynamic environments with unpredictable or high technology change. Example: Zara. Need to be flexible and experimentation-oriented.
Visionary Approach: Used to create or recreate industries or reshape industries through technological change. Example: IKEA, UPS.
Shaping Approach: Used to reshape the industry and adapt to unpredictable markets through the collective effort of multiple companies. Example: Facebook
Survival Approach: Used when a company's survival is threatened. The strategy aims to secure the survival of the firm.

Strategy Making Processes

Analyze
Plan
Execute
Experiment
Scale up
Select
Envisage
Build
Persist
Engage
Evolve
Orchestrate
React (or anticipate)
Economize
Grow

Ambidexterity Strategy

Balancing exploitation (use of existing ideas) and exploration (seeking new ones)
Exploration: Risk-taking, tolerance of failure, long-term perspective, and experimentation
Exploitation: Disciplined management, variance elimination, and short-term focus.

Achieving Ambidexterity

Integration: Switching (top-down) and self-organizing approaches
Separation: Creating a separate business unit
Ecosystem: Acquisition, partnerships, and incubators

Resource Allocation

X% (exploitation) and 1-X% (exploration) in resource allocation
Need for continuous adjustments to resource allocation to maintain the exploitation/exploration balance, depending on the company's environment evolution

Business Intelligence and Analytics (BI & A)

Using information systems to gather and analyze internal and external sources for better decisions.
Enables a swift response to external threats and opportunities.
Necessary for improving knowledge acquisition and decision-making, positively associated with successful ambidexterity strategies

Takeaways

Companies need to anticipate digital disruption.
Companies should avoid the trap of perpetual search.
The goal is ambidexterity (balance between exploitation and exploration)
Need to continuously adjust resource allocation to the business environment's evolution.

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Description

This quiz delves into various strategies companies can adopt to thrive in the digital age, as discussed in Session 3 of our course. With insights from case studies such as Fujifilm, it explores how businesses can define their digital strategies amidst new challenges. Learn about competitive advantages and the need for operational excellence in a rapidly changing environment.