Digital Transformation: Evolution and Imperatives

• Digital Transformation (DT) integrates new technologies to improve efficiency and customer value.
• DT involves integrating new technologies across the value chain and all departments, and requires a cultural shift.
• DT provides companies with improved customer experience and better decision-making.

Evolution

• Before 2008, non-tech companies led the world.
• The top companies now can anticipate customer needs and create emotional connections.
• Manufacturing and Distribution Age grew through traditional awareness but the Information Age started in the late 20th century.
• The Customer Age includes behavioral, social, sensor, and environmental data.
• Data leads to information, knowledge, and wisdom.

Market Imperatives

• Transform the customer experience.
• Drive business growth with privacy.
• Turn Big Data into business insights.
• Embrace the mobile mind shift.
• Accelerate digital business.
• Data-centric companies prioritize data as a key asset.
• Such companies are proactive, not reactive.

Advantages of Data Centric Companies

• Better decision-making from collecting and analyzing data.
• Improved efficiency through optimization or automation.
• Improved customer experience through personalization.
• Competitive advantage from anticipating market changes.
• Improved risk management.

Data Explosion (5 V's)

• Large volume, high velocity, and variety of data.
• Data must be reliable (veracity), and customers change constantly (variability).
• Big Data is the explosion of data, processing capacity, and advanced analytics.
• AI technologies can analyze complex data and find patterns.
• Big data is a prerequisite for Digital Transformation.

Definitions

• Digitalization converts analog data to digital.
• Digital Transformation integrates technology into all business areas.
• Innovation introduces new ideas or products to add business or customer value.

Pillars of Digital Transformation

• Technology implements new technologies for business operations.
• Talent involves having skilled and adaptable people.
• Culture and Integrated Strategy requires a mindset shift.
• Involves defining vision, embedding digital strategy, anchoring business cases, and aligning leadership.
• New Business Model adapts business models to leverage digital technologies.

Challenges

• Resistance to change.
• Lack of digital skills and talent.
• Legacy systems, cybersecurity and data privacy concerns.
• Uncertainty about financial risks.

Opportunities

• Increased efficiency and productivity.
• Improved customer experiences.
• Enhanced agility and flexibility.
• Development of new business models and revenue streams.
• Access to new markets and global expansion opportunities.

Traditional vs New Business Models

• Traditional models: Direct sale, retail, print advertising, franchise and manufacturing.
• New models: E-commerce, sharing economy, subscription models.
• Scalability: New models have exponential growth versus linear growth.

Advantages of New Business Models

• Flexibility, scalability, customer focus, innovation, and cost-efficiency.

Artificial Intelligence (AI)

• Systems interpret external data and learn to achieve goals through adaptation.
• AI simulates human intelligence by machines.

Machine Learning

• Algorithms identify patterns through data analysis.
• Supervised: learns from past, labelled data.
• Unsupervised: learns without supervision.
• Reinforce: learns through rewarding desired behaviors.

Impacts of Machine Learning

• Revenue growth, capital savings and investment costs.
• Efficiencies in process, labor and value chain.

Blockchain

• Decentralized, transparent ledger across multiple computers.
• Consists of blocks of validated transactions that can't be altered retroactively.

Internet of Things (IoT)

• Network of physical objects with sensors and technologies.
• Objects connect and exchange data.

Extended Reality (XR)

• Umbrella term for VR, AR, and MR that combines physical and virtual worlds.
• Augmented Reality (AR) combines the real world with digital elements.
• Virtual Reality (VR) creates a digital environment.

Robotics

• Field focusing on the design, development, and implementation of robots for autonomous tasks.

Vision & Mission

• Vision: the company's aspirations.
• Mission: the organization's reason for being.
• Strategy translates mission and vision into action.

Stakeholders

• Stakeholders are individuals or groups with a special stake or claim on the company.
• Includes internal (employees, managers) and external (customers, suppliers) entities.

Leadership Challenges

• Fuzzy priorities, fuzzy accountability, and culture clash.

Internal Analysis: Corporate Culture

• Corporate culture is the unique set of behaviors within an organization.
• Culture represents the deeper spirit of an organization and influences how employees interact.
• Important as it enhances success and speeds up decision-making.
• Digital culture promotes digitalization and breaks down silos.

Cultural Challenges and Solutions in Funding Stages:

• Agility through market changes.
• Calculated risk taking.
• Fluid organizational structures and processes.
• Talent development and focus on scalability.
• Diversity and inclusion.

Corporate Governance

• Principles, policies and processes that guide an organization.
• Prevents conflicts of interest and fosters trust.

Board of Directors

• Responsible for decisions, goals, and representing stakeholders.
• Includes executive directors and non-executive directors.
• Independent directors and nominee directors.
• Government and public interest directors.
• Executive management team implements decisions.
• Shareholders responsible for electing board members.
• External stakeholders include regulators, auditors and creditors.

Digitalization and Corporate Governance

• Digitalization affects board composition, data-driven decision-making and cybersecurity.
• Requires transparency and better boardroom dynamics.

Basic Company Functions

• Planning, organizing, motivating and staffing.
• Controlling performance data.

Human Resources

• AI helps automate recruitment.
• Training assesses employee skills.
• Performance management and team collaboration.
• Employee well-being.

Marketing

• Analyzing customer needs including data, segmentation and feedback.
• Selling through traditional and digital channels.
• Product and service planning.
• Cost/benefit analysis.

Finance and Accounting

• Financial reporting provides insight into the company's financial health.
• Cash management, investment decisions, and dividends.

Products/Operations

• Process and capacity decisions.
• Inventory decisions.
• Workforce design.
• Quality decisions.
• Research and development.
• Improvement and innovation.
• R&D present in clothing, mobile and pharmaceutical industries.

Management Information System (MIS)

• Collects and analyzes data to support decision-making.

External Analysis (PESTEL)

• Political, economic, social, technological, environmental, and legal forces.

Industry Analysis (Porter's Five-Forces Model)

• Rivalry, new competitors, substitute products, supplier power, and consumer power.

Analysis of the Industry in Different Moments

• Development: Buyers few, product highly differentiated with scarce benefits.
• Growth: Buyers are early adopters and high growth occurs.
• Shake-Out: Rapid buyer growth; financial and management strengths needed.
• Maturity: Mass market.
• Decline: Collapse of demand; emphasis on efficiency/low cost.
• A Strategic Group Map visualizes the strategic groups to identify the major areas of competition.
• Blue Ocean compares competitors according to performance.
• Blue Ocean involves new market spaces versus Red Ocean (crowded market).

Establishing Objectives

• Strategic objectives: long-term, broad and aligned with mission.
• Operational objectives: short-term, specific and aligned with strategy.

SMART

• Specific, measurable, attainable, realistic and time-bound.

Key Performance Indicators (KPIs)

• Measure success/fail of objectives and help to measure progress. Return on investment, market share, customer aquisition cost, social media engagement, inventory rate, number of defects, etc.

Data Analysis

• Data mining: finds patterns in big data.
• Text mining: analyzes unstructured data.
• Machine learning: computer learns from data.
• Time series: spots trends over time.
• Network analysis: finds patterns within networks.
• Sentiment analysis: understands feelings.
• Predictive analysis: guesses future events.
• Descriptive analysis: summarizes data.
• Prescriptive analysis: finds the best course of action.

Organizational Design

• Resource, efficiency, silos among functions.
• Clear product focus, customer centric, inter-division issues.
• Collaboration, high team autonomy, supervision issues.

Organizational Structure

• Functional Structure: efficient, but can create silos.
• Divisional Structure: focused, but can create internal competition.
• Matrix Structure: collaborative, but complex.
• Emerging Agile structure: focuses on creating solutions and understanding the customer.

Strategy Design

• Strategy is important for decreasing costs, improving quality and enhancing customer focus.

Business Model Canvas

• A canvas explains how an organization creates, delivers and captures values.
• Describes four fundamental areas of a business (customers, supply, infrastructure and financial viability.

Balanced Scorecard (BSC)

• It is used to evaluate the company´s strategy.
• Uses four traditional perspectives (Financial, Customer, Internal process, and Learning and growth) + Social and Environmental perspectives.
• Improves brand reputation, better talent acquisition, saves costs...

Ethics

• Ethics: principles of conduct that guide decisions.
• Business ethics: ethical leadership, integrity...
• Digital era challenges: trust, transparency and cybersecurity.
• Transhumanism affects our identity as humans.
• ESG criteria.
• Improve sustainability.
• Privacy in the digital era is imporant due security breach.
• Singulirazation and likability.
• Anonymization and pseudonymization.