Digital Transformation in IB - Exam Sample Questions

The domains of digital transformation include customers, competition, data, value, and innovation. These areas are interconnected and influence how businesses approach digital change.

The strategic theme "build platforms, not just products" emphasizes the importance of creating ecosystems that facilitate value creation and exchange for multiple stakeholders, rather than focusing solely on individual products.

A customer network strategy of "be faster, be easier, be everywhere, be always on" prioritizes customer access and engagement by ensuring seamless and convenient experiences across multiple touchpoints.

The transition from distinct partners and rivals to blurred distinctions and rivals, along with moving from firm-owned assets to network-based assets, reflects the shift towards collaboration and interconnectedness driven by digital transformation.

Digital transformation is a strategic process that involves rethinking the core business model, including its value proposition, customer engagement, and internal operations, rather than just implementing new technologies.

Platforms like Uber and Airbnb are classified as exchange platforms, where value is created through the exchange of services between two separate groups of users. These platforms act as intermediaries facilitating the interaction.

Direct network effects occur when the value of a service for one group of users increases as the number of users from the same group rises. More users lead to a more valuable experience for everyone in that group.

A platform's ability to leverage data from multiple sources and analyze patterns to inform decision-making, improve services, and create new opportunities is critical to digital transformation. Data is the building block for innovation.

Essential data types for business strategy include customer data, product/service data, and business process data. These data sets provide insights into customer behavior, product performance, and operational efficiency.

Platform business models offer a competitive edge by leveraging network effects, where the value proposition grows as more users participate. This allows them to scale faster and create a more impactful user experience than traditional product-based models.

Building platforms allows for rapid scaling through network effects, which involves attracting more users, creating more value, and attracting even more users in a positive cycle.

Distinctive characteristics of big data include volume (large amounts), velocity (fast processing speeds), variety (structured and unstructured), and veracity (accuracy). These characteristics pose unique challenges and opportunities.

Divergent experiments are exploratory in nature, with informal design aiming to generate new ideas and hypotheses, rather than testing specific predictions.

A significant challenge in the digital age is turning raw data into valuable insights that support business decisions and reveal hidden patterns.

Convergent experiments focus on testing specific predictions and hypotheses, following a more formal and controlled design with causal hypotheses, test and control groups. These experiments aim to confirm existing theories.

In the analog era, value propositions were typically defined by industry standards and traditional business models. Digital transformation necessitates a shift towards more dynamic and adaptable value offerings.

When new technologies emerge, they can threaten the relevance of existing products or services. Shrinking markets can be addressed through adapting to changing customer needs, introducing new offerings, or creating new markets.

Organizational challenges for adapting value propositions include avoiding myopia (staying focused on the long-term), dedicating leadership to drive change, and allocating resources effectively.

An outside-in trajectory reflects a business entering a market with a new value proposition addressing unfulfilled customer needs. This can be through disrupting existing players by providing an alternative,

Laddering is a customer research technique exploring customers' immediate and higher-order needs. This helps businesses understand the underlying motivations driving customer behavior and design tailored solutions.

Creating an independent disruptor involves launching a new business unit to directly compete with the disruptor. This strategy aims to retain market share and leverage the existing company's resources while addressing the emerging threat.