Digital Transformation Lecture PDF

Was ist … die BWL? Prof. Dr. Julia Backmann Prof. Dr. Martin Artz Prof. Dr. Christoph Schneider Prof. Dr. Thorsten Hennig-Thurau Prof. Dr. Sebastian Hohenberg Prof. Dr. Tobias Brandt Wintersemester 2024/25 Bitte beachten Sie, dass das gesamte Material urheberrechtlich geschützt ist un...

Was ist … die BWL? Prof. Dr. Julia Backmann Prof. Dr. Martin Artz Prof. Dr. Christoph Schneider Prof. Dr. Thorsten Hennig-Thurau Prof. Dr. Sebastian Hohenberg Prof. Dr. Tobias Brandt Wintersemester 2024/25 Bitte beachten Sie, dass das gesamte Material urheberrechtlich geschützt ist und nicht außerhalb der Universität verwendet werden darf. Den Teilnehmern ist es nicht gestattet, die Folien zu vervielfältigen, oder an Personen weiterzugeben, die nicht für den Kurs eingeschrieben sind! UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 1  Was ist … Digital Transformation? Prof. Dr. Julia Backmann Prof. Dr. Martin Artz Prof. Dr. Christoph Schneider Prof. Dr. Thorsten Hennig-Thurau Prof. Dr. Sebastian Hohenberg Prof. Dr. Tobias Brandt Wintersemester 2024/25 Bitte beachten Sie, dass das gesamte Material urheberrechtlich geschützt ist und nicht außerhalb der Universität verwendet werden darf. Den Teilnehmern ist es nicht gestattet, die Folien zu vervielfältigen, oder an Personen weiterzugeben, die nicht für den Kurs eingeschrieben sind! UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 2 Source: Pexels (2022) Source: Wikimedia (2022) UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 3 What is digital business? When you book a vacation, (how) do you book a hotel? If you want to buy something, do you go to the retail store? … UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 4 The digital transformation of business: All business is digital business in the digital age! Digital Economy Mobile Cloud Internet of Artificial Advanced eXtended Internet Computing Things Intelligence Robotics Realities Digital technologies helped develop multiple sectors in the economy: Retail e-commerce Transportation (semi-)autonomous cars Social interactions social networks & the metaverse Education massive open online courses Health care electronic records, drug development & personalized medicine …more to come Many of the technologies that drive the digital economy also disrupt key traditional industries. Deep-dives on next slides UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 5  Deep-dive #1: Artificial Intelligence (AI) intelligence#:~:text=Artificial%20intelligence%20%28AI%29%20is%20technology%2 0that%20enables%20computers,They%20can%20understand%20and%20respond% “Artificial intelligence (AI) is technology that enables computers and machines to simulate human learning, What is it? comprehension, problem solving, decision making, creativity and autonomy.” (IBM, 2024) Part 2 of this lecture on Gen AI with Alexander Lüring (13.01.25) Sources: https://www.ibm.com/topics/artificial- What is it used for and who is using it? Machine learning Deep learning 20to%20human%20language. (selected examples) Generative AI UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 6 able%20of%20taking,redefine%20the%20optimal%20route%20to%20complete%20it Deep-dive #2: Advanced Robotics robotics/#:~:text=Advanced%20robotics%20involves%20robotic%20systems%20cap “Advanced robotics involves robotic systems capable of taking commands and reacting to them in an intelligent way.” What is it? (Robotnik, 2022) Sources: https://robotnik.eu/what-is-advanced-robotics-advanced-industrial- What is it used for and who is Industrial production using it? Warehouse operations (selected examples) Medical procedures s%20mission. UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 7 https://www.youtube.com/watch?v=Sq1QZB5baNw UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 8  Deep-dive #3: eXtended Reality (XR) “Extended Reality (XR) is defined as the spectrum of virtual and augmented experiences, which merges the physical What is it? and virtual worlds to create engaging and immersive environments where users can interact with computer-generated elements in real-time.” Source: https://www.techopedia.com/definition/extended-reality-xr What is it used for and who is Virtual reality using it? Augmented reality (selected examples) Mixed reality UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 9  Why and how is XR disruptive? Example of disruption https://www.youtube.com/watch?v=0paPNZJaFVg UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 10 This lecture at a glance 1. Why all business in the digital age is “digital business” 2. How to grow business in the digital age a. Deep dive: the relationship of growth and stock price b. Learning from the digital growth champions 3. The Center for Business Transformation UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 11  Argument #1: MAMAA 2023 Countries‘ GDPs vs MAMAA market cap (in trillion US dollars) These companies are so United States big – they compare to countries, not other firms Source: World Bank https://data.worldbank.org/indicator/NY.GDP.MKTP.CD China Germany Japan India https://www.forbes.com/advisor/investing/faang-stocks-mamaa/ United Kingdom France The combined market cap of MAAMA (11+ T USD) is Microsoft Apple only exceeded by 2 Italy Brazil Canada Alphabet countries‘ GDP Russian Federation Amazon Mexico Australia Korea, Rep. Microsoft or Apple Spain Indonesia themselves are bigger Meta Netherlands than the GDP of 96% of all 0T 5T 10T 15T 20T 25T 30T countries UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 12 Argument #2: digital startups (1/2) Most valuable start-ups in terms of market valuations by venture capitalists (VCs) in 2017 68 billion Ride-sharing platforms 50 billion … Accommodation platform 31 billion … Workplace-sharing platform 20.2 billion … Local life information and trading platform 18.3 billion … Social media platform 12.3 bn Disruptive business models, in particular platform business models, are challenging existing industries. UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 13  Argument #2: digital startups (2/2) Most valuable start-ups (USA) in terms of market valuations by venture capitalists (VCs) in 2024 Aerospace 200 billion 157 billion AI research & development Source: https://www.cbinsights.com/research-unicorn-companies 24 billion 70 billion Financial Services 25 billion 43 billion Enterprise & Automation Software 17.5 billion 22.5 billion Virtual Experiences/Worlds & Gaming 15 billion Delivery 31 billion New digital challengers are continually pushing into and challenging more existing (traditional) industries. UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 14 Which companies missed their opportunity to transform (and lost their momentum)? UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 15  Evidence: the Fortune 500 Initial Fortune 500 Today (1955) (2023) 12% of companies Fortune 500 Today Source: https://fortune.com/fortune500/ (2010) (2023) 58% of companies UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 16  Why do successful companies die (or lose momentum)? 1. The competency trap Source: Venkatraman, V. (2017): The Digital Matrix: New Rules for Business Transformation Through Technology. Los Angeles, CA: LifeTree Media UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 17  Why do successful companies die (or lose momentum)? 2. The talent trap Source: Venkatraman, V. (2017): The Digital Matrix: New Rules for Business Transformation Through Technology. Los Angeles, CA: LifeTree Media UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 18  Why do successful companies die (or lose momentum)? 3. The metrics trap Source: Venkatraman, V. (2017): The Digital Matrix: New Rules for Business Transformation Through Technology. Los Angeles, CA: LifeTree Media vs. UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 19 What can managers do about it? Learning from the digital growth champions. But… UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 20 This lecture at a glance 1. Why all business in the digital age is “digital business” 2. How to grow business in the digital age a. Deep dive: the relationship of growth and stock price b. Learning from the digital growth champions 3. The Center for Business Transformation UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 21 DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 22  World Wrestling Entertainment Stock Price Disappointing Deal for TV Rights with NBC Universal 2014 Source: Yahoo Finance DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 23  World Wrestling Entertainment Stock Price Expected future revenue falls Stock price falls 2014 Source: Yahoo Finance DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 24  World Wrestling Entertainment Stock Price WWE most viewed sport globally on YouTube. Revenue Revenue falls double Stock price by 2020 falls 2014 2018 Source: Yahoo Finance DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 25 DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 26  Third Quarter Earnings, October 2022 The user-base of Horizon, Meta’s flagship VR Sources: https://www.forbes.com/sites/paultassi/2022/10/17/metas-horizon-worlds- https://www.cnbc.com/2022/10/26/facebook-parent-meta-earnings-q3-2022.html platform declined from 300.000 to 200.000 has-somehow-lost-100000-players-in-eight-months/?sh=6bfcae302a1b monthly active users (i.e., MAUs) DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 27  Meta stock price $250 Decline in $200 Horizon user-base $150 $100 Source: Thomson Reuters Eikon (2022) $50 $0 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 28  What is the relationship between growth and stock price? Source: Srivastava, R. K., Shervani, T. A., & Fahey, L. (1998): Market-Based Assets and Shareholder Value: A Framework for Analysis. Journal of Marketing, 62(1): 2–18 Grow slower stock price falls Grow faster stock price rises Who cares? DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 29 DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 30  Sources: https://www.ft.com/content/b2bfa1d7-e34b-46d6-bbeb-42bb6ea28720 https://www.wsj.com/articles/starbucks-boosts-sales-with-help-from-new-drinks-store-upgrades-11564088470. https://www.wsj.com/articles/lego-returns-to-growth-as-it-builds-on-china-expansion-11551259001. DEEP DIVE All material is copyrighted and must not be used outside the university. Who else cares about the relationship between growth and stock price? UNIV.-PROF. DR. SEBASTIAN HOHENBERG 31  You’re not the CEO. Do you care if your firm grows? DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 32  Who else cares about if a firm grows? DEEP DIVE All material is copyrighted and must not be used outside the university. UNIV.-PROF. DR. SEBASTIAN HOHENBERG 33  Back to the digital growth champions: 1. Who are they? Market capitalization (=Market Cap): Berk, J., & DeMarzo, P. (2019): Corporate Finance, Global Edition (5th edition). Harlow, Sources: https://companiesmarketcap.com/top-companies-by-market-cap-gain/, Value of publicly traded company’s outstanding common shares (owned by shareholders) Share price * amount of shares outstanding (Absolute) Market Cap gain: Absolute increase of a company’s market cap over a pre-defined time period (here 30 days) England: Pearson. Market capt – market capt-1 UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 34  Back to the digital growth champions: 2. How do they grow? Source: Homburg, C., Theel, M., & Hohenberg, S. (2020): Marketing Excellence: Nature, Measurement, and Investor Valuations. Journal of Marketing, 84(4): 1–22. End-user engagement Building ecosystems in proximal End Eco- and distal networks End-user-based business model user system generation Fostering integrated ecosystems Agility Simplified structures Fast decision-making and trial and error learning UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 35  Back to the digital growth champions: 3. How effective are their actions? Cumulative returns on 100$ invested Source: Homburg, C., Theel, M., & Hohenberg, S. (2020): Marketing Excellence: Nature, 1400 1200 Measurement, and Investor Valuations. Journal of Marketing, 84(4): 1–22. Value in $ 1000 800 600 400 200 0 S&P 500 Marketing Excellence Market Orientation (ecosystem priority & agility priority & end-user priority) UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 36  Back to the digital growth champions: 4. How do their actions look like? The VR in NPD example Source: Harz, N., Hohenberg, S., & Homburg, C. (2022). Virtual reality in new product development: Insights from prelaunch sales forecasting for durables. Journal of Business Develop- Testing and Scoping Case ment Forecasting IDEA LAUNCH Accurate feedback on user behavior available Marketing, 86(3), 157-179. Accurate feedback on user behavior needed Leverage technology to make NPD agile! UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 37 Let’s recap To transform business, we can learn from the digital growth champions: All business is digital business in the digital age! c The aim of business is (organic) growth! UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 38 This lecture at a glance 1. Why all business in the digital age is “digital business” 2. How to grow business in the digital age a. Deep dive: the relationship of growth and stock price b. Learning from the digital growth champions 3. The Center for Business Transformation UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 39 How are we going to get you ready for business in the digital age? A user-centric approach Connected consumers Connected employees Digital business models Digital management models Retail Transportation Entertainment Social networks … How can companies develop and execute digital go-to- How can companies manage connected employees to market strategies to serve connected customers? execute on their go-to-market strategies? UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 40  Your path towards a Business Transformation Expert at the University of Münster within the BSc program Bachelor Thesis Building Block #1 Building Block #2 Other Elements Managing radical change and Digital transformation & changing Teams and future work innovation (Chair of Transformation of markets (Chair of Digital collaborations seminar Work, Prof. Dr. Backmann, Winter) Transformation, Prof. Dr. Hohenberg, (Prof. Dr. Backmann) Summer) Corporate restructuring & transformation (Prof. Dr. Artz) Financial restructuring (Prof. Dr. Schneider) … PHILOSOPHY Competences focused on: business sense, digital excellence, analytics & storytelling TEACHING Innovative & interactive methods: flipped classroom approach, simulation, modularization, NPS surveys, cases Holistic & interdisciplinary approach: in a connected world, interfaces are opportunities for innovation UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 41 About us: The Chair of Digital Transformation UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 42 Connect with us on LinkedIn Chair of Digital Tranformation https://www.wiwi.uni-muenster.de/digit/de https://www.linkedin.com/in/sebastian-hohenberg UNIV.-PROF. DR. SEBASTIAN HOHENBERG All material is copyrighted and must not be used outside the university. 43