Digital Transformation Playbook PDF

Five domains of digital transformation New rules of the game Customers...

Five domains of digital transformation New rules of the game Customers Competition Data Innovation Value https://www.youtube.com/watch?v=CPZvupB2W2A New capabilities enabled by the technology Rogers, D. L. (2016). The digital transformation playbook: Rethink your business for the digital age. Columbia University Press. 1- New rules of the game 1.1. Customers: from passive to dynamic networks  Less loyal  Connected and active  Can be involved in the innovation process  Brand is no longer only defined by the company, it can be co- created by customers. Customers engagement at Dell “We are at our best when we are hearing directly from our customers. We listen, learn, and then improve and innovate based on what our customers want.” (Michael Dell, CEO, Dell Inc.) Reconsidering strategic assumptions about customers in the digital era From To Customers are mass market Customers are dynamic network Communications are broadcast to customers Communications are two-way Firm is the key influencer Customers are the key influencer Marketing to persuade purchase Marketing to inspire purchase, loyalty, advocacy One-way value flows Reciprocal value flows Economics of (firm) scale Economics of (customer) value Rogers, D. L. (2016). The digital transformation playbook: Rethink your business for the digital age. Columbia University Press, p.21. 1.2. Competition  Different players with different strategies  Old sources of competitive advantage are largely disappearing  Change in competition Different players with different strategies  Digital giants: (Example Amazon, facebook, google)  Industry incumbents: need to adapt or fail  Tech entrepreneurs: constantly work to innovate and disrupt the market.  Old sources of competitive advantage are largely disappearing  Scale: Scaling in the digital environment is easy and costless (Scalability of the platforms).  Transactional costs are decreasing (example financial services)  Vertical integration: Digital technology makes easy to disintegrate and specialize (new entrants)  Change in the competition  Companies can partner with other competitors to create value for customers (coopetition) Example: Consortium created by Volkswagen, BMW and Daimler in order to create a technology that provides mapping data and location services.  Companies are facing competition from different companies (different sector, different business model). Example: Amazon in the retail sector, Uber in the automotive industry.  The shift of competition from products to platforms (to be further studied in session 4) New capabilities enabled by the technology 2. New capabilities enabled by the technology 1. New data capabilities 2. Data as a strategic asset 3. New opportunities to transform business (Create new value with digital technologies and innovate quickly) 2. 1. New data capabilities  Increased storage (opportunities enabled by cloud computing)  Increased processing power  Faster communication Reconsidering strategic assumptions about data in the digital era From TO Data is expensive to generate in firm Data is continuously generated everywhere Challenge of data is storing and managing it Challenge of data is turning it into valuable information Firms make use only of structured data Unstructured data is increasingly usable and valuable Data is managed in operational silos Value data is in connecting it across silos Data is a tool for optimizing processes Data is a key intangible asset for value creation Rogers, D. L. (2016). The digital transformation playbook: Rethink your business for the digital age. Columbia University Press, p.91. 2.2. Data as a strategic asset  Data used to be highly focused on operations  Strategic use of the data to innovate and create value for customers (leveraging data can add value to customers): Example Stitch Fix  Strategic use of data to improve decision-making.  Strategic use of data to manage and optimize business processes and reduce risks: Example Lufthansa Big Data https://www.youtube.com/watch?v=jGhRiwGHh30  BIG data use in Lufthansa Chen et al., 2017 “How Lufthansa Capitalized on Big Data for Business Model Renovation”, MISQ executive, (16:1), pp.19-34. Different use cases  Use Case 1: Personalizing Customer Experiences  Use Case 2: Handling Irregular Situations  Use Case 3: Predicting Departure Delays and Proactive Irregular situation Recovery  Use Case 4: Predictive and Preventive Aircraft maintenance  Prior to deploying big data systems, Lufthansa stored only structured, transaction- oriented data.  Lufthansa’s CIO, “we want to link with unstructured and semi-structured data from social networks, etc. We need to know about customer likes/dislikes, etc. from all possible data sources.”  Director, IT Service Factory Ground Ops: “We currently have a DSS [decision support system], but incorporating big data—external data in real time—has improved our predictive analysis results for ground operations, staff management and aircraft maintenance.”  Main challenges companies face when reconsidering their data capabilities  Organizational challenges of data: the need to change business processes.  Finding people with the right skill sets.  Bridging silos: bring the data in a unified way  Sharing data with partners (what data will be shared with partners? )  Cybersecurity, privacy and consumer attitudes (customers need to know that data is being collected and see the benefits they are receiving in returns). 2.3. New opportunities to transform business  Speeding up the innovation process  New value proposition Speeding up the innovation process  Digital technologies enable quick test and real time experiment  Capability to explore many more innovative ideas (Example: facebook can experiment new features and learn in real time).  Social media enable to foster the innovation process: innovation is no longer top down but both customers and employees can be involved in the innovation process.  Learning curves are less pronounced (Companies can easily learn from other failure) New value proposition  Value proposition is no longer static but is constantly evolving and adapting to the need of the market.  Digital technologies create new opportunities for innovative value proposition Example Stitch fix: the company is creating a new business model by selling personal style to mass market. Reflect and apply Ford case study (20 min)  Read the Ford case study and answer to the following question:  Based on the information provided in the text, Analyze the triggers that incite Ford to invest in mobility services (please use the D. Rogers framework to provide your answer) Conclusion  Takeaways  The framework provided by D. Rogers is a valuable tool to analyze the new opportunities and constraints the company is facing (the five domains of digital strategy).  To remain competitive, companies need to understand the new rules of the game (change in competition and new customers’ expectations and behaviors ) and rethink their strategy.  Digital technologies create new opportunities that should be integrated in the strategy.  New rules of the game (change in competition and customers expectations and behaviors) The need to rethink strategy to survive and remain competitive New capabilities enabled by the technology What is next?