Digital Strategy Formulation (SKEMA Business School) PDF

Session 2: Digital strategy formulation Digital Business Two-year MSc Course coordinator: Nabila BOUKEF Ph.D Associate Professor in information Systems and digital transformation SKEMA Business School C...

Session 2: Digital strategy formulation Digital Business Two-year MSc Course coordinator: Nabila BOUKEF Ph.D Associate Professor in information Systems and digital transformation SKEMA Business School 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 during this session  How can digital transformation create a competitive advantage?  How to formulate a digital strategy? Sessio Why Drivers of digital transformation ? n1 Analyzing the new rules of the games and opportunities enabled by the digital technologies Create a competitive Strategy approach Digital growth advantage Creating a What Creating a Adapting Session 2 competitive strategy with sustainable advantage with the constraints competitive ? digital technologies of the environment advantage Transform your business with digital technologies How Transforming the processes ? Digital capabilities Digital leadership Transforming the organization Investing in digital technologies Managing the ecosystem Outline for this session 1. Competitive advantage enabled by digital strategy 2. Create a competitive advantage with AI 3. Formulate a digital strategy  Conclusion 1. Competitive advantage enabled by digital strategy A clear and transformative ambition is needed How can companies use digital technologies to transform their business? There are three options: A. Enhancing customer experience B. Focusing on operational excellence C. Reinventing business Model A- Enhancing customer experience  Use new channels to enhance customer reach and engagement  Strategic use of data and analytics to create customer intimacy  Adapt the organization to meet customers’ requirements  Continuous improvements Illustration: Burberry case  Burberry created a competitive advantage by creating a compelling customer experience  « Our vision was that any person, any constituency, needing to interact with Burberry would come to Burburry.com and enjoy exactly the same experience as in-store customers. We wanted them to come into our world-Burberry world- and be able to visit all the different parts of the business as they would do in our HQ. » Angela Ahrendts (CEO of Burberry from 2006- 2014) Westerman G., Bonnet D. and McAffe A. (2014), Leading Digital, Harvard Business Review Press, p.31 B- Focusing on operational excellence  Use technology to address inefficiencies in processes  Hardly copied by competitors Illustration: UPS case UPS created a competitive advantage based on standardization and operational efficiency  C- Reinventing Business model  Reinventing industry (disrupt before being disrupted)  Substitution of products and services (consider replacing your products and services if yours are under digital threats).  Creating new digital business (create brand-new digital businesses).  Reconfiguring value delivery models (reconsider how connecting products, services and data in an innovative way to create extra-value).  Rethinking value proposition to meet new needs (reinforce the company’s presence in its current market). Illustration Reinventing industry Case of Airbnb which reshaped the hospitality Substitution products and services: Case of Fujifilm which made a shift from film to cosmetics Creating new digital business Case of Nike which created a new digital business unit Nike+  Reconfiguring value delivery Case of Volvo which transformed its business model from B2B model to B2B2C model Dealers Customers The push- to-talk button The company relied heavily on technology (social media, analytics, smart connected devices as well as the implementation of push-to-talk button that enables driver to talk directly with an operator in the call center) to interact directly with its customers. The relationship with the Rethinking value proposition to meet new needs  Drivers of the digital transformation Based on the text, customers and competition are the main drivers. However, you need to analyze all the drivers. The analysis should be done at the macro level (the banking industry and not limited to DBS). Drivers Analysis Customers Savvy customers: Use of digital technologies to interact with the bank (new expectations). Bank customers are visiting banks less frequently (new behaviors) Competition Threat from new entrants (Fintech companies) Competition from the other banks Data New opportunities enabled by analytics to improve decision making and better understand customer expectations. Innovation The innovation process is faster for the new entrants (the Fintech revolution) than the incumbent banks. Value Value created by the banks is evolving thanks to the use of digital technologies. Example provided in the text; Hana Bank (enable customers to use smartphone to withdraw cash from ATM’s, send money and pay at stores).  Customers Value Why Data Innovation Competition Drivers of digital disruption ? Create a Strategy approach Digital growth competitive advantage What New BM (both customer intimacy and operational ? excellence). Leverage capabilities existing Transform your business with digital technologies Agile and scalable digital operations How New digitally enabled customer experience (higher affordability, greater accessibility and wider social connectivity). ? Digital capabilities Robust and flexible platform Digital leadership Relying on an ecosystem (interactions with customers, (incubating digital data analytics, digital products innovations). and services can be delivered) Digital workplace Reconfigurations of IT (development of digital skills functions. required for digital New Business Model: Examples of companies that successfully reshaped their BM 2. Create a competitive advantage with AI Growing interest in using AI Johnson, V., Torres, R., Maurer, C., Guerra, K., Srivastava, S., & Mohit, H. (2023). The 2022 SIM IT Issues and Trends Study. MIS Quarterly Executive, 22(1).  The disruptive impact of AI Integrating AI: Navigating the next wave of business transformation, Expleo report 2024. AI outcomes Barriers to the adoption of AI Teamwork How AI can be used to create a competitive advantage? Think of concrete examples of companies where AI has been used to optimize processes, enhance customer experience, or develop innovative Business model  Case study Staudt, P., & Hoffmann, R. (2024). How a utility company established a corporate data culture for data-driven decision making. MIS Quarterly Executive, 23(1), 3, p.19-35. 3. Formulate a digital strategy: comparison between three different companies Hess et al. (2017) « Options for formulating digital transformation strategies », MISQ executive, june, (15,2), pp. 123-139. Why did the companies embark in a digital transformation? P7S1 Mittelbayrische Ravensburger Strategic choice to Decreasing a New opportunities take advantage of newspaper sales (Digital and mobile the opportunities technology) offered by digital technologies Customers Value Competition Customers Different triggers for digital transformation: The decision to embark in a digital transformation can be a strategic choice (P7S1) or triggered by a threat. What is the digital ambition? P7S1 Mittelbayrische Ravensburger P7S1 Ravensburger Developing new Defend the position Enriching the core business areas as the region n°1 business provider of local Digitally enrich the news and Create value for company’s TV information. customers portfolio Exploiting selected Focus on enriching Diversification of its digital opportunities analog products with business and propose new digital content services to Focus on Branding customers (Limited and customer diversification) interaction (1)How radically different is your digital future? How did the companies achieve competitive advantage? P7S1 Mittelbayrische Ravensburger P7S1 New Business Enhancing customer New Business Model Model: Reinventing experience (online gaming and its BM ebooks). An internet-based (from TV map sevices (new broadcaster to products) Video on demand Gaming content => New BM related to TV content) Ecommerce Online travel services The scope of the digital transformation P7S1 Mittelbayrische Ravensburger Company-wide Mostly products Products and processes (2) From limited to wider scope of transformation The strategic use of IT P7S1 P7S1 Mittelbayrische Ravensburger Ravensburger Technology as enabler for Technology is seen as a Technology as a main driver innovation: the company support function to reach for innovation actively looks for strategic goals (enrich Invest in content platforms. opportunities to implement products, reengineering new technologies. processes). (3) Two options: Technology is enabler: Invest in technology to reach strategic goals Technology is supporter: technology is a support to reach strategic goals.  Company’s ambition regarding new digital technologies  Innovator: innovate new technologies  Early adopter: actively look for opportunities to implement new technologies  Follower: rely on well-established solutions  How to formulate a digital strategy? Define your How radically different is your digital future ? What is the scope of the digital transformation? Digital ambition How does the company use IT to leverage its strategic ambition? Identify changes to be made Set up measurable outcomes Make it evolve What has been changed (the What)? P7S1 Processes improvement Ravensburger Investing in IT (Digital capabilities) Organizational changes (new structure and new skills) Changes in processes (Digitize the core) P7S1 P7S1 Mittelbayrische Ravensburger Ravensburger Improvement of processes (reengineering and digitalization of the processes) Changes in IT (Building digital capabilities) P7S1P7S1 Mittelbayrische Ravensburger  Ravensburger Investment in new ITs Processes improvement Digitalization of the products and services to enhance customers experience. The organizational changes P7S1 P7S1 Mittelbayrische Ravensburger Ravensburger Separate BU No structural change Separate structure in New business order to foster internally if necessary innovation (agile structure) New skills (Personal development program Foster the necessary New skills (Attract digital mindset and different skill sets) skill set among existing staff. Attract digital natives.)  How to formulate a digital strategy? Define your How radically different is your digital future? What is the scope of the digital transformation? Digital How does the company use IT to leverage its ambition strategic ambition? Identify What needs to be changed (processes, Products, changes to be Business model, Skills, organizational structure, IT…)? made Set up measurable outcomes Make it evolve The business value of digital transformation (the outcomes) P7S1 P7S1 Mittelbayrische Ravensburger Ravensburger 20% of revenue through Enrichment of core Digitally enriched products digital business product enabled market enabled to successfully Leadership stabilize core businesses  How to formulate a digital strategy? How radically different is your digital future? Define your What is the scope of the digital transformation? How does the company use IT to leverage its strategic Digital ambition ambition? Identify changes What needs to be changed (processes, Products, Business model, Skills, organizational structure, IT…)? to be made Set up What are the measurable benefits for the company? measurable What are the measurable benefits for the employees? outcomes Make it evolve The key success factors P7S1 P7S1 Mittelbayrische Ravensburger Ravensburger Leadership Top management Top management Top management support support support Existing capabilities One of the leading Strong focus on Higher brand TV enterprises in regional content and awareness Europe/ one of the offerings Higher quality of two large TV Most popular content company Ensuring in Europe digital growth newspaper in the area surrounding Ragensburg Conclusion  Takeaways Customer intimacy Competitive advantage enabled by Digital transformati on Operation Reinvent al Business excellenc Model e Different options to reap the benefits of digital transformation How to formulate a digital strategy? Define your How radically different is your digital future? What is the scope of the digital transformation? Digital How does the company use IT to leverage its ambition strategic ambition? Identify What needs to be changed (processes, Products, changes to be Business model, Skills, organizational structure, IT…)? made Set up What are the measurable benefits for the company? measurable What are the measurable benefits for the outcomes employees? The need to ensure the digital growth Make it evolve (Ambidexterity) Why Drivers of digital transformation Analyzing the new rules of the games and opportunities ? enabled by the digital technologies Use the Framework of D. Rogers (Data, customers, Value, Innovation, competition) Create a competitive Strategy approach Digital growth advantage Creating a What Customer Adapting intimacy strategy with sustainable operational the constraints competitive ? excellence reinvent BM Next of the session environment Digital Platforms advantage strategy Transform your business with digital technologies How Reviewing the processes ? Digital capabilities Digital leadership Investing in digital technologies Transforming the organization What is next? What’s coming up next  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 AT HOME WORLDWIDE* * Chez vous, partout dans le monde