Digital Transformation Strategies PDF

Questions addressed during this session  How can digital transformation create a competitive advantage?  How to formulate a digital strategy?  Drivers of digital transformation Session 1 Why? Analyzing the new rules of the games and...

Questions addressed during this session  How can digital transformation create a competitive advantage?  How to formulate a digital strategy?  Drivers of digital transformation Session 1 Why? Analyzing the new rules of the games and opportunities enabled by the digital technologies Create a competitive Strategy approach Digital growth advantage Creating a Adapting strategy Creating a sustainable Session 2 competitive with the constraints competitive advantage What? advantage with digital technologies of the environment Transform your business with digital technologies Transforming the processes How? 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 dealers was not impacted. 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 Data Drivers of digital disruption Why? Innovation Competition Create a competitive Strategy approach Digital growth advantage New BM (both customer intimacy and operational What? excellence). Leverage existing capabilities Transform your business with digital technologies Agile and scalable digital operations New digitally enabled customer experience (higher affordability, greater accessibility and wider social connectivity). How? Digital capabilities Digital leadership Robust and flexible platform Relying on an ecosystem (incubating (interactions with customers, data digital innovations). analytics, digital products and Digital workplace (development of services can be delivered) digital skills required for digital Reconfigurations of IT functions. transformation, encourage innovation…) 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 take Decreasing a newspaper New opportunities (Digital advantage of the sales and mobile technology) opportunities 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 business Defend the position as Enriching the core areas the region n°1 provider of business local news and Digitally enrich the information. Create value for company’s TV portfolio customers Exploiting selected digital Diversification of its opportunities and Focus on enriching analog business propose new services to products with digital customers (Limited content Focus on Branding and diversification) customer interaction (1)How radically different is your digital future? How did the companies achieve competitive advantage? P7S1 Mittelbayrische Ravensburger  P7S1 New Business Model: Enhancing customer New Business Model Reinventing its BM experience (online gaming and ebooks). (from TV broadcaster to An internet-based map Video on demand sevices (new products) Gaming content related to TV content) => New BM 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 P7S1P7S1 Mittelbayrische Ravensburger  Ravensburger Technology as enabler for Technology is seen as a support Technology as a main driver for innovation: the company actively function to reach strategic goals innovation looks for opportunities to (enrich products, reengineering Invest in content platforms. implement 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 Digital How radically different is your digital future ? What is the scope of the digital transformation? 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 order New business internally if to foster innovation (agile necessary structure) New skills (Personal development program New skills (Attract different Foster the necessary digital skill sets) mindset and skill set among existing staff. Attract digital natives.)  How to formulate a digital strategy? Define your Digital How radically different is your digital future? What is the scope of the digital transformation? ambition How does the company use IT to leverage its strategic ambition? Identify changes to What needs to be changed (processes, Products, Business model, Skills, organizational structure, IT…)? be 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 digital Enrichment of core product Digitally enriched products business enabled market Leadership enabled to successfully stabilize core businesses  How to formulate a digital strategy? Define your Digital How radically different is your digital future? What is the scope of the digital transformation? ambition How does the company use IT to leverage its strategic ambition? Identify changes to What needs to be changed (processes, Products, Business model, Skills, organizational structure, IT…)? be made Set up measurable What are the measurable benefits for the company? What are the measurable benefits for the employees? outcomes Make it evolve The key success factors  P7S1 P7S1 Mittelbayrische Ravensburger  Ravensburger Leadership Top management support Top management support Top management support Existing capabilities One of the leading TV Strong focus on regional Higher brand awareness enterprises in Europe/ content and offerings Higher quality of content one of the two large TV Most popular newspaper company in Europe in the area surrounding Ragensburg Ensuring digital growth Conclusion  Takeaways Customer intimacy Competitive advantage enabled by Digital transformation Reinvent Operational Business excellence Model Different options to reap the benefits of digital transformation How to formulate a digital strategy? Define your Digital How radically different is your digital future? What is the scope of the digital transformation? ambition How does the company use IT to leverage its strategic ambition? Identify changes to What needs to be changed (processes, Products, Business model, Skills, organizational structure, IT…)? be made Set up measurable What are the measurable benefits for the company? outcomes What are the measurable benefits for the employees? The need to ensure the digital growth Make it evolve (Ambidexterity)  Drivers of digital transformation Why? 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 Customer intimacy Adapting strategy Creating a sustainable operational excellence with the constraints competitive advantage What? reinvent BM of the environment Digital Platforms Next session strategy Transform your business with digital technologies Reviewing the processes How? Digital capabilities Digital leadership Investing in digital technologies Transforming the organization