3. Digital Disruption And Digital Business Models

Question 1

What is digital disruption?

Answer 1

Associated with industries, products and services, which are being transformed by advances in digital technologies and emerging business models (displacing established organisations)

Question 2

What are examples of technological trends powering the digital revolution?

Answer 2

1. Internet enabled devices: smart devices capable of performing more tasks on-the-go; fuelling demand of customers to have personalised interactions; risk of customers switching to competitors with more advanced platforms; risk of holder greater quantities of data
2. Internet of things and outcome economy: introduction of sensors and tracking devices embedded into products and services; outcome economy concerned with developing services to match customer needs based on outcomes (selling not just one product); risk of hackers
3. Big data and intelligent enterprises: analyse large, complex sets of data; better understanding of customer needs; risk of theft or loss of data; risk that data fails to capture views / opinions / trends of customer behaviour
4. Automation: use of robotic technologies; improve efficiency and enhanced processes; risk cost of machinery; risk of scope for disruption if technology fails
5. AI and ML: virtual assistants; machines learning to solve problems; risk of alienating certain groups; reduced number of human jobs may damage reputation
6. Reimagined workforce: develop environments for machines and humans to work together; expensive for smaller organisations; cyber risks; wearable technologies to better understand wellbeing of staff; risk of security of data and ethics
7. Homeworking: since COVID, advances in IT and internet infrastructure; responsive to needs of workers; able to retain talent; risk of lower productivity
8. Cloud computing: accessing files remotely; may improve productivity and reduce operational costs; risk of leaving data with external parties; loss of data through mismanagement or theft
9. Unmanned aircrafts: increase range of services (photography, security, surveillance, etc.); loss of personal privacy; risk to the public if crashed or used inappropriately

Question 3

Examples of disruptive technologies

Answer 3

1. Fintech
2. Blockchain
3. Cryptocurrencies
4. Big data (Four Vs: Volume, Veracity (truthfulness), Velocity, Variety (availability))
5. Digital assets

Question 4

What are five trends the World Economic Forum encourages business leaders to focus on surrounding digital disruption?

Answer 4

1. Internet of me: users must be placed at the centre
2. Outcome economy: customers are attracted to outcomes, not just products
3. Platform (r)evolution: opportunities for innovation and faster service delivery
4. Intelligent enterprise: harness data to increase innovation and efficiency
5. Workforce reimagined: AI and humans deployed in different ways, not removed altogether

Question 5

What has been the impact of digital disruption?

Answer 5

1. Falling costs are driving their usage (presenting opportunities and risks)
2. Start-ups challenging and displacing existing operators
3. Attracting a large customer following at considerable speed

Question 6

What factors will older generations of management need to overcome when implementing new technologies?

Answer 6

1. Fear of the unknown
2. Risk-averse culture
3. Lack of creativity and innovation among management
4. Lack of individuals in the organisation with technical knowledge and skill to implement new ideas
5. Lethargy to explore new ways of working
6. Uncertainty over where to start

Question 7

Three World Economic Forum strategies to disrupt

Answer 7

1. Innovate on the periphery: focus on activities which exist at the edge of its operations which are consistent with disruptive change (disrupting in a more gradual way)
2. Hire digitally savvy individuals (e.g., black ops / hacking teams): instrumental in changing how the organisation currently works
3. Copy successful firms by investing in capabilities with potential future opportunities. This may require working with successful partners and specialists

Question 8

What are the five World Economic Forum strategies for creative disruptive business models?

Answer 8

1. Build strategy: build a new business model by developing internal capabilities and infrastructures; focus on hiring talented workers and develop necessary technologies or processes
2. Buy strategy: acquire a digital start-up business to gain access to digital processes and build on the technologies of the start-up. Appropriate when org is keen to own a market and where hiring workers is not possible
3. Partner strategy: working with a digital disrupter to learn about market and customer approach. Appropriate for an established company keep to discover more about emerging technologies whilst avoiding the cost of acquiring
4. Invest strategy: investing in start-ups; access skills and capabilities of the start-up and avoid stifling entrepreneurial spirit that usually happens when big companies acquire smaller ones. Leaves the start-up independent.
5. Incubate / accelerate strategy: similar to invest, but differs in that the investing organisation forms close ties with start-up; investing organisation deploys own internal capabilities and resources to help and nurture the start-up

Question 9

What is an operating model?

Answer 9

Describes key relationships that exist between an organisation’s internal business functions, processes and structures, and the interactions that take place between them. They represent key linkages between an organisation’s strategic intentions and the execution of that strategy

Question 10

What are the different types of digital operating models?

Answer 10

1. Customer-centric: empower its customer-facing staff, decentralise organisation structure (empower staff), develop customer-first culture
2. Xtra-Frugal: reduce operational costs, optimise internal processes, centralised organisation structure, less is more culture
3. Data powered: analytics capabilities, agile and innovative culture
4. Skynet: improve productivity and flexibility, centralised organisation structure, strong engineer culture with a focus on automation
5. Open and liquid: ecosystem environment, localised organisation structure, culture based on sharing information to benefit customers

Question 11

What are the World Economic Forum’s seven steps to create a digital workforce?

Answer 11

1. Attract and retain talent (e.g., use of contacts and online networks to identify and refer prospective employees)
2. Become an employer of choice (e.g., appeal to technology-savvy individuals)
3. Develop digital skills (e.g., training, or hiring expertise)
4. Develop digital leadership (e.g., willingness to embrace new technologies)
5. Foster a digital culture (e.g., senior management championing the need to embrace change)
6. Harmonise environments (e.g., redesign the work environment)
7. Integrate on-demand workforce (e.g., use third party contractors with digital skills)