Digital Business Strategy Flashcards
What are the three pillars of digital transformation that should be balanced?
- Mind & Machine.
- Product & Platform.
- Core & Crowd.
What is the Moravec paradox?
Moravec paradox: what is easy for people to do, is hard for a computer and vice versa. The ML approach for vision systems is still far from flawless, but even people have trouble quickly recognizing puppies’ faces or, more embarrassingly, see their cute faces where none exist. Example: trouble differentiating between muffins and chihuahuas, or mops and dogs.
The mind-machine rebalancing shifts the way work can be done, allowing more work to be assigned to machines because machines are becoming more capable of doing work that previously only humans could do. True or False
True
Overall, this shift in work assignment has implications for many business processes.
What are the 6 new digital goods characteristics?
- High fixed costs on the first production (high sunk costs).
- Low or even near zero reproduction/replication costs.
- Remember the Laws of Information.
- Lock-in costs to customers.
- Selling products in bundling.
- Offering various versions of the product (basic version vs premium version).
What are the laws of information?
- Information decay: information loses its value over time, especially in the digital age where information can become outdated quickly.
- Information share: information is infinitely sharable.
- Information combination: the value of information increases when combined.
- Information network: the value of information increases with the number of people connected to the network (Metcalf).
- Law of the search: the ease of finding information is inversely proportional to the amount of information available.
- Law of the referral: people trust information more if it comes from someone they know or trust.
- Law of the long tail: the value of information is not limited to a small number of popular sources but is distributed across many niche sources (Anderson).
What are the characteristics/consequences of markets with externalities (network effects)?
- Consuming propension increases as the number of connected individuals increases.
- Direct effects: benefits for consumers.
- Indirect effects: producers will bet on the complementary goods.
- Supply side: less costs.
- Demand side: more utility.
New digital businesses are leveraging the unusual economic properties of data to create platforms that compete with physical products without incurring the costs of creating those physical products. True or False
True
Examples: Uber will get you a ride across town without owning any cars; Airbnb will give you a room for the night without owning an expensive hotel.
Companies always need to own physical assets to make money. True or False
False
What are the most important characteristics in platform wars?
Speed and pace of iteration are most important! It is about who can learn faster and be at front!
There is no room for various platforms offering similar products. True or False
False, however one or two appears to be the number in the market, a third platform might not survive giving the strong network effects of platforms
What should a company do to succeed on a platform?
A company should:
- control which inventory should add and when
- work on building and maintaining a great reputation on the platform.
What are the key questions to consider when deciding on joining or starting a platform?
- Does this platform lead to commodification among its suppliers, or not?
- Are you differentiating your company on quality and service, or on price?
- It may not be necessary to join an existing platform if you’re not having any trouble generating demand;
- or if your efforts at brand building will be in conflict with those of the platform.
What are the most important assets on a platform?
- Control over the user experience/ user interface.
- Large amounts of data.
- Access to a toolkit of approaches, techniques and algorithms that lets you build trust to manage supply and demand, and that lets you offer mass personalization (price dynamically in order to balance supply and demand).
