Digital disruption and digital business models Flashcards
What is the definition of Digital Disruption?
Associated with industries, products and services which are being transformed by advances in digital technologies and emerging business models. Digital disruption is increasingly displacing established organisations.
What are the technological trends that are powering the digital revolution?
- ) Internet enabled mobile devices - perform a greater variety of tasks on the go.
Personalised interactions. Need to be aware of risks that come with holding more customer data.
2.) Internet of things and outcome of economy - sensors such as RFID (Radio Frequency Identification) tags and tracking devices in products. Smart meters have empowered customers. Organisations have used sensors to measure their operations. Increased use of sensors heightens risk of hackers stealing data that they capture.
3.) Big data and intelligent enterprise - analyse big and complex data sets. Gain better understanding of their customers’ needs. Risk- loss or theft of data.
4.) Automation - improve efficiency of raw material usage, enhance precision of products manufactured.
5.) AI - virtual assistances, chatbot, efficiency of handling customer interactions, risk of alienating certain customer groups.
6.) Re-imagination of workforce - machines and humans can work together safely.
7.) Homeworking -
8.) Cloud computing - access files anywhere, improves productivity, reduce operational costs,
9.) Unmanned aircraft (drones) - increase range of services
What is FinTech (Financial Technology)?
- Peer to peer lenders replacing banks for lending and saving
- Peer to peer money transfer services replacing banks for money transmission and foreign exchange
- Firms providing payment security and verification
- Financial advice driven algorithms, offered at lower cost than traditional financial advisors
- App-based insurance companies
- Digital- only start-up banks, with no legacy of branch networks, call centres or complex systems.
What is Blockchain?
- Is a form of public bookkeeping that uses a digital ledger to allow individuals to share a record of transactions.
- Increases level of transparencies of transactions
- ## Easier for accountants to verify the background and transactional history of prospective new clients.
What is Cryptocurrency?
- Digital currency which uses internet technologies to facilitate transactions made online. Cryptography is a key feature of cryptocurrency.
- Bitcoin and Ethereum
- Cryptography involves encrypting the code behind digital currencies so that they cannot be counterfeited by criminals.
- Have a disruptive effect on traditional banking systems.
- Not controlled by central bank
- Lack of control leads to fluctuations in value of cryptocurrencies as they are traded and exchanged around the world.
What is Big Data?
- Popular term used to describe the exponential growth and availability of data, both structured and unstructured.
- ## Big V’s of data = Volume, Velocity, Veracity, Variety
What are Digital Assets ?
- Assets that are not available in physical form.
-Digital Asset Management (DAM)
What are the 5 trends that organisations are encouraged to focus on when it comes to digital revolution?
1.) Internet of me - users must be placed at centre of personalised digital experience.
2.) Outcome economy - customers are attracted to outcomes, not just products.
3.) The Platform revolution - evolution of platforms speeding up all the time, offering opportunities for innovation and faster service delivery.
4.) Intelligent enterprise - organisations should harness data to increase innovation and efficiency.
5.) Workforce reimagined - as AI grows, human resources should be deployed in different ways, not removed altogether.
What are the 3 steps to take when initiation strategies to disrupt?
1.) Innovate on the periphery - management should focus on activities and projects which exist at edge of its operations which are consistent with disruptive changes in the environment.
2.) Hire digitally savvy individuals (hire black ops/hacking teams) - individuals are likely to be instrumental in changing how the organisation currently works. Can help organisation how to apply the latest technologies to existing operations and processes.
3.) Copy successful firms such as Google - organisation should invest its capabilities by establishing a team designated to exploring ‘big ideas’ being potential future opportunities which can only be realized by embracing use of latest technologies.
What are the 5 different strategies that an organisation can follow to create disruptive business models?
1.) Build strategy
2.) Buy strategy
3.) Partner strategy
4.) Invest strategy
5.) Incubate/accelerate strategy
Build strategy =
- Involves organisation building a new business model
- Appropriate for organisations where an opportunity exists to develop a new business model which draws upon the organisation’s existing competencies.
- Involves organisation developing its internal capabilities and infrastructures so that it can change way it currently operates.
- ## Hiring workers with talent to develop technologies and processes which will enhance organisation’s way of working
Buy strategy =
- Buy strategy is where established organisation acquires a digital start-up business (digital disrupter).’
- Acquiring digital start-up enables organisation to gain access to digital processes or innovative technologies developed by the start-up firm.
- Benefit from fact that processes or technologies acquired may be become instrumental to other stakeholders.
- This strategy is appropriate where organisation is keen to effectively ‘‘own” a market. Common when cannot hire workers with necessary skills.
Partner strategy =
- Enables organisations to work with digital disruptor to learn about markets that it serves and the products and services that it provides.
- Appropriate for an established company keen to discover more about emerging technologies used by other businesses, as it can avoid incurring costs of acquiring the partner entity.
- Allows organisation to gain better understanding of types of technology and partnerships which may be advantageous in future.
Invest strategy =
- Involves investing in potentially interesting start-up companies.
- Provides investing organisation with access to skills and capabilities of start-up while helping start-up to avoid typical burdens(governance) that often stifle entrepreneurial spirit.
- Leaves the start-up independent.
Incubate/accelerate strategy =
- Investing organisation forms closer ties with start-up.
- Requires investing organisation to deploy its own internal capabilities and resources to help support the start-up.
-The aim is to help nurture the start-up.
