Digital Strategy: Digital Leadership, Reimagining Biz, Reevaluate Value Chain Flashcards
What is the most impt skill organizational leaders should have to succeed in a digital workplace?
- Transformative Vision (22%)
- Forward-Looking (20%)
- Understands Tech (18%)
- Change Oriented (18%)
- Strong Leadership (11%)
What does digital leadership involve? (5)
- Set very clear goal
- Have visions - pivoting to high growth & high value area
- Transformation should be done across the entire biz (not just set up a digital department)
- All abt alignments - leadership, people (communication), biz, investment
- Thoughtful & selective - make sure tech is mature enough to deliver the benefits
What does the digital strategy framework include? (1 Core, 4 steps in the cycle)
Build for the Future:
1. Reimagine your biz (Scope, Biz Model, Platform)
2. Reevaluate your value chain (R&D, Op, Omnichannel)
Strengthen the Core:
3. Reconnect with your customers (Acquiring, Engaging, Measuring)
4. Rebuild your organization (Transition, Org design, Skills)
- All revolves around digital leadership
Reimagining your business: What reflects the core essence of business
Scope:
- What biz are we in? E.g. Amazon started as online retailer but no longer JUSR that
- Redefine the scope of biz to stay competitive
Biz Model:
- How to create & capture value? E.g. Music industry: recorded music (vs iTunes, Spotify) -> live performances
Ecosystem:
- Manage ecosystems of players - both partners & competitors
- E.g. Amazon invities competitors to sell pdta on their platfrm
- Shift from selling pdts to creating a platform
Amazon Evolution - Why AWS?
- Cloud biz - totally new competitors - IBM
- AWS helps Amazon scale its tech for future growth
- Leverage & monetize its excess web capacity
Amazon Evolution - Why Kindle?
- Hardware business
- Customers shifted from physical pdts to digital goods
- Strategy for Kindle is different from Apple’s iPad
- Razor & Blades strategy
List all the business scope (5)
- Define biz ard customers, not pdt / competitors
- Competition is no longer defined by traditional industry boundaries
- Competitive advantage no longer comes from low cost / pdt differentiation
- Complementary pdts & network effects provide strong competitive advantage
- Data & customers become critical assets of a company
Why does competitive advantage no longer comes from low cost / pdt differentiation
- Traditional strategies to create competitive advantage
-> Low-cost producer -> scale economy & operational efficiency
-> Differentiated pdts & services that command higher prices - Unique advantages of Amazon
-> Deep knowledge of customers by mining consumer data
-> Integrated back-end logistics for warehousing & shipping
-> Ability to manage tech infrastructure makes it a dominant player in cloud computing (AWS) - Accurate estimation of demand -> quick delivery -> Meet customer needs
Describe the business scope - complementary pdts provide strong competitive advantage
Complementary good - a pdt or service that adds value to another
iPhone vs Samsung vs Nokia
- Apple ecosystem provides complementary services such as iTunes & FaceTime -> harder for iPhone users to switch
Amazon vs Walmart
- Started as a low-cost player -> Amazon redefined its competitive advantage by building a series of complementary services (e.g. free music & video for Prime members)
Describe the business scope - Network effects provide strong competitive advantage
Network effects: pdt / service gains additional value when ↑ people use it -> Winner-take-all outcome
- Single pdt - Single customer
- Single pdt - Multiple customers
- Multiple pdts - Single customer
- Multiple pdts - Multiple customer
Describe the business scope - Data & customers become critical assets of a company
Data network effect: Value of data ↑ as ↑ data is collected
- AI & IoT help create pdts w the ability to learn & improve
- e.g. Tesla improves its self-driving algo & updates software from its data
E.g. Amazon leverages on prime customers to introduce new series - grocery shopping, entertainment (e.g. video, game) etc. These data reveal consumer preferences that help:
- Personalized recommendation
- Targeted advertising
What are the business models?
- Razor and Blades
- New way to capture value
- Create value thru experiences
- Build an asset-light biz (in e sharing economy)
- Transition to Product-as-a-Service (PaaS)
- Freemium business model
- Marketplace model
- Subscription model
- Capture value by building an ecosystem
What is the Razor & Blades business model about?
One item is sold for the purpose to make money on the other complementary item, usually a consumable
Converting razor into blades:
- higher price to bundle & sell
- convert the razor (i.e., concerts) into blades (the money making part of biz)
E.g. Music - there were 12-15 songs in a cassette / CD even if you are only interested in 1/2 songs
- ↑ price to bundle & sell
- Digital technology dramatically changed the distribution of music
- iTunes allows unbundling & sell singles
- Music piracy -> significant ↓ of revenues
What is the new way to capture value business model about?
E.g. The Weather Company - Revenue was from selling weather forecasts on TV
Insight: People use weather to plan their day -> inherently local
Action:
- “platishers” - a combi of platforms & content publishers
-> New content on org stories “Grid breakers” (about explorers in extreme weather)
-> X2 time on site -> better advertising partnership
- WeatherFX - a platform that predicts demand based on weather & location
-> Retailers - when to put pdts on promo & what pdts
E.g. Racing & the Weather Company
- Chevy Racing is teaming up w The Weather Company to improve critical decisions during races by integrating real-time weather data & insights into their race strategy
What is the create value thru exp. business model about?
E.g. Reinventing grocery store - a place for customer to eat, shop & learn
- New concept about store design -> Blend of restaurants, a marketplace & a culinary sch
- Store size & location -> Locate in big cities to generate traffic. Expect people to come from all over for good exp (& not just convenience)
- Marketing & promotions -> in-store communication, event hosting, social media
- Metrics -> Not sales / revenue per square or store; Selling exp.
What is the build an asset-light business business model about?
E.g. Tesla
- does not have a dealer, but has showrooms in shopping malls
- Multimedia interactive screens to customize the tech options
- VR replaces visting the dealer to test drive a car
What is the transition to Product-as-a-Service (PaaS) business model about?
E.g. Signify (formerly Philips lighting) Light-as-a-Service (LaaS)
- Customers pay for the lighting service for an annual fee, X buy LED lights
-> eliminates the customer’s intial capital investment in switching to energy-efficient LED lighting -> savings in energy costs & carbon emissions - Signify installs the light, retains ownership & handle maintenance, service, upgrading, repair, replacement & eventually recycling
-> allows Signify to re-use or recycle lighting pdts & systems -> reducing the environmental impact
Future System - Circular Economy
PaaS -> Pdt Contract -> Pdt Usage -> End of Pdt usage -> Return -> (Raw) Materials -> Production -> Pdt -> PaaS
Manage ecosystem of players
- Platform revolution to connect parties
-> Sellers & buyers - Carousell
-> Consumers & developers - Apple’s app store
-> Biz & freelancers - Upwork - Digital tech enables ↓ of transaction costs -> easier to find & match relevant parties
