Week 4 - Digital Innovation and Strategy Flashcards
What is DIGITIAL INNOVATION?
- the Use of Digital Technology and Apps to Improve Existing Business Processes and Workforce Efficiency, Enhance Customer Experience, and Launch New Products or Business Models
- some of Latest Innovative Technology - e.g. chatbots, wearable devices etc
- in an age where world’s largest taxi company has no taxi (Uber)
State the 3 Phases of Innovation
(1) INNOVATION
(2) PRODUCT/SERVICE OFFERING
(3) IDEA
Explain the Classification of Innovation - SUSTAINING or INCREMENTAL INNOVATIONS
- offer Improved Performance Within an Established Market
- May be Radically new Offerings Within the Market but they Don’t Change the Nature or Basic Assumptions About how Things Work. most New Offerings are Sustaining in Nature
- obvious examples , New Apps Offered Through an App Store, and New, Improved Mobile Phone Handsets
Explain the Classification of Innovation - DISRUPTIVE or RADICAL INNOVATIONS
- Bring to Market a Different and New Kind of Value Proposition, which May have the Effect of Changing the Market’s Assumptions around How Things Work
- although a Disruptive Offering may Initially Underperform Against Established Products in some ways, it Needs to be Significantly Preferable through being Advantageous in Price, Size, Performance, Simplicity or Convenience
- e.g. Amazon, Digital Camera, Netflix, Uber, etc.
Explain the Classification of Innovation - TECHNOLOGY PUSH
- an Innovation Based on Technology Push is Driven by a Research and Technology Idea that has been Qualified as Offering the Potential to be Developed as a Successful Market Offering
- e.g. Digital Camera
Explain the Classification of Innovation - MARKET PULL
- an Innovation Based on Market Pull is Driven by an Observed Need, Problem or Opportunity in a Market
- e.g. in 2018 - Facebook addressed Need (initially identified by snapchat) for Images that Disappear After a Period of Time
- the Resulting Incremental Functionality is a Market-Pulled Innovation that’s Competitively Motivated
Explain the Classification of Innovation - VERTICAL MARKET
- Innovation that Addresses Industry Specific Problems such as Energy, Education, Retail or Health Care
- Involves Integrating New and Existing Technologies or Practices to Achieve an Improved Performance or Effect
- e.g. in Healthcare sector is 3D4 Medical, an AR offering that helps medical staff to learn about anatomy without having to cut open a body
Explain the Classification of Innovation - HORIZIONTAL INNOVATION
- Innovation that Addresses the Needs of Many Industries
- Includes Technologies such as Cloud or Authentication Services that Provide a Technical Platform for a Range of Offerings
- e.g. Apple Pay, enable Online Payments within or Across Any Sectors
Explain the Classification of Innovation - PRODUCT INNOVATION
- one that Introduces Change in the Things that are Offered and/or in the Customer Experience Of the Offering
- e.g. an Improved Encryption Search or Analysis Algorithm
Explain the Classification of Innovation - PROCESS INNOVATION
- is one that Brings Change in the Way Things are Created, Performed or Delivered
- e.g. the Introduction of Secure Online Payments ant the continuing evolution of such mechanisms
Explain the Classification of Innovation - PARADIGM INNOVATION
- One that Brings About Change in the Underlying Mental Model Whereby People Think about How Something
- e.g. the Change from On-Premise Installation of Software Applications to Cloud-Based Software as a service (SaaS) offerings
Define the Innovation Process
- a Process through Which a New Product, Technique or Useful Service is Obtained from the Generation of New Ideas and their Development
Explain Ideas and Their Origins - ASSOCIATION
- association : the Bringing Together of Previously Unconnected Ideas to Solve a Problem or Open a New Market
- was Time where Phones were Used Only to Make Calls and Photos could Only be Taken by a Camera
- the Ideas to Associate these Functions Contributed To the now Ubiquitous Smart-phone Products
Explain Ideas and Their Origins - ADAPTATION / ANALOGY
- Adaptation of an Existing Solution for a Different Situation
- Platforms such as Uber Under-lie Collaborative Consumption or the Sharing, Access or Peer Economy
- this Approach is Now being Applied to a Wide Range of Business Situations to Create Platforms whereby Consumers Pay to Access Someone Else’s Goods or Services
Explain Ideas and Their Origins - SERENDIPITY / CHANCE
Serendipity / Chance - a New Ideas Arises Through Random Occurrence or Accident
- e.g. 1945 , Percy Spencer was working with magnetrons –> he noticed the melting of a chocolate bar in his pocket when stood next to a magnetron –> this observation Led to the Invention of the Microwave Oven
Explain the 2ND PHASE of INNOVATION - Exploitation of Ideas Through a Product or Service Offering
- About Way Idea can Be Taken to Market Through Form of Offering
- Idea Cannot be Taken to Market In its Pure Form : Needs to be Wrapped Into a Product or Service Offering with an Associated Business Model
- a Business Model is a Set of Propositions, Analyses and Design Decisions that Embrace all Aspects of How an Offering will be Taken to Market
- a Business Model is Embodied In and Empowered by a Business Structure
Explain the 3RD PHASE of INNOVATION - Market Consumption of an Offering
- About Interpreting and Handling the Market’s Response to an Offering
- Positive Response Provides Evidence that Business Model is Working, and Hence Encourages More of the Same
- Negative or Disappointing Response may Reflect Badly on the Idea, on the Way it’s Been Wrapped Into an Offering, or on the Business Model Adopted
- Understanding and Interpreting Market Response is Only Possible If the Required Data is Available
What is Strategy?
- defines How we will Meet Our Objectives
- Sets Allocation of Resources to Meet Goals
- Selects the Preferred Strategic Option to Compete Within a Market
- Provides a Long-term Plan for the Development of the Organisation
What are 3 Different Forms of Organisation Strategy in relations to Corporate Strategy
- Business Unit Strategies
- Regional Strategies
- Functional Strategies
What Happens in the Absence of Digital Business Strategy (4)
- Missed Opportunities for Additional Sales and More Efficient Purchasing on the Buy-Side
- Fall Behind Competitors in Delivering Online Services - may Become Difficult to Catch Up, e.g. Dell
- Poor Customer Experiences from Poorly Integrated Channels
- Loss of Competitive Advance
State the 4 Stages of the STRATEGIC FORMULATION PROCESS
(1) STARETGIC ANALYSIS
(2) STRATEGIC OBJECTIVES
(3) STRATEGIC DEFINITION
(4) STRATEGIC IMPLEMENTATION
Explain the Stage of the Strategic Formulation Process - STRATEGIC ANALYSIS
- EXTERNAL ENVIRONMENTAL
Social, Legal and Ethical, Economic, Political, Technological - INTERNAL RESOURCES
Resource analysis, Portfolio analysis, Swot analysis, Demand analysis, Competitor anlaysis
DIGITAL BUSINESS SPECIFIC
- Stage Models of Digital Business Development
- Assessing sell-side, buy-side and value network opportunities and threats
- Stages Models of Digital Business Development
- Assessing sell-side, buy-side and value network opportunities and threats
Explain the Stage of the Strategic Formulation Process - STRATEGIC OBJECTIVES
- VISION
Replace vs Complement
Extent of Adaptability NEEDED - OBJECTIVES
Smart Objectives
Online Revenue contribution
Balanced Scorecards - E-BUSINESS SPECIFIC TECHNQIUES
Vision about capability to change, to reinvent
Online revenue contribution
Explain the Stage of the Strategic Formulation Process - STRATEGIC DEFINITION
- OPTION GENERATION
- OPTION EVALUATION
- OPTION SELECTION
- 8 Key e-business strategic decisions
Decision 1 : e-business channel priorities
Decision 2 : Market and Product Development
Decision 3 : Positing and Differentiation Strategies
Decision 4 : Business and Revenue Models
Decision 5 : Marketplace Restructuring
Decision 6 : Supply chain management Capabilities
Decision 7 : Internal Knowledge Management Capabilities
Decision 8 : Organisational Resourcing and Capabilities
Explain the Stage of the Strategic Formulation Process - STRATEGY IMPLEMENTATION
- PLANNING
- EXECUTION
- CONTROL
IMPLENTATION ISSUE
Supply chain management strategies
Digital marketing strategies
Customer Experience and Service Design
Digital Transaction and Growth Hacking
State 4 Models for Digital Strategic Analysis
- PORTER’S 5 FORCES - analyses the Different External Competitive Forces that Affect an Organisation and How Information can be Used to Counter Them
- PORTER’S COMPETITVE STRATEGIES - assess how External Competitive Forces ccan be Harnessed
- MCFARLAN’S STRATGEIC GRID - a Model for Assessing the Current and Future Applications Portfolio Within an Organisation
- PEPPARD and WARD’S MODIFIED STRAGEGIC GRID
Explain PORTER’S 5 FORCES MODEL
the business and it’s External Threats :
- BARGAINING POWER of CUSTOMERS
- THREAT OF SUBSITUTIES
- THREAT OF NEW ENTRANTS
- EXTENT OF RIVARILY BETWEEN COMPETITORS
- POWER OF SUPPLIERS
State the 4 COMPONENTS of PORTER’S COMPETIVE STRATEGIES
- OVERAL COST LEADERSHIP
- DIFFERENTIATION
- FOCUS OR NICHE
- STUCK IN THE MIDDLE’
Porter’s Competitive Strategies - explain OVERALL COST LEADERSHIP
- Firm Aims To Become the Lowest-Cost producer in the Industry.
- by Reducing Costs, One is More Likely to Retain Customers and Reduce the Threat Posed by Substitute Products
Porter’s Competitive Strategies - DIFFERENTIATION
- Creates a Product Perceived Industry-Wide as Being Unique.
- by Being Able to Tailor Products to Specific Customer’s Requirements or by Offering Exceptional Quality of Service, the Risk of Customers’ Switching is Reduced
Porter’s Competitive Strategies - explain FOCUS OR NICHE
- this Involves Identifying and Serving a Target Segment Very Well (e.g. buyer group, product range, geographic market).
- this Firm Seeks to Achieve or Both of ‘Cost Leadership’ and ‘Differentiation’
Porter’s Competitive Strategies - explain ‘STUCK IN THE MIDDLE’
- the Firm is Unable to Adopt Any of the Above Approaches and Therefore is Ultimately at the Mercy of Competitors that are Able to Offer these Approaches
Explain what is MCFARLAN’S STRATEGIC GRID
- Used to Indicate the Strategic Importance Systems to a Company and Now and in the Future
- assesses the Current Mix of Business Information Systems (IS) Within an Organisation
4 Segments - STRATEGIC - the Business Depends on Both its Existing IS and its Continued Investment in New IS to Sustain Continued Competitive Advantage
- TURNAROUND - While Business in this position Doesn’t Currently Derive Significant Competitive Position
- FACTORY - while Depending on its Current IS to Operate Competitively Doesn’t Envisage Further s Investment having a Positive Impact on it’s Competitive Position
- SUPPORT - Doesn’t and believes it will Not, it will not, derive significant Competitive Advantage from Information SYSTEM
