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LECTURE 1 - Chapter 1: The Five Domains of Digital Transformation & Crittenden et al. (2019)We live in an age of digital transformation so we need to develop new ways of thinking about
international strategy in an age of digital transformation
- International business and digitalization are interrelated
- The Chief Innovation and Strategy Officer should be responsible for digital transformation in
digital business
- Digital transformation affects all dimensions of international business
- Industries are disrupted through digitalization: Amazon - retailing, AirBnB - tourism, Uber - taxi
industry, Wikipedia - encyclopaedias, Spotify and Netflix - music media
- Global tech firms belong to the biggest firms in the world: Google, Facebook, Apple, Microsoft
- New business models emerged: digital platforms - Booking.com, Facebook, Google, Just Eat
Takeaway
- Just Eat affects the restaurant market, it expands the food delivery market so the
markets of restaurants increase, it increases competition among restaurants, fragmented
delivery services consolidate in a few concentrated services such as Just Eat
How can digital technologies be used by international firms to reinvent their core business or to disrupt
industries?
Digital transformation is inherently incorporating digital technologies throughout the business:
External drivers of digital transformation:
● Digital technology
● Digital competition
● Digital customer behavior
Phases of digital transformation:
● Digitization: encoding of analog into a digital format - typing written into a database
● Digitalization: how IT can be used to alter business processes - creating an online feedback area
● Digital transformation: company-wide change and new business models - providing services via
the cloud
Strategic imperatives of digital transformation:
● Digital resources
● Organizational structure
● Growth strategy
● Metrics and goals
,Digital transportation is redefining business strategy and culture:
- Think of technology as a strategic competency
- Amazon revolutionised the entire concept of shopping
- Digital world has radically changed consumer behavior and expectations
- Digital transformation continues to accelerate due to evolving technology and increase
availability and usage of data
- Real-time data about consumers, competitors, markets, supply chain is extremely important
- Helps businesses to take the right decisions leading them toward innovation and success
- Provides low-cost tools and strategies that enables small and medium-sized businesses to
compete with major enterprises
- Digital transformation depends on data which depends on effective collection, cyber security,
analytics and application; essential of digital transformation
Industry 4.0 phase - refers to the different levels of digitalization:
Digital transformation is not easy, many initiatives fail or don’t meet goals
- Culture is the most significant self-reported barrier to digital effectiveness
- Most fail due to resistance from employees
It has dark and problematic sides:
- Privacy concerns, security concerns
- Failing mega-projects
- Haves and have nots of digital resources
- Sustainability concerns
- Inner cities become ghost towns without shops due to online shopping
- Monopolistic power of global tech firms
- Price wars and race to the bottom (easy to find lowest price for a good)
- Dependency on powerful technology vendors (who misuse power to ask for high prices)
- Gig jobs (jobs with very few rights and harsh conditions); employees of Uber
The most serious concern regarding digitalization is privacy and surveillance issues
,The business model rules have changed: the spread of new digital technologies and disruptive threats
are transforming business models
Who survives? What separates businesses that manage to adapt and thrive from those who fail?
The 5 domains of strategy are changing:
1. Customers: relationships are much two-way with dynamic
participation as a success driver
a. From passive targets to dynamic networks; reinventing market
funnel
b. Less like isolated individuals and more like tightly connected
individuals
i. Many companies are harnessing customer networks to
enhance their products:
1. Learning to engage, empower and co-create
with customers
2. Leverage ways that happy customers influence
others
3. Thinking like a media company
2. Competition: competitive assets no longer just reside within the
company, but in the network of partners brought together
a. Build platforms, not just products
b. The more people are part to a network, the higher the value of
the network
i. Network effects: the effects of a product or service has
on a user while other use the same service or product
1. Direct impact: direct value of additional users
2. Indirect impact: more usage of A leads to
complements B and in turn A (IOS and mobile
payments)
, 3. Data: everyone creates data and storage is now easier and cheaper
Turn data into assets; from silos to strategic assets
i. Assembling the right data and applying it effectively to
generate long-term business value; effectively
collaborating with data partners
ii. Understanding sources of analytical capabilities of big
data
iii. Risks of data security and privacy
b. Data is everyone and up for grabs
c. Data no longer just supports an organization, it is an asset
itself
4. Innovation: digital technologies enable continuous testing and
experimentation
a. Innovate by rapid experimentation rather than top down
planning
b. The 7 principles of experimentation: learn early, best fast and
iterative, fall in love with the problem not the solution, get
credible feedback, measure what matters now, test your
assumptions, fall smart
5. Value: constantly searching for the next source of customer value is
imperative
a. Adapt your value proposition rather than defend it, it cannot
be set in stone
i. Learn to focus beyond current business models
ii. How the best value can be delivered as new
technologies reshape opportunities and needs
iii. Continuous configuration may involve discovering new
customers and applications for current products, or
new business models all together
A playbook for digital transformation:
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