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Theories of Digital Business Summary Easy overview
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Summary in comprehensive blocks of all articles in the course Theories of Digital Business in the Digital Business track. Master Business Administration
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1. Edelman, In a classic journey, consumers engage in extended repititve1 Singer phases of consideration and evaluation before a purchase
(Mckinsey) takes place. In contrast, in a new journey, the consider step
note that the is shortened, or even eliminated, essentially delivering
explosion of customers directly into the loyalty loop (lock-in).
digital
technologies
has created
new journeys
for today’s
customer’s.
Distinguish
between
classic and
new journeys.
Please explain Companies shift from a reactive to an aggressive proactive
how strategy, trying to lock in customers – letting them realize what
companies use they benefit from. Companies make use of emerging
new emerging technologies and processes to enhance one of the four key
technologies, capabilities, which makes journeys more attractive and
processes and stimulates customer lock-in
structures to 1) Automation: steps that were formerly done manually are
change now executed automatically allows processes tob e
strategies done quickly and easily
tackling 2) Proactive personalization: uses historical information
customer and automation processes to optimize a shopper’s
journeys.. (4 experience
key 3) Contextual interaction: using knowledge about where a
capabilities) customer is in a journey phisically or virtually to draw a
customer to an interaction a firm wants to pursue.
4) Journey innovation: ongoing experimentation and
analysis of customer needs, technologies, and services
may result in the discovery of opportunties that create
new value for both firm/ customer.
How is
organizational
structure and
managerial
change needed
for journeys to
become
successful?
Chief Digital officer oversees everything, whereas journey
, strategis prioritize current journeys for digital development, and
spot opportunties for new ones. Central placed journey product
manager are guided by a firms business priorities (ROI) to
explore ways to expand and optimize the journey’s they are
responsible for. This requires the mastering of the 4 capabilities.
1. Weill and - Firms first need to decide whether they want to be part
2 Woerner note of a complex ecosystem, or whether they prefer to fully
that the control the value chain.
amount of - Firms also need tot o know how much they want to invest
digital into knowing their end consumers
disruption is Firms can be:
causing - Suppliers (partial knowledge end consumer, potential loss
companies to of power due to intermediairy, skills should be low-cost
evaluate producer, and incremental innovation insurance via
threats and agent)
opportunities. - Omnichannel business (complete knowledge end
In the digital consumer, therefore owns customer relations, and has an
era, what 4 integrated value chain. Consumers interact with multiple
business channels that give access to the company’s products.
models are be bank retailer)
suitable (i.a. - Ecosystem driver (complete knowledge of end consumer,
how should relations with other parties that offer
companies complementary/competitive services, branded platform
perpare for that ensures great customer experience, but also gains
digital insight from all data, consumer need is matched with
disruption) other parties. (Amazon, apple)
- Modular producer (partial knowledge of end consumer,
able to adapt to ecosystem, constant innovation of
product service, plug-and-play product/service (PayPay)
Findings show that ecosystem drivers had the highest margins
and growth, customer knowledge is key.
What two 1. Gain better knowledge about consumers through
capabilities do a) enhanced digital capabilities in obtaining info about
companies customer goals b) enhance customer in the firm (e.g.
need to customer satisfaction metric via social media), emphasize
develop to evidence based decision making, develop integrated
prepare for the multi- product and channel customer experience.
future 2. Becoming more of an ecosystem by;
a) being the first choice for a sig. nr of consumers
(created through brand promises, world-class execution
in meeting demands, and receiving great
recommendations)
b) become great at building partners
c) create service enabled interfaces that others can use by
standardizing and making available of business rules and
transactions d) by treating efficiency and compliance as
a competence
,1. Ch2 book:
3 explain value
chain
Value chain forces you to think of primary & support activities ->
add value or reduce cost -> with a big picture mindset
How can the Managers can use the value chain framework from a strategic
value chain be perspective to consider firm’s differences and distinctiveness
used to sustain compared to rivals, and can reveal operational weaknesses.
a CA? When a value chain is imitation resistant, a firm may have a
critical competitive set. If a firm’s value chain can’t be copied by
competitors without engaging in painful trade-offs or if the value
chain helps to create and strengthen other assets overtime it can
be a key source for competitive advantage.
What can be - Brand (symbolic embodiment of all the information
exceptionally connected with a product or service used to lower
powerful search costs, indicates quality, and inspires trust)
resources for - Scale (economies of scale (cost of the investment can be
competitive spread across increasing units of production or a growing
advantage? customer base). May also lead to increased bargaining
power what can lead to lower supplier prices, faster
deliveries, and higher sales prices.
- Switching costs costs for consumers related to moving
from one product or service to another. Strong switching
costs cement consumers to firms. Sources: learning costs,
re-entering information and data, financial commitment
& investments, contractual commitments, search costs,
loss of loyalty benefits)
- Differentiation: the offering of services or products that
are different from others on key aspects important for a
(large) group of consumers.
- Network effects: exist when a product or service becomes
more valuable as more people use it. (Whatsapp) + might
also see value added by third parties (IOS, Playstation)
leading to a industry standard
- Distribution channels: If no one sees your products, it
won’t get considered by consumers. Tech opens up
opportunities for new ways to reach customers.
- Patents: can be a source of competitive advantage to
product innovations that are deemed to be useful, novel
and nonobvious. Firms that receive patents have some
, degree of protection against copycats that try to mimic
their products or methods.
How can - Technology can play a key role in creating and reinforcing
technology assets for sustainable advantage by enabling an
help sustain a imitation-resistant value chain; strengthening a firm’s
competitive brand; collecting useful data and establishing switching
advantage? costs; creating a network effect; creating or enhancing a
firm’s scale advantage; enabling product or service
differentiation; and offering an opportunity to leverage
unique distribution channels
- E.g. Netflix: brands built on consumer experience, scale
from distribution network, selection, and the long tail
(products n/a in retail stores), network effects (large
customer base), first mover advantage,
How can It’s not a time or technology lead that provides sustainable
timing and competitive advantage; it’s what a firm does with its time and
technology technology lead. If a firm can use a time and technology lead to
lead to a SCA? create valuable assets that others cannot match, it may be able
to sustain its advantage. But if the work done in this time and
technology lead can be easily matched, then no advantage can be
achieved, and a firm may be threatened by new entrants
5 forces
How can - Tech can increase intensity of rivalry: Instead of only
technology competing geographically via physical brick and mortar
shape and stores, the competition is online as well
reshape the 5 - Tech can offers substitutes, whilst first music was only
forces? listenable via cd and other audio carriers, digital only
now also can be bought.
- Tech can increase bargaining power of the consumer:
Consumers can compare prices online, are not or less
geographically bound and have greater choice in general.
- The bargaining power of supplies can also increase by
tech, taking the example of music: Labels, bands and
producers now have new ways of reaching fans
What other - Potential new entrants?
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