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Digital business models summary week 1-3
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Digital Business Model detailed summary containing the 15 articles of the first three weeks of the course.
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Week 1: StrategyLecture 1
Vision ⇒ clear picture of what the organization wants to become at some point in the future.
Instead, the mission is what they are currently.
Strategy ⇒ how the vision will be achieved
Objectives ⇒ what will be achieved, brad guiding principles, descriptive
Goals ⇒ how objectives will be achieved, SMART, more goals are tied to each objective,
usually start with an action verb
Article 1: Consumer power: Evolution in the Digital Age
Power shapes consumers purchasing patterns, opinion leaders continuously influence
consumption decisions through recommendations, and browsing behaviors are adjusted to
limit the data provided to companies.
Power → asymmetric ability to control people or valued resources in online social relations.
A powerful entity requires a comparison with a powerless one to drive its position. The
position is established as the powerful control more people or resources. In online
environments, power situations are less stable as they need continuous action. Individual
activity is continuously measured and compared with others activities = clear function of the
consumer’s online behavior.
Influence → function of reach, the degree of the person’s embeddedness in the social
network and persuasiveness linked to the relevance of the content the person creates
online. Control over valuable resources refers to the right to dispose of tangible or intangible
assets online.
Empowerment → refers to the dynamic process of gaining power through action by changing
the status quo in current power balances.
SOURCES OF CONSUMER POWER
The internet influences the emergence and evolution of consumer power. The source of that
influence is tracked to two main infrastructure characteristics:
1) hard infrastructure characteristics determines through the developer’s source code in
terms of:
a) openness of the infrastructure architecture → modularity, distributed access,
and the value of the collective effort created as individuals collaborate across
online networks. Many networks restrict information to certain groups of
people to centralize control.
b) infrastructure interaction designs → availability and restrictions on data types,
amount, and directionality of interaction conditions both network participation
and the empowerment process by providing different interaction formats and
different types of relationships.
2) soft infrastructure characteristics ⇒ social processes built into the platform.
Governance formed through social processes, prompt normative expectations that
tacitly define appropriate behavior and implicit obligations associated with online
interaction.
The 4 sources are the following:
1) demand-based power ⇒ aggregated impact of consumption and purchase behaviors
arising out of Internet and social media technologies. The option to exit is a classic
statement to signal dissatisfaction. However, it does not provide feedback to the
, marketer. Search engines allowed increased consumer access and choice, yet
knowledge, financial, and infrastructure barriers at this time limited an individual’s
ability to create personal websites and share information. It also gives rise to
significant downward price pressures. Consumer’s search activity can serve as a
proxy of objective measures of consumer economic activity.
2) information-based power ⇒ the rise of the internet granted consumers access to
information, both firm created and consumer created. Easy access to product
reviews, performance data, and prices enables consumers to better match their
preferences to products and reduces information asymmetry between marketers and
consumers. The provision of more information also leads to consumers being more
educated, more difficult to influence = harder to spark consumer’s awareness, higher
consumer power.
a) diffusion theory ⇒ shorter adoption cycles produce shorter product life cycles,
which increase pressure on marketers.
b) Content production of consumers is a means to catalyze change by providing
a feedback mechanism to publicize undesirable practices, policies, or outputs
by firms.
c) the ability to profile individual consumers on the basis of their information
search, history, purchase, and consumption cycles may erode some
advantages that consumers have won over the past decade in terms of
enhanced information access and control.
d) Online tools for enabling information-based power grant ordinary consumers
the means to become experts in areas that previously were the sole domain
of paid professionals.
e) Personality traits influence the propensity to purchase certain products
depending on the online consumption process used.
3) network-based power ⇒ metamorphosis of content through network actions
designed to build personal reputation and influence markets through the distribution,
remixing, and enhancement of digital content. Network-based power is based on the
abilities of others to add value beyond the original content → the value derives from
content dissemination, content completion, content modifications… Network is a
source of power because it allows the reach to more people, internet increases
connectivity.
a) complements both information and voice-based power, arising from the mass
distribution and consumption of user-generated content. The strength and
number of social connections in one’s network substantially increases the
ability to share and influence others, empowering consumers to distribute
content, regardless of whether it is self-created, created by others or
co-created → multiway dialog.
b) Centered on consumer connections, the openness of the infrastructure plays
a substantial role in terms of determining the accessibility and redistribution of
content → soft infrastructure characteristics designed to reward specific types
of contributions may indirectly influence the nature of content transformation
and redistribution.
c) Although it is considered generally positive for consumers, people can
experience social obligations in the context of virtual environments, which can
create risks for their personal autonomy and privacy.
, d) empowerment/disempowerment paradox ⇒ the internet has gained the
power to determine what is real. Pressure to maintain an active profile and
nurture relationships through online platforms might lead to feelings of
discontentment.
e) dilemma between private/public → as the online digital footprint grows,
private acts can be disseminated across vast networks and transformed into
public events.
4) crowd-based power ⇒ ability to pool, mobilize, and structure resources in ways that
benefit both the individuals and the groups. Deliberate aggregation of all the other
power bases = virtual communities, amplifies demand-based power through
communal buying. Information-based power is amplified through standardization, and
easy access for content consumption (hard infrastructure). Network-based power is
amplified through content production reward and acknowledgment systems (soft
infrastructure). Crowd-based power is amplified through bolstering individual
connections in networks to increase reach and pool resources across groups,
creating new levels of buying power and new marketplaces. Crowd-based power is
useful as people can organize themselves to achieve a common goal.
a) can be both used in both structures and unstructured efforts → in structured,
such as consumption communities, it offers the possibility to build a cohesive
identity and mobilize members. When it is used by individuals, they can invest
in a product for their individual benefit.
b) The power between consumer and marketer in this case depends on the
network's characteristics.
c) crowd-based power is able to create economic value by linking sellers, which
creates social networks that act as virtual shopping centers, increasing the
accessibility of shops within the network.
d) intrinsic value in being part of the community ⇒ creation of sense of
belonging, and shared social relationships in particular makes collective
affiliation meaningful to participants.
Article 2: Antecedents and consequences of e-business adoption for European
retailers
E-business describes an integration of communication technologies with business processes
and management practices via the internet. These web technologies help firms to
understand consumers' needs.
Organizational implications of conducting e-businesses → inter-organizational systems have
an impact on value chain management and on the relationships within the value chain. The
Internet has the ability to link these activities and make data widely available both within the
company and to suppliers, partners and customers. These changes are influenced by the
environment, such as competitive pressures. Size and uncertainty are also variables that
affect undertaking changes.
1) changes in corporate strategy → the use of e-technologies creates a new
marketplace. Hence, the organization became a network, which requires more
flexible and fluid corporate scope ⇒ H1: e-business use leads to changes in
corporate strategy.
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