Theories of
Digital Business
Summary
October 2019
,1. DIGITAL STRATEGY (#0-2) -------------------------------------------------------------------------------------------------------------------------- 3
1.1 SETTING THE STAGE (L1) ---------------------------------------------------------------------------------------------------------------------------------- 3
1.1.1 Gallaugher Ch. 1: Setting the Stage: Technology and the Modern Enterprise ------------------------------------------------------- 3
1.1.2 Weill, P., & Woerner, S. L. (2015). Thriving in an increasingly digital ecosystem. MIT Sloan Management Review,
56(4), 27-34 ---------------------------------------------------------------------------------------------------------------------------------------------------- 4
1.1.3 Edelman, D. C., & Singer, M. (2015). Competing on Customer Journeys. Harvard Business Review, 88-100. ------- 5
1.2 DIGITAL STRATEGY 1: USING DIGITAL TECHNOLOGIES FOR STRATEGIC ADVANTAGE (L2) ---------------------------------------------- 6
1.2.1 Gallaugher Ch. 2: Concepts and Frameworks for Achieving Success ------------------------------------------------------------------ 6
1.2.2 Gallaugher Ch. 3: Zara: Fast Fashion from Savvy Systems --------------------------------------------------------------------------------- 9
1.2.3 Gallaugher Ch. 4: Netflix in two acts: Sustaining Leadership in an Epic Shift from Atoms to Bits ----------------------------- 10
1.3 DIGITAL STRATEGY 2: IT GOVERNANCE (L3) ------------------------------------------------------------------------------------------------------ 12
1.3.1 Gallaugher Ch. 6: Disruptive Technologies: Understanding Giant Killers and Tactics to Avoid Extinction ------------------- 12
1.3.2 Gallaugher Ch. 7: Amazon: An Empire Stretching from Cardboard Box to Kindle to Cloud -------------------------------------- 14
1.3.3 Borgman, H.P. (2014). IT Governance. In: Khosrow-Pour, M. (ed.). Encyclopedia of InformationScience and
Technology, 3rd Edition, 2745-2753. IGI-Global. ------------------------------------------------------------------------------------------------- 20
1.3.4 Smeekes, I. & Borgman, H.P. (2018). A wheelbarrow full of frogs: understanding portfolio management for agile
projects, In 51th Hawaii International Conference on System Sciences (HICSS). -------------------------------------------------------- 22
1.3.5 Arikan, M., Borgman, H.P. (2020). IT Governance: Oil or Sand in the Wheels of Innovation. In 5rd Hawaii
International Conference on System Sciences------------------------------------------------------------------------------------------------------- 23
2 DIGITAL PROCESSES (#1-4) ----------------------------------------------------------------------------------------------------------------------- 24
2.1 DIGITAL PROCESSES 1: INFORMATION SYSTEM’S DEVELOPMENT (L5) ---------------------------------------------------------------------- 24
2.1.1 Gallaugher Ch. 13 ---------------------------------------------------------------------------------------------------------------------------------- 24
2.1.2 Gallaugher Ch. 14 Software in Flux ----------------------------------------------------------------------------------------------------------- 29
2.2 DIGITAL PROCESSES 2: MANAGING IT INITIATIVES (L6) ---------------------------------------------------------------------------------------- 31
2.2.1 Rigby, D. K., Sutherland, J., & Takeuchi, H. (2016).Embracing Agile. Harvard Business Review; -------------------------- 31
2.2.2 Neves, F. G., Borgman, H., & Heier, H. Success Lies in the Eye of the Beholder: The Mismatch Between Perceived
and Real IT Project Management Performance. In 2016 49th Hawaii International Conference on System Sciences (HICSS)
33
2.3 DIGITAL PROCESSES 3: DIGITAL TRANSFORMATION AND CHANGE (L7) --------------------------------------------------------------------- 34
2.3.1 Ford, J.D., Ford, L.W.& D’Amelio, A. (2008). Resistance to change: the rest of the story. The Academy of Management
Review, 33(2), 362-377------------------------------------------------------------------------------------------------------------------------------------ 34
2.3.2 Kotter, J. (2012). How the most innovative companies capitalize on today's rapid-fire strategic challenges-and still
make their numbers. Harvard business review, 90(11), 43-58; -------------------------------------------------------------------------------- 36
2.3.3 Heier, H., Borgman, H.P. & Hofbauer, T.H. (2008). Making the most of IT governance software: understanding
implementation processes. In 2008 43th Hawaii International Conference on System Sciences (HICSS), 435-44--------------- 37
2.4 DIGITAL PROCESSES 4: PROCESS MODELLING (L10) ---------------------------------------------------------------------------------------------- 39
2.4.1 Kim, Y.G., "Process Modeling For BPR: Event-Process Chain Approach" (1995). ICIS 1995 Proceedings. Paper 11. 39
2.4.2 Yourdon, E. (2006) Chapter 6: Data Flow Diagrams. In: just enough structured analysis. Book originally only
published online until Yourdon passed away in 2016. -------------------------------------------------------------------------------------------- 39
3 DIGITAL TECHNOLOGIES (#1-3) --------------------------------------------------------------------------------------------------------------- 40
3.1 DIGITAL TECHNOLOGIES 1: A MANAGER’S GUIDE TO TELECOMMUNICATIONS AND THE INTERNET (L4) ---------------------------- 40
3.1.1 Gallaugher Ch. 5: Moore’s Law and More: Fast, Cheap Computing, and What This Means for the Manager ------------ 40
3.1.2 Gallaugher Ch. 16 A Manager’s guide to Internet and Telecommunications ------------------------------------------------------- 43
3.2: DIGITAL TECHNOLOGIES 2: ARTIFICIAL INTELLIGENCE AND ROBOTICS (L8) ------------------------------------------------------------- 47
3.2.1 Agrawal, A. K., Gans, J. S., & Goldfarb, A. (2017). What to Expect from Artificial Intelligence. MIT Sloan Management
Review, 58(3), 23-27. -------------------------------------------------------------------------------------------------------------------------------------- 47
3.3: DIGITAL TECHNOLOGIES 3: BIG DATA AND ANALYTICS (L9) --------------------------------------------------------------------------------- 49
3.3.1 Gallaugher Ch. 15.1-15.7 Data & Competitive Advantage ------------------------------------------------------------------------------ 49
3.3.2 Gallaugher Ch. 17 Information Security ------------------------------------------------------------------------------------------------------ 52
3.3.3 Gallaugher Ch. 18 ---------------------------------------------------------------------------------------------------------------------------------- 54
4. OVERFLOW/WRAP UP ---------------------------------------------------------------------------------------------------------------------------------- 58
4.1 OVERFLOW (L11) ------------------------------------------------------------------------------------------------------------------------------------------ 58
4.1.1 Gallaugher Ch. 9 Social Media, Peer production and the Crowd --------------------------------------------------------------------- 58
4.1.2 Gallaugher Ch. 10 The Sharing Economy, Collaborative Consumption, and Efficient Markets through Tech ------------ 61
4.1.3 Gallaugher Ch. 11 Facebook, Platforms, Privacy and Business ----------------------------------------------------------------------- 62
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, 1. Digital Strategy (#0-2)
1.1 Setting the Stage (L1)
1.1.1 Gallaugher Ch. 1: Setting the Stage: Technology and the Modern Enterprise
1.1 Tech's Tectonic Shift: Radically Changing Business Landscapes
IPO Initial public stock offering, the first time a firm makes shares available via a
public stock exchange, also known as "going public."
Internet of Things A vision where low-cost sensors, processors, and communication are embedded
into a wide array of products and our environment, allowing a vast network to
collect data, analyze input, and automatically coordinate collective action.
Key take-aways:
• In the previous decade, tech firms have created profound shifts in the way firms advertise and individuals and
organizations communicate.
• New technologies have fueled globalization, redefined our concepts of software and com- puting, crushed costs, fueled
data-driven decision-making, and raised privacy and security concerns.
1.2 It's Your Revolution
Key take-aways
• Recognize that anyone reading this book has the potential to build an impactful business. Entrepreneurship has no
minimum age requirement.
• The ranks of technology revolutionaries are filled with young people, with several leading firms and innovations
launched by entrepreneurs who started while roughly the age of the average university student.
• Several forces are accelerating and lowering the cost of entrepreneurship. These include crowdfunding, cloud computing,
app stores, 3D printing, and social media, among others.
1.3 Geek U p - Tech Is Everywhere and You'll Need It to Thrive
Sarbanes- Also known as Sarbox or SOX; US legislation enacted in the wake of the accounting scandals of the early
Oxley Act 2000s. The act raises executive and board responsibility and ties criminal penalties to certain accounting and
financial violations. Although often criticized, SOX is also seen as raising stakes for mismanagement and
misdeeds related to a firm's accounting practices.
Key take-aways:
• As technology becomes cheaper and more powerful, it pervades more industries and is becoming increasingly baked into
what were once nontech functional areas.
• Technology is impacting every major business discipline, including finance, accounting, marketing, operations, human
resources, and the law.
• Tech jobs rank among the best and highest-growth positions, and tech firms rank among the best and highest-paying
firms to work for.
• Information systems (IS) jobs are profoundly diverse, ranging from those that require heavy programming skills to those
that are focused on design, process, project management, privacy, and strategy.
1.4 The Pages Ahead
Key take-aways:
• This text contains a series of chapters and cases that expose durable concepts, technologies, and frameworks, and does so
using cutting-edge examples of what's happening in industry today.
• While firms and technologies will change, and success at any given point in time is no guarantee of future victory, the
issues illustrated and concepts acquired should help shape a manager's decision-making in a way that will endure.
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,1.1.2 Weill, P., & Woerner, S. L. (2015). Thriving in an increasingly digital ecosystem.
MIT Sloan Management Review, 56(4), 27-34
The article presents a framework to help mangers think about their competitive environments in the digital era. Managers seek to
transform in two dimension;
1) knowing more about their end customers,
2) and to operate in an increasingly digital ecosystem.
(1) Supplier model: enterprises continue to digitize and search becomes easier, therefore suppliers lose power and are
pressured to continually reduce prices. This results in further industry consolidation.
(2) The Omnichannel model: provide customers access through multiple channels, physical and digital channels, giving them
greater choice and seamless experience.
(3) Ecosystem driver model: provide a platform for participants to conduct business. Like omnichannel businesses,
ecosystem drivers use their brand strength to attract participants, ensuring a great customer experience and offer one-stop
shopping
(4) The Modular Producer Model: To survive, must be best in category. To thrive they need to continue roll out new
products and services to demonstrate they are among the best options available and best priced.
Companies with ecosystem drivers as dominant model have the highest margins and growth. That is because they are 1)more
responsive to their customer needs and become a 2)destination to sell their own products as well as others.
To prepare for the future, companies need to develop new capabilities in two areas:
1. Gain better knowledge about consumers through:
- Enhanced digital capabilities in obtaining info about customer goals
- Enhance customer in the firm (via customer satisfaction metric)
- Emphasize evidence based on decision making
- Develop integrated multi-product and channel customer experience
2. Becoming more of an ecosystem by:
- Being first choice for customers (through brand promises, world-class execution)
- Become great at building partners
- Create service enabled interfaces
- Treating efficiency and compliance as a competence
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, 1.1.3 Edelman, D. C., & Singer, M. (2015). Competing on Customer Journeys.
Harvard Business Review, 88-100.
Comments: Paper has very idealistic view. In real life, there are many different privacy and individual preferences. So why was
this paper chosen?
1. Overview of how a company can benefit from big data
2. Why companies should be able to get all of these people to work together
Customer journeys need to be stickier:
1. Companies should design journeys in a way that customers won’t even consider leaving the journey, and therefore stay in
the loyalty loop.
2. New journey: compresses the consider step and shortens or/and eliminates the evaluate step, delivering customers
directly into the loyalty loop and locking them within it.
Shift from primarily reactive strategy to aggressive proactive strategy
- Classic: consider -> evaluate -> consider -> buy -> enjoy -> advocate -> bond
- Loyalty loop: buy -> enjoy -> advocate -> bond
Companies building the most effective journeys master four interconnected capabilities
1. Automation: digitization and streamlining of steps in the journey that were formerly done manually. This creates the
essential for sticker journeys by allowing customers to execute former complex journey processes quickly and easily.
2. Proactive personalization: companies should take information gleaned either from past interactions with a customer or
from existing sources and use it to instantaneously customize the shopper’s experience.
3. Contextual interaction: using knowledge about where a customer is in a journey physically (enter hotel) or virtually
(reading product reviews) to draw him forward into the next interactions.
4. Journey innovation: occurs through ongoing experimentation and active analysis of customer needs, technologies, and
services in order to spot opportunities to extend the relationship with the customer. Goal is to identify new sources of
value for both the company and consumers.
Today, winning brands owe their success not just to the quality and value of what they sell, but to the superiority of the journey
that they create.
Capabilities in practice
1. Use of API to pull data from other providers to assemble a picture of the customer
2. Creating customer dashboards for production and use
3. Integrate services with home-management networks to automate energy conservation
4. Create conservation-oriented customer communities
Building successful journeys
Chief Experience: guide the decision on journey investments and customer segments to focus on, he prioritizes current journeys
for digital development and spots opportunities for new ones.
Journey product managers: at the center of
the action. People in this role are economic
and creative stewards. Their job is to
understand how customers move through the
journey. Main goal is to extend the journey
and increase its stickiness and value.
Scrum teams: execution-oriented, agile and
fast in testing improvements. They
understand the needs and wants and use
prototyping and customer-use data to
measure the impact on customer behavior.
They are brought together by journey
managers for design sprints in which they
pitch new paths.
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