Innovation

• “..development and implementation of new ideas by people who over time engage in
transactions with others within an institutional order..” (Van de Ven, 1986)
Session 2-3 • “.. commercialization of an enabling technology..” (Fetterhoff and Voelkel, 2006)

Innovation Precursors, • “.. the formation of new products or services, new processes, raw materials, new markets and
new organizations..” (Schumpeter, 1934)
Innovation Impulses, and
Juggad • “.. a new or improved product or process (or combination thereof) that differs significantly
from the unit’s previous products or processes and that has been made available to potential
users (product) or brought into use by the unit (process)..” (OSLO Manual, 2018)

• New/ Significantly Improved

Current and Emerging Issues in Strategic Management • Ideas/ Products/ Processes/ Markets/ Organizations
• Commercialization/ Exploitation/ Use / Value
• Potential Users
Prof. Shiwangi Singh
shiwangi.singh@iimranchi.ac.in

Innovation vs. Invention The “4Ps” of Innovation

• Product innovation
• Changes in the things (products or services) which an organization offers
• Innovation
• Generation of new idea or invention
• Process innovation
• Conversion of idea into a business or successful • Changes in the ways in which they are created and delivered
application

• First use
• Position innovation
Innovation = • Invention • Changes in the context in which the product or services are introduced

Invention + • Creating new knowledge

Exploitation • Discovery of new existence • Paradigm innovation
• Changes in the underlying mental modes which frame what an organization does
Invention: Thomas Edison
Innovation: Edison Electric Light Company
Component and Architectural Innovation

The modification of existing

solutions for an entirely new
market
 First and second-generation models Fourth generation models
Rothwell’s five generations of innovation
models

Third generation models

Fifth generation models

Innovation Impulses Innovation Impulses

• Industry • Internal

• Industry Maturity • Scope of innovation activities

• Highly mature with sign of commercialization • Close coordination among business units
• Minimum coordination among business units
• Nascent market with unclear business model

• Innovation culture
• Entrepreneurial culture, innovation is core part of company DNA
• Innovation viewed as distractions
• Competitive dynamics
• Fast moving industry with short product life cycles • Breadth of talent
• Slow moving industry • Managers able to develop legitimate ideas
 Innovation Impulses in E-Commerce Innovation Impulses in E-Commerce
• Omni channel presence
• Customer-data centric approach - user design and user
acceptance testing
• Experimenting 3D modelling - use of virtual reality
• Eco-friendly product
• Customer service and personalization
• Rewarding buyers

Innovation Impulses in Automotive Industry Innovation Impulses in Automotive Industry

• Government support
• Co-creating strategy
• Partners - Joint ventures
• Agile developments
• Global network of R&D
Precursors to Innovation Precursors to Innovation
• Build a game plan for growth - Calculating growth gap
• Control over your existing assets • Gap between growth aspiration and innovation pipeline
• Core business should be strong to • Growth opportunities
support growth initiatives • Expand core businesses
• Move into adjacent markets
• Whether core business requires control
• Create entirely new businesses
• Year-by-year revenue and profit growth rate
• Average of your category or industry
• Estimate potential of your innovation pipeline
• Shed underperforming assets Current Adjacent Moves New Growth Year 1 Year 2 Year 3 Year 4 Year 5
Operation Initiatives
Current Targeted Number
• Create new growth business revenues adjacencies launched

• Operate existing business Five-year

growth rate
Expected
revenue/initiativ
• Trade declining business e in 5-years
Projected year-5 Projected year-5 Projected
core revenues adjacent success rate
revenue
Notes: Notes: Projected year-5
new growth
revenues
Notes:

Targeted year-5 Revenue Projected year-5 Revenue Growth Gap

Precursors to Innovation Precursors to Innovation

• Build a game plan for growth – Mapping balanced innovation portfolio • Build a game plan for growth – Creating a Train schedule

• Aligning portfolio with investment objectives • Detailed time frame for launch of product for a period of 10 years
• Date to start the innovation and first product launch
• High risk – Low risk • Specifies the type of innovation
• Close to core incremental innovations • If competitors have launched products with new feature, the development
• High risky initiative with a greater chances of failure schedule can take that into consideration
• Manage resources
• Increase the diversity • Meet future growth targets
MARKET SHARE
70%

60%

50%

40%

30%

Pacemaker market 20%

10%

0%
Precursors to Innovation Precursors to Innovation
• Build a game plan for growth – Identifying Goals and Boundaries • Build a game plan for growth – Identifying Goals and Boundaries

• Which customer group can be target? • How we will generate new revenues?
• Business focused or consumers • New revenue streams
• Large companies or small companies
• Which suppliers and partners we will use?
• Which distribution channel can we use?
• Existing suppliers or new suppliers
• Retail channel or direct sales
• Outsourcing
• Mass channel or niche
• What tactics we will use?
• What revenues do we have to reach at steady state?
• Acquisitions and partnerships or organic growth
• What is the offering we will provide?
• What go-to-market approach will we use?
• Products or services
• Test market with prototypes
• What geographic areas will we target?
• Globally or locally

• Which brand will we use? Can we consider creating a new brand?

• New brand or existing brand

Precursors to Innovation Precursors to Innovation

• Build a game plan for growth – Picking growth domain • Master the resource allocation process – How many resources?

• Short list of domains that have high potential

• The rate of growth in core business
• Focusing on priority area • Decreasing growth rate – Direct resources towards the new opportunities
• Look for marker close enough to your core but far enough from traditional
competitors
• Changes in the competitive intensity of the businesses
• More competition in mature business – Direct resources towards the new opportunities

• The company’s expertise in creating new businesses

• Less experience, more resources
• Go to the source of opportunity to envision opportunities

• Ask what business we are in • The ratio of capital intensity of potential new businesses compared with older
ones
• P&G 1990s – Fluoride based tooth-paste – Innovation in variants of flavor • High asset intensity, more resources
• Customer purchased it for “healthy teeth and great smile”
Precursors to Innovation Precursors to Innovation
• Master the resource allocation process – Time is the scarcest asset • Master the resource allocation process – Treat investments like capital
• Human resources and Financial resources allocation decision
• Time resources: Set deadlines, otherwise it won’t happen
• Maintain separate buckets of funding for different kinds of project
• Allocating human resources to innovation
• Portion of the time to innovation

Long Term
Core Incremental Growth
• Group of people to focus on innovation all time Opportunities

• Core business face trouble???

• Use resources allocated to long range projects can have disastrous effect in long term
• 10% rule
• Spend resources wisely as opportunities evolve

Measurement Traps
Precursors to Innovation
• Too short list of metrics
• Single metrics – Return on innovative activities
• Prioritize measure markets over higher potential non-measurable
market
• Right inputs
• Right processes
1. Gain
3. Master the control over • Sustaining innovation
resource your
existing • Innovation that offer incremental growth
allocation
resources • Hamper the ability for substantial growth
process
• Low risk innovation vs. disruptive innovation

• Focusing on inputs over outputs

2. Build a game • Scientific resources vs. low impact project
plan for growth • Invention vs. Innovation
• Output matters
 Suggested Metrics Suggested Metrics
Input Related Process Related
• Financial resources dedicated to innovation • Process speed
• Just enough resources and add more, if required • Conception to critical decision stage (kill a project/market test)
• Industry specific (years time to develop a protype)
• Human resources focused on innovation
• Dedicated time that people spend on innovation • Breadth of idea-generation process
• People close to market
• Customers/ channel partners/ competitors
• Separated protected resources for noncore innovation
• Percentage ideas that comes from outside the company
• Low-risk, low return innovation

• Separate resources for potentially higher risk with greater growth potential • Innovation portfolio balance
• Stage of development, target market, and risk potential
• Senior management time invested in innovation
• Careful nurturing by senior management • Distinct processes, tools, metrics for different types of
opportunities
• Number of patents filed
• Constant effort to develop new technologies

Suggested Metrics
Innovation Dashboard
Ouput Related
Maximizing the core Year 0 Year 1 Year 2
Combined audience reach from core products

• Number of new products and services launched # of core products users who provided inputs
# of targeted products
• Tangible outputs
Building Audiences Year 0 Year 1 Year 2

• Percentage of revenue in core categories from new products Combined audience reach from non-core products
# of non-consumers who provided innovation input
• Close to core opportunities that are critical for growth # of products that are not core

Innovation enablers Year 0 Year 1 Year 2

• Percentage of profits from new customers / new categories % senior management time spent on innovation
% employees trained
• Lower price – High Volume – Low Margin; Higher price – Low volume – High Total spending on innovation
Margin
• Spot innovative opportunities General Year 0 Year 1 Year 2
% EBIDTA
% revenue from products launched in last 3 years

• Return on innovation investment

Combined reach of all products
 “Jugaad”
• An innovation fix
• An improvised solution born from ingenuity and
cleverness
• Unique way of thinking and acting in response to
challenges
• Art of spotting opportunities in the most adverse
circumstances and resourcefully improvising solutions
using simple means
• Doing more with less

Six Principles Six Principles

1. Seek opportunity in adversity 2. Do more with less
• 2000s – Airtel required capital and technology to scale up
business
• Outsources all the major activities
• Suzlon
• IT Infrastructure – IBM
• 1980s – Textile unit
• Network Infrastructure – Nokia and Siemens
• Power supply – 40 – 50% of the
operating cost
• 1990 – Invested in wind turbines
• Today Suzlon is world’s fifth largest
wind energy solution provider
 Six Principles
3. Think and act flexibly Six Principles
Dr. Mohan’s Diabetes Specialists Centre 4. Keep it simple
• Problems
• Difficulty in reaching rural areas • 2011 – Mr. Kapil Sibal (Minister of Communication and Technology)
• Doctors and city technicians are expensive launched INR 3000 tablet
• Retaining healthcare providers in rural areas is difficult • World’s cheapest tablet
• Internet connectivity • Indian students (subsidized price of INR 1750)

• Solutions • Basic requirements

• Not to use regular doctors and nurses in mobile clinic • Web browsing, video, wi-fi, and word processing software
• Recruited young people with basic education to perform specific • Android and open-source technologies
tasks • Solar changing options
• Trained local people for follow up care • Touch screen
• Encouraged volunteers for societal welfare • Simplified user interface
• Partnered with ISRO to get free satellite communication • Pre-loaded software in local languages

Six Principles
5. Include the margin Six Principles
6. Follow your heart
Zone V Limited (Abhi Naha, Founder)
• Phone for exclusive blind and partially sighted people Big Bazaar

• High-end smart phone

• Initially followed Wal-Mart model
• Simplified user interface for elderly • Should look like Indian street
• Mid-range smart phone markets
• Chaotic look
• Blind and partially sighted people in urban areas • Cluttered aisles
• Basic low-cost phone • Bins of vegetables

• Valuable features for blind and partially sighted for bottom of pyramid
• Stocked product mix that fits
people local needs
“Your time is limited, so don’t waste it living on someone else’s
life. Have the courage to follow your heart and intuition. They
somehow already know what you truly want to become.
Everything else is secondary”

-- Steve Jobs
 What is Strategic Thinking?
Session 4-5
Strategic Thinking

Mental process which Mental or thinking process Deciding on how we Purpose: Discover novel
involves synthesising, applied by an individual in expect the trends to and imaginative strategies
utilising intuition, and the context of achieving develop and where we will that can rewrite the
Current and Emerging Issues in Strategic Management creativity to identify and success try to go ourselves competitive rules and
solve problems envision future

Prof. Shiwangi Singh

shiwangi.singh@iimranchi.ac.in

Why is it important to practice strategic thinking?

• Look toward the future

• Identify new opportunities
• Position your product/services/firm
• Long-term success
• Competitiveness
• Survive and prosper

Why is it important to practice strategic thinking?

 How can we overcome the kind of bias depicted in this statement and become more creative and
flexible thinkers?
Components of Strategic Thinking
Information Complete and accurate information

Test Test your theories and explore any contradictions Intelligent System
opportunism perspective

Challenge Challenge your theory and assumptions

Hypothesis- Intent-
driven focused

Explore Explore alternative explanations

Thinking in
time

1. System Perspective 2. Intent Focused

• Understand end-to-end system • Planned direction and destiny to be pursued by the company
• Shape or reshape intent

Reprographic business
Inbound Operations Outbound Marketing & Service
logistics logistics sales • Understanding Xerox patents
• Licensing technologies to create a product
• Internal and external context • Gearing up internal R&D
• Stakeholders • Strategic intent: Canon sought to beat Xerox • Licensing its own technologies to other to fund R&D
• Strength, Weakness, Opportunity, and Threat • Entering market segment (Japan & Europe) where Xerox was
weak
• Interdependencies
• Vertical linkages within the system
• Raw materials to consumers
What must we do
• Horizontal linkages between department differently to get closer
• For instance, Marketing and finance
• Strategic intent of Coca cola:
to our strategic intent
Within an arm’s reach of every consumer
next year?
 2. Intent Focused 3. Intelligent Opportunism
• Corporate Challenge
• Analyzing competitors
• Foreseeable patterns Rejuvenate
product line
Entry into
new market
Customer Focuses on intended Leave the possibilities for Intention must be broad
care strategy emergent strategies and flexible
Reducing
product
Quality development
time
• Reinvent the copier – Personal copier at target price
$1000

4. Thinking in Time 5. Hypothesis Driven

• Avoids the analytic-intuitive dichotomy
• Sense of continuity with our past and a sense of direction for our future
• Iterative cycles of hypothesis generating and testing
• Ever-improving hypotheses, without forfeiting the ability to explore new ideas

“what does the future that we want to create look like?“

• Includes a conditions that can be tested or measured
“having seen the future that we want to create, what must we keep from our
past, lose from that past, and create in our present, to get there?”

“what if . . .?”
“If. . ., then. . .?”
 Personal
• Family upbringing/ Education
Development of Strategic Thinking
• Work experience
Experiences Interpersonal
that • Being mentored Completion of
hierarchy of
Contribute
• Being challenged by colleague
Practice of rational challenges
Organizational
to the ability • Monitoring results / Benchmarking
planning
Development of
of Strategic • Doing strategic planning
• Spearheading a major growth initiatives understanding
Thinking External
• Dealing with a threat to organizational survival
• Vicarious experiences
Source: Goldman, E. F. (2007). Strategic thinking at the top. MIT Sloan management review, 48(4), 75.

Development of Strategic Thinking Development of Strategic Thinking

1. Development of understanding 2. Practice of rational planning

Source: Goldman, E. F. (2007). Strategic thinking at the top. MIT Sloan management review, 48(4), 75. Source: Goldman, E. F. (2007). Strategic thinking at the top. MIT Sloan management review, 48(4), 75.
 Development of Strategic Thinking
3. Completion of hierarchy of challenges

https://hbr.org/video/4672762766001/identify-your-thinking-style

Source: Goldman, E. F. (2007). Strategic thinking at the top. MIT Sloan management review, 48(4), 75.

Think Strategically
Think Strategically 2. Analyze risk
• Identify major sources of uncertainty
• External risk Professional risk Personal risk
• Funding
• Goals • Health
1. Understand your organization • Competition
• Conflict with other firms • Experience • Family
• Strategic objectives
• Training • Finances
• Challenges/Needs/Opportunities – • Internal risk
• Accreditation • Personality
6months/1years/Long-term • Personnel changes
• Work logistics
• Team contribution • Team dynamics
• Office politics
• Conversations with senior, peer-group, and
your team Impossible
to handle • Inexperience
• Workload
• Company or in coding
division may
be sold
Direct Easy to
impact handle
 Think Strategically
Think Strategically
…continued
People
3. Develop a big picture • New Hires
• Change in power dynamics
• Observe signals inside your organization
Processes
• Internal signals • Key technologies or processes being adopted
• People • Pattern in the type of request from key stakeholders

• Process Products
• Product • Drop in sales
• Launch of products/services
• Strategy
Strategy
• Trends in industry • Series of new acquisition
• News and competitors updates • Stakeholder priorities
• Latest research • Change in resource allocation

• Macro trends

Think Strategically Think Strategically

…continued 4. Move from information to insights
News and competitor updates
• Headlines
• Conversations in social media
• New product offerings • Connect random signals to useable insights
• Press release
Branding efforts are ineffective
Latest research
• Industry or trade association for latest trend reports
• White papers

Macro trends Product placement

• Demographic
• Socio-cultural
• Technological
• Legal Price
 Think Strategically Think Strategically
5. Zoom In, Zoom Out
Continued.. • Zoom In – Too close to make sense

• Categorize the information into common themes

• Socio-cultural factors
Limit the growth!!!
• Demographics
• Time • Obscure the bigger picture
Scenarios Sales of Sales in Long-term • Overlook important issues
• Discuss the implications existing region impact on
• Underlying causes, alternatives, and long-term solution
product organization
• Build less time-consuming products
1. Partnerships with
• Target working class populations other products
• Build multiple scenarios 2. Combine lotions and
moisturizers • Zoom out – Big picture decision
3. Sell other products in • See the map and stay focused
warmer region • Analyze events as general pattern

Think Strategically Think Strategically

Continued.. Continued..
• Stuck in perspective that’s too detailed! Questions that well help you to zoom out
Overwhelmed by countless details • What is the context? What matters most?
• Indicators
• Overwhelmed by countless details Take things personally, find “me” angle • What overall purpose is being served? What is the stake of others?

• Take things personally, find “me” angle Trade favors, “others will do it for me” • Why is the task or mission worthy of support?
• Trade favors, “others will do it for me”
Make exceptions, based on particular circumstances • Will the circumstances recur? What policies or frameworks could be used?
• Make exceptions, based on particular circumstances
• Jump on good-looking offers Jump on good-looking offers • Does this fit the goal or destination? What else might be important?
• Treat every situations as unique
Treat every situations as unique • Are there other similar situations? What categories or group make sense?

Source: Adapted from HBR Guide to Thinking Strategically

 Think Strategically Think Strategically
Continued.. Continued..
• Stuck in perspective that’s too zoomed out! Questions that well help you to zoom in
Dismiss deviations from plan • Does deviation challenges the model? How can the deviations be understood?
• Indicators
• Dismiss deviations from plan Conduct big study before taking any
• Is there sufficient information to proceed? What are the costs of delay?
actions
• Conduct big study before taking any actions
• Stay on major established path Stay on major established path • Are there any sideroads or shortcuts?

• Too much focused-on mission, not human capital Too much focused-on mission, not human
• How is this affecting the people who must carry out the mission?
• Fit everything into general category capital

Fit everything into general category • What are the details that make things different? Which details matter?

Source: Adapted from HBR Guide to Thinking Strategically

Think Strategically Seven Steps for Faster Decision Making

6. Align decisions with strategic objectives

1 2 3 4 5 6 7

Write five pre- Write down 3- Write down Write down Involve a Write down Schedule a
Reflex vs. Reflect
existing goals 4 realistic the the impact team of 2-6 what was decision
or priorities alternatives information your decision members decided and follow-up in 1-
that will be that you are will have in how much 2 months
impacted by missing future team
Reflect before decision making the decisions supports the
decision

Who is involved? – What are opportunities and

What is involved? – Stake
Stakeholders risks? – Future potential
Make Strategic Thinking a Part of Your Job

Identify Strategic Uncover Patterns to Focus Invite Dissent

Requirements of Job Resource Investments

• Operational missteps • Prioritize resources • Strategic insights from team

• Customer complaints • Generate new insights
“Examining patterns of performance “Inviting people who must
“What’s the most important
— financial, customer, operational, execute to disagree with
thing your reporting manager
and competitive data — develop can improve your strategic
want you to accomplish in this
foresight about future opportunities thinking”
role?”
and challenges”
 Blue Ocean vs. Red Ocean
Session 7-8 Red Ocean Blue Ocean
Market Space Known Untapped
Blue Ocean Strategy Industry Boundaries Well-defined Not defined; created by expanding
existing boundaries
Competitive Rules Known Unknown
Aim Outperform rivals to get a better Seize new profit and growth
market share opportunities
Market demand Exploit Create
Strategic choices Differentiation or cost-leadership Differentiation and cost-leadership
Current and Emerging Issues in Strategic Management

Prof. Shiwangi Singh

shiwangi.singh@iimranchi.ac.in

Rising Imperative of Creating Blue

Impact of Creating a Blue Ocean
Oceans
• Technological advances – improvement in productivity Launches within Red Ocean Launches within Blue Ocean

• Supply is greater than demand

• Brands are becoming more similar
14%
• Increasing price wars 38%

• Shrinking profit margins 61%

86%
62%
39%

BUSINESS LAUNCHES REVENUE IMPACT PROFIT IMPACT

 Cirque du Soleil Porter 5 forces analysis of circus industry

• 150+ million people

• 300+ countries
• Remarkable growth Bargaining power of Bargaining power of Threat of New Threat of Substitute Existing rivalry
Suppliers Buyers Entrants
• Is circus an attractive industry or declining industry?
Medium Ringling Bros
Performers: Strong (Star- Urban entertainments Video games
performers) Barnum & Bailey
Sports events
Switching cost low
• Porter 5 forces analysis of circus industry Sentiments against use of
animals

Declining Industry

Cirque du Soleil Cost saving is made by eliminating and

reducing various factors an industry

Value Innovation
competes on

• Neither an ordinary circus production nor a classic theater

• Fun and thrill of circus + Artistic Richness of theater • Value
• Theme and story line (Theater performance) • Value creation on incremental scale
• Innovation
• Expanding the market boundaries of circus and theater
• Technology driven, market-pioneering, or
• Target customers: Adults and corporate clients futuristics
• Beyond what buyers are ready to accept and pay
for
• Value Innovation
• Align innovation with utility, price, and cost
position
• Pursue cost and differentiation strategy
The simultaneous pursuit of differentiation and low cost
simultaneously
Buyer value is lifted by raising and
creating elements the industry has
never offered
Value Innovation - Cirque du Soleil Analytical tools and frameworks
• Low cost • The Strategy Canvas
• Forgo traditional circus acts (Animal shows costly)
• Priced more than traditional circus and lower than theater prices • Current state of play in the
existing market space
• Differentiation • Factors the industry currently
• Tent, clowns, and classic acrobatics (retained) – role was reduced and made elegant
competes in
• Fun and thrill of circus + Artistic Richness of theater
• Theme and story line (Theater performance) • Investment on those factors
• Multiple productions (rather than one for all show)

Creating Value: Four Action Framework

Reduce
Creati ng Val ue: Four Acti on Framework
Which factors • Eliminate
should be reduced
well below • Factors that do not add value
industry’s standard?
• Change in what buyer value
• Reduce How to drop cost structure vis-
Eliminate
Which factors that Create • Overdesigned products à-vis competitors
industry takes for Which factors
granted should be
A New Value Curve
should be created • Decreasing overall cost structure
eliminated? that the industry
has never offered? • Create
• New value
• Create new demand How to lift buyer value and
Raise • Raise create new demand
Which factors
should be raised • Factors that add value
well above the
industry's
standard?
 Formulating Blue Ocean Strategy Formulating Blue Ocean Strategy
1. Reconstruct market boundaries
Path 1: Look across alternative industries 1. Reconstruct market boundaries
• Substitutes (function) vs. Alternatives (purpose) Path 2: Look across strategic groups within industries
• To do taxes
• Hire CA • Group of companies following similar strategies
• Use APP
• Mercedes, BMW, and Jaguar – Same strategic group – compete within group
• Own
• Aim: To file tax
• Understand customer’s decision to trade up and down in the strategic groups

• Cinemas vs. Restaurants

• To spend an evening/ a nightout • US Fitness Industry
• Traditional health clubs
• Home exercise program

Formulating Blue Ocean Strategy Formulating Blue Ocean Strategy

1. Reconstruct market
boundaries 1. Reconstruct market boundaries
Path 2 Path 3: Look across time
• Direction of evolution of a technology, adoption, and scalable
• Trends
US Fitness Industry • Home exercise program • Discontinuity in technology
New lifestyle
• Traditional health clubs •
• Change in regulatory or social environments
• 1990s
• Flood of illegal music sharing apps
What made women trade either up or down between
traditional health clubs and home exercise programs? • 2000s
• Billions of illegal music sharing
• Fast growing demand for digital music
Trade up: Discipline to work-out • 2003
• iTune online music store
Trade down: Time saving, lower cost, and privacy • Legal, ease to use, and flexible song downloads
• Listen song for 99 cents or an entire album for $9.99
• Better sound quality
• Improved browsing and search functions
 Formulating Blue Ocean Strategy Formulating Blue Ocean Strategy
1. Reconstruct market boundaries 2. Focus on big pictures not numbers

A. Visual Awakening
Red Ocean Blue Ocean
Compare your business with your competitors by drawing “as is” strategy canvas
Industry Focus on existing competitive players Look across industry (alternatives)
(substitutes) See where you are lagging and where it needs to be changed
Strategic groups Competitive positions within group Across strategic groups
Buyer groups Better serving buyers Redefining buyers
Time Adaptation to external trends Shape external trends over time

Formulating Blue Ocean Strategy Formulating Blue Ocean Strategy

2. Focus on big pictures not numbers
2. Focus on big pictures not numbers
C. Visual Strategy Fair
B. Visual Exploration
• Draw strategy based on field-insights
Explore different paths to create blue ocean strategy
• Get feedback on alternatives strategy canvases from customers, competitor’s customers, and non-
Observe distinctive advantage of alternative products/services customers
Observe the factors to eliminate, create, or change • Use feedback to redefine your “to-be”strategy
 Formulating Blue Ocean Strategy Formulating Blue Ocean Strategy
2. Focus on big pictures not numbers 3. Reach beyond existing demand

D. Visual Communication • Noncustomers

• Support those projects that aligns with new strategic profiles • Commonalities between what buyer value rather than differences

• EFS distributed the one-page picture showing its new and old strategic profiles so that every employee Three-tiers of Non-customers
could see where the company stood and where it had to focus its efforts to create a compelling future • First tier: Minimally purchase your industry offerings, soon
• Only those ideas that would help EFS move from the old to the new value curve were given the go-ahead to be noncustomers
• Regional offices requested that the IT department add links on the website • Second tier: People who refuse to use industry offerings
• IT asked them to explain how the new links helped move EFS toward its new profile • Third tier: Never thought of market offerings as an option

Formulating Blue Ocean Strategy

Formulating
Blue Ocean 4. Get the strategic sequence right
Strategy Buyer Utility
Compelling reason to buy your products

4. Get the strategic

sequence right
 Formulating Blue Ocean Strategy Formulating Blue Ocean Strategy
4. Get the strategic sequence right 4. Get the strategic sequence right
Purchase Use Maintenance Strategic Pricing
Time to find the product Product use require training or expert assistance External maintenance • Attract buyers and retain them
Place of purchase accessible Easy to store when not in use Frequency
Pace of making purchase Product functions and features effectiveness Cost
Streamlining and cost innovations
Delivery • Raw materials to less expensive
Supplements Disposal
Time to deliver the product • Change of locations
Requirement of other products Ease
Difficultly in installing • Hub and spoke model
Cost of other products Cost
Cost of delivery
Ease of obtaining Environmental issues
Partnering
• Needed capabilities fast and effectively
Profit model of blue ocean strategy

Executing Blue Ocean Strategy Executing Blue Ocean Strategy

Overcoming key organizational hurdles Building Execution into Strategy
ü Cognitive
Value proposition
• Waking employees for the need of strategic change
Utility - Price
ü Limited resources
• Limited resources

ü Motivation Blue Ocean Strategy

Differentiation and Low Cost
• Unmotivated people

ü Politics
• Opposition from powerful vested interest People proposition
Profit proposition
Employees, partners,
Revenue - Cost
and stakeholders
 QUIZ
• Create a blue ocean strategy in travel industry. Draw their
strategic canvas and four action framework. Mention their 3-
tiers of non-customers. Discuss commercial viability of the blue-
ocean idea.
 What is Disruptive Innovation?
Session 9 -10
• Any situation in which the industry is shaken up and previous successful
incumbents stumble
Disruptive Innovation and
Big-Bang Innovation • Is Uber a disruptive innovation?

• Is Netflix a disruptive innovation?

Current and Emerging Issues in Strategic Management

• Is Android a disruptive innovation?

Prof. Shiwangi Singh

shiwangi.singh@iimranchi.ac.in

Disruptive Innovation Is Uber a Disruptive Innovation?

• Uber is transforming the taxi services
• Process whereby a smaller company with fewer resources are able to challenge
established incumbents • But is it disrupting the taxi business?
• Incumbents • No
• Sustaining innovation • Originate in low-end or new-market foothold
• Need of demanding (most profitable) customers • Incumbent focus on profitable segment
• New firm focus on low end customer with a good-enough product
• New entrants
• Uber launched for people who were already using taxi-services
• Targets overlooked segment • Uber positioned itself in main-stream market and then went to over-looked segment
• More suitable functionality at a lower cost • Don’t catch on with mainstream customers until quality catches up to their standards
• Improve the product • Wait to raise the quality before actual adoption
• Adoption of functionalities by mainstream customers • Uber services has rarely been described as inferior to taxi services
• Tap on smart phone, competitive prices, rating drive, car feedback, time to reach the destination, etc.
 Were Android-based phone a Disruptive Aspects of Disruptive Innovation
Innovation? 1. Process
• Not about a product or service at one point of time
• No
• Evolution of a product or service overtime
• Initial smartphones were better in quality
• Minicomputers
• Offered to mainstream customers • Started as low-end upstart
• Cheaper, more accessible, and cost-advantage over Nokia • Later held superior to main-frame
• Disruptive due to path they followed from low-end to main-stream
• Netflix
• Launched in 1997
• Blockbuster customer: Rented movie on impulse (new release)
• Netflix has collection of movie (online presence), delivery through US mail (days to arrive)
• Customers: Early adopters of DVD players, and online shoppers
• Streaming video over internet
• Content: on-demand, low-price, high-quality, and highly convenient approach

Aspects of Disruptive Innovation Aspects of Disruptive Innovation

2. Business model different from incumbent 3. Some disruptive innovations succeed; some don’t
• Measure disruption as success of firm
• Health care hospitals vs Tele-health service • Not every disruptive innovation leads to success, and not every new players follows
• Standardized process to deal with small disorders disruptive path
• Increasing number of patients
 Aspects of Disruptive Innovation Key Implications
4. “Disrupt or be disrupted” can be misleading 1. New Technology
• Don’t dismantle profitable businesses • Strategic choice between disruptive path and sustaining path

• Strengthening relationship with core customers 2. Incumbents

• Increase pace of innovation
• Focus on sustaining innovation
• Beat the entrant or acquire
• Focus on creating new businesses out of emerging opportunities
3. Difficult to shift investment to disruptive innovation
• Incumbent firms focus on sustaining innovation
• Adapted in internal processes

Disruptive Innovation for Social Change Identifying Catalytic Innovations

• Support for organizations involved in catalytic innovations

• Creating scalable, sustainable, systems-changing solutions

• Providing good-enough solutions to inadequately addressed social problems

• Catalytic innovation
• Social change is the primary objective
Look for signs of disruption in Identify specific catalytic Assess the ability to implement the
• Meet a need that is overserved (existing solution complex, hence costly) or underserved processes innovations desired innovation
• Simpler and cost effective Identify preexisting catalytic innovators: Innovation and not the • Effective introduction of
• Generate resources such as donations, volunteer manpower etc. • New entrant: lower cost and less- organization innovation
functional alternative • Scalable and sustainable
• Dominant player: Moving away from business model
new entrant to profitable segment • Alignment of resources,
• New entrant: Improving their offerings processes, and value to
and expanding market reach support innovation
 Target Big-Bang Disruption
• Unserved Market
• Market is created or destroyed over-night
Offerings

Disruptive • Good enough

• Don't create dilemmas for innovators, they create disaster
• Goes beyond information-based goods and services
Innovation
Price

• Low

Tool Competitors

• Do not care

Business model

• New

Three Features

Traditional Unencumbered Unconstrained Undisciplined

Technology development growth strategy
Adoption
Free of any financial liability Two segment
Vs. Big- Trail users and
General Business Strategy (focus on
one): Cost leadership, product
Bang Low-cost experiments on fast Everyone else differentiation, and focus strategy
Disruption maturing technology platforms
Big Bang Innovators (focus on all
Hackathons Curve: taller and compressed
three): Low cost, constant
Development, deployment, and innovation, and customized offerings
Aim: How new products can be
replacement
paired together
Declining technology cost – right
Twitter invented Hackathons
feasible solution
“Send standard message to multiple
users simultaneously”

More than 200 million active users

 Surviving Big-Bang Disruption Surviving Big-Bang Disruption

• See it coming
• Recognize the warning signs • Slow the disruptive innovation long enough to better it
• Technology visionaries “Truth-tellers” • Make it harder for its developers to cash in
• Customers, line-managers, or CXOs • Delay their profitability
• Learn not only whom to listen to and when, but also how • Locking in customers with long-term contracts
• Forming strategic alliances with advertisers and other companies critical to your rivals’
plans
• Leverage your surviving assets elsewhere

Surviving Big-Bang Disruption Finding a Job using Disruptive Innovation

• Get closer to the exits, and be ready for a fast escape

• Rapid decline in value
• Shed technologies before they become worthless
• Once customer shift to new technology – fire sale
Ask right questions Start looking at jobs to be Start networking to create a Start experimenting with
• Value: Patents + Cash in hand done rather than jobs you job things you’ve never done
once did

• Questionstorming session • Jobs-to-be-done • Follow a not-like-me • Experimentations

“What job?” to “What kind of attitude See trending skills
Spend time to understand
job?” the nature of Jobs Spend time to people required for job
How can I earn a bucket of with different Develop new skills
money? ---- What will make me Discover surprising or experience and interest
happy for long term? ---- How unexpected way of doing
do I create something for the work Might spur a new angle
long-term? in the way you work
“Change will come not over time but suddenly stay prepared”
 Session 15-16
Blockchain in Business
Current and Emerging Issues in Strategic Management

Prof. Shiwangi Singh

shiwangi.singh@iimranchi.ac.in

Blockchain
• Blockchain is an distributed ledger technology in which all the participating
members have access to monitor and share the immutable records in the
network

• Distributed ledger
• Store transactions across the entire network of partners
• Decentralized consensus
• More than one party verifies, accepts, or rejects transactions
• Control is shared by all the members without relying on central coordination
• Reduce the reliance on a single member as the sole information holder and the decision
maker
• Access to monitor
• Immutable records
• As the block grows, difficult to modify records without having network consensus
• Network (Peer-to-peer system)
• Direct communication between each participating partner in the network
• Validating and permanently storing transactions and agreements on a shared ledger
 Distributed Ledger
• Blockchain

• Digital signatures
• Unique digital keys used to authorize and check transactions and
identify the initiator

• Consensus mechanisms
• Rules and techniques to ensure agreement of the accuracy of
transaction

• Digital currency
• Cryptographic token that represent actual value

Advantages and Disadvantages

Advantages Disadvantages
• Decentralization • Throughput (TPS)
• Immutability • Latency (Time to complete transaction)
• Traceability • Size and bandwidth (Data storage)
• Security • Usability (Slow processes, many users)
 Blockchain
• Hash: Identification code in contained in each addition made to the
chain
• Miners
• Validate new blockchain transactions and record them on blockchain
• Add new blocks to the existing chain and ensures that these additions are
accurate
• Solve the mathematical problem based on the hash algorithm
• Verify blocks created by other miners
• Verify the validity of transactions added to the blocks

Blockchain Consensus Algorithm

• Consensus algorithm is used to ensure that the data cannot be
tampered with or forged
• Consensus algorithms help to introduce security in blockchain-based
systems and to maintain data integrity that is stored on the
blockchain
 Stages of Blockchain Maturity
Blockchain 1.0
• Transactions
Bitcoin

Blockchain 2.0
• Smart contracts
Ethereum applications

Blockchain 3.0
• Decentralized application (dApp)
Backend codes that run on a decentralized peer-to-peer network connecting users and
providers

Blockchain 4.0
• Decentralized Artificial intelligence
• AI allows computers to learn from accessible data, whereas blockchain ensure accuracy of data
• Automated decision-making process (without human interference)

Value Creation Implications

Blockchain 1.0 (Transactions)
• Reduce cost: Eliminate need for central authority to ensure secure transaction

Blockchain 2.0 (Smart contracts)

• Added services: Not only related to financial services; Mitigates risk of manipulation and errors

Blockchain 3.0 (Decentralized application (dApp))

• Organization boundaries: Sharing or partial outsourcing of activities that would otherwise be handled
by other organizations; Network approach, create learning and access to new technology

Blockchain 4.0 (Decentralized Artificial intelligence)

• Autonomous decision-making: Make decisions without human interference; Indirectly management
may operate by (tightly) setting parameters or (loosely) dictation areas of application; focus: setting
directions
Blockchain Algorithm Management Process

Source: Angelis and Silva (2019)

Fit-Viability Model
Viability

Low High

Find
High Alternative Good Fit
Technology

Te c h n o l o g y F i t

Low Forget it
Organization
Restructuring
 Is it feasible
What value is and viable to
being sought? adopt
Blockchain blockchain?

Adoption
Evaluation Why a
blockchain is
What
combination of
technology can
preferred to a
be aligned with
centralized
the value being
ledger?
sought?

Blockchain Adoption Evaluation

• What value is being sought?
• Specific need for providing
• Transparency
• Reliability
• Immutability
• Ledger privacy
• Safety

• Value driver
• Reduction is transaction cost
• Addition of new services
• Delineation of organizational boundaries
• Automation in decision-making
 Blockchain Adoption Evaluation
• Is it feasible and viable to adopt blockchain?
• Feasibility and Viability
• Resources (Access to skilled programmers; Access to skilled managers; Financial)
• Regulation
• Scope of use
• Security
• Inoperability

• Why a blockchain is preferred to a centralized ledger?

• New or improved solution offerings or business processes
• Use of distributed ledger vs. centralized ledger (ERP)
• Database owner (one or many) (Sales or monetary transaction)

Blockchain Adoption Evaluation

• What combination of technology can be aligned with the value
being sought?
• To provide
• Scalability
• Privacy
• Autonomous decision-making

Value Feasibility and Viability Appropriate Technology

Specific need Value driver Resources Distributed ledger

Transparency Reduction is transaction cost Regulation Centralized ledger
Reliability Addition of new services Scope of use
Immutability Delineation of organizational Security
Ledger privacy boundaries Inoperability
Safety Automation in decision-making
 Session 13-14
Artificial Intelligence in Business
Current and Emerging Issues in Strategic Management

Prof. Shiwangi Singh

shiwangi.singh@iimranchi.ac.in

Artificial Intelligence
• Computational agents that act intelligently
• Perceive their environment before taking decision
• Input – Process – Outcome
 Working of AI
Artificial intelligence

Computer vision Human Visual System

Understand what are Difficulty in

in the picture recognition

Classify the picture in Repeat process to

each block and look identify objects:
of higher intensity • Car
pixels • Traffic light
• Building
• Human

Building Blocks of AI Systems

Inputs Processes Outputs

3. Pre-processes 6. Information
• Natural Language • Natural Language
1. Structured Data
Understanding Generation
• Computer Vision • Image Generation
• Speech Recognition • Robotics

4. Main-processes
2. Unstructured
Data • Problem Solving
• Reasoning
• Machine Learning

5. Data Storage: Knowledge Base

Source: Adapted from Paschen et al. (2019, p. 1412)
 Inputs
• Structured Data
• Standardized and organized data
• Predefined format
• Example: Sales, Inventory, Click-through rates, etc.

• Unstructured Data
• Not standardized
• Difficult to analyze
• Example: Blogs, Tweets, Reviews, Audio/Video/Image files, etc.

Processes
• Pre-processes
• Data cleaning, data transformation, data selection
• Example: Natural Language Understanding, Computer Vision, etc.
• Natural language understanding: Interpret human spoken and written language
• Speech recognition: speech to text, do not ascribe meaning
• Analyze structure, contexts, and relationships based on lexicons and set of grammar rules
• Likely meaning is derived by statistical modeling and machine learning
• Usage of NLU: text summarization, sentiment analysis, and relationship extraction

• Computer vision: Transforms image representations

• Use computer and machine learning to recognize patterns and extract meaning
• Usage: Using facial recognition system in surveillance cameras for criminal suspects
 Processes
• Main-processes
• Problem solving, reasoning, and machine learning
• Problem solving
• Selecting solutions that best meets the purpose
• Convergent problem solving: Uncovers single best solution facilitated by AI systems
• Divergent problem solving: Generates and evaluates alternatives solutions that may be equally
valuable

• Reasoning
• Uses logic to arrive at a conclusion

• Machine learning
• Supervised machine learning: Pre-programmed rules, limitations
• Unsupervised machine learning: Model find themselves the patterns and trends

Data Storage: Knowledge Base

• Intelligent behavior relies on storage of past data, information, or
knowledge
• Experiences reflected in the past can influence future behavior
 Outputs
• Information
• Basis for human decision making or as input to other information system
• Natural language generation
• Turns large datasets into reports and business intelligence insights
• Use of Chatbots in marketing and customer service, google assistant, etc.

• Image generation
• Completes the image even if the background or some information is missing
• Use of drawing bots: Draw image from text description

• Robotics
• Machine use information to physically interact and alter their environment
• Use of robots in warehouses

AI in Action
1. Marketing and sales

ü Personalized experience – 6 to 10% increase in revenue

ü Location, time of purchase, frequency of purchase – Generate custom suggestions
ü Augment the overall process

ü Insurance
ü Different life stages – Different requirements
ü Demographics, policy benefits, age of insurers
ü Machine learning to sales efforts
ü Increase cross-selling
 AI in Action
2. Operations
ü Predictive maintenance
ü Feeding years of operational data and maintenance information
üIntegrating warehouses, sales data, and ERP system: Demand forecasting
and demand pattern due to supply chain disruption

3. Support functions
üAutomation platforms to reduce labor cost
üBank: Robotic process automation
ü Routed the cases to human workers when they are uncertain about work

AI in Action
4. Product and Services
üSelf-driving cars
üRobo-investment advisors
 AI and Innovation Typology
Product innovation

• Autonomous vehicles Competence Competence • AI in navigation apps

• Human driving skills and • Alerts system to warn the
destroying- enhancing- drivers
geographical knowledge - redundant
product product • Improve driving experience
innovation innovation

Competence Competence
destroying enhancing
• AI to automate digital media ads. Competence Competence • Installed IoT Sensors
Based on audiences, bids, keywords, • Use AI to analyze data
• destroying- enhancing- • Problem identified,
targeting, domains, and placement to
understand what is working and what not
process process technicians are informed
• Specialized skills of human - redundant innovation innovation
Role of AI in organizations’ competencies:
• Competence-enhancing (bio-chemist-
AI enabled innovation boundaries: drug discovery)
• Product innovation (Autonomous vehicles) • Competence-destroying (autonomous
• Process innovation (Decision making) Process innovation vehicles-taxi drivers)

AI Journey
1. Ideation and testing
ü Customer need (External (Sales) or Internal (support functions))
ü Data sources (Training the AI system)
ü Identifying promising use cases (different scenarios)

2. Prioritizing and pilot launch

ü Potential value
ü Speed of delivery
ü Test and learn sprints (agile developments)

3. Scaling up
ü Building capabilities and data infrastructure
ü 12 to 18 months
ü Maximize value
 Disparity in Adoption and Understanding
• Pioneers
• Understand and adopt AI
• Organizational offerings and internal processes
• 19%
• Investigators
• Understand AI
• Pilot stage
• 32%
• Experimenters
• Piloting or adopting AI without understanding
• 13%
• Passives
• No adoption or understand of AI
• 36%

AI Implementation Challenges
• Interoperability with other information systems and platforms
• Incompatible application program interface

• Quality of data to train AI

• Skewed
• Incomplete
• Biased

• Carefully designed privacy measures

• Training data is sensitive
• How to attain the consent
• Implication of such data

• Intuitive understanding of AI
• How programs learn from data
• How AI can benefit a business unit
 Implications for Future
• Future work
• Require employees to learn new skills
• Automate some aspects of jobs
• “AI are starting to replace people who don’t
use AI”

• Shifting value creation

• Combination of data and AI algorithms
create the possibility of new and more
effective workarounds
• Healthcare Industry
• Machines read diagnostic images,
• Surgeons rely on robots,
• Real-time medical devices communicate data to
improve preventive and chronic care

Implications for Future

• Building Competitive Advantage
• Significant improvement in the processes or products
• Highly data-driven, fueled by the data companies
• Human skills and AI can aid each other

What type of products they buy

How long they spend on a product page

Generate recommendation system

“How to market, who to market to, when and where to market, and even why to market?”
Question??
 Two Loops of Disruption
Session 11 -12
1. Digital entrant challenge incumbent
ü Entrant creates new competitive markets
Digital disruption and
Digital transformation ü Google maps navigation app for smartphones vs. standalone navigation
devices

2. Red Queen competition

ü Firms engage in aggressive imitation
ü United Parcel Service Inc. vs. FedEx Corp.
Current and Emerging Issues in Strategic Management

Prof. Shiwangi Singh

shiwangi.singh@iimranchi.ac.in

Digital Disruption Key Principles Digital Disruption Key Principles

• Separate for better performance • Develop new customer segments
• Operate independently • Rather than just defending market segment
• Securing resources
• View threats and opportunities from fresh perspective
• Appoint an active integrator
• Manages the tension between new venture and parent firm
• Fund in stages • CEO or divisional manager
• Control flow of investment
• Reduce threat induced investment behavior
• Consider acquisition
• Developing new venture – challenging, core business – successful
• Cultivate outside perspective • Successful firms
• Bring new employees
• Acquisition can create new paths of growth
• Different from core organization
• Reduce bias
 Digitization Digitalization
• Moving from analogue to digital data for streamlining existing processes • Digital technologies can be used to alter existing business processes
• When digits are used to represent data, the data become digitized • IT key enabler
• Structure, shape, and influence the business decisions • Cost saving and processes improvements
• Value creation

• Could computing: Storage

• Communication: Chatbots

Ritter, T., & Pedersen, C. L. (2020). Digitization capability and the digitalization of business models in business-to-business firms: Past, present,
and future. Industrial Marketing Management, 86, 180-190.

Digital Transformation Digital Transformation

• Customer
• Customer not just as target for selling products
• Company-wide change that leads to the development of new business • Brand champion or innovation partner
models • Technology
• Artificial intelligence
• Growth mind-set Customer • Internet of Things
• Blockchain
• Data
Change • Business Data
Technology
Capability
• Inventory and supply chain data
• Human resources
• Managers and optimize business operation and reduce risk
• Customer Data
• Purchases
• Behavior and interactions
Process Data
• Survey responses
• Opportunity for relevant and valuable interactions
 Digital Transformation Digital Platforms
• Process • A platform is a business that creates value by facilitating direct interactions between two
• End-to-end mindset
• Rethinking of ways to meet customer needs, seamless connection of work activities, and the or more distinct types of customers
ability to manage across silos
• Transportation
• Retail • Uber
• Amazon • Riders and freelance drivers
• Buyers and sellers

• Freelance work
• Advertising • Upwork
• Freelancers and Clients
• Google
• Advertisers and purchasers
• Change capability
• Teamwork, leadership, emotional intelligence, etc.
• Managing resistance • Education
• Coursera
• Students and Teachers

Transforming your Organizations Transforming your Organizations

1. Establishing Establishing a sense of urgency
1. Establishing a a. Examining market and competitive realities
sense of urgency b. Identifying and discussing crisis, potential crisis, and major opportunities
2. Forming Forming a powerful guiding coalition

3. Creating Creating a vision 2. Forming a a. Assembling a group with enough power to lead the change effort
powerful guiding
b. Encouraging group to work together as a team
4. Communicating Communicating the vision coalition

5. Empowering Empowering others to act on vision

3. Creating a a. Creating a vision to help direct the change effort
vision b. Developing strategies for achieving that vision
6. Planning Planning for and creating short-term wins

7. Consolidating Consolidating improvements and producing still more change

4.Communicating a. Using every vehicle possible to communicate the new vision and strategies
the vision b. Teaching new behaviors by the example of the guiding coalition
8. Institutionalizing Institutionalizing new approaches
 Transforming your Organizations Achieving Digital Transformation
5. Empowering a. Getting rid of the obstacle to change
others to act on
b. Changing system/ structure that undermine the change
1. Define operational experience
vision • Redesign the operation
• Processes: Better, faster, and cheaper
6. Planning for and a. Planning for visible performance improvements • Technology: Add value
creating short-term b. Creating those improvements
wins c. Recognizing and rewarding employees involved in those improvements

7. Consolidating
improvements and a. Using increased credibility to change systems, structures, and policies that don’t fit the vision
producing still b. Hiring, promoting, and developing employees who can implement the vision
more change

8. Institutionalizing a. Articulating the connection between the new behaviors and corporate success
new approaches b. Developing the means to ensure leadership development and succession

Achieving Digital Transformation Achieving Digital Transformation

2. Focus on specific problem 3. Identify your competition
• Use data and capabilities to create value for customers • Focus on ”job to be done”
• Investment and return data • Travelling: Railways, airlines, buses, trucking, and even cars
• Create “From–to matrix” – Problem, solution, way of measuring success

Every possible leisure activity

• Television
• Movies
From To Measures
• Sports
Significant effort needed to Automated on-board Reduction in time to reach • Podcasts
onboard new member and assistance that help new productivity from 30 days to Increase in total view hours
bring them up to speed team member to learn 5 days Increase in avg view hours per account
No capture of learning Routine recording of Reduce in duplication
created in one part of the outputs and learning efforts and increased
organization for reuse employee productivity
elsewhere
 Achieving Digital Transformation Achieving Digital Transformation
4. Look for platforms 5. Test your assumptions
• Focus on two sides of market: suppliers and buyers • Fast feedback about products from potential customers
• Platform value to any user increases as the number of other users increases • Use experimentation to resolve disagreements about design decisions
• Scalable business model

Starting small
Experimentations on ongoing portfolio learning a lot
Win early supporters and early adopters
Demonstrating impact on financial performance indicator

Key to Success Key to Success

• Personalized products and services • Usage-based pricing
• Better tailored • Charge per use
• Customer’s individual and immediate needs
• Collaborative ecosystem
• A closed-loop process • Collaboration with supply-chain partners
• Rather than hierarchal process (Production-usage-disposal) • Cost reduction
• Products are recycled
• Agility
• Asset sharing • Real-time adaptation with changing needs
• Sharing of cost
Factors influencing Digital Transformation Factors influencing Digital Transformation
• Absorptive Capacity • Strategic Flexibility

• Firms’ ability to transform is determined by its capability to recognize, • The ability of a firm to reallocate and reconfigure its organizational
assimilate, and utilize the new and existing knowledge to improve firm resources, processes, and strategies to deal with environmental
capabilities changes

Search for relevant Use different information Apply new knowledge Easily change its current plans Necessary practical knowledge to
information within Industry sources in their practical work make shifts

Cross-departmental Link existing knowledge Adapts system according Pro-actively develop a new project Prepared to react in a modified
support to solve problems with new insights to new knowledge and viable manner

Factors influencing Digital Transformation Factors influencing Digital Transformation

• Strategic Resources • Technology acceptance

• Strategic resources are the tangible or intangible strategic assets that • An individual’s psychological state with regard to his or her voluntary
are tied semi-permanently to the firm and are valuable, rare, non- or intended use of a particular technology
substitutable, and non-imitable

Employee learning Exchange of business information Increases the productivity Technology makes it easier to do job
and experiences

The right kinds of resources are Resource structure is now well Interaction with the technology is Learning to operate technology
allocated aligned clear and understandable
Factors influencing Digital Transformation
• Climate

• Employees’ shared perceptions of the importance of transformation

within the organization

Need to accomplish Necessary 24 * 7 Support

Support activities readily available Type of outcome