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Putting Transformation back to Digital Transformation

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There is a high chance that when somebody says “digital transformation,” they mean something else. But what is it & how can you disrupt others or self-disrupt?
A companion to the blog post on digital transformation here https://goo.gl/UpRC9X

Published in: Business
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Putting Transformation back to Digital Transformation

  1. 1. P U T T I N G T R A N S F O R M A T I O N B A C K T O D I G I T A L T R A N S F O R M A T I O N A c o m p a n i o n t o DIGITAL TRANSFORMATION BLOG POST
  2. 2. SCENE FROM NETFLIX'S HOUSE OF CARDS Twitter, blogs, enriched media, they’re all surface, they’re all fads. Tom Hammerschmidt Chief Editor of Washington Herald Image: Netflixlife
  3. 3. Those who refuse to adapt, will fall behind. Those that embrace digital transformation (such as the one bringing you House of Cards) will leap forward. He believes the newspaper’s only way to survive is to stick to the tradition, to hard news. Tom got fired afterwards.
  4. 4. Sceptical Scared/Confused It-is-not-gonna-happen-to-us Follow the herd TYPICAL SENTIMENTS TOWARDS DIGITAL TRANSFORMATION
  5. 5. There is a high chance that when somebody says “digital transformation,” they mean something else.
  6. 6. Do they mean This is like putting on fashionable clothes to look more impressive. In this case, the “clothes” are cool digital technologies. 1. DIGITAL DRESS‐UP?
  7. 7. Examples Building a website for your business where none exists Making an online store that lets people browse products and create orders without payment or other integrations DIGITAL DRESS‐UP
  8. 8. Or do they mean This maintains what the business is doing but seeks to do it better by leveraging digital. Similar to when a person gets a makeover, it doesn’t necessarily change who they are underneath. 2. DIGITAL MAKEOVER?
  9. 9. Examples A marketing department rolling out a new data analytics platform that allows the company to customise content & target readers more precisely An IT division upgrading their systems to the cloud to reduce maintenance costs and improve efficiency DIGITAL MAKEOVER
  10. 10. Or do they truly mean Change needs to happen to the business model, processes and people as well as technology stack. 3. DIGITAL TRANSFORMATION?
  11. 11. By choice, businesses don't undergo They have failed to evolve Competitors are following too close Market shifts throw everything into chaos DIGITAL TRANSFORMATION Unless:
  12. 12. CASE STUDY ‐ XEROX
  13. 13. Xerox’s margins and market share were suffering due to competition from Asia. By 2000, Xerox’s more complicated, expensive line of copiers and printers resulted in net losses of $273 million. SITUATION SYNOPSIS
  14. 14. DUAL TRANSFORMATION PATH Reposition the core business to adapt to the changing environment Branch out to a digital offering that will be the main source of growth Machines that could match competitors’ price and simplicity, and beat them in technology. Xerox Global Services formed to handle document management and other back-office processes.
  15. 15. Businesses tend not to consider digital transformation before it is too late, i.e. when digital disruption is inevitable.
  16. 16. Disruption occurs “when a business creates or employs a technology in a new way, forming a business model that provides an edge over competitors.” Digital Disruption HERE Read more on
  17. 17. STARTUP VS. ESTABLISHED COMPANIES Source: McKinsey
  18. 18. HOW THE INCUMBENT WAS DISRUPTED BLOCKBUSTER NETFLIX Was comfortable with a 45% market share in 2003, before going out of business seven years later. Shifted its focus to online streaming, then invested in content production. Latest revenue at $6.78 Billion. Focused on opening new retail stores and entering new markets. Gained traction with its mail- based DVD rental service.
  19. 19. HOW THE INCUMBENT WAS DISRUPTED BORDERS AMAZON Being late in the digital game, the incumbent ceased its operations in 2011. Moved to e-books, e-book readers, and an all-you-can- get e-store nowadays. Over-invested in retail stores and CD sales. Made its debut as an online book store in 1995.
  20. 20. Undergo a full blown digital transformation Cannibalise their core business to make way for something new Self-disruption: Sometimes companies need to go against their corporate instincts and...
  21. 21. European media company wasn’t satisfied with just a digital makeover like other newspapers. From 2005, the business started acquiring new digital properties and moved to online classifieds. Moreover, it also divested some of its biggest print media products, accounting for 15% of its sales in 2013. AXEL SPRINGER Today, the media company derives 70% of its EBITDA from digital.
  22. 22. Once you have opened up to the possibility of disruption, the next step is to formulate a strategy. It would help detect digital disruption early on and make pre-emptive moves. IDENTIFYING THREATS & OPPORTUNITIES
  23. 23. SUPPLY & DEMAND LENS Source: McKinsey
  24. 24. Examples of disruptors leveraging iTunes lets customers buy individual songs rather than whole albums Travel sites like Expedia makes it easier to book trips anytime anywhere UNDISTORTED DEMAND
  25. 25. Airbnb lets consumers become suppliers, or opens up lodging supply UNCONSTRAINED SUPPLY
  26. 26. Sites like comparethemarket.com removes the middleman such as brokerage NEW MARKET
  27. 27. Domino’s pizza delivery tracking gives real- time insights BeerDroid offers connectivity for home beer brewing hobbyists via a mobile app NEW VALUE PROPOSITION
  28. 28. Dropbox transformed storage from a (hardware) product to a digital service REIMAGINED BUSINESS SYSTEM
  29. 29. Amazon’s Kindle Direct Publishing connects authors directly with readers HYPERSCALING PLATFORM
  30. 30. Another way to spot threats and opportunities is by looking at how competitors may unbundle or decouple the components of your products. UNBUNDLING & DECOUPLING LENS
  31. 31. Allows consumers to only buy what they want. The picture on the next slide shows how various disruptors have unbundled the services of a traditional bank. Essentially, they zoom in on a specific consumer need (e.g. wealth management) and try to do it better. UNBUNDLING
  32. 32. UNBUNDLING OF TRADITIONAL BANK Source: CB Insights
  33. 33. The “separation of consumption activities that traditionally go together, hand-in-hand.” In the diagram below, disruptors separate the non-value creating portion from consumption activities and only focus on the value creating portion. DECOUPLING
  34. 34. DECOUPLING EXAMPLES Source: European Business Review
  35. 35. “Companies rarely die from moving too fast, and they frequently die from moving too slowly.” REED HASTINGS, CEO of Netflix
  36. 36. T H A N K S   F O R   R E A D I N G C R E A T E D B Y Read full blog post at: blog.enabled.com.au/digital-transformation

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