Digital Transformation
100 flashcards · Other · by Nemes Zsombi
Qualities that customer seek from every business today.
On-demand, customizable, connected, shareable
5 core customer behaviors:
Access Engage Customize Connect Collaborate
customer network model
current and potential customers have access to a wide variety of digital platforms that allow them to interact, publish, broadcast, and innovate – and thereby shape brands, reputations, and markets
One of the main points in the model of customer networks
t a “customer” can be any key constituency that the organization serves and relies on (customer may be end consumers purchasing a product or businesses purchasing professional services).
The marketing funnel (the purchase funnel)
one framework for understanding how customer networks have such a great impact on businesses’ relationships to customers.
Today’s customer networks make their biggest impact on the marketing funnel though an additional level,
advocacy (at the psychological stage, customers are not just loyal; they advocate for the brand and connect the brand to people in their network e.g., reviews on TripAdvisor, product photos on IG etc.).
omni-channel
An omni-channel experience uses design to integrate the path to purchase as it moves from one touchpoint to the next.
Customer Network Behaviour 1: Access
they seek to access digital data, content, and interactions as quickly, easily, and flexibly as possible. Any offering that enhances this access is incredibly compelling
Customer Network Behaviour 2: Engage
they seek to engage with digital content that is sensory, interactive, and relevant to their needs
Customer Network Behaviour 3: Customize
they seek to customize their experiences by choosing and modifying a wide assortment of info, products, and services
Customer Network Behaviour 4: Connect
they seek to connect with one another by sharing their experiences, ideas, and opinions through text, images, and social links
Customer Network Behaviour 5: Collaborate
as social animals, they are naturally drawn to work together. Accordingly, they seek to collaborate on projects and goals through open platforms
Five customer network strategies
Access Strategy (1/5)
An access strategy may take a variety of approaches, including mobile commerce, omni-channel experiences, working in the cloud, and on-demand service.
Mobile commerce -Access Strategy
QR codes, room doors that unlock with a swipe of a phone, mobile payments, etc
Omni-channel experiences - Access Startegy
integrated experience across all digital and physical touchpoints; : Walmart’s a mobile shopping app with different features designed for when customer is in Walmart store versus the same app at home (the right version is depending on the location of the phone).
Working in the cloud - Access Strategy
shifting work processes to the cloud with a software-as-a-service (SaaS) (providers like Google, Apps, Dropbox etc.). This result in much lower IT costs for businesses and greater flexibility for an increasingly mobile and collaborative workforce.
On-demand services - Access staretgy
: increasingly, services that used to require the customer to be in a specific location at a specific time are now accessible to customers anywhere at any time (e.g., retails banks and their app, health care and telemedicine etc.)
Engage Startegy (2/5)
must expand their approach beyond interruption advertisements; learn to create their own content that is relevant enough for customers to seek it out, consume it, and even share it within their networks ; content must add value to businesses by enhancing their customer relationships
product demos - Engage Strategy
content that demonstrates the value proposition of a business or product in a compelling and engaging way can be extremely effective (“dermablend” on tattooed buy).
Storytelling - Engage Strategy
brands can reach a broader audience by creating an emotionally compelling story that is less product-specific
Utility - Engage Strategy
brands can effectively engage consumers by providing useful content at just the right time (Columbie Sportswear connects to consumers interested in an active, outdoor life by creating mobile app that range from a guide to trying to rope knots to a GPS Portable Activity Log)
Brands as publishers - Engage Strategy
brand moves beyond individual pieces of content and engage customers by becoming publishers in their own right (luxury department store Barneys NY has a website for ecommerce, but it also has become publisher The Window, an online magazine that tells the stories of designers, fashion models)
Customize Strategy (3/5)
The customize strategy for business is to make your offering adaptable to your customers’ needs.; may take a variety of approaches, including recommendation engines as well as personalized interfaces, products and services, and messages and content
Recommendation engines - Customize strategy
Netflix and their recommendations. The impact of these recommendations can be measures by how infrequently customers bother to use the search bar to find a show to watch
Personalized interfaces - Customize Strategy
Lancôme’s magical mirror on their Facebook page that allows customer to select one of their FB photos and then try out various beauty products virtually applying them to the photos to see how they look on the customers’ own features, complexion, and hair.
Personalized products and services - Customize Strategy
: Coca-Cola and their personalized cans with names on them
Personalizes messages and content - Customize Strategy
One of the easiest ways to customize an offering for customers is through media and messaging.
Connect Strategy - (4/5)
A connect strategy may take a variety of approaches, including social listening, social customer service, joining the conversation, asking for ideas and content, and hosting a community.
Social listening - Connect Strategy
customer conversations can be a tremendous source of market insight for businesses, which can listen and learn with the help of numerous tools. Many brands have used social insights to inform new branding and campaigns.
Social customer service - Connect Strategy
social media can serve as an effective channel within their customer service mix, alongside call centers, instant chat, and other tools
Joining the conversations - Connect Strategy
building a portfolio on social media; uploading pictures and videos
Asking for ideas and content - Connect Strategy
many times, companies will connect with customers by using social media to ask them for ideas, suggestions, or content in the form of photos or videos.
Hosting a community - Connect Strategy
business hosting its own online community around a shared topic of interest.
Collaborate Strategy (5/5)
A collaborate strategy is distinct from a connect strategy in that that the company invites customers not just to share goal or objective but also work together in a focused way toward a shared goal or objective, using open platforms
Passive contribution - Collaborate Strategy
sometimes collaboration can involve as little as customers’ consent so that actions they are already taking can be used to power a collective project (the Waze navigation app each customer provides real-time data on the speed of traffic and best routes to destinations).
Active contribution - Collaborate Strategy
customers are invited to contribute their efforts directly to a cause, taking a small part of a large project (CNN’s iReports allows anyone to contributes photos, videos, eyewitness reports to a crowdsources journalism website. When the material is newsworthy, it is picked up and included in the main CNN broadcast).
Crowdfunding - Collaborate Strategy
the process of seeking collaborators to contribute to and raise funds for a new project, product launch, or initiative
Open competitions - Collaborate Strategy
for problems that cannot be easily divided amongst contributors, competitions can be used to enlist a diverse group to find the best answer or solution
Collaborative platforms - Collaborative Strategy
the business creates a context for collaboration but lets the network of collaborators define the challenges to be addressed.
Customer Network Straetgy Generator
Step 1: Objective Setting
Direct objectives: these are the objectives that you are directly responsible for addressing in your project (e.g., if you were responsible for developing direct-to-consumer sales for the first time via ecommerce, you might be seeking to drive awareness and product discoverability, reduce friction in the purchase decision, and engage lead customers as evangelists for your new sales channel). Higher-order objectives: these are the objectives that you are solely responsible for but that your pro…
Step 2: Customer Selection and Focusing
The next step is to get a clear picture of the customers that you are seeking to address.
Step 3: Strategy Selection
Access: Be faster, be easier, be everywhere, and be always on for your customers. Engage: Become a source of valued content for your customers. Customize: Make your offering adaptable to your customers’ needs. Connect: Become a part of your customers’ conversations. Collaborate: Invite your customer to help build your enterprise.
Step 4: Concept Generation
A concept is a specific, concrete idea for a product, service, communication, experience, or interaction you design for customers.
Step 5: Defining Impact
The point here is to articulate a measurable benefit to your company and clarify how you think the strategic concepts you have developed will achieve this outcome.
Tripodi’s perspective, we must think about customer networks in terms of three different networks:
End customers Business customers (whether retailers, analysts, or opinion elites who influence your industry and regulations). Your own employees.
Competition: Changes in Strategic Assumptions from the Analog to the Digital Age
Platform
is a business that creates value by facilitating direct interactions between two or more distinct type of customers.
4 Types of platforms
Exchanges (marketplaces); Transaction system; Advertising - supported media; Hardware/software standards
Exchanges-(marketplaces) (platform 1/4)
These types of platforms bring together two distinct groups of customers for a direct value exchange, with each group attracted by the number and quality from the other side. Example no1: real estate brokers, who bring together buyers and sellers. Example no2: shopping mall, which promotes itself as a shopping destination to consumers and rents space to various vendors.
Transaction system (platform 2/4)
These platforms act as an intermediary between different parties to facilitate payments and financial transactions. (PayPal)
Advertising – supported media (platform 3/4)
The platform typically plays an additional role of creating (or sourcing) media content that is attractive to consumers. Example: a printed newspaper or an online news publication hires writers to create professional content. Once the value of the content attracts an audience, the platform can charge advertisers who are eager to present their messages to that audience. As the platform attracts more people, its value to advertisers increases. The advertisers, in turn, provide value to the audi…
Hardware/software standards
These platforms provide a uniform standard for the design of subsequent products to enable their interoperability and benefit the ultimate consumer. Example: Apple, Samsung
Direct (“same-side”) network effects
occur when the increasing number of customers or users of a product drives an increase in value or utility for that same type of user. As the number of users increases, each additional user leads to an exponential increase in the number of potential connections that can be made in the network. Direct network effects occur in platforms such as Facebook.
Indirect (“cross-side”) network effects
occur when an increase in the number and quality of customers on one side of the platform drives increasing value for customers on the other side of the platform In advertising supported media, the indirect network effects usually run only one way: as the number of readers increases for a newspaper, its value to advertisers increases as well, but increasing the number of ads in each issue does not directly increase the value for reader
digital technologies are driving four key elements of platforms
Frictionless acquisition; Scalable growth; On-demand access and speed; Trust
Competitive benefits of Platforms
Light in Assets; Winner takes all; Economic efficiency; Competition Between Platforms
Winner takes all
1. Multihoming – using more than one platform – is hard for the customer. 2. Indirect network effects are strong. 3. Feature differentiation is low.
Areas in competing with other platforms in the same industry
Network-added value: due to network effects, the platform with the most current customers is often the one most likely to draw future customers. Platform-added value: unique features and benefits that attract customers. Open standards: offering more-open and easier-to-uses standards that platforms’ competitors. Interaction tools: competing by providing the customers with the best tools to find and interact with the right partners. Trust enablers: Offering better methods to enable trust among th…
Co-opetition
Real competition is far from a zero-sum contest; In many cases, effective strategy calls for even direct competitors to find ways to work together in certain areas.
Tool: The platform Business Model map
an analytic and visualization tool designed to identify all the critical parties in a platform and analyze where value creation and exchange take place among the different customers and with the platform business itself
Tool: The Competitive Value Train
is a tool designed to analyze competition and leverage between a firm and its business partners, direct rivals, and asymmetric competitors
The competitive value train
START (no 4): horizontal train of firms leading to a final consumer on the right 1. (no. 3) DISTRIBUTOR: delivers the product/service to the consumer 2. (no. 2) PRODUCER: Creates the finished products/services or offering paid for by a consumer. 3. (no. 1) ORIGINATOR: Creates unique elements or parts of the offering.
Two Rules of Power in Value Trains
Principle 1: POWER TO THE UNIQUE VALUE CREATION At every stage in the value train, each business needs to create unique value to exert competitive leverage on its partners upstream and downstream. The more a business can distinguish itself from asymmetric and symmetric competitors at its own stage in the value train, the more bargaining power it will maintain with its own partners and customers. Principle 2: POWER TO THE ENDS As industry redefinition leads to more asymmetric competitors,…
Channel conflict
situation where a business is balancing both working with a key sales channel and going around it. When companies do launch a direct-to-consumer channel in competition with their primary sales channel, they need to establish clear boundaries (e.g., Geographic boundaries, branding)
Data: Changes in strategic Assumptions from the Analog to the Digital Age
Key Data Types for Business Strategy
5 priciples of developing a data strategy
Gather diverse data types Use data as a predictive layer in decision making Apply data to new product innovation Watch what customers do, not what they say Combine data across silos
3 trends in big data
Analyze unstructured data Apply new tools Use cloud computing: Applications and services delivered seamlessly over the Internet.
Unstructured data
information that is recorded but doesn’t fit easily into neat forms.
Important sources of data outside the organization
Customer data exchanges Lead users Supply chain partners Public data sets Purchase or exchange agreements.
Turning Customer data into Business Value: 4 template
1. Insights: revealing the invisible 2. Targeting: narrowing the field 3. Personalization: tailoring to fit 4. Context: providing a reference frame
Tool: The Data Value Generator
Step 1: Area of Impact and key Performance Indicators: Defining the area of your business you are seeking to impact or improve through a new data initiative. Once the area of impact is defined, you should identify your primary business objectives in that area. Step 2: Value Template Selection: You should choose to pursue one template or combination (Insight; Targeting; Personalization; Context). Step 3: Concept generation: Concept generation should aim for this level of concrete application…
Changes in strategic Assumptions from the Analog to the Digital Age
Convergent experiments
best suited for learning that eliminates options and converges on a specific answer to a clearly defined question Formal/scientific experimental design for innovations intending to improve your core business
Divergent experiments
best suited for learning that explores options, generates insights, asks multiple questions at the same time, and, when done right, generates new questions to explore in the next iterative stage More informal than the of convergent experimentation. for innovations intending to develop new business areas
Customer value assumption (first)
Do your customers value the solution? Will they use it?
Business model assumption (second)
How will you manufacture your offering? How much will it cost?
For established business, the decision after each field test is one of four options:
Proceed: your test has validated your ideas so far (go back to step 4) Pivot: there are some issues (go back to step 4) Prepare to launch: finished successfully (go to step 9) Pull the plug: ran out of testing solutions or hit the limits; stop the process and asses what you learned (go to step 10)
Four Paths to Scaling Up an Innovation
MVP Rollout
Easiest; You can start your rollout with a limited test market and then iterate rapidly as you gain additional feedback from customers.
MVP Launch
Harder; Your business is forced to iterate very quickly after launching your innovation because you are not able to effectively limit the scope of launch
Polished Rollout
Harder; You can launch your innovation in limited locations or for limited customers, but you cannot quickly iterate it once it is public. It, therefore, needs to be much more polished at the point of release
Published Launch
Hardest; You must offer your new innovation to all customers at once, and you are unable to iterate it quickly
Rethinking Value: What Business are you in?
Review your value elements, and place each into one of four columns
Core elements – to build on (source of strength that you plan to use as a focus of continuing innovation). Weakened elements – to bolster (current value elements that are losing their impact for your customers and that you have chosen to try to reinforce and improve) Disrupted elements – to deprioritize (former sources of value that have lost its ability to deliver for your customers and that you have chosen to move away from and drop from your strategic focus). New elements – to create: (new v…
Business disruption
happens when an existing industry faces a challenger that offers far greater value to the customer in a way that existing firms cannot compete with directly
Two Sides of a Business Model
First side – value proposition – the value that a business offers to the customer. Second side – value network – the people, partners, assets, and processes that enable the business to create, deliver, and earn value from the value proposition.
Value Proposition Differential
Price: digital business models often allow for the same product/service to be offered at a substantially lower price. Free of “freemium” offer: many new business models add customer value with freemium offers, where some level of service is available for free, but a premium paid version offers additional benefits. Access: ability to access content or services remotely, anywhere, any time. Simplicity: many digital business models disrupt by removing friction from the sales process, making decisi…
Value Network Differential
Customers: the challenger may be pursuing different customer segments or types than the incumbent currently serves. Channels: online distribution, direct delivery to customer, or distribution through intermediaries Partners: sales, manufacturing, supply chain, or other key partners what are critical to the challenger’s offer. Networks: if the challenger has a platform business model, then an established network of customers or partners may be essential to how it delivers its offer. Complementar…
Two Differentials in Christensen’s new Market Disruption
Christensen’s new market disruption is simply a description of all those cases of disruption where the value proposition differential is difference in price or access and the value network differential includes a difference in customer segment
Three Variables in Business Model Disruption theory
customer trajectory, disruptive scope, and multiple incumbents.
Customer Trajectory
Outside-in: the disrupter starts by selling to buyer that are not currently serves by the incumbent, and over time, the disrupter works its way in until is starts to steal customer directly from the incumbent’s own market. Inside-out: From the beginning, the disrupter starts by selling to some subsegment of the incumbent’s current customers. The initial subsegment may be small, but over time, it grown as the successful disrupter expands outward to claim more and more of the incumbent’s customer…
Disruptive Scope
Even after being disrupt, the incumbent’s product or business model hangs on, confined to a diminished portion of the market but still a notable player in the industry.
Multiple Incumbents
A single disruptive business model can disrupt more than one incumbent.
Outside-in disrupters
begin by selling to noncustomer of the incumbent and then work their way inward to encroach on the incumbent’s own customers.
Inside-out disrupters
begin by selling to a segment of the incumbent’s current customers and then work their way outward to take more of its market
5 domains of digital transformation
Customer; Competition; Data; Innovation; Value