digital disruption desconstructed by michael wade

© Michael Wade 2016 © 2016 IMD – International Institute for Management Development. Not to be used or reproduced without permission.

DigitalDisrup,onDeconstructed Professor Michael Wade IMD Professor of Innovation and Strategy Cisco Chair in Digital Business Transformation


©2015GlobalCenterforDigitalBusinessTransforma:on.Allrightsreserved.

#7Hospitality&

Travel#8

CPG&Manufacturing

#9Healthcare

#10U:li:es

#11Oil&Gas

#12Pharmaceu:cals

#1Technology

Products&Services

#2Media&

Entertainment

#3Retail

#4FinancialServices

#5Telecommunica:ons

#6Educa:on

The Digital Vortex


What Industries Will Self-Driving Cars Disrupt?


One Disruption Can Redefine Many Industries in the Digital Vortex

©2015GlobalCenterforDigitalBusinessTransforma:on.Allrightsreserved.

#7Hospitality&

Travel #8CPG&

Manufacturing

#9Healthcare

#10U:li:es

#11Oil&Gas

#12Pharmaceu:cals

#1Technology

Products&Services`

#2Media&

Entertainment

#3Retail

#4FinancialServices

#5Telecommunica:ons

#6Educa:on

AccordingtoMorganStanley,self-drivingcarscouldcontribute$5.6trillioninannualsavingstotheglobaleconomy.


You could conduct the same exercise for…

Blockchain

Virtualreality

MachineLearning

ConnectedDevices

10 © 2015 Global Center for Digital Business Transformation. All rights reserved.

Question

Why do you use Uber?

11 © 2015 Global Center for Digital Business Transformation. All rights reserved.

Three Categories of Digital Value

Free / Ultra low cost

Consumption-based pricing

Reverse auctions

Buyer aggregation

Price Transparency

Customer Empowerment

Customization

Automation

Instant Gratification

Reduced Friction

Digital Marketplaces

Crowdsourcing

Communities

Ecosystem

Data orchestrator

$

Platform Value Experience Value Cost Value

Divided into 15 Business Models

12

Are you responding appropriately?

45% of respondents

say digital disruption is NOT

a CXO-level concern

Does not recognize or is not

responding appropriately

Taking “follower” approach

Actively responding

by disrupting our own business

43%

32% 25%

In general, what is the attitude of your company’s leadership toward digital disruption?


Tradi@onal View of Strategy

Wewanttobehere

Time

Wearehere


Emerging View of Strategy

????????

????????????????

????????

????

???? ????

????

????

????

Wearehere

Time

15

Hyper- awareness

Informed Decision-Making Digital

Business Agility

Fast Execution

Hyperawareness A company’s ability to detect and monitor changes in its business environment

Informed Decision-making A company’s ability to make the best decision in a given situation

Fast Execution A company’s ability to carry out its plans quickly and effectively

Digital business agility enables companies to respond and react to digital disruption

Companies Must Build Digital Business Agility — Starting with Three Capabilities

16

Hyperawareness

Being highly alert to stimuli in the entirety of your internal and external environment, particularly to changes that spotlight opportunities or threats.

Hyper- awareness


Business Agility

Fast Execution

17

Which of these brands is the odd one out?

Here’s a question for you…

18

What are we looking at?


Your hyperawareness?

• Yourabilitytocaptureinsightsaboutnewdigitaltechnologyandbusinessmodeltrendsastheyemerge

• Yourabilitytocaptureinsightsabout/fromyouremployees• Yourabilitytocaptureinsightsabout/fromyourcustomers• Yourabilitytocaptureinsightsabout/fromyourpartners• Yourabilitytocaptureinsightsabout/fromyourcompe:tors(exis:ngandemerging)

• Yourabilitytocaptureinsightsabout/fromyouropera:ngenvironment

20

21

Informed Decision-making

Hyper- awareness


Business Agility

Fast Execution

• Active decisions based on real data • Collaboration across the enterprise • Outside-in approach


Brand A Brand B

Traffic c. 10 M sessions / year c. 5 M sessions / year

Conversion rate c. 0.06% c. 0.7%

Average basket value c. $1’500 c. $550

What should you do to increase online revenue… for Brand A? Brand B?

Adaptedfrom:AntonioCarriero,2016


0

10

20

30

40

50

60

70

80

70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

Transactions

Sessions

29/11/2015

04/12/2015

07/12/2015 30/11/2015

25/10/2015

26/10/2015

14/12/2014

17/12/2014

18/12/2014

16/12/2014

15/12/2014

20/12/2014

27/01/2015

1. 55 US segmentation study conducted on Google Analytics, UA-46573917-1, from 11/10/2014 to 31/01/2015 Source: Google Analytics data

Correlation between transactions and sessions for Brand A # sessions, # transactions, each point is a day between 14/12/2014 and 7/12/2015

R²=0,32 (R²=0,1 without Christmas)

Tracking issue

For Brand A transactions and traffic are not correlated



Brand A Brand B

Traffic c. 10 M sessions / year c. 5 M sessions / year

Conversion rate c. 0.06% c. 0.7%

Average basket value c. $1’500 c. $550

What should you do to increase online revenue… for Brand A? Brand B?



Make Decisions Smarter, Faster, Together

ChallengeEnablehigh-speedanddata-drivendecisionmakinginagroupenvironment

OutcomeEs:mated70%reduc:onindecision-makingprocess:meformedium-sizedVAR

HowProprietaryalgorithmsdrivecollec:vedecision-makingthroughmul:-criteriavo:ngwithsmartvisuals

InclusiveDecision-making


Informed Decision-making

• Yourabilitytoaccessanddisplayimportantdatainreal:me(i.e.,throughdashboards)

• Yourabilitytoshareinforma:onacrosstheorganiza:ontosupportdecision-making.

• Yourabilitytoempowerpeopletomakedecisionsattheappropriatelevel

• Yourabilitytomakedecisionquickly• Yourabilitytomakedecisionsbasedonadvancedanaly:cs• ThestabilityofyourITinfrastructure

28

Fast Execution

Hyper- awareness


Business Agility

Fast Execution

Putting decisions into practice rapidly, mobilizing resources dynamically, and continuously monitoring options and progress against goals


Fast Execu@on

• Yourabilitytoactquicklybasedonnewinforma:on• Yourabilitytoturndecisionsintoac:on• Yourabilitytodynamicallyacquirepeopleandresources• Yourabilitytodynamicallyallocatepeopleandresources• Yourabilitytocon:nuouslylearnandadapt• Yourabilitytotoleratefailure

31


Strategy is not dead…

32

…it is just becoming less relevant.

Agility is the new differen@ator.

© Michael Wade 2016 © 2016 IMD – International Institute for Management Development. Not to be used or reproduced without permission.

DigitalDisrup,onDeconstructed Professor Michael Wade IMD Professor of Innovation and Strategy Cisco Chair in Digital Business Transformation


Digital

34

The convergence of mul@ple technology innova@ons enabled by connec@vity

i.e. big data and analy@cs; cloud compu@ng; mobility and mobile solu@ons; social media and other collabora@ve applica@ons; connected devices and the Internet of Things (IoT); ar@ficial

intelligence and machine learning; loca@on-based services; and virtual reality


Digital Disrup@on

35

The effect of digital technologies and business models on a company’s current value proposi@on, and its resul@ng market

posi@on


Digital Business Transforma@on

36

Organiza@onal change through the use of digital technologies and business models to improve performance

digital disruption desconstructed by michael wade

Marketing