Digital Models

Business Models for a DigitalFuture

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Business

Models : Business Models in Digital World Digital Future :

Micro Environment

Macro Environment

Types of Organizations from Digital Perspective

Building Digital Competencies

Leadership skills to effect the digital change

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The Internet Macro Environment

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PESTEL Factors

Political, Economical, Social, Technology, Legal and Environmental factors

Each factor has a subjective impact on Digital Marketing

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Social Factor A lot of research articles have identified the

following factors as detrimental to adoptionof internet

No perceived benefit, lack of trust, securityproblems, lack of skills and cost are thefactors

These factors in combination or in isolationlead to the less use or no use of internet

Research has identified social exclusion apart of the society not getting benefits gotby other part , also as a problem difficult tomitigate

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TAM

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Legal and Ethical Issues Ethical standards are the personal or

business practices which are generallyconsidered acceptable by the society

Privacy refers to the moral right of anindividual to avoid intrusion into theirpersonal affairs. The failure to protectprivacy has led to a dramatic increase inidentity thefts - The misappropriation ofthe identity of another person , withouttheir consent or knowledge

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Legal and Ethical Issues

The information needs on internet arecontact information, demographicinformation and behavioural information(on single and multiple sites)

Proper laws basis each country exist toprotect cyber crimes

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Legislation The Information Technology Act , 2000

was amended in 2008 ( The IT ActAmendments , 2008)

It now incorporates a general limitationto prevent the use of electroniccommunication devices to send grosslyoffensive information resulting to insult

This is very broad based and itsenforcement is subject to sanction from acompetent authority

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Legislation

The amended act of 2008 also exemptsan entity from liability for any lossesoccasioned by a loss of sensitive personaldata in case such entity demonstrates thatit had implemented reasonable securitypolicies and procedures

The personal data ambit includes bankaccount, credit card, health information ,medical history amongst others

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Technology factors

Electronic communications are thedisruptive technologies that have causedmajor changes in the society

Researchers have created a hype cycle agraphic representation of maturity,adoption and business applications ofspecific technologies

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Hype Cycle

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Economic Factors

The more financially stable the country ,the more technology based innovationswill be viable

Managers using E commerce will alsotarget those countries which have asound economy

Example of exception : Mpesa in Africafrom the dimension of social as well aseconomic factor

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Political factors

Government uses internet to providefacilities to people. This is known as e-governance

Internet governance describes the controlput in place to manage the growth of theinternet and its usage

For e.g. in an e-wallet govt. of Indiaallowed an individual to deposit a limitedamount owing to cybercrime threats

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The Internet Micro Environment

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The Internet marketing environment

Figure: The Internet marketing environment16Dr.Jay Trivedi

The Marketplace Analysis

The marketplace analysis of anorganization comprises of the interactionsbetween all the elements of the microenvironment. It includes competitiveforces, Value chain analysis, newchannel structures, location of trading,transactions and new revenue andbusiness models

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Competitive forces Porters 5 force model

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Value chain

A model that considers how supply chainactivities can add value to products andservices delivered to the customer

Value can be created by Offering of tangible (quality) and Intangible benefits (brand) 19Dr.Jay Trivedi

Two alternatives of value chain

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Value Networks

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Value Network The links between an organization and its

strategic and non strategic partners thatforms its external value chain

As companies outsource more and moreactivities ,management of the links betweenthe company and its partners becomes moreimportant

Value network management is the process ofeffectively deciding what to outsource in aconstraint based , real time environmentbased on fluctuation

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Value Network

Value chain deconstruction : This happensthrough deconstruction of the primaryactivities of the value chain andoutsourcing them as appropriate

Value chain construction : The value chainis streamlined to increase efficiencybetween each of the value chain partners

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New channel structure

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Location of trading

Concept of marketspace There are 3 key online locations for

the promotion of services and for E Comm transactions are :

- Supplier controlled sites (www.dell.com)- Buyer controlled sites - Neutral sites (www.policybazzar.com)

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Business Models in e commerce Business Model : A summary of how a

company will generate revenue, identifyingits product offering, value added services,revenue sources and target customers

There can be 11 different types of businessmodels that can be facilitated by the web :

- e shop, e procurement, e mall, e auctions, virtualcommunities, collaboration platforms, third partymarket places, value chain integrators, value chainservice providers, information brokerage and trustand other services

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Competitors

Competitors use of Internet in thebusiness strategy is very important

How the competition uses internet to hisadvantage and how their customers farewith its use is a matter of study

The major factors to be studied in thiscontext are : new approach from existingcustomers, new companies on theinternet and new technologies and design

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Suppliers

The speed, pricing and efficiency withwhich the suppliers can serve a buyerbecomes a crucial aspect

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COLLABORATION BETWEEN RETAILERS AND VENDORS Vendor Managed Inventory :- Here , a vendor is responsible for maintaining the

inventory of the retailer - The vendor determines the reorder point- The retailer shares the sales / POS data with the vendor

to enable this system - An improved version of VMI is CPFR / Collaborative

planning, forecasting and replenishment

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Intermediaries Marketing intermediaries are firms that

help a company to promote, sell anddistribute its products or services

Online intermediary sites providesinformation about destination sites

Destination sites are sites typicallyowned by merchants

Directories, search engines, malls, virtualresellers, financial, evaluators, forums aresome types of intermediaries

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Business Models E-Shop Marketplace Model E-auction E-procurement E-Mall Third Party Marketplace Virtual Communities Value Chain integration Value chain service providers Collaboration platforms Information brokerage

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E-Shop Web Marketing of a company or a shop Options to order and pay , often combined

with traditional marketing channels Benefits for the company are increased

demand , a low cost route to globalpresence and cost reduction of marketingefforts

Benefits to consumers can be lower prices,wider choice, better information, and buyingprocess convenience

Consumers can also benefit from the loyaltyschemes offered by the e-shops

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E-Procurement Electronic tendering and procurement of

goods and services Benefits to organization includes of this

process are wider choice of suppliers ,reduced cost of procurement

Benefits to suppliers include widerapplication , lower cost of tendersubmissions or even collaborativetendering

Example : www.tenders.gov.in

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E-Auction

E-auctions offer an e-bidding process Can be accompanied by multimedia

presentation of goods This results in saving of overheads

involved The 3rd phase bidding for the radio

frequencies conducted by the Informationand Broadcasting ministry was an e-auction process

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E-Mall

An electronic mall , in its basic form ,consists of a collection of e-shops, usuallyenhanced by a common umbrella

This may be enriched by a common,guaranteed payment method

Malls specializing on a certain marketsegment become more of an industrymarket place

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E-Mall

Benefits to e-mall members is benefits of traffic , sophisticated hosting facilities and payment security

Benefit to hosts is revenue fromadvertising and membership fees

However due to the e-commerceadvancement such ventures have shownlittle promise

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Third Party Marketplace

This is an emerging model wherecompanies can leave the web marketingto a 3rd party

Revenues are generated from one-offmembership fees, service fees, transactionfees or a percentage of the transactionfee

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Virtual Communities

A virtual community can also be animportant add-on to other marketingprograms in order to build customerloyalty

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Value Chain Service Provider

These specialize in a specific function ofthe value chain such as electronicpayments or logistics

They earn revenue from fixed fee orpercentage of transaction

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Value Chain Integrators

These focus on integrating multiple stepsof the value chain

Some of the 3rd party marketplaceproviders are moving into the direction ofvalue chain integration

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Collaboration Platforms They provide a set of tools and an

information environment forcollaboration between enterprises

GEARING UP Special teams of thefirms will help with group's digitaldrive by working with Tata Unistore,which is spearheading theconglomerate's online retailingventure aimed at becoming acustomer-centric corporate unit

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Information brokerage

A whole range of new informationservices are emerging to add value to thehuge amount of data available on theopen networks or coming fromintegrated business operations such assearch

Organizations specializing in extracting,transforming and analyzing this data aregrowing at a fast pace

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Building a Digitally CompetentOrganization

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Building a Digitally CompetentOrganization Nike Nike has built a digitally competent

organization based on innovation Online customers can order personalized

shoes in hundreds of colour combinations Digital tools have made manufacturing

and product design faster

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Building a Digitally CompetentOrganization Nike Social media enables Nike to be an integral

part of conversations around major sportingevents and products

Nikes digital product such as fuel bandallows athletes to track workouts, sharetheir performance online and get advicefrom digital coach

Inspite of all this success in Nike decided toinvest in a new SBU called Nike Digital Sportto build new digital products and marketers,designers and engineers work jointly tolaunch new products

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Building a Digitally CompetentOrganization Asian Paints Asian paints is Indias largest paint

company and Asias 3rd largest paintcompany

Asian paints has expanded to 17countries and is riding high on the digitalfront to enable operational efficiencyacross these markets

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Building a Digitally CompetentOrganization Asian Paints Asian Paints started with unifying the

company through strong IT systems formanufacturing , order processing andsupply chain

They centralized routine customer ordertaking into the single corporate callcenter to focus on customer service

This transformed the sales force of Asianpaints into a connected relationshipmanager

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Building a Digitally CompetentOrganization Asian Paints Automated plants helped Asian paints

produce environment friendly products The future course includes integrating all

suppliers, employees and customers andcreate an extended enterprise

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Building a Digitally CompetentOrganization Nike and Asian paints are very different

organizations but have a very uniquecommonality which is their digitaltechnology competence

These organizations did not only investinto digital capabilities but also buildleadership capabilities to get most oftheir digital activities

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Digital Master

Digital Mastery

Investing in Digital

Capabilities

Build Leadership Skills

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Building a Digitally CompetentOrganization Research says that most organizations

have already invested into social media,analytics, mobility and embedded devices

Strong digital models can be build byleading the change process and investinginto digital technology

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Role of a leader and technology inbuilding a digital model While investing in digital technologies the

firm should foresee a strong reason for it Companies should see investments into

digital not only to send signals to investorsbut to get closer to customers, empowertheir employees and transform internalbusiness processes

Leaders creating digital models should steerby setting direction, building momentum andensuring that the company follows through

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Four levels of digital competence

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Beginners Beginners are just at the start of their digital

journey They try to adopt a wait and see strategy to

gain certainty Beginners only have a basic digital capability

and lag behind competition on multiplemeasures of financial performance

An apt beginner insurance company put alltheir agents on LinkedIn to nurturerelationship marketing practices

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Fashionistas

Fashionistas are not waiting to act They invest into any digital capability but a

structured plan to integrate thesecapabilities does not exist

A well known Indian giant developed aknowledge management platform formanufacturing, marketing and finance butthey were in silos and not connected

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Conservatives Conservatives have useful digital leadership

and technology but are not able to accrue itsbenefits owing to excess prudence

They are always involved in ensuring if theyextract maximum from current digital assetsin turn losing on latest advancements

This myopic vision makes them fall into thegovernance trap where the focus is controland not making digital progress

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Digital Masters

Digital Masters have overcome thedifficulties that challenge theircompetitors

They know where and how to invest Their leaders are committed to guiding

the company towards a digital future They are well versed at extracting the

maximum advantage to build superiorcompetitive positioning

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Digital capability and financialperformance

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Digital capability and financialperformance DMs strong digital capabilities make new

digital initiatives easier and less riskywhile providing the revenue leverage thatcan generate new cash

Simultaneously strong leadership ensuresthat synergies are created that can freeup money for investments while engagingemployees to identify new opportunities

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Digital Mastery by Industry

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Digital Mastery by Industry

Some industries have embraced digitalmuch more rapidly than others

Travel has dealt with digital competitorssince long , but pharma is yet to feel theheat

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How to take the first step ? If your firm is a Fashionistas , start with

building leadership capabilities and gainsynergy across digital assets

If your firm is a conservative , take advantageof your digital leadership to gain new digitalassets in a strategic manner

If one is a beginner , the ideal way to start isby experimenting to test the digital waters ,either with your customers or your internaloperations

Example : Pharma briefing to Doctors onmobile

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Conclusion It takes a systematic investment in

technology towards creating a digitallycompetent organization

A research conducted by Harvard saysthat companies are involved in building 3new types of digital capabilities :

- Creating a compelling customerexperience

- Optimizing the power of core operations- Reinventing business models

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Step 1 : Building Digital Capabilities

Creating Compelling ConsumerExperience

Exploring the Power of Core Operations Reinventing Business Models

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Creating a CompellingCustomer Experience

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Customer Experience Transforming the customer experience is

at the heart of digital transformation If you want to listen to your customers

social media gives you that edge If you want to connect with customers on

the move , mobiles let you do it If you want to know where your

customers are , geo location is the answer If you want better predictions for your

sales , consumer analytics is your forte

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Burberry Creating a digitaltransformation Burberry was competing (LV, Hermes Int,

Kering) in a category which was growingat 15 % . However Burberry was growingonly at 2 %

The players in the category weretargeting baby boomer generation (1946 -1964). These players had large ad budgetsand great recall. Burberry had neither

Hence Burberry decided to target theGenY

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Burberry Creating a digitaltransformation To communicate and engage the gen Y ,

Burberry decided to use their language digital

To begin with they hired a youngmarketing team , digitally empowered

A larger pie of the ad spends was given tothe digital

The website was revamped and given 11language platform

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Burberry Creating a digitaltransformation Burberry launched a fragrance with innovative FB

sampling They also spend on live stream fashion shows,

tweet walk This is a partnership with Twitter to tweet

backstage photos of each and every look in thecollection before live streaming its LondonFashion Week runway show. Its also make selectitems (coats and handbags only) available forpurchase immediately after

For those addicted to Facebook, the show waslivestreamed on Burberrys FB page in HD

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Burberry Creating a digitaltransformation Kisses.burberry campaign :Simply

head to kisses.burberry.com, plant a kisson your phone screen and watch ittransform into a digital kiss print.

You then have the option to select thelipstick shade (from Burberry's latestbeauty collection, obviously), then send it- complete with a message - to someoneyou love

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Burberry Creating a digitaltransformation Burberry simultaneously kept up its retail

investment opening up 20 stores eachyear

These stores were made into RetailTheaters. Consumers were suggested tocome and se the live shows done byBurberry and order there itself

Customers service was improvised withclick to call , click to chat in 14 languages

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Burberry Creating a digitaltransformation The next step was analytics A customer 360 degree program was

launched This is a data driven shopping experience

that invites customers to share theirbuying histories , shopping tendencies andfashion preferences to allow consumerprofiling

Today Burberry is very digital. 60%consumers shop online pick up in a store

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4 Digital Interventions towards transforming customer experiences

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4 interventions towards consumer experiences First digital masters spend time

understanding consumer behaviour and theninitiating designing the customerexperience outside in

Second use of digital channels is increased toincrease reach and engagement

Customer data is used at the heart ofcustomer experience

Lastly digital masters work seamlesslytowards meshing the physical anddigital experiences

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Outside in consumer experience Learn how the consumers will interact

with your product, services, channels,brand , infrastructure and employees

How do consumers behave before andafter an interaction with your company ,where are the pain points and how toalleviate them, what part of experiencecan be digitally enhanced , which segmentof consumers may engage digitally andhow are the points to learn

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Outside in consumer experience

Behaviors across large consumer basesare rarely homogenous

Data and analytics should inform thesegmentation of your consumer base ,defining targeted experiences accordingto specific behaviour patterns

The TESCO Baby Diper and Beer case

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OnePlus Twitter Campaign OnePlus has announced a new campaign

with Twitter which uses microbloggingplatform's 'Flock to Unlock' tool to unlockinvites for OnePlus. All OnePlus Twitter fansneed to do is visit OnePlus' exclusive onlinepartner, Amazon India's official twitter handle@amazonIN and tweet or retweet thefollowing message:

"Tweet to us using #UnlockOnePlusX for achance to get your hands on a OnePlus Xinvite. 5000 invites up for grabs!"

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Creating reach and engagement

In 2008 , Starbucks was experiencingdeclining store sales in 2008

The picture on the technology front wasalso bleak

POS data was also unconnected and storeheads had no e-mails also

The CEO then envisioned that Starbuckswill undergo a digital transformation

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The first Starbucks foray into digital wasthe myStarbucks app allowing thecustomers to locate the nearest store

The app also gave a lot of info toconsumers on coffee and even build theirown drinks

Then Starbucks introduced theirStarbucks card mobile app. This allowedthe consumers to pay using their mobiles

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Creating reach and engagement App users can present the onscreen

version of their loyalty card and top uptheir point online. The POS technologywas ready to read the bar codes onscreen

Starbucks also enabled integration of itsapplication with Apples native passbookfeature which consolidates ticket, couponand loyalty card info on iphone or ipadtouch for easy access

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Processing fees for mobile payments havesuccessfully gone down owing to a largevolume of 3 million mobile payments perweek. This benefits both the consumersand the company

Starbucks has build a huge presence onsocial media. It has more than 60 millionFB fans, 4 million + twitter followers,1million + instagram followers

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Starbucks uses this social media presencefor co-creation

More than 2 lac consumer ideas arecollected by the company to improve itsproducts and corporate initiatives

The ideas are shared with employees whorespond to ideas personally and they letcustomers know when they can see theirideas in action

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Putting Customer Data at thecentre The digitization of all activities has

created a huge sea of information Data can hence become the lifeblood of

all the activities done towards creatingcompelling customer experiences

By adding science to art , data helpscompanies move from guesswork toinspired predictions and hypothesistesting

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Case of TESCO

TESCO captures all the POS data and thedata is collected from the loyalty program

This data is then used to form more than1 lac different customized offers todifferent sets of consumers basis theirdemographics and past purchase data

The have further used the POS data tocreate different consumer strata basisvalue share

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Putting Customer Data at thecentre Mobility and location based data also can

play a crucial role towards improvingconsumer experience

A famous hotel gives it customers specialservice for check in.If the customer hasopted for the digital check in serviceoffered by the hotel then the customercan check in via an SMS

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Putting Customer Data at thecentre The hotel also has a tie up with various

other business in the city Based on where the customer is in the

city a jewellery chain can send a specialoffer to this customer thus increasing thevalue for the customer as well as for thehotel

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Putting Customer Data at thecentre Data in the digital world can be in various

forms structured and unstructured There is a need to enrich this data by

merging it with location based data frommobile services

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Seamlessly mesh physical and digital experience in new ways Companies with multiple channels to

customers physical , phone, mail, social,mobile and so on are experiencingpressure to provide an integratedexperience

Delivering this omni - channel experiencerequires envisioning and implementingchange across both front end andoperational success

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Seamlessly mesh physical and digitalexperience in new ways Success does not come from opposing

the old and the new Burger King when launched in India

offered this experience Consumers can order their burger online

and can collect it at a retail used bysharing the code

Starbucks digital network offers in-storepremium content like NYT and TheEconomist alongside the coffee

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Seamlessly mesh physical and digitalexperience in new ways This seamless meshing is not only the

prerogative of the commercialorganizations, public services are alsogetting into the act

The Cleveland museum of art is usingtechnology for bettering customerexperience

The visitors can use a 40 foot widescreen to see different artifact in themuseum

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Seamlessly mesh physical and digital experience in new ways They can collate all the artifacts of their

interest and get information about thesame

Additionally they can get the image of theartifact embedded on the variousproducts sold at the museum thusincreasing consumer involvement

Additionally the visitor can get their picswith the various idols from the museumand share on social media

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Cleveland Museum

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Exploiting the Power of CoreOperations

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Core Operations

Codelco, the worlds largest copperproducer did not choose consumerexperience as the focus of its digitaltransformation

It transformed its operational processesto increase both its efficiency and itsinnovativeness

This Govt. co. employs 18000 people andproduces 10% of worlds copper.

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Core Operations

In 2010, 38 miners were trapped inside amine for 68 days

There were frequent truck accidents alsoaround the mining area due to carelessdriving

Mining productivity was also challengedowing to labour issues and laws

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Core Operations

Focusing on the challenges future maybring into mining productivity , workersafety and environmental protection ,codelcos executive team decided totransform mining operations and movefrom a physical model to the onepowered by the digital technology

To give life to this vision came in CODELCO DIGITAL

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Core Operations The goal of this initiative was to drive

radical improvements in the miningautomation and support the executives indeveloping, communicating and evolving along term vision

The CEO worked with all codelcosemployees to innovate the operationalprocess

The first step they did was to improveinternal administrative process

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Core Operations

The focus now shifted to transformingthe mining process

The co. implemented real time mining i.e.a comprehensive real time view ofoperations with a view to improveoperational performance

This led to increased focus on automationwhich led to trucks moving man free withless accidents and automated mining

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Core Operations

The advantages of this digitalization gomuch beyond the safety and operationalefficiency

If Codelco can dig deeper into mineswithout risking human life that means itcan huge reserves of ore which are notaccessible today due to their location

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Operational paradoxes of thepredigital age

Standardizing Empowering

ControllingInnovating

OrchestratingUnleashing

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Standardizing and Empowering

Organizations have broken this paradoxby using digital platforms

Asian Paints standardized the process oforder taking from retailers

This gave their sales people a platform toinvolve in meaningful conversations withtheir retailers and this boosted therelationship AP enjoyed with its channelpartners

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Standardizing and Empowering UPS delivers more than 16 million packages

daily. The total workforce involved is to thetune of 400 thousand employees. Thecompany operates in 220 countries

Route optimization is a key challenge whenyou imagine that UPS has a lot of ways intowhich routing can be done

UPS team uses advanced algorithms to shavemillions of miles from delivery routes

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Standardizing and Empowering

The project crunches business rules, mapdata, customer info, employee work rulesto optimize routes

This routing has not only saved 650000gallons of fuel and reduced carbonemissions by 6500 metric tons

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Controlling and Innovating

Paints is a low-margin business with manyopportunities to make mistakes

The biggest cost is raw materials whichconstitutes 60 % of the cost

Chemicals must be mixed in the rightamount so as to produce the right qualityof product with great conformity and alsoensure zero environmental damage

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Asian paints operates 2 fully automatedplants combined volume of 5 lac tones

Raw material flows in from the storagetanks where machines mix the materialsand place finished products intocontainers in a continuous process

Technicians monitor progress andmaintain the machinery , but computerscontrol everything else

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Automation led to greater scalability ,better quality, and stronger safety andenvironment protections

Product conformity is a huge bonus

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Companies like Asian Paints , Codelcohave tightly controlled processes but thatdoes not inhibit innovation

These organizations conduct controlledexperiments accurately measuring thedifferences between treated and nontreated groups

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The case of Seven Eleven Japan Seven eleven food stores are IT enabled

and connected with distribution centersreal time

Store managers have the status ofeveryday order they have placed ,whether hot food, cold food or hardgoods. The delivery of each is also welltracked

Managers know what is selling and what isnot

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The case of Seven Eleven Japan

But this strongly controlled process alsofosters innovation

The co. routinely launches new productsand tests them in certain stores gettingrapid feedback on product performance

Managers keep an eye on consumerchoices and the product attributesinfluencing their choices

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Organized and Freehand Digital technologies create many

opportunities to orchestrate supplychains better

Channel Partners suppliers,intermediaries, third party serviceproviders, or consumer can shareinformation on a real time basis

Proactive supplier collaboration andvisibility of raw materials flow canimprove order quality and reduce costs

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Orchestrating and Unleashing

Kimberly Clark Corporation , a USbased personal and healthcare productssupplier built a demand driven supplychain using data analytics to gain bettervisibility into real time demand trends

The org. utilized POS data from retailerssuch as Walmart to generate forecast thattriggered shipments to stores and guidedtactical planning

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Orchestrating and Unleashing This reduced the inventory issues and

reduced supply chain costs Zara supports its fast fashion business

model through unique buyer drivensupply chain capabilities

Designers at co.HQ monitors real timeinformation on consumer purchases tocreate new designs

Zara also has invested in creating a closeproduction to distribution facility

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Orchestrating and Unleashing

This complete control ensures the design,production, and deliver new apparel tostores in about 2 weeks whereas theaverage is 9 months in the industry

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Reinventing Business Models

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Reinventing Business Models Organizations like Burberry have achieved

success by transforming customerexperience

Codelco has succeeded by buildingoperational efficiencies

But some organizations go a step further.They rethink customer experience,internal operations, and economicformulas to reinvent their businessmodels

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Reinventing Business Models

Competitive landscape is changing rapidly Many barriers to entry have fallen.

Competition is global owing to digitaltechnologies and shelf life of existingmodels is becoming shorter , questioningthe notion of sustainable competitiveadvantage

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Reinventing Business Models Business model reinvention sometimes

involves radically shifting what you sell, howyou sell, how you make money from it

Reinvention may mean reimaginingcompetition, reconfiguring your value chain,transforming to global operations, movingfrom products to value added services

All this needs you to change your businessmodel

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Potential in Business ModelReinvention First, reinvention can reorder the value

chain Second it can lead to efficiencies difficult

for competition to replicate fast Third todays fast changing technology

platform is continually challenging the coswith opportunities

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The London Taxi Case

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Getting a Taxi in London was a problem On the other hand drivers were ideal for

most of the time Taxi companies were running cost heavy

admin structure like 24*7 call centers andGPS equipment cost

3 entrepreneurs saw an opportunity inthis gap

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They created a 2 way benefit strategy forthe driver and the consumer

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Benefit to the driver

A job is exchange for a 10% flat fee A community which is close knit Traffic updates Burst alert like ending of a movie show Giving driver an analysis of their earnings

per hour

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Benefit to the Consumer

Hailo developed a consumer smartphoneApp

On average cab in 4 minutes 5 minutes wait time Mobile payments in the time when 99%

payments were in cash

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Investment

No hardware so not cost of installing aGPS mobile display unit. This is done bythe cabbies Smartphone

Hence operations run on an algorithmthere is no need of 365 days call centers

The success of such models is a result offocus on supply side control, economicmodel, customer experience andefficiency in execution

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5 Archetypes of business model reinvention

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Business Model Reinvention

Reinventing industries Substituting products or services Creating new digital business Reconfiguring value delivery models Rethinking value propositions

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Reinventing Industries Reinventing industries require new

competencies, new models of operationsand new economic models and hence is arare phenomenon

Apple did it with iPoD. With iPoD , appledelivered a user friendly way to downloadmusic. But magic happened when Applelaunched iTunes a tight link betweenhardware, software, digital music in oneuser friendly package

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Reinventing Industries

Digitalization is moving industries fromtight silos to Sharing economy

Marriott , in collaboration with mobileand web app company Liquid space ,started renting meeting space in its hotelson demand challenging the notion thatyou have to go as a hotel guest to use thisfacility

Example of Hotel Savera Chennai

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Reinventing Industries Car sharing start up Zipcar consumers

can rent cars for a day or an hour This can be done using their phones or

credit cards to reserve a car Insurance and parking are part of the

model Cars are located into parking slots across

the city rather than rented assets This makes getting a car easy for the

consumers

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Substituting Products and Services

After digital photography replaced film,and smart phones replaced cameras , bothKodaks and Fujifilm's traditional businessmodels became obsolete

Kodak stuck with its traditional modeland rest is history

Fujifilm diversified into chemicalcompounds, cosmetics and optical filmsfor LCD flat panel screens

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Another case is postal operators inAustralia

Postal operators were seeing a steadydecline in their user base

They quickly responded by introducing amulti service platform called e-Bok

e-Bok facilitates online payments E-Bok facilitates online documentation for

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E-Bok also allows large companies to fullydigitize their transactionalcommunications processes withconsumers

E-Boks can be accessed via web or an app E-Boks growth story is closely linked to

strong e-government policies establishingthe legal status of digital communicationsand active government support andadoption

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Creating new digital businesses

Nike + Example Naukri.com example Example of ATOM Examples from Class

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Reconfiguring value delivery models

Many companies want to connect with itscustomers but find it difficult owing to the3rd party championed distribution model

Insurance companies for years have reliedon agents , may now want one to oneinteraction with its consumers

Automobile companies have been moreB2B as they are used to sell to dealers

Do they know consumers or do dealersknow the consumers ??

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The Volvo Case

Swedish car co. Volvo decided to tacklethis issue without hurting the dealers

Volvo undertook a deep transformationof business model from a B2B modelwhere volvo directly provided someservices to the customers

This gave rise to a B2B2C model Services like connected car, volvo on call,

are delivered through local call centers

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The Volvo Case A driver in a volvo car can push a button

and talk to the call center Through GPS the call center provides

services like the tow truck location, policestation, accident alerts

The on call service was free for few yearsand then renewed for a fee

Volvo also used social media to establishone to one conversations with theconsumers not to sell but to connect

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Rethinking Value Propositions

Entravision Communications Corporationis a spanish language media company withsignificant reach in the US latino audience, a market that collectively has over atrillion dollars in purchasing power

The co. started in 1996 operates over a100 radio and TV stations and also digitalplatforms

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The co. has a unique ability to offer highlylocalized marketing in differentgeographies

In this the co. saw an opportunity tomaster analytics

This mastering saw cos also buyingentravisionss finely grained data

This gave birth to Luminar now a bigdata co. servicing Nestle,Target etc..

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The tenet here is not to start withtechnology but reimagining how to deliverbetter value to customers at a profit

The models which may be weaved may bevery difficult for competition to copy

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Leadership Capabilities forDigital Competency

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Building a Digital Vision

Digital vision should have explicit goals Digital vision should be communicated

across platforms not creating a fearpsychosis amongst the employees

Digital vision should be graduallyexecuted to reality

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The Case of a Yellow PagesDirectory Pages Jaunes in France Shifting consumer preferences towards

digital platforms in place of directory Advertisers loosing interest in business

directory But employees fixated on the current

model , looking at digital as a threat Management unable to convince staff for

undergoing a transformation

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The Case of a Yellow PagesDirectory Pages Jaunes in France The CEO taking charge of the situation Giving a clear number oriented goal /

explicit goal to the organization ( 75 %rev. from digital against 25% )

Briefed employees on a common platformabout the realities of the digital change

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The Case of a Yellow PagesDirectory Pages Jaunes in France This communication went on from a

smallest employee to all largerstakeholders

The organization underwent an gradualchange from books to online givingenough time to all on board to unlearnand learn

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Leadership

Research done by Harvard B-School saysthat successful digital transformationstarts at the top of the organization withclear vision of the top leaders

What change should leaders look at???????

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Changes towards digitalcompetency Re Envisioning consumer experience- Using digital to ease interacting with the

consumers- Gaining consumer insights from digital tools Re Envisioning operations - The business drivers of operations visions

lies in increasing the efficiency and need to integrate disparate operations

- Example : P& G and its business partners - Example : Codelco

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Changes towards digitalcompetency Re Envisioning consumer experience- Some executives combine ideas around

operational processes and the customerexperience to envision new businessmodels

- Research has seen 2 broad ways to forma new business model vision : Defensiveand Offensive

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Engaging the Organization at Scale

Unlike incremental change which can beachieved by a few people workingtowards a goal, transformations can beachieved only by engagement of many

It is a commitment first made by topmgmt, then by a few champions and thenby the critical mass who execute thatchange

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Role Model concept works wonderstowards increasing employee engagement

At Kraftcasts all employees have an accessto senior mgmt through ipads. Theexchange of information and theconnect also becomes easier in this way

They also are aware of the latestdevelopment in the organization and getanswers to any queries they have

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A problem of digital divide is existing intodays organizations

Companies like LOreal are employingreverse-mentoring to raise the digital IQ ofits employees

A team of 120 young members are pairedwith equal number of more senior members

The senior brings their consumer insightsand the young the digital platform to accruethat insight

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Crowd sourcing your own employees todrive innovation is crucial

A French based telecom company wasfacing problems of cable theft

Through its intranet platform thecompany came to know that an employeewas working on an app to curb thefts

This app had facilities to alert the policein case they felt a theft was attempted

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Digital Governance Mechanism

Digital Governance should not be left tochance. Ineffective governance leads tomissed opportunities , increases costs andbecomes a huge risk

The digital governance mechanismsinclude using :

- Shared digital units- Governance committees- Digital Leadership roles

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Three elements of technologyleadership capabilities The digital platform as a leadership

challenge The importance of IT-Business

relationship Building digital skills

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Building Technology LeadershipCapabilities The major drivers of a digital

transformation are vision, governance andengagement

Additionally what drives a transformationis the strong relationship digital mastersestablish between their IT and businessleaders

This is known as TechnologyLeadership Capabilities

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Technology Leadership LloydsBanking Group LBG was having a very good online retail

platform but had not scaled to therequirements of the modern bankingconsumers

To add to the challenge , the bankacquired mid sized bank further putting astress on the digital capabilities

The mgmt immediately asked the bankCEO and IT head to find a solution

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Technology Leadership LloydsBanking Group The results were immediate the decision

was to put together a plan to replace the oldplatform with a new scalable one

Once the basic platform was in place theteam took further challenges like includingfinancial products on the banking platform

Gradually a new digital division wasdeveloped (1000 people strong) focusing onconsumer engagement and marketing

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Technology Leadership LloydsBanking Group Regardless of the digital platform built ,

the value of digital transformation comesnot from initial investment but from howyou can extend your capabilities toincrease revenue , cut costs, or gain otherbenefits

When Asian paints implemented an ERPsystem , they did not envision the truepotential of the system

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Technology Leadership LloydsBanking Group They just knew that the unified data and

standardized processes would help thecompany reach at a new business level

Then with the unified data and a strongcall center , they were able to envisionnew things

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Technology Leadership LloydsBanking Group Mobile equipped sales people, outbound

call centers could serve retailers better But it is a must to know that the company

had started with and IT + business leaderteam

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Business Models for a Digital Future Slide Number 2The Internet Macro Environment PESTEL FactorsSocial Factor TAM Legal and Ethical Issues Legal and Ethical Issues Legislation Legislation Technology factors Hype Cycle Economic Factors Political factors The Internet Micro Environment The Internet marketing environmentThe Marketplace Analysis Competitive forces Porters 5 force model Value chain Two alternatives of value chain Value Networks Value Network Value Network New channel structure Location of trading Business Models in e commerce Competitors Suppliers COLLABORATION BETWEEN RETAILERS AND VENDORS Intermediaries Business Models E-Shop E-Procurement E-Auction E-Mall E-Mall Third Party Marketplace Virtual Communities Value Chain Service Provider Value Chain Integrators Collaboration Platforms Information brokerage Building a Digitally Competent Organization Building a Digitally Competent Organization Nike Building a Digitally Competent Organization Nike Building a Digitally Competent Organization Asian Paints Building a Digitally Competent Organization Asian Paints Building a Digitally Competent Organization Asian Paints Building a Digitally Competent Organization Digital Master Building a Digitally Competent Organization Role of a leader and technology in building a digital model Four levels of digital competence Beginners Fashionistas Conservatives Digital Masters Digital capability and financial performance Digital capability and financial performance Digital Mastery by Industry Digital Mastery by Industry How to take the first step ? Conclusion Step 1 : Building Digital Capabilities Creating a Compelling Customer Experience Customer Experience Burberry Creating a digital transformation Burberry Creating a digital transformation Burberry Creating a digital transformation Burberry Creating a digital transformation Burberry Creating a digital transformation Burberry Creating a digital transformation 4 Digital Interventions towards transforming customer experiences 4 interventions towards consumer experiences Outside in consumer experience Outside in consumer experience OnePlus Twitter Campaign Creating reach and engagement Creating reach and engagement Creating reach and engagement Creating reach and engagement Creating reach and engagement Putting Customer Data at the centre Case of TESCO Putting Customer Data at the centre Putting Customer Data at the centre Putting Customer Data at the centre Seamlessly mesh physical and digital experience in new ways Seamlessly mesh physical and digital experience in new ways Seamlessly mesh physical and digital experience in new ways Seamlessly mesh physical and digital experience in new ways Cleveland Museum Exploiting the Power of Core Operations Core Operations Core Operations Core Operations Core Operations Core Operations Core Operations Operational paradoxes of the predigital age Standardizing and Empowering Standardizing and Empowering Standardizing and Empowering Controlling and Innovating Controlling and Innovating Controlling and Innovating Controlling and Innovating The case of Seven Eleven Japan The case of Seven Eleven Japan Organized and Freehand Orchestrating and Unleashing Orchestrating and Unleashing Orchestrating and Unleashing Reinventing Business Models Reinventing Business Models Reinventing Business Models Reinventing Business Models Potential in Business Model Reinvention The London Taxi Case The London Taxi Case The London Taxi Case Benefit to the driver Benefit to the Consumer Investment 5 Archetypes of business model reinvention Business Model Reinvention Reinventing Industries Reinventing Industries Reinventing Industries Substituting Products and Services Substituting Products and Services Substituting Products and Services Creating new digital businesses Reconfiguring value delivery models The Volvo Case The Volvo Case Rethinking Value Propositions Rethinking Value Propositions Rethinking Value Propositions Leadership Capabilities for Digital Competency Building a Digital Vision The Case of a Yellow Pages Directory Pages Jaunes in France The Case of a Yellow Pages Directory Pages Jaunes in France The Case of a Yellow Pages Directory Pages Jaunes in France Leadership Changes towards digital competency Changes towards digital competency Engaging the Organization at Scale Engaging the Organization at Scale Engaging the Organization at Scale Engaging the Organization at Scale Digital Governance Mechanism Three elements of technology leadership capabilities Building Technology Leadership Capabilities Technology Leadership Lloyds Banking Group Technology Leadership Lloyds Banking Group Technology Leadership Lloyds Banking Group Technology Leadership Lloyds Banking Group Technology Leadership Lloyds Banking Group

Digital Models

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