D4 - Strategy and Technology

Digital disruption

New digital technologies undermine existing ways firms make money, operate, and create value.

Purpose of digital transformation

Use technology to change how a firm competes and what capabilities it has.

Digitization

Converting analog/paper processes to digital form.

Digitalization

Connecting and integrating digital systems across the business.

Digital transformation

Using tech to reshape strategy, business models, and competitive position.

Sustainable competitive advantage

Ability to outperform industry averages consistently.

Operational effectiveness

Doing the same activities as rivals but more efficiently; not enough for long-term advantage.

Value chain

Series of activities that create value: inbound logistics, operations, outbound logistics, marketing/sales, support.

Imitation-resistant value chain

A value chain competitors cannot easily copy.

Fast follower problem

Rivals quickly copy innovations and outperform pioneers by learning from their mistakes.

Instagram vs Snapchat example

Instagram copied core Snapchat features, reducing Snapchat’s advantage.

TiVo example

TiVo had superior tech but lacked distribution, making it easy for cable companies to copy.

Strategic positioning

Performing different activities than rivals or performing the same activities differently.

FreshDirect example

Redesigned grocery distribution for NYC using tech and a new business model.

Resource-based view (RBV)

Firms gain sustainable advantage when resources are VRIN: valuable, rare, inimitable, nonsubstitutable.

VRIN

Valuable, rare, imperfectly imitable, and nonsubstitutable resources.

Value disciplines

The three strategic focuses: customer intimacy, product leadership, operational excellence.

Customer intimacy

Deep understanding of customers to tailor offerings.

Product leadership

Focus on innovation and premium products.

Operational excellence

Efficiency, low cost, streamlined operations.

Technology as a strategic asset

Tech enhances differentiation, scale, brand, switching costs, and distribution channels.

Porter’s Five Forces

Rivalry, threat of entrants, buyer power, supplier power, threat of substitutes.

Internet impact on Five Forces

Increases price transparency and buyer power, especially for commodity goods.

Information asymmetry

One party has more information than another, affecting bargaining power.

GenAI disruption example

ChatGPT caused major declines in Stack Overflow traffic and layoffs.

DARSIL framework

Define, Analyze, Review, Select, Integrate, Learn – steps of digital transformation.

DARSIL: Define

Clarify the problem motivating transformation.

DARSIL: Analyze

Examine current processes and architecture.

DARSIL: Review

Explore potential digital technologies.

DARSIL: Select

Choose technologies to implement.

DARSIL: Integrate

Embed chosen tech into business processes.

DARSIL: Learn

Assess what worked, what didn’t, and what remains incomplete.

WHY of transformation

Benefits such as customer experience, value, cost reduction, and flexibility.

WHAT of transformation

People, processes, technology, and organizational structures.

HOW of transformation

Disruptive tools like AI, cloud, IoT, robotics, blockchain, etc.