I) Introduction - Digitalisation


Digital businesses have 3 main different characteristics to physical businesses

i) the ability to scale incredibly quickly, without having to go through a slow process of opening offices in new places

ii) they become very profitable once they do hit scale

iii) generally the winner takes all

When looking at a digital organisation you need to understand 3 elements

i) focus on number one (number 2 player never catches number 1 in the digital world)

ii) don't underestimate the pace of acceleration in revenue, ie once a business gets to number 1 (the network effect means that these businesses can intuitively accelerate as they get bigger)

iii) need to focus on how big the total addressable market is (how long is the runway for growth and how large is the market that it is disrupting?)
(source: Chris Wright 2018)

Digital business design - using digital technologies to expand your organisation's strategic options and solve your most pressing business issues. It will shift how your organisation operates in several important ways:

- from guessing to knowing. Reliance on guesswork leads to unfortunate results such as stockpiled inventory, mark downs and blowout sales. With digital business design, the basis of your decision-making shifts to knowing exactly what customers want before having to start the wheels of manufacturing and distribution. This will improve customer satisfaction and allow real time customer information to test opportunities

- from mismatch to perfect fit. Digital business design enables organisations to offer customers a perfect fit rather than having to choose from a fixed production line.

- from lag time to real-time. There is an important need for speed in obtaining information and sharing it within the organisation. Digital business design shifts the information flow to real-time

- from supplier service to customer self-service. Increasingly, customers prefer the convenience of on-line ordering and customer service to relying on the supplier to perform tasks.

- from low value-added work to maximum talent leverage. Digital business design will shift the use of staff's time to more productive, customer-centred tasks, ie shifts staff from repetitive, costly and un-interesting tasks to customized, online training programs.

- from 10% improvement to 10 times productivity. Digital business design will result in quantum leaps in productivity rather than incremental improvements in efficiency.

To initiate digital business designs, Slywotzky and Morission (2001) asked the following questions:

- what are the most important business issues facing your organisation today? What are the smartest business designer choices for responding to them?

- how might digital (particularly on-line) technology open up whole new strategic options for your organisation? How could you take advantage of such options to become unique in the eyes of customers?

Below shows which industries are more threatened by digital disruption (source: Deloitte, 2013)

organisational development change management

Digitilisation - not for its own sake, but in support of business strategy to leap ahead of competitors in productivity and profitability - that is the critical point.

Fortune Magazine (2000) correctly anticipated that the next step with Internet and digitalisation would be broad bandwidth (high speed network able to carry video and voice). It is important to understand that wireless is different from the fixed-line Internet world.


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