Digital Matrix

Digital Matrix is a model for mapping the types of players and at which stage of digital
transformation are they in. This is a tool developed by Venkat Venkatraman. This
matrix helps to see how players use a variety of digital technology to shape the future
of the industry while also impacting the digital strategy of the firm.
The two-dimensional matrix has two factors to consider, what type of firm is it and
what level of the transformation it is presently on. The types of firms are:
• Tech Entrepreneur
• Industry Incumbent
• Digital Giant
Tech Entrepreneurs are the firms who started in digital space to challenge the
traditional offerings in the industry. They are considered to be the starting of
disruptions in the industry. They believe in crafting business models that promise to
deliver high value to customer using digital technology. They think beyond the
constraints of industry and continuously evolve their business models through digital
transformation.
Industry Incumbents are the firms who are major players in the industry. They are
generally following traditional ways of the industry. They also set out to explore the
digital transformation, especially the forward-looking firms which are constantly
evolving with the world.
Digital Giants are the companies like Google, Amazon, Microsoft etc. who are not
limited to their industry instead of providing solutions and offerings to other industries
also. They were initially the tech entrepreneurs who extended their scope into various
domains. However, their core competency remains to be providing digital solutions.
Nevertheless, backward and forward integration for them is more accessible than any
other companies.
There are three types of transformation that these above players would be there.
These transformations are:
• Phase 1: Experimentation at the edge
• Phase 2: Collision at the core
• Phase 3: Reinvention at the root
Experimentation at the edge means it is the initial stage where different trials and
errors are done with digitization and constantly evolve it. As one idea may mature,
another idea emerges such that digital business experiments are happening all the
time. The thrust of this phase is to look for the landscape of the industry and see how
far can the firm explore it.
Collision at the core is the phase where traditional and new offerings are merged
together and offered to the customers. Experimentations have been done, and the
successful idea is evolved into the business model to take the traditional business ways
into the digital world. New business models are developed in this phase to implement
to cope up with the disruptions.
Reinvention at the root means when all the three players work together to solve core
problems for the consumers by using digital functionality.
Digital matrix in brokerage industry

Fig 1.1

In the above figure, present companies have been positioned according to their
characteristics. Brokerage firms like Kotak, HDFC, ICICI, Axis, Zerodha and Upstox was
taken for the matrix. Brokerage veteran firms like Kotak, HDFC, ICICI and Axis are
among the most prominent players in the brokerage industry and have been in the
industry in one way or other for more than 15 years. Therefore, they can be termed as
Industry Incumbents. They started their operations with offline presence by opening
several branches across the nation. However, with the advancement in technology,
they also started developing their online presence. As of now, all of them have their
own websites for trading as well as apps. Thus, we can conclude that they are at the
stage of Collison at the core where they are merging the traditional and digital offering.
Firms like Zerodha and Upstox entered in the market with an only digital presence.
They aimed to engage clients online, where the hassles of brokers, paperwork and
other requirements can be decreased. This model was opposing to the traditional
offerings of the industry. Therefore, they can be termed as Tech Entrepreneurs. These
types of services initially experimented by the firms in the form of iterations to see
how to make the user interface better and decrease the limitations of the online
process. Nevertheless, with time, online trading has become one of the mainstream
ways of trading, and many of the investors are using such a platform to conduct trades.
Hence, we can say these firm’s transformation has shifted from experimentation at
the edge to collision at the core where they are a prominent substitute to the offline
offerings.
Talking about the future of the industry, as more technological development is
happening, most of the tech entrepreneurs who survive will come into the category of
Industry Incumbent. Although Zerodha has highest clients, due to definitions, it is still
considered a tech entrepreneur. Further, with boosting by the government and
regulators to digitise, will help the industry to move into the next phase where Digital
giants like Google and Facebook will be included, and all the players will be together
solving the pain points of the customers.