Digital Business Fundamentals

Five Domains of Digital

Transformation
Introduction

“Digital transformation is not about

technology—it is about strategy and new
ways of thinking.” 
Prof. David Rogers,
Columbia Business School

Author of The Digital Transformation Playbook 

Video Links for Pre-read
1. Five Domains of Digital Transformation
https://youtu.be/CPZvupB2W2A
2. The art of innovation | Guy Kawasaki | TEDxBerkeley
https://www.youtube.com/watch?v=Mtjatz9r-Vc
Digital Disruption: Transforming Your Company for the Digital Economy with Jeanne
Ross - YouTube
 Digital Transformation
According to Prof Rogers
“A Chief Information Officer’s traditional
role has been to use technology to optimize
processes, reduce risks and better run the
existing business.
But the emerging role of the Chief Digital
Officer is much more strategic
 Digital Transformation

 The role of Chief Digital Officer is much more

strategic, focused on using technology to
reimagine and reinvent the core business itself
 There are five domains of digital transformation
that organization leaders must master in order to
successfully guide the future growth of their
firms
Customer Domain
 Digital technologies change how we connect and
create value with our customers.
 The relationship becomes much more synergistic
 The communications and reviews provided by
customers position them as bigger influencers than
advertisements or celebrities
 The dynamic participation of customers has
become a critical driver of business success.
Competition

 The companies are competing not just with

rival companies from within their own
industries, but also with companies from
outside industries that are stealing customers
away with their new digital offerings.
Competition

 We may find ourselves competing fiercely

with a long-standing rival in one area while
simultaneously leveraging their capabilities
by cooperating in another sector of our
business.
Competition

Increasingly, our competitive assets may no

longer reside within our own organization; rather,
they may be contained in a network of partners
that come together to form loose business
relationships.
Dynamics of Competition in
Digital Age
• Enterprises really need to challenge their strategic
assumptions of competition;
• Move from zero-sum to win-win,
• Understand what is being competed for and
• Be thoroughly prepared for blindsides.
Moving from Symmetric to
Asymmetric Competition
The rise (and rise) of asymmetric competitors
Asymmetric competitors often look nothing like your
symmetric competitors.
Built on an asymmetric business model dynamic, they have a
completely different structure, business model and source(s) of
value
Yet they are solving the same problem for your customer.
Economics of Complements

Asymmetric business models are commonly built on the

economics of complements.
This is where an enterprise identifies and collaborates with
a complementor to commoditize and bundle their products
creating a stronger value proposition. 
Economics of Complements
The economics of complements says that when you
reduce the value of the complement, demand for the
product increases.
Leveraging economic complements one can create an
unfair advantage as it often transfers profits and customers
across industries.
Economics of Complements

 They often can also be quite tricky to replicate, defending

value in the process and creating a considerable barrier to
entry.
 Recently, Microsoft bundled MS Teams with its existing
Office 365 userbase to extend value, thus, growing its user
base from 44 million to 75 million as of April 2020.
Data
 In traditional businesses, data was expensive to obtain,
difficult to store, and they were utilized in organizational
silos.
 The data was produced through variety of planned
measurements (from customer surveys to inventories).
 Data was mainly used to evaluate, forecasting and decision
making for increasing operational efficiencies
 Just managing this data there was a need to purchase and
maintenance of massive IT systems.
Data
 By contrast, today we are faced with a data deluge.
 Most data available is not generated through any systematic
planning like market surveys
 Instead, it is being generated in unprecedented quantities
from every conversation, interaction or process inside as well
as outside organization
 Every business has access to river of unstructured data
through social media, mobile devices and sensors on every
object in a companies supply chain
Data
 And not just by companies but by everyone.
 Data is becoming lifeblood of every business
 A strategic asset to be developed and deployed over
time.
 Moreover, cloud-based systems for storing data are
increasingly cheap, readily available, and easy to use.
Data
 The biggest challenge today is finding a way to derive
valuable information from our ever-expanding stores of
data.
 Organizations are deploying new analytical, AI and ML
tools to generate value for carving out new business
models.
 The information generated out of these data is becoming
a new source of revenue generation for most business
Innovation
 The fourth domain of digital transformation is
Innovation.
 It is the process by which new ideas are developed,
tested and brought to the market.
 Traditionally, innovation was expensive with high
stakes and insular.
 Testing new ideas was difficult and costly
Innovation
 Hence businesses relied on their managers to
determine the most viable options to be built, tested,
and launched in the market.
 Most decisions on new innovations were based on the
analysis and intuition of managers.
 Since cost of failure was high, the focus was on
avoiding the failures.
 Corporates had zero tolerance on failures
Innovation
 Today, digital technologies enable continuous testing and
experimentation with a level of complexity that would have
been inconceivable in the past.
 Prototypes can be built for pennies and ideas tested quickly
by user communities.
 Constant learning and the rapid iteration of products, both
before and after their launch date, are becoming the norm.
 Organizations have started rewarding new ideas that may or
may not eventually succeed.
Value
 The final domain of digital transformation is “value” a
business delivers to its customers.
 Traditionally a firm's value proposition was fairly constant
 It was defined by the industry
 Many a times businesses experiencing success in the
marketplace too quickly allow a dangerous complacency to
set in.
Value
 In digital age, customers value can change very
quickly,
 And competitors are constantly discovering new
opportunities that our customers may find more
affordable or appealing.
 In the digital age, “Only the paranoid survive.”
 Businesses should constantly push the envelope to
find our next source of customer value is.
Co-creating value with customers
DART Model
D: Dialogue

A: Access

R: Risk Assessment

T: Transparency
Article on Co-creating unique value with customers by CK Prahalad
Summary
 Harness Customer Networks
 Build Platforms, not just products
 Turn Data into Assets
 Innovate by Rapid Experimentation
 Master the art of value creation in the digital
age
Post Read
 Five Domains of Digital Transformation
 Co-creating unique Value with Customers
 Entrepreneurial Innovation at Google
 Digital Play Book: By David Rogers, Page 1
– 18
 3 Articles on Customer, Competition and
Value proposition
 Q&A
and
Discussions