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P U T T I N G T R A N S F O R M A T I O N B A C K T O
D IG I TA LTRANSFORMAT ION
A c o m p a n i o n t o
DIGITAL TRANSFORMATION BLOG POST
SCENE FROMNETFLIX'S HOUSEOF CARDS
Twitter, blogs, enriched media,
they’re all surface, they’re all fads.
Tom HammerschmidtChief Editor of Washington Herald
Image: Netflixlife
Those who refuse to adapt, will fall behind.
Those that embrace digital transformation(such as the one bringing you House of Cards)
will leap forward.
He believes the newspaper’s only way to survive isto stick to the tradition, to hard news.
Tom got fired afterwards.
Sceptical
Scared/Confused
It-is-not-gonna-happen-to-us
Follow the herd
TYPICALSENTIMENTSTOWARDS DIGITALTRANSFORMATION
There is a high chance thatwhen somebody says “digitaltransformation,” they mean
something else.
Do they mean
This is like putting on fashionable
clothes to look more impressive.
In this case, the “clothes” are cool
digital technologies.
1. DIGITAL DRESS‐UP?
Examples
Building a website for your business
where none exists
Making an online store that lets people
browse products and create orders
without payment or other integrations
DIGITAL DRESS‐UP
Or do they mean
This maintains what the business is
doing but seeks to do it better by
leveraging digital.
Similar to when a person gets a
makeover, it doesn’t necessarily
change who they are underneath.
2. DIGITAL MAKEOVER?
Examples
A marketing department rolling out a new data
analytics platform that allows the company to
customise content & target readers more precisely
An IT division upgrading their systems to the cloud
to reduce maintenance costs and improve efficiency
DIGITAL MAKEOVER
Or do they truly mean
Change needs to happen to the
business model, processes and
people as well as technology stack.
3. DIGITAL TRANSFORMATION?
By choice, businesses don't undergo
They have failed to evolve
Competitors are following too close
Market shifts throw everything into chaos
DIGITAL TRANSFORMATION
Unless:
Xerox’s margins and market
share were suffering due to
competition from Asia.
By 2000, Xerox’s more
complicated, expensive line of
copiers and printers resulted in
net losses of $273 million.
SITUATIONSYNOPSIS
DUAL TRANSFORMATION PATH
Reposition the core
business to adapt to the
changing environment
Branch out to a digital
offering that will be the
main source of growth
Machines that could
match competitors’ price
and simplicity, and beat
them in technology.
Xerox Global Services
formed to handle document
management and other
back-office processes.
Businesses tend not to considerdigital transformation before it
is too late, i.e. when digitaldisruption is inevitable.
Disruption occurs “when a
business creates or employs a
technology in a new way, forming
a business model that provides
an edge over competitors.”
Digital DisruptionHERE
Read more on
STARTUP VS. ESTABLISHED COMPANIES
Source: McKinsey
HOW THE INCUMBENT WAS DISRUPTED
BLOCKBUSTER NETFLIX
Was comfortable with a
45% market share in 2003,
before going out of
business seven years later.
Shifted its focus to online
streaming, then invested in
content production. Latest
revenue at $6.78 Billion.
Focused on opening new retail
stores and entering new markets.
Gained traction with its mail-
based DVD rental service.
HOW THE INCUMBENT WAS DISRUPTED
BORDERS AMAZON
Being late in the digital
game, the incumbent ceased
its operations in 2011.
Moved to e-books, e-book
readers, and an all-you-can-
get e-store nowadays.
Over-invested in retail stores
and CD sales.
Made its debut as an online
book store in 1995.
Undergo a full blown digital transformationCannibalise their core business to make
way for something new
Self-disruption: Sometimes companies needto go against their corporate instincts and...
European media company wasn’t
satisfied with just a digital
makeover like other newspapers.
From 2005, the business started
acquiring new digital properties
and moved to online classifieds.
Moreover, it also divested some
of its biggest print media
products, accounting for 15% of
its sales in 2013.
AXEL SPRINGER
Today, the mediacompany derives 70% ofits EBITDA from digital.
Once you have opened up to
the possibility of disruption,
the next step is to formulate
a strategy.
It would help detect digital
disruption early on and make
pre-emptive moves.
IDENTIFYINGTHREATS &OPPORTUNITIES
SUPPLY & DEMAND LENS
Source: McKinsey
Examples of disruptors leveraging
iTunes lets customers buy individual
songs rather than whole albums
Travel sites like Expedia makes it easier
to book trips anytime anywhere
UNDISTORTED DEMAND
Airbnb lets consumers become suppliers,
or opens up lodging supply
UNCONSTRAINED SUPPLY
Sites like comparethemarket.com removes
the middleman such as brokerage
NEW MARKET
Domino’s pizza delivery tracking gives real-
time insights
BeerDroid offers connectivity for home
beer brewing hobbyists via a mobile app
NEW VALUE PROPOSITION
Dropbox transformed storage from a
(hardware) product to a digital service
REIMAGINED BUSINESS SYSTEM
Amazon’s Kindle Direct Publishing
connects authors directly with readers
HYPERSCALING PLATFORM
Another way to spot threats and
opportunities is by looking at
how competitors may unbundle
or decouple the components of
your products.
UNBUNDLING &DECOUPLING LENS
Allows consumers to only buy
what they want.
The picture on the next slide
shows how various disruptors
have unbundled the services of a
traditional bank.
Essentially, they zoom in on a
specific consumer need (e.g.
wealth management) and try to
do it better.
UNBUNDLING
UNBUNDLING OF TRADITIONAL BANK
Source: CB Insights
The “separation of consumption
activities that traditionally go
together, hand-in-hand.”
In the diagram below, disruptors
separate the non-value creating
portion from consumption
activities and only focus on the
value creating portion.
DECOUPLING
DECOUPLING EXAMPLES
Source: European Business ReviewSource: European Business ReviewSource: European Business Review
“Companies rarely die frommoving too fast, and they
frequently die from movingtoo slowly.”
REED HASTINGS, CEO of Netflix
T H A N K S F O R R E A D I N G
C R E A T E D B Y
Read full blog post at: blog.enabled.com.au/digital-transformation
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