DBIS Summary
Week 1 - Course introduction, Introduction to Digital Business & Innovation,
Technology-Centric View of IT in Business, Digital Strategies.
Digital Innovation: a product, process, or business model that is perceived as new, requires
some significant changes on the part of adopters, and is embodied in or enabled by IT
(p.330). (Fichmann, 2014)
Moore’s Law -> relatively cheap and increasingly easy-to-use world- wide digital
infrastructure.
More focus on the individual manager since the barriers that prevented ordinary people from
becoming innovators are gone
Digital Innovators have an understadning of what has become possible and an outlook on
what unmet needs (organizational or societal) can be stilled with that.
READINGS Week 1
Carr, N. G. (2003). IT doesn't matter. Educause Review, 38, 24-38.
Subtitle: As information technology’s power and ubiquity have grown, its strategic
importance has diminished. The way you approach IT investment and management
will need to change dramatically.
Main Points:
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Investments in IT have gone up
Assumption that with ITs potency and ubiquity also its strategic importance
has developed is wrong
IT as a commodity invisible for strategy
Proprietary technology vs. Infrastructural technology (example is the building
of rails) -> infrasctructural technology is more valuable when shared than used
in isolation whereas proprietary can be owned by one company (patents etc.)I
Infrastructural technology can be proprietary if secured by IP rights, physical
limits etc.
The window for gaining advantage from an infrastructural technology is open
only briefly (after ist buildout all you can gain is a cost advantage)
Advancements in Infrastructural technologies are felt on macroeconomic level
(so e.g. for a country) but not on individual firm level (e.g for strategic potential
of a firm)
Is IT an infrasctructure technology? Yes, because it transports data uses great
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standardization, is highly replicable and shows huge price deflation
Web-services (via Internet/cloud) have made this even more possible
There is example of firms that used the temporary technical advantage for
longer lasting competitiva advantage such as Walmart or Dell.
Where is „IT“ on ist phase in the buildout, Carr is arguing closer to the end
than beginning (power is outstripping needs, prices is very low, internet has
caught up to demand, IT vendors positions as commodity suppliers,
investment bubble has burst)
What should companies do?
o If you see IT as an commodity you need to focus on mitigating the risks
of a failure instead focusing on the glorious outlooks of the future
o Manage the costs (e.g. why roll out PCs to workforce that only requires
email and word)
o Follow, don’t lead: wait for the investment as you will get more value
(computing power) for your money
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Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. V. (2013). Digital
business strategy: toward a next generation of insights. MIS Quarterly 37(2).
Keywords: Digital business strategy, scope of digital business strategy, scale of
digital business strategy, speed of digital business strategy, digital business strategy
value creation and capture
Main points:
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So far IT strategy had to be aligned with the Business strategy but was
ultimately subordinate (=alignment view)
The authors calls for the emergence of a Digital business strategy that is more
than a functional strategy
Recent drivers for adapted business infrastructures: computing power, global
connectiviy through standard protocols (internet/web) -> enable work to be
carried out across boundaries of time, distance, and function
Its harder to disentagle digital products and services from their underlying IT
infrastructure
Working defintion of digital business strategy: organizational strategy
formulated and executed by leveraging digital resources to create differential
value
Four key themes are scope, scale, speed of DBS and sources of value
creation and capture
Scope: many firms realize the potential of digital resources to create new
products and services in their scope of business -> using novel digital
resources to expand the scope of business strategy (e.g. AWS from Amazon)
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In a digitally intensive world rethinking is needed from tight supply chain to
more losely couples ecosystems
Scale: scale has always been important for the profitability of a firm, scale of
digital business strategy is distinct and qualitatively different in four areas
o Rapid scale up or down due to cloud computing (not only in IT domain
but also other areas)
o Network effects are becoming a main driver for scale potential in a
digitally intensive world (example are mentioned on p. 475)
o Strategies for scaling need to incorporate the abundance of data due to
the Internet of things etc.
o Easier shared digital assets will faciliated partnerships and alliances for
scaling (APIs, web services, shared reservation systems etc.)
Speed: time or speed was always important but even more so in digital
settings – four dimensions
o Product launches: in a digital world launches need to be aligned with
other players in the ecosystems (e.g. Kindel with Android OS)
o Decision making: how do companies invest in using the data make
faster and better decisions?
o Network orchestration: manages today’s and tomorrows product
portfolie
o Network formation and adaption: speed of network formation is way
faster than in traditional supply chains (e.g. collaboration of Software
developers vs. Automotive)
Sources of value creation and capture:
o Increased value from information: democratization of information, new
business models based in information instead of physical assets
o Multsided business models: multiside business revenue model are
gaining importance
o Coordinated business models in networks: cocreate value in networks
and share their respective pieces of value (e.g. videogame industry)
o Control of digital industry architecture
R. Fichman (2012). Distinctive IT Characteristics: Implications for Digital Innovation
and Value Creation, Boston College.
Bughin, J., Chui, M., & Manyika, J. (2013). Ten IT-enabled business trends for the
decade ahead. McKinsey Quarterly, 13(May).
Nylén, D., & Holmström, J. (2015). Digital innovation strategy: A framework for
diagnosing and improving digital product and service innovation. Business Horizons,
58(1), 57-67.
Hopkins, M. S. (2010). IT-DRIVEN INNOVATION-Value Creation, Experiments and
Why IT Does Matter. MIT Sloan Management Review, 51(3), 57.
Ross, J. W., Beath, C. M., & Sebastian, I. M. (2017). How to Develop a Great
Digital Strategy. MIT Sloan Management Review, 58(2), 7.