Week 1: Digital "x"
Digitalization and digitization, what is the difference?
When I started writing this entry, my computer kept auto correcting the word
digitalize to digitize. At first, I was losing my patience over it. Then, I realized that not even
the system knows that there is a difference between both concepts. If someone would have
asked me an hour ago what the difference between digitization and digitalization is, I would
confidently have responded that they are synonyms. While both concepts encompass
technological connotations and can be directly adopted within businesses, I can argue, after
having reviewed this week’s content, that simply put, digitization has to do with operational
efficiency, while digitalization has to do with innovation and new value propositions.
In this way, I visualize an example of both concepts as an old-fashioned library that
has been going through a digitization process by converting its books to digital versions,
while it has digitalized its business model by adding computers and screens where clients can
read e-Books, and therefore creating new value propositions and responding to new
necessities in the market by imagining what customers want and delivering it. Additionally, it
could be stated that the library in this example went from being in the “Stone Age'' quadrant
to being in the quadrant known as “Digital Ready,” according to the lectures.
Digital world, omnichannel strategy, and recognizing new value propositions
When I think of the role of digital technologies in today’s businesses, I can recognize
that their impact is far wider than many could have ever predicted. Last semester I took a
course on omnichannel strategy within companies and, just like in this week’s interview with
Jeanne Ross, the importance of recognizing new value propositions arose. Not only do
customers now have more demanding expectations, their necessities have also changed as
new technological advances are introduced. Today, customers expect businesses to adapt and
offer direct solutions to their needs. In this way, success stories of companies that have
shaped their value propositions to suit demands and have literally defeated their competitors
can be mentioned. These include the common example of the rise of Netflix and the fall of
Blockbuster, the rise of Uber and Lyft and the fall of traditional taxi services, etc.
Week 2: Going digital – Re-conceptualizing a business and digital offerings
Going digital in an unfamiliar domain and the five building blocks
Although many of us were born into the digital age and going digital has been
ingrained into our brains since our first college class in business school, for many companies
that have been in the market for decades, the concept of digital may not be as familiar as it is
to us. As a result, if organizations are selling their products or services, are achieving their
goals, and are succeeding within their parameters, change (e.g. digital transformation) may be
perceived as unnecessary and risky, especially if the leaders are not familiar with these
processes. This is the case for many traditional companies. However, something that I learned
this session is that all organizations, no matter what industry they are competing in, will need
to start a digital transformation, sooner rather than later, if they want to keep succeeding.
With this in mind, it is crucial for all organizations to start working towards having all
of the five building blocks mentioned by Ross et al., 2019. Nevertheless, I will argue in favor
of the idea presented by Jeanne Ross in her Webinar, where she mentions that a business
should first be good at the four initial building blocks (shared customer insights, operational
backbone, digital platform, digital platform, and accountability framework) to then focus on
the external developer platform. I agree because without the foundation of the first four
blocks, even the best of the external developer platforms would fail to be useful. Seen this
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way, a good analogy for the five building blocks is that each block can be seen as a part of a
rubix cube. They all fit in together and if one part of the cube is moved, other parts get
affected.
Example of companies overcoming the hurdles
An example of companies overcoming the hurdles mentioned by Baiyere and
Lambaert (n.d.) are those that had to incur in digital transformation processes to prosper
throughout the pandemic. In my home country, Costa Rica, locally owned supermarkets are
very popular. Although these usually operate with very traditional methods, they had to
rethink their value propositions as a response to the pandemic. People did not want to go out
and risk getting sick, but they still needed groceries. While some supermarkets allied with
food delivery companies, such as Uber Eats, to deliver the groceries to their customers, others
created their own digital platforms. Through these platforms, customers could order their
groceries and have them delivered at home, or choose the “Click & Collect” option, which let
customers buy the products online and pick them up at the store without having to leave their
cars. This way, the supermarkets were able to overcome the hurdles, pressured by a stimuli
that was a threat (the pandemic) and were able to come up with innovative strategies and
value propositions that suited their customers’ needs.
Week 3: Logics of digital organizing I
IT vs. Digital
The most important concept that I learned this week was the idea that the difference
between IT and digital can be easily detected with the help of four basic logics that were
discussed in the article by Baiyere et al. (2020). After analyzing these concepts, I can state
that the logic that stands out the most to me is the strategy rationale. I mention this because
this logic discusses the most essential difference between IT and Digital: the development of
business-aligned strategies versus the development of business-centric strategies. “Compared
to digital, the underlying strategy of the IT unit does not aim at exploring technology to
find new business opportunities, but to align technology with the business unit’s
strategic goals” (Baiyere et al., 2020, p. 12). This statement perfectly summarizes the key
learning for this topic: While IT transformation seeks to be in alignment with the current
value proposition of the organization, digital transformation seeks to generate new value
propositions, or redefines the current value proposition, by detecting the latest opportunities
impulsed by technology.
I can also argue that the hardest rationale to detect is the organizing logic. For various
companies, such as the ones mentioned in the article by Baiyere et al. (2020) (Danske Bank,
Daimler, and Fastems), the digital unit can easily be recognized as it stands, either as an
independent or dependent identity, apart from the rest of the teams. However, other
companies that are undergoing digital transformations might not necessarily introduce a
digital unit and rather have it dispersed around the organization. A current example of this is
Target. The company was founded in 1902 and has characterized itself for traditional and
hierarchical processes. However, although they did not introduce a specific digital unit,
several of their teams have been exploring new opportunities with technologies such as
Augmented Reality, Artificial Intelligence, and Virtual Reality to introduce new ways for
customers to engage with their products, as well as enrich the overall shopping experience
with modern value propositions. Currently, they are still collecting data and are planning to
introduce the new concepts in the near future.
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Week 4: Logics of digital organizing II
Digital platform vs. operational backbone
In simple words, a digital platform can be described as a set of components that is
built incrementally. These components can be comprehended more easily if they are
exemplified. An example is Airbnb, which is a digitally-born company, making it simpler to
understand:
Fig. 1: Model based upon the model by Ross W. et al. (2017).
On the other hand, the operational backbone is much harder to construct. In the case
of AirBnB, its operational backbone helps the two-sided market (guests and hosts) find one
another and match with the most adequate options.
Week 5: Digital culture, leadership and business process
The role of people in digital and shifts in business process logics
One of the main conclusions that I can draw is that the importance of people in the
digital transformation process cannot be underestimated. A company can have a clear path
towards digital and be working towards achieving the building blocks in an effective way.
However, if the workforce does not comply with the new ideas, or is not content with the
transformations, they have the power to bring the whole project down. This is encompassed
in the building block known as the “Accountability Framework.”
One concept that I would add to this week’s lessons is resistance to change. Although,
as seen in class, many companies create a digital unit that is likely to be built up of a team
that is passionate about digital transformation, there is still a chance that people will feel
overwhelmed because of the multiple changes to their ways of working, specifically in
traditional companies that were established a long time ago. These changes can be further
visualized in the shift of business process logics, mentioned in the article by Baiyere et al.
(2020), in a regular context versus in a digital transformation.
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Week 6: Digital platform/ecosystems thinking
Platform business model vs. pipeline business model
Since the introduction of technology, platforms have been transforming entire
industries and sectors of the economy. In this way, concrete examples may include the
following:
Fig. 2: Examples of platform business models.
In all of these examples, each platform has its own ecosystem, in which network
effects are essential for each one to be valuable to its users.
With this in mind, I argue in favor of developing a new Business Model Canvas that
takes into consideration the most recent changes, such as the one by Lubinksi and Viebig
(2019). Specifically, this model touches on a very important point that the traditional model
by Osterwalder does not: there are different value propositions depending on the type of user
that is being analyzed. For example, in the case of AirBnB, the value proposition for hosts
may be to offer a channel through which they can make an income off of their own assets in a
simple way, while the value proposition for guests may be to offer places for them to stay at
with competitive prices and safety measures.
Week 7: Digital journey and the pathways
Four pathways to digital transformation
The article by Weill and Woerner (2017) mentioned four different pathways that
companies can endure while on their digital transformation journey. For this topic, I would
like to go back to the example I mentioned in Week Two, where I mentioned local Costa
Rican supermarkets going digital. This exemplifies pathway 2, in which the customer
experience was declining as the pandemic hit, and the supermarkets could not wait any longer
to improve. As a result, I can argue the following:
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Fig. 3: Digital journey based upon the model by Weill and Woerner (2017).
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Bibliography
Baiyere, A., & Lambaert, R. (n.d.). Strategizing in unfamiliar domains-A digitalization
journey.
Baiyere, A., Salmela, H., & Tapanainen, T. (2020). Digital transformation and the new logics
of business process management. European Journal of Information Systems, 29(3),
238–259. https://doi.org/10.1080/0960085X.2020.1718007
Baiyere, A., Wessel, L. K., Ologeanu-Taddei, R., Cha, J., & Jensen, T. B. (2020). Logics of
Digital versus IT: An empirical unpacking
Lubinski, C., & Viebig, C. (2019). Platform Business Model Canvas: A Tutorial Growing a
Network with Critical Mass.
Weill, P., & Woerner, S. L. (2017). FUTURE READY? PICK YOUR PATHWAY FOR
DIGITAL BUSINESS TRANSFORMATION.
https://www.finextra.com/newsarticle/29533/
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