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DIGITAL INNOVATION STRATEGIES

Indian School of Business, Term8, 2019

OfficeHours: By Appointment.

Faculty

Nicholas Berente Associate Professor, Mendoza College of Business, University of Notre Dame

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@nberente

Youngjin Yoo

Professor, Design & Innovation, Elizabeth M. and William C. Treuhaft Professorship in Entrepreneurship, Weatherhead School of Management, Case Western Reserve University

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@youngjinyoo

Course Objectives

Everything in business is designed. The role of design has become even more important as digital technology continues to disrupt traditional business models. In the digital economy, the ways by which companies innovate and create value is fundamentally shifting from products to experiences. As demonstrated by the phenomenal success of Apple, for example, rapid convergence to digital technology opens up new opportunities to offer new products and services that did not exist before. At the same time, emerging and ubiquitous technologies such as mobile computing, social networks, and smart thingsmake new forms of organizing possible. The convergence of computing, communication, content, and entertainment are resulting in new business models (digital business models). Industries such as banking and financial services, entertainment, and retailing have been transformed through digital innovations. Today, we are witnessing dramatic transformations in media industries because of the digital innovations. The health care industry increasingly looks to digital capabilities for transformational models in the delivery and management of health care costs and quality. At the same time, technological innovation has fueled a dramatic surge in entrepreneurial activity around the world. The Internet and other information technologies have become a platform for entrepreneurial activity and given rise to prominent success stories such as Google and Facebook, as well as innovative internet- based platforms for social development such as e-choupal. In India, with the availability of technical talent and the rapid proliferation of mobile computing, the opportunities for digital innovation are on the rise.

The goal of this course is to provide students with concepts and frameworks for learning and thinking about how innovators can produce radically new products and services in this increasingly digital world. In doing so, the course takes a design approach to innovation. The course will be of particular interest to students who are seeking to develop competencies and careers at the intersection of technology, strategy, entrepreneurship, and marketing.

Digital innovation involves the following activities: (i) identifying innovation opportunities based on keen understanding on human needs, (ii) scanning and recognizing the capabilities of current and emerging technologies, (iii) designing solutions for the identified problems by creating new products, services, business processes, and business models, and (iv) managing the competitive, financial, and behavioral elements associated with the market launch of such innovations.

The course integrates concepts from digital and business strategy, marketing, and economics to provide students with insights about the following ideas:

1. Why is innovation particularly important in the digital age? Students will learn about the idea of creative destruction and how digital technologies are accelerating the pace of disruptive innovation.

2. What is the process for generating digital business model innovation? Students will learn about the concept of a digital business model and the process for blending analysis of markets, technologies, and finances in designing business models. In particular we explore how digital business models can be different than traditional business models, and highlight some of the key digital business models. Case studies and analyses of emerging business models will be used to provide concrete frameworks for digital business model innovation.

3. What is the process for creating digital product or services innovation? Students will learn how to focus on customer experiences and the role of digitization in creating new and valuable experiences for product or services innovation. To this end, students will be introduced to approaches for design inquiry, involving tools to frame problems and explore possible solutions. This method builds on emphatic and contextual observation, different approaches for ideation, visualization, scenario planning, prototyping, and stake- holder analysis. This approach is a radical departure from the traditional innovation strategies that is based on core competencies, strategic resources, and industry analysis. This relentless focus on customer experience allows companies to adopt anoutside-inapproach to exploring innovation opportunities.

4. How do firms successfully manage digital innovation? Students will learn about the importance of managing digital innovation networks and collaboration ecosystems with other firms in developing. In addition, discussions about open innovation will also be covered to help understand the successful management of innovation.

The pedagogical approach for the course will include lectures, case discussions, hands-on activities and workshops, and a group project. The lectures will integrate concepts from different literatures and will provide students with the basic frameworks. Case discussions will include analysis of digital innovations in industry-leading organizations. The centerpiece of the course will involve various design exercises and a series of creative design workshops whereby groups will design a digital product or system innovation following a design inquiry process.

The course will be valuable for students in the following ways:

Students seeking consulting careers will gain knowledge about technological innovation, transformation, and competitive advantage across firms and industries. This knowledge will also help them develop expertise in assessing firmsinnovation port- folios and pinpoint new

opportunities.

Students seeking positions in strategy will gain knowledge about how information technologies, economics, and strategy intersect with each other in the development of new business models

Students seeking business development or strategy positions in the information technology industries will gain knowledge about product and services innovation strategies in a technology business

Students interested in entrepreneurship will gain knowledge to discover technological entrepreneurship ideas and develop them into potential ventures.

Learning Goals

Effective Oral Communication

Each student shall be able to communicate verbally in an organized, clear, and persuasive manner, and be a responsive listener. Assessment: Project Presentation

Critical and Integrative Thinking Each student shall be able to identify key issues in a business setting, develop a perspective that is supported with relevant information and integrative thinking, to draw and assess conclusions. Assessment: Quizzes, Case Write-ups and Discussions, Design Workshop and Group Project

Awareness of Global Issues Affecting Business

Each student shall be able to identify key relevant global factors, and be able to analyze the impact of the global environment on business issues, as compared with domestic factors. Assessment: Project Presentation and Case Write-ups and Discussions

Required/Recommended Text Books: None

Software requirements for the course: None

Pre-requisite for your Course: None

Grading

The grade for the course will be based on the following:

Individual case write-ups (choose 2):

10%

(due: March 1, 5, and/or 7)

•Individual design research report

15%

(due: March 12)

Initial group problem statement

10%

(due: March 14)

•Group project design brief

20%

(due: March 28)

•Group project final solution and presentation: 20%

(due: March 28)

Individual Class participation

25%

Individual Case Write-ups: You need to submit written analyses for two out of three designated cases by responding to the assigned questions for each case (maximum 2-page, double spaced).

Cases analyses will be graded for both form and content (5 points each writeup). The grading will be based upon the quality of your analysis. Merely restating case facts will not help your grade and, in fact, will use up valuable space in your brief. In writing your briefs, assume that you are a consultant to the company who is being paid to analyze the company's situation and make a set of recommendations. Students are expected to read and prepare all cases, but are only required to turn in write-ups for two of their choosing.

Group Project: Exploring Digital Opportunities in Construction. Healthcare in India is an area of great importance and opportunity. This term we will be exploring the particular issue of diabetes in India along with our partner organization, Medtronic. The goal of this project is for each student team to investigate opportunities and design a new digital business model having to do with diabetes. Student team will use design inquiry to identify innovation opportunities to create disruptive digital products or services in this market. Students should leverage the lessons and frameworks learned from the class in creating a proposal for a digital product or business model innovation. Students are expected to carry out field and desk research to deeply understand the health care industry in India, and the problems associated with diabetes, broadly conceived. The interim report should focus on the identification of the opportunities. The report should cover fundamental shifts in industry structure, cost drivers, the value creation process, business models in the industry, and products/services that can be offered as a result. You are expected to use appropriate data from secondary sources to back up your analysis and projections. Implications of the changes for new entrants and existing industry players must also be discussed in your report. Teams will present out at the end of the term.

Team Composition: Students will be free to form their own teams. Each team will have a maximum of 5-6 members and must primarily be formed with students from within the same section. Instructors approval is needed in cases where teams wish to have members across sections by providing the appropriate rationale.

Group Project Deliverables:

Due March 12 - Individual Design Research Report: In the first two weeks of the course, each student will work in class and outside class to analyze key stakeholders, conduct an ethnography, interview relevant stakeholders, and capture lessons with images, drawings of rich pictures, empathy maps, etc. They will work with group members to perform either a market analysis or a competitive analysis. From this research each student is expected to submit a report Due March 12 before class documenting the activities and summarizing the notes and findings from these activities. Format: 4-6 pages double spaced total: ~2-3 pages summary of industry/competitive analysis; ~2-3 pages summary of ethnography and interviews. Should also include images, drawings, etc., as an appendix.

Due March 14 Problem Statement Presentation: In the third week of the course, teams will have collaborated to integrate the findings of their research and identified multiple interesting areas to pursue further. These areas involve pain points and problems of stakeholder groups, challenges, or opportunities posed by competitive actions. Presentations will be short (~5 min) and will summarize the relevant findings from design research of individual group members, and conclude with 1-3 very

concise problem statement(s), stating:

What is the problem/opportunity?

With respect to which stakeholder?

Why is this a problem?

Due March 28 Design Brief and Design Presentation: Teams will deliver a client-ready design brief, and develop a presentation. More details to follow on the requirements for these deliverables.

Class Participation: One of the primary highlights of this course is that it facilitates learning through discussion, interaction, and feedback. Informed discussions are central to the success of this class. Please be prepared to participate fully in the class discussion. Good class participation includes asking interesting and relevant questions, sharing personal insights and experiences, offering constructive alternative points of view, and providing courteous and professional feedback to other peoples opinions. You can also contribute to the shared learning experience by offering pointers to additional articles or resources that add to the collective knowledge and learning of the class.

You should evaluate and comment on readings and cases throughout the seven weeks of this course. The quality and appropriateness of your participation as well as your attendance and contributions to class discussion will determine your grade for this component. Class participation grades will reflect the assessment of your total contribution to the learning environment. This reflects both the frequency of your contributions in class and their quality (ability to draw on course materials and your own experience productively, ability to advance or sharpen in-class discussion and debate, willingness to take risky or unpopular points of view, use of logic, precision, and evidence in making arguments). In addition, I will consider the professionalism of your conduct (attendance, punctuality, preparedness, respecting all students and their class contributions, and refraining from conduct that is distracting).

Please note:

Insights or value-added, divided by airtime, serves as a measure of contribution to class discussions.

Since class discussion forms such a central part of the learning process, attendance and participation in class is required (part of the grading). If you know that you are going to miss a specific class due to work related travel or a family emergency, please notify the instructor in advance of the class via e-mail.

While in class, you are expected to be considerate of others in the classroom.

As a courtesy to the speakers, please refrain from using laptop during class for non- class purposes (such as email, off-topic web surfing). The sound on your laptop and cell phone should be turned off during class sessions.

Ways of identifying your name are highly recommended in each class.

Attendance Policy

ISB students are admitted partly based on the experiences they bring to the learning community and what they can add to class discussions. Therefore, attendance is an important aspect of the ISB Post-Graduate Programme in Management. ISB insists on 100% class attendance for all its courses.

Absence is only appropriate in cases of extreme personal illness, injury, or close family bereavement. Voluntary activities such as job interviews, business school competitions, travel plans, joyous family occasions, etc. are never valid reasons for missing any class.

Please refer the below link for ISB - Attendance Policy

Coding scheme for ALL course work

 

What kinds of collaborative activities are allowed?

What material can be referred to? 1

References

Can I discuss general concepts and ideas relevant to the assignment with others?

Can I discuss specific issues associated with the assignment with others?

Can I refer to external material? 2

Can I refer to the case-study solutions or problem set solutions?

/Coding

Scheme

4N

N

N

N

N

3N- a

Y

N

N

N

3N-b

N

N

Y

N

2N-a

Y

Y

N

N

2N-b

Y

N

Y

N

2N-c

N

N

Y

Y

1N

Y

Y

Y

N

0N

Y

Y

Y

Y

As a general rule:

Students are responsible for submitting original work that reflects their own effort and interpretation. Remember that any submission should be your own work and should not be copied in part or verbatim from any other source whether external or internal.

An honour code violation is an honour code violation. A violation under coding scheme 0N is not less severe than others. A 0N coding scheme submission is judged against a 0N coding scheme, and a 4N coding scheme submission is judged against a 4N coding scheme; therefore, any honour code violation is equally severe irrespective of the coding scheme of the submission.

Students can discuss cases and assignments with the course instructor and the Academic Associate for the course.

Required and recommended textbooks for the course and the course pack can be used to answer any individual or group assignment.

Although not all submissions may be subject to academic plagiarism checker (e.g. turn-it-in), in retrospect, if the Honour Code committee feels the need, any of the previous submissions of an individual or a group can be subjected to turn-it-in or any other academic plagiarism checker technology.

When in doubt, the student should contact the instructor for clarifications.

1 Any referencing needs to be accompanied with appropriate citations 2 A non-exhaustive list includes journal articles, news items, databases, industry reports, open courseware

Week 1Feb 26 & Mar 1

Session 1: Introduction Innovation 101 (Tuesday Feb 26) The goal of this session is to get an overview of the course and an introduction to the diabetes situation.

Design Exercise:

Stakeholder analysis and empathy map of stakeholders.

Readings:

1. McKinsey (2012) Capturing the upside of technology-driven threatsfrom Perspectives on Digital Business, January 2012

2. Brown (2008) Design ThinkingHarvard Business Review, June 2008

3. Blomberg et al Ethnographic Field Methods and Their Relation to Design

Session 2: Digital Disruption (Friday March 1)

This session will focus on digital business innovation in particular, areas of an organization where there are opportunities for digital innovation. We will discuss how industries are fundamentally transformed by digital innovations. Students should think of additional examples as well as other emerging patterns and come prepared to discuss the case as well as other examples of digital transformations and disruptions. Topics covered include:

Digital convergence & Digital disruptions

Industries transformed by digital innovations

Design Exercise: Competitive assessment - disruptions

Readings:

1.

Foster & Kaplan (2001) Creative Destruction; Chapter 1: The Game of Creative

Destructionp.1-24

2.

May (2012) Observe First, Design Second: Taming the Traps of Traditional Thinking,Rotman Magazine, Spring 2012.

3.

Salvador et al Design Ethnography,Design Management Journal, Fall 1999.

Case:

Bonnier: Digitalizing the Media Business, HBS Case: 9-813-076, Date 11/30/2012 Discussion Questions:

1. Was the approach Bonnier chose to establish a centralized R&D department and to change its

innovation practices a sound business decision? Was it risky? Why or why not?

2. What is the nature of digital innovation, and how can fast-paced digital innovation processes be handled in traditional and conservative business contexts and industries? How did Ohrvall organize innovation differently from the traditional incremental innovators in the industry?

Week 2March 5 & 7

Session 3: Digital Business Model Innovation (Tuesday March 5)

The goal of these sessions is to develop an understanding of business models and the ways in digital technologies are providing opportunities for business model innovation. Students will learn about the following:

What are digital business models? What are the fundamental ways in which digital technologies enable new business models?

What are the frameworks for business model innovation?

What factors are important for successful business model innovation through technology?

Design Exercise: Competitive assessment digital business models

Readings:

1.

Johnson et al (2008) Reinventing your business modelHarvard Business Review, December

2008

2.

Weill & Woerner (2015) Thriving in an increasingly digital ecosystemSloan Management

Review, Summer 2015

Case:

Hindustan Unilever Mulls Over e-Grocery Market Option, Ivey Case: W15504, Date 11/9/2015 Discussion Questions:

1. Should HUL enter the e-grocery field? Why or why not? HUL had always been at the forefront of using technology to reach consumers, but was e-commerce the best way forward? Can you think of other digitally-enabled directions?

2. If HUL decided to enter the e-grocery field, where should it implement a viable online model first? Should the company focus on metropolitan cities (Tier 1), which offer the benefit of infrastructure, or Tier 2 and Tier 3 cities, which promised massive demand?

Session 4: Digital Platforms (Thursday March 7) The goal of this session is to develop an understanding of how digital technologies are revolutionizing products across industries. Students will learn about:

Digital platforms and platform-based business models

Creativity techniques

Design Workshop: Empathy Interview exercise

Readings:

1.

Weill &Woerner (2013) Optimizing your digital business model,Sloan Management Review, Spring 2013.

2.

Edelman (2015) How to Launch your digital platform,Harvard Business review, April 2015

Case:

Philips Healthcare: Marketing the HealthSuite Digital Platform, HBS Case: 9-515-052, Date

9/8/2015

Discussion Questions:

1. Will the platform be attractive for app developers and providers? What could HSDP do to improve this attractiveness?

2. What are some challenges to this platform strategy? Alternatives to this strategy? What are the pros and cons of this strategy compared to alternatives?

Week 3 March 12 & 14

Session 5: Design March 12

Everything in business is designed. We will explore what is design and how it is different from management and art. We will discuss design methods and design attitude. We will also discuss why design-based approach is necessary for successful digital innovations. Design project will be introduced in detail.

Design Workshop (1)

Cognitive mapping exercise

Readings:

W. Isaacson (2012), The Design, from Steve Jobs, pp. 125-134.

Boland, Collopy, Lyytinen and Yoo, Managing as Designing: Lessons for Organization Leaders from the Design Practice of Frank O. Gehry*

Sessions 6: Design Inquiry for Digital Innovations Thursday March 14 In this class, students will learn the basic framework and methods of design inquiry. Students learn the five key questions one needs to ask for a successful new experience design. Students will develop a basic research plan for their design project.

Design Workshop (2):

Presenting the results of design research & preliminary design hypotheses (How Might We?)

Developing an initial solution and a plan to ask stakeholders to gather initial feedback

Readings:

Yuhgo Yamaguchi (2015), “Better Healing from Better Hospital Design”, Harvard Business Review (https://hbr.org/2015/10/better-healing-from-better-hospital-design)

Tim Brown & Roger Martin (2015), Design for Action, Harvard Business Review (https://www.ideo.com/images/uploads/news/pdfs/DesignForAction.pdf)

Jon Kolko, (2015), A Process for Empathetic Product Design, Harvard Business Review

(https://hbr.org/2015/04/a-process-for-empathetic-product-design)

Week 4 March 19 & 21

Session 7: Digitalization and Digital Innovations Tuesday March 19 In this class, students will learn the basic framework and methods of design inquiry. Students learn the five key questions one needs to ask for a successful new experience design. Students will develop a basic research plan for their design project.

Design Workshop (3):

Refining the solution based on the initial feedback and integrating digital components

Thinking about the key stakeholders experience and strategic moment of impact

Readings:

Yoo, Y. (2010). "Computing in everyday life: A call for research on experiential computing." MIS Quarterly 34(2): 213-231.

Yoo, Y., O. Henfridsson, et al. (2010). "The New Organizing Logic of Digital Innovation: An Agenda for Information Systems Research." Information Systems Research 21(5): 724-735.

Session 8: Persona and Service Blue Print Thursday March 21 In this session, students will identify the areas of opportunities for digital innovations based on their design research. Further, they will identify key stakeholders and their unmet needs.

Design Workshop (4):

Building a persona of key stakeholder and a to-beservice blue print

Making a plan to take the idea to the key stakeholders to test the idea

Readings:

Service Design Tools: Personas: http://www.servicedesigntools.org/tools/40

Service Design Tools: Blueprint: http://www.servicedesigntools.org/tools/35

Week 5 March 26 & 28

Session 9: Making it work Tuesday March 26 In this session, students will build prototypes of their solutions and explore necessary resources and organizational structure. We will discuss organizational challenges in managing digital innovations following the design process

Design Workshop (5):

Refine the idea based on the feedback

Refine business model with service delivery model, pricing plan, and resource acquisition requirements

Readings:

Youngjin Yoo & Kyungmook Kim (2015), How Samsung Became a Design Powerhouse, Harvard Business Review, https://hbr.org/2015/09/how-samsung-became-a-design- powerhouse

Session 10: Design Project Presentations Thursday March 28 Students will make the final presentations. They will prepare a formal business presentation and a scenario prototyping to demonstrate how their solution might change the user experiences and create new values. The formal presentation should include the business model, basic market research and technology overview. The scenario prototyping (acting out) will include how the product or services will be consumed in the real setting.