Chapter: 1 - the five domains of digital transformation

Why the book is important

Often management doesn’t know how to follow, understand and address the competitive challenges of
digitalization
 Example of industrial revolution (electrification) – some business didn’t manage to keep up with the
changing environment
 Today businesses like Britannica need to realize the possibilities created by the digital technologies
Book should help companies to formulate their own strategies to successfully adapt and grow in the digital age
 set of strategic themes (costumers, competition, data, innovation and value) for a total integrated effort of
the digital transformation within the firm

Five Domains of Strategy that digital is changing CC-DIV

Costumers - Competition - Data - Innovation - Value

Chapter: 2 - Harness Customer networks

First example: Life Church
 Bobby Gruenewald
 Build a digital mission
 Included: on demand and live-streaming video services, Google ads to reach people who searched
for pornography, You-Version (bible apps for smartphones)

Rethinking costumers
Costumers search for on-demand, customizable, connected and sharable products

Summary - Companies need to:

 Engage empower and co-create with costumers beyond the point of initial purchase
 Collaborate with costumers directly
 Find the right moment in their digital lives
 Create an effective costumer strategy
 Key Concepts:
o Reinvented marketing funnel
o Path to purchase
o Core behaviors of costumer networks (accessing, engaging, customizing, connecting,
collaborating)

Past view and handling of costumers

 Mass production
 Mass communication to reach, inform, motivate and persuade them to buy
 Firm as key influencer
 One-way-value flows
 Economy of scale
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Present
 Connection and interaction through costumer networks
 Digital tools change how they discover, evaluate, purchase and use products
 Reciprocal value-flows
 Economy of value
 networked costumer as a focus group, brand champion and innovation partner

Example Industry where changes relationship is noticeable: Music business

 From few mass channels for promotion by record labels to direct interactions between musicians and
costumers, search engines, social media and networks, algorithms

1. Costumer network paradigm

 How and why the relationship of costumers to business is changing –
 Costumer network = tightly connected network

Mass market model

In the 20th century most businesses where built like it
- Costumers are passive and in aggregate
- Role: purchase or not purchase
- Company tries to identify product or service that will
fulfill needs of as many costumers as possible
- Mass media and mass production to deliver and
promote to as many costumers as possible
- Success through efficiency of scale

Costumer network model

 Costumers as nodes in a network, linked together digitally and interacting dynamically

- Firm still central actor in creation and promotion of goods

and services
- Role of the costumer: no longer binary
- Current and potential costumers have access to digital
platforms  interact, publish, innovate
- able to shape brands, reputations and markets
- no direct influence by firm but by another

New role of Companies:

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  Need to engage with its costumers’ networks
o Observe interactions
o Understand their perceptions, responses and unmet needs
o Identify and nurture the ones that may become brand champions, marketing partners or
cocreators of value
 Costumer can be any key constituency that the organization servers and relies on
 Important to look at range of interconnected constituencies in the network: end consumers, business
partners, investors, press, government, employees

Example of PepsiCo
 Brand-focused traditional enterprise
 Best communications are created by the costumers themselves  get invited to create ads
 Doritos brand won awards for being most liked and talked about
 Let them help reinvent the product by letting them select new products
 Many costumers want a transactional relationship with active consumer participation

2. The Marketing Funnel

 Marketing funnel = hierarchy of the progression of a potential costumer to loyalty towards the brand, at
each stage the number of costumers gets smaller
 In Mass-market area: use of broadcast marketing tools but becoming less and less effective over time
and less cost effective
 Now: every stage of the marketing funnel influenced by customer networks
 Advocacy = additional level through customer networks  people advocate for the brand and connect
the brand to people in their network (eg. Product photos on Instagram), due to search engine
algorithms heavily weighted to influence search results  feeds up to the top  looped funnel

3. Path to purchase
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= refers to series of channels that customers use or are exposed to in order to convert into a 'purchase'.
 Big range of possible touchpoints with a company: Search engines, company website, mobile app, local
search map, online and physical retailers etc.
 Touchpoints open multiple paths to purchase
 Businesses can increase their influence by mapping and optimizing the costumer experience on each
path  need to develop an omni-channel view of the costumer

Implication for companies: create compelling experiences at each step of the patch to purchase and drive
customer advocacy at the end of the funnel to engage and co-create value with the most involved customers

4. Five customer network behaviors and corresponding costumer network

strategies
= recurring pattern of behaviors that drive the adoption of digital experiences
1. Access (simple and instant)
 C want access to digital data, content and interactions as quickly, easy and flexible as possible
 Strategy - new innovations that grant greater access to consumers:
a. Mobile commerce: mobile payment systems, in-store targeting etc.
b. Omni-channel experiences: integrated experience across all digital and physical touchpoints
e.g. Walmart shopping app
c. Working in the cloud: Software as a service, lower It costs, greater flexibility
d. On-demand services: service is accessible to costumer anywhere at any time
 Key to the strategy: simplicity, ubiquity and flexibility
2. Engage (with content)
 C want to engage with digital content that is sensory, interactive and relevant for their needs
 Strategy - becoming a source of valued content for the costumer through:
a. Product demos: Content that demonstrates the value proposition of a business or product in a
compelling and engaging way e.g. Loreal - tattoo cover up blender
b. Storytelling: creating an emotionally compelling story that is less product specific
c. Utility: engage customers by providing useful content at the right time
d. Brands as publishers: Engage costumers by becoming publishers in their own right
 Key to the strategy: think like a media company, focused every day on earning the attention of the
audience
a. know your costumers and create content that is relevant, compelling or useful
b. strategize how to use the engagement to strengthen the costumer relationship
c. Measure the impact on your business
3. Customize (the experience)
 C want to choose and modify a wide assortment of information, products and services
 Strategy - make offerings adaptable to your customer needs through:
a. Recommendation engines: to help costumers find what they want e.g. Netflix
b. Personalized interfaces: online, in retail spaces or moving between them
c. Personalized products and services coca cola cans
d. Personalized messages and content: deliver only the most appropriate content for each
costumer through media or messaging
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  Key to the strategy: Identification of the areas where costumer’s need and behaviors diverge and
finding the right tools to either personalize on their behalf or empower them to personalize their own
experience
4. Connect
 C want to share their experiences, ideas and opinions through text, images and social links
 Strategy - businesses are expected to be present, responsive and active in social media conversations
a. Social listening: customer conversation as market insights, information of new branding and ad
campaigns
b. Social costumer service: effective channel within a customer service mix to answer questions
c. Joining the conversation: corporate communication for hiring, recruiting and employee
satisfaction
d. Asking for ideas and content: using social media to ask for ideas, suggestions or content in
form of photos or videos, C feel a sense of ownership and contribution to company
e. Hosting a community: hosting a online community around a shared topic of interest
 Key to the strategy: focusing on the social media your costumer uses and engage in conversations to
solve problems, learn about your market and become closer to the costumers to create value for the
business
5. Collaborate
 C want to collaborate on projects and goals through open platforms
 Strategy - careful creation of the right context and the right motivations for participants to take action
and to feel they are being fairly treated
a. Passive contribution: actions that are already taken by the consumer can be used to power a
collective project e.g. geo data for traffic locations
b. Active contribution: direct contribution of effort taking on a small part of a large project
c. Crowdfunding: seeking collaborators to contribute to and raise funds for a new project
d. Open competitions: to enlist a diverse group to find the best answer or solution
e. Collaborative platforms: business creates a context but lets the network define the challenges
to be addressed  provides a structure on which others can build
 Key to the strategy: understand the motivations of the contributors, giving everyone a stake so no one
feels exploited, allowing to contribute at their proper level of expertise

Tool: the customer network strategy generator

 To help to develop new strategic ideas for engaging and creating value with networked customers
 Links business objectives to the core behavior of costumer networks to generate new marketing
communications, customer experiences, new products and service annotations
 To get a set of compelling new customer strategies for the team to consider for implementation

Step 1: Objective Setting

 Define the objectives your hoping to achieve for your business
 Direct objectives: directly responsible for addressing the project
 Higher order objectives: overachieving objectives to support through the initiative, not solely
responsible for but project should support it

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Step 2: Costumer selection and focusing
 Getting a clear picture of the customers that you are seeking to address
 Selecting costumer segments that are most relevant to the stated objectives and finding for each
costumer segment the:
o Unique objectives
o Barriers to success e.g. lack of awareness
o Value proposition – the reason for costumers to give their attention, money and time
Step 3: Strategy selection
 Considering the set objectives and the costumers to reach, choose one or more of the strategies:
 Access: be faster, be easier, be everywhere and be always on for your customer
 Engage: Become a source of valued content for your costumer
 Customize: Make offerings adaptable to your customers’ needs
 Connect: become part of your customers conversation
 Collaborate: Invite your customer to help build your enterprise
Step 4: Concept generation
 Concept= specific, concrete idea for a product, service, communication, experience or interaction
designed for the costumer
 Creation of specific strategic concepts based on the broad strategies, objectives and costumer selection
 High creative, idea-generating effort
 Best way: diverse small group of people from different backgrounds to look for benchmarks and
creative ideas outside the industry and create compelling and differentiating new offerings
Step 5: Define impact
 Articulate a measurable benefit to the company and clarify how the strategic concepts will archive this
outcome
Afterwork: strategic concepts must be tested, validated, resource allocation, refining metrics & public launch

Internal costumer networks - employees

 Application of the same customer network strategies to help internal teams to archive their goals
o Often big cultural challenges: reduction of hierarchical control, fear, distrust etc. will restrict them
from using online tools effectively
o Important to nurture an effective employee network and use technology to connect and educate
the WF
 Many departments (marketing, sales and series etc.) need to learn new skills (media and community
management, e-commerce etc.)  important to avoid outsourcing and implementing the actions inside
the firm to be able to integrate them into the development of strategic thinking
o Key challenge: Sharing best practices internally and quickly bringing employees to a baseline
level of shared knowledge
 Possibility of tensions about who leads customer interactions across digital touchpoints
o Strategy needs to be able to support the diverse needs of the entire business
o Critical that marketing and It-department learn to work together effectively

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Chapter: 3 – Build platforms, not just products
First example: Airbnb
 Platform that brings together two distinct types of people
 Just a small number of employees but high revenues
 Builds trust trough verification system, insurances

Rethinking competition
Companies must rethink which competitive assets need to be owned by the firm and which can be managed
through new kinds of external relationships
 every relationship between firms today is a constantly shifting mic of competition and cooperation

Summary - Companies need to:

 Learn to cope with the asymmetric challenges that change the roles of competition and cooperation
in every industry
 Key Concepts:
o Platform business models
o In-direct networks effects
o Dynamics of (dis)intermediation as an intermediary that brings together competing businsses
o Competitive value trains

Changes in Strategic assumpti ons

Past
 Competition with defined industries
 Clear distinction between partners and rivals
 Key assets are held inside the firm
 Products with unique features and benefits
 A few dominant competitors per category
Present
 Competition across fluid industries
 Blurred distinction between partners and rivals
 Competitor corporate in key areas
 Platform with partners who exchange values
 The winner takes it all through network effects
 Facilitating the interaction between other businesses or costumers
 Competition is happening less within industries and less between similar companies that seek to replace
each other, more across industries and between partners who rely on each other for success

Co-opetition = companies that compete directly in some areas and act as partners in others

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Rise of the platf orm
 = bringing together two or more parties to create and exchange value through the business
 Wide range of industries that host platforms: Retail, media, advertising, finance, gaming, mobile
computing (ios, android), business software, home appliances, hospitality (aribnb), transportation,
education etc.
 Often light in asset but generate large revenues
 Ecosystems that get costumers to interact with each other

Origins of platf orms – theory

 Economic theories of two-sides markets: business serves two different types of customers that are
dependent on each other  two sides often show different price sensitivity and one side often
subsidizes the other  can be translated into multisided markets
 Markets with more than two sides of costumers = multisided markets  (multisided) platforms

Defi niti on
Platform = business that creates value by facilitating direct interactions between two or more distinct types
of customers
Distinct types of costumers = each play different roles and contribute and receive different kinds of value
Direct interaction = platform must enable the sides to interact directly with a degree of independence
Facilitating = interactions must take place directly through the platform and facilitated by it

Four types of platf orms

1. Exchanges:
 brings together two distant groups for a direct value exchange, with each group attracted by the
number and quality from the other side
 Seller and buyers of products (ebay) and services (Airbnb)
2. Transaction systems:
 Intermediary between different parties to facilitate payments and financial transactions
 To succeed: needs to get sufficient number on board from each side (paypal)
3. Advertising supported media:
 Creation of media content that is attractive to consumers
 Once the value of content attracts an audience, the platform can change advertisers (FB, insta)
4. Hardware / software standards:
 Platform provides a uniform standard for the design of subsequent products to enable their
interoperability and benefit the ultimate consumer (iOS, Android)

Direct and Indirect network eff ects

Direct network effects
 Increasing number of customers or users of a product drives an increase in value or utility for that
same type of user
 Eg. Facebook

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Indirect network effects / cross-side network effects
 An Increase in the number and quality of costumers on one side of the platform drives increasing
value for costumers on the other side of the platform e.g. Visa cardholders and merchants
 Drive to a virtuous cycle with new customers on each side increasing the attractiveness  rapid
growth and highly defensible market position
 doesn’t have to be reciprocal: ad-supported media

The platf orm spectrum

 mix of platform and no-platform models even in the same business unit (amazon)  sometimes
both significant, sometimes they serve different customers
 Most things can happen to a certain degree e.g. independence of interaction between costumers on
the platform

Digital impact on platf orms

 Digital technologies are supercharging the growth and power of multisided platforms
 Technologies are driving four key elements of platforms:
1. Frictionless acquisition:
 Process of acquiring new costumers, no longer need to negotiate terms for additional
participants due to Web, API
 Example: Google Ads
2. Scalable growth
 Any size of business can rapidly scale the size of its platform as fast as it can acquire new
customers, no virtually ceiling on growth, due to cloud computing
 Example: Airbnb, Uber
3. On-demand access and speed
 Platform can be accessible to all of its customers anywhere and at any time due to cloud
computing e.g. uber
4. Trust:
 Ability to authenticate customers through social media, recommendations for sellers

Competi ti ve benefi ts of platf orms

1. Light in assets:
 Customers are creating the value, low capital and operating costs
 Few employees  customers do much of the work that employees would do in a vertically
integrated business  high operating margins on a percentage basis
 E.g. alibaba, Airbnb, Uber
2. Scaling fast
 Low operating costs and scalable cloud computing architecture: can grow extremely fast
 High revenue increase with slow employee growth
3. Winner takes it all
 Once established in its category very hard to launch a direct challenger with a similar service
 Weaker in ad-supported media with only one-sided network effects
 Winner-takes-it-all consolidation likely if:
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 1) Multihoming (=using more than one platform) is hard for the costumer
2) Indirect network effects are strong
3) Feature differentiation is low
4. Economic efficiency:
 Platform business can enable the efficient use of labor, assets and skills
 Through reduction of transaction costs and aggregation of community of partners, platforms can
benefit from individual actors that other wise wouldn’t have found their passion

Competi ti on between platf orms

Areas of value that platforms compete against another:
1. Network added value
 The platform with the most current customers is often the one most likely to draw future customer
 Quality of goods and services as well as data provided by one group of costumers to attract other
group
2. Platform added value
 Unique features and benefits of the platform that offers the customer (goods, free content etc.)
3. Open standards
 More-open and easier-to-use standards to offer access to outside parties – also act as control
points by which platform owners restrict what data and functionalities outside parties can access
4. Interaction tools
 Providing costumes with the best tools to find and interact with the right partners, enabling
transactions between users
5. Trust enabler
 Enable trust among the parties they bring together through reputation systems, customer reviews,
financial safeguards, platform that connect devices from different producers

Tool: the platf orm business model map

 identification of all critical parties in a platform and analyze where value creation and exchange take
place among the different customers and with the platform business itself

Shapes
Circle = the platform
Diamonds = the players  costumers that provide revenue for the platform 
primary revenue source
Rectangle = the sweeteners  other costumers that are attracted 
add value for the linchpin
Double-borders = the linchpin  costumer who does
the network effect  attracts everyone else to the
platform

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Can answer important question for own platform or competition:
1. Key customers
2. Role, value contribution of each customer type
3. How to monetize
4. Value for the customers

Shift ing landscape of competi ti on

 In digital area shit two mix of competition and cooperation
1. Co-opetition
 Direct competition = zero sum game  price wars and low profitability
 Even direct competitors should to find ways to work together cooperatively in certain areas
 Right strategy for rival business often mix of competition and cooperation on different fronts
 Need to cooperate and link services and products to defend themselves against disruptive threads
of new technologies
2. Fluid industries and asymmetric competition
 Fluid industries: due to rapid technological change: boundaries of industries less static
 Asymmetric competition: Companies must compete with business that offer similar value
proposition to customers but have another business model  “substitutes”
3. Disintermediation and Intermediation
 Disintermediation = the disruption or reconfiguration of business relationships through the removal
of an intermediary or middlemen from a series of business transactions e.g. bookstores /amazon
 Intermediation = a new business inters itself as an intermediary between customers and companies
that used to sell directly to them (intermediary platform builds such large customer base and
becomes such a valuable interface to customers that other businesses can’t afford to skip them)
e.g. applepay and visa

Tool: the competi ti ve value train

 To analyze competition and leverage between a firm, its business partners, direct rivals and asymmetric
competitors
 Focuses on competition by looking at the leverage between the companies in a supply chain and their
potential substitutes
 Maps how a particular service or product reaches a particular
group of costumers

Horizontal train of firms leading to a final costumer on the right.

Types of costumers:
1. Distributor: delivers the product or service to the costumer but may
not manufacture it e.g. amazon
2. Producer: creates the finished product, service or offering paid for by
the consumer e.g. record label
3. Originator: creates unique elements or part of the offering e.g.
musician for the record label
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Competitors: (multidimensional view of competition and cooperation)
1. Symmetric competitors
2. Asymmetric competitors
 Intermediation vs. disintermediation

Organizati onal challenges of competi ti on

1. Shifting Roles midstream  shifting channels strategy
 Cannel conflict = business is balancing both working with a key sales channel and going around it
 Risk of cannibalizing current sales in pursuit of ne opportunities

When launching direct-to-customers channel in competition to primary sales channels, need to
establish clear geographical or branding boundaries
2. Warfare mentality
 Leaders need to stop looking a competition as a zero-sum contest and know where to fight and
where to make peace
3. Openness
 Companies need to let go some of the value creation process  Hands-off-approach
 Letting their distinct outside parties each bring their own value to the platform and interact with a
substantial degree of independence

Chapter: 4 – Turn Data into Assets

First example: TWC
 Past only media company with weather cannel
 Now collecting managing and analyzing data as strategic asset for innovation and value creation
 Work with major retailers to identify spikes, insurances etc. get data from “weather junkies”

Rethinking data
 Data is now in constant surplus and often free
 Big data of unstructured information with new computational tools  key strategic asset
 Costumer and behavioral data as one of the key strategic intangible assets

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  Costumers get benefits with loyalty programs, personalized service experiences (Disney) etc.
 Companies need to: Assemble the right data and apply it effectively to generate long term business
value
Past
 Expensive to generate for a firm
 Hard to store and manage it
 Only use of structured data
 Tool of optimizing processes
Present
 Continuously generated everywhere
 Challenge: turning it into valuable information
 Unstructured data increasingly usable and valuable
 Key intangible asset for value creation
 Strategic asset that must be deployed and developed over time

Principles of Data strategy

1. Gather diverse data types to serve different purposes:
a. Business process data e.g. supply chain, HR to optimize business operations, reduce risk
b. Product or service data of the core value proposition
c. Costumer data e.g. transaction data, reviews for more relevant and valuable transactions
2. Use data as predictive layer in decision making in all aspects of business
a. Operations data: Optimization of resources
b. Customer data: predict the success of changes in services or communications
3. Apply data to new product innovation
 Imaging and testing new product innovations more cheaply and quickly
4. Watch what customers do  Behavioral data as direct measure of actions of customers
5. Combine data across silos
 Combination of previously separate sets of data to see how they relate to each other
 As business environment becomes increasingly complex, important to find, combine and learn
from diverse sources of data

Unstructured data
= Information that is recorded but doesn’t fit easily into neat forms
e.g. ungrammatical text, social media posts, images, location signals

Big Data
Trends:
Rapid growth of new types of unstructured data
Rapid development of new capabilities for managing ang making sense of it
Rise of cloud computing infrastructure to make the potential of big data accessible to more businesses
Myths

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 1. The algorithm will figure it out  still need of human involvement to see quality and accuracy of data,
managers to ask the right questions of the data
2. Correlation is all that matters  Importance of causation between data
3. All the good data is big data  data doesn’t have to be big data to generate value for the costumer

Social data
= one of the biggest sources of unstructured data through social media
Can measure:
1. Attitudes: captures opinions, likes and dislikes
2. Affinity: Social ties and relationships between and in networks
3. Change in opinions, sentiments and conversations  real time- and continuous
4. Location data through mobile devices combined with search engine results

Internet of Things
= connection of devices via the Internet with the help of sensors embedded in smart automobiles, factory and
product supply chains etc.

Tools to analyze unstructured data

 Due to exponential growth of computer processing power with acceptable cost  possibility to do real-
time computing of data for e.g. digital advertising
 Data-mining tools are able to pick patterns out of raw data from social media
 Natural language processing: identification of pattern in big data set of human language
 Machine learning: computing systems that can recognize patterns and improve their own capability
over time based on experience and feedback
 Neural networks: spotting patterns in unstructured data, receive feedback and reprogram themselves
over time

Cloud
 Revolution in storage and accessibility of data and data processing
 More and more computing applications and services delivered seamlessly over the internet
 Higher scalability
 Cloud bases storage and customer databases also for small businesses

Sources of data
1. Data generated by own business  might has gaps
2. Customer value data exchange
Customers contribute data as part of the interaction with the business or in direct exchange of
value to them
 Key factors: type of value or rewards offered, presence of a trusted relationship, type of data
requested, industry of the business
3. Lead user participation
 Lead user = most active, avid or involved customer
 Have a greater interest in interacting with the products or business and can be a unique and
powerful source of data e.g. weather junkies

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  Possibility to get input and feedback from much more selective and important communities
4. Supply chain partners
 Business partners as data-partnerships to share data so both sides benefit
5. Public data sets
 Though: Online public forums, twitter, governments
6. Purchase or exchange agreements
 Purchase or swap of valuable data with other firms
 Reputable services that enable anonymized data comparison between different parts of the value
chain
 Data exchange between firms and governments

Turning customer data into business value - four templates:

1. Insights:
 Revealing previously invisible relationships, pattern and influences
 Insights into customers psychology, behavior and the impact of specific actions on both
 E.g. impact of long-term advertising efforts: how customers perceive brands (Cadillac)
2. Targeting:
 Narrowing the field of possible audiences and identifying the most relevant ones
 Using advanced segmentation schemes to categorize customers in micro-categories
3. Personalization:
 After targeting micro-segments possibility to treat customers in the way that’s relevant and
valuable for them
 Tailoring of messages, offers, pricing, services and products to fit the costumers needs
 Challenge: interacting with customers over different platforms
4. Context
 Providing a frame of reference to create new value for business and customers
 Customers comparing their own data with the data of others by helping customers understand the
probabilities of different outcomes e.g. high school data for college applications
 To identify hazard

Tool: the data value generator

 To find options for data initiatives
1. Area of impact and key performance indicators
 Define the area of the business you are seeking to impact and improve through a new data initiative
 Specific business unit, division, new venture and identify the primary business objectives in that area
 Highly measurable outcomes and clearly measure impact  multiple objectives and KPIs
2. Value template selection
 Fine the value template that is most valuable for the objectives: Insight, targeting, personalization,
context
 Pursue one template or a combination
3. Concept generation
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  Identify specific ways that data can deliver more value to the costumers and the business
 Produce specific ideas for putting the data to work in the business
4. Data audit
 Assemble the data that the strategy will require, surveying the data that the business already has
 Identify the data gaps:
o More records or rows
o More types of data
o More historical data
 After the gap identification, determine ways to fill them: customer value exchange, lead users, supply
chain partners etc.
5. Execution plan
 Plan for the execution of the key pieces of the data plan
 Technical issues that need to be worked out: data warehousing, latency  IT department
 Identify the decisions and actions that will change before rolling out any technical solution
 Best way: Integrate the new data strategy into an existing initiative at the company
 Data-driven strategies should be in line with everything the business is doing and help people to do
their jobs better

Organizati onal challenges of data

1. Embedding data skill sets
 Finding people with the right skill set
a. Data scientist: Outside partner for analytics, hiring a single analyst or building an entire team
b. Everyone in the business must adopt a mindset that includes using data
o Educating the workforce about the ways data can be applied in their business
o Developing a company culture that embraces data and analytical thinking
2. Sharing data with partners
o Especially important for businesses that don’t own the ultimate point of sale for their customers
o Data sharing as the key element of every important business partnership with suppliers etc.
3. Cybersecurity, privacy and consumer attitudes
o Risk of massive consumer data theft, data attacks as a means od corporate warfare and data hacks
as government espionage  develop a legal risk management and security plan and have a
transparent value exchange with the customer (know what is collected, why & benefits)

Chapter: 5 – Innovate by rapid experimentation

First example: Google
 Continuously updating their search engine by measuring the results that get clicked on, in what
order and how fast  always presenting minimal different search results
 Constantly testing each of its new ideas, measuring costumer response and iterating on what it
learns
Innovation = any change to a business product, service or process that adds value

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Rapid experimentation and continuous learning = identifying the right problem and then developing, testing
and learning from multiple solutions  essential to bring new ideas to the market faster and with less cost, risk
and greater organizational learning e.g. through the minimum viable prototype  Digital technologies make it
fast, easy and inexpensive to test
Past
 Decisions made based on intuition and seniority
 Testing ideas expensive, slow and difficult
 Experiments conducted infrequently by experts
 Challenge of innovation: finding the right solution
 Failure avoided at all cost
 Focus on finished product
Present
 Decisions based on testing and validating
 Testing ideas is cheap, fast and easy
 Experiments conducted constantly by everyone
 Challenge: solve the right problem
 Failures to learn early and cheaply
 Focus on minimum viable prototypes and iteration after launch

Case study: Inuti ’s story

 Focus on designing and selling great accounting and finance tools for individuals and small businesses
 Focus on rapid experimentation
 Project in India: help farmers to sell their products on an in transparent market  develop a product
that could help farmers raise their income
 Tested a few ideas, the last one in a small scale (no platform just with 3 people analog) and it worked
 Not more then 1 million farmers use it

Experimentati on is learning
Experimentation = iterative process of learning what does and what does not work
Goal: quickly and cheaply test as many promising ideas as possible in order to learn which one’s work to
increase learning
Tools: digital A/B testing

Types of experiments
 Convergent experiments
o Learning to eliminate options and finding a specific answer to a clearly defined question
o Need of initial causal hypothesis  which event is causing the other
o Formal, scientific test design: causal hypothesis, test and control group, randomly assigned
participants, statistically valid sample size, blind testing
o Need of representative costumer sample
o Useful for optimization and late stages of an innovation
o Example: A/B testing (two slightly different designs) or pricing testing
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 o Often used in communications and direct marketing  data driven strategies
o Common mistake: Improperly assigning participants to test and control group
 Divergent experiments
o Learning to explore options, generate insights, ask multiple questions at the same time and
generate new questions to explore the next stage
o Informal experimental design
o Needs the right customers, sample size may vary
o Goal: testing as rough prototypes as possible for the question “good enough”
o Useful for idea generation and early stages of innovation
o Example: putting a prototype in the hands of customers
o Common mistake: testing too late
 Why both are useful:
o Good in different stages of testing and different parts of the business
o To balance exploratory and confirmatory learning
o Convergent to improve existing core business, finalize design and optimize key elements
o Divergent to develop new business areas/ products, test out broad ideas and learn

Digital impact on experiments

 New tools, increased speed, rapidly changing environment
 Convergent testing:
o more powerful and affordable  easier to test in real time and low cost
o increasing focus on data-analytics for companies of all sizes and industries
o Tools: mobile computing, internet of things
 Divergent experiments:
o New ways to prototype ideas cheaply and fast to show customers
o Tools: 3-D printing and computer simulations, new programming languages and reusable code

Principles of experimentati on
1. Learn early
 Start experimenting at the very beginning especially with much uncertainty and high failure rate
 Late learning will trigger a heavy financial loss  value of early learning
2. Be fast and iterative
 Increasing sped might require good infrastructure
3. Fall in love with the problem not the solution
 Keep the focus on the customers and their needs  customers problem
 Innovation process should be focused on customer value
 Consider more than one solution
4. Get credible feedback
 Real or potential customers
 Prototype must be real enough to get meaningful results on the actual product
 Common mistake: ask a focus group to rate a product or service with no prototype to interact
5. Measure what matters now
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  Identify the most important single metric for the success of the innovation, may change over time
 Gather data on other metrics to explain the changes in key metric
6. Test your assumptions
 Especially important for innovations in unknown territory (e.g. rent a runway)
 Testing the assumptions when planning the innovation
7. Fail smart
 Making failure an important part of the process of innovation
 Smart failure if it can help you: learn, change the strategy, was easy and fast, can be shared
 Cheap and effective tests that show the gaps between where you are and where you want to be

Tool: the convergent experimental method

 Useful for innovating on existing products, services and processes, optimizing and constantly improving
them and compare versions on later stages of the process
1. Defined the question and its variables
a. Question statement  as specific as possible  translate it into variables
b. Independent variables: factor that you will be testing
c. Dependent variables: factor that will be influenced by the experiment
2. Pick the testers: Should have statistical knowledge
3. Randomize the test and control  Test group will receive the experience or offer
4. Validate the sample  Sample size = number of units that is placed in each test and control group n =
min 100 in each group
5. Test and analyze
a. Analyze data and find significant differences in the dependent variables
b. Gather data beyond the dependent variable to explain the differences
6. Decide: make a decision based on findings  should lead to further iteration and testing of additional
ideas to see if they can lead to greater improvement
7. Share learning: capture and share learnings of the experiment, document what you learned and
communicate the findings to others in the organization

Tool: the divergent experimental method

 Useful for innovations that are less defined from the outset like new products, services or business
processes
Preparation
1. Define the problem: rooted in an observed customer need or market opportunity
2. Set limits: Time limit, Money limit, scope limit
3. Pick the team:
a. Size: as small as possible – 5 people
b. Diverse: skillset, bias, backgrounds, part of the organization
c. Competition: many small teams competing to develop best solution
Iteration
4. Observe: deepen understanding of problem, broaden the range of ideas  costumer context
5. Generate more than one solution: new ideas and possible solutions
6. Build an MVP = minimum viable product  not fully finished  Minimum cost, maximum learning
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 7. Field test: get feedback on the MVP and test the assumptions
a. Audience as similar as your future costumers as possible
b. Assumptions your seeking to validate: Customer value: will they use it? Pay for it?, Business
model: Manufactory possibilities, costs
8. Decisions after each filed test:
a. Proceed: next round of prototype development and assumption testing
b. Pivot: adjust the idea based on what was learned or test another solution
c. Prep to launch after finished successive prototype that was completely validated
d. Pull the plug: hit limits of time or budget, stop the process and asses what you learned
Action
9. Scale up: Solution that was tested in minimal viable form is translated into full release for the
marketplace
a. Rollout-plan – where and how, distribution – which channels, Marketing – advance buzz,
launch, beyond, More resources: staff, budget, sponsorship
b. Paths of scaling up an invention:

1. MVP Rollout: rollout at a limited test market/ set

of customers, from MVP direct to actual product
development
2. MVP Launch: not able to limit the scope of launch
because relying on network effects or high
visibility
3. Polished rollout: launch in limited locations /
customers
4. Polished launch: offer to all customers at once, need to carefully test it,
needs to be “perfect” e.g. car, can attract mass media
10. Share learning: formalized process for capturing, sharing and accessing the learning

Organizati onal challenges of innovati on

1. Building a test-and-learn culture about every aspect of their business
2. Leading without deciding constantly testing the assumptions behind new strategies
3. Involving everyone: isolated innovation teams, boot camps, train everyone
4. Planning to fail and celebrating it: show why and how to fail
 Risks if not: incremental innovation effort (risk aversion leads to non-creative solutions), Loss of
learning: no incentive to bring failure to light, throwing money after bad: more budget to justify the
underperformance “zombie projects”

Chapter: 6 – Adapt your value proposition

First example: Record music industry Moving Pictures Expert groups
 Moving Pictures Expert groups released MP3  music can be stored small and easy
 Through WWW possible to transmit music in digital format  instant access, large collection
 Music industry didn’t follow, napster took advantage  free, got sued
 Itunes took over, low entry price and on popular devices
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Rethinking value
 New technologies reshape opportunities and needs
 Companies needs to constantly examine the core value offer and find new ways to add value to their
customers
 Instead of defining the job what its industry has done in the past, it must define its job to match his
customers ever changing needs
 Need to judge each technology not by how it impacts the current business model but how to create the
next one
 New technologies can bring rapid change in customer’s needs (substitute offering, decline in relevance,
product innovation, marketing)
 Two general dimensions for growth: new vs. existing products and markets
Past
 Value proposition defined by industry
 Optimization of the business model as long as possible
 Judge change by how if impacts current business
 Market success allows for satisfaction
Present
 Value proposition defined by changing customer needs
 Uncover the next opportunity for costumer value
 Evolve before you must, to stay ahead of the curve
 Judge change by how it could create you next business
 “only the paranoid survives”

Three routes of a shrinking market positi on

1. New customer – same value
 Find new customers to buy same offering or use
case for existing customer through creative
thinking
 Often limits to find new customers especially if
value proposition is losing relevance
2. New value – same customer
 Continue serving same customer but adapt value
proposition to stay relevant to needs e.g. record
music industry, real estate agents
3. New value + new customer
 Dramatic shift in the value proposition to succeed in capturing a new market of customers
 Often new customer base is only discovered after a reinvention of the value proposition e.g. marvel
 In digital age: mature business that is facing a decline is less likely to uncover previously unreached
markets for the same products and services  better focus on adapting its value proposition to
provide new relevance to customers and reach into new markets

Adapt before you must

 “only the paranoid survive”
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  Even if achieving great success companies need to look ahead to shifts in customer needs and prepare
to enter new markets with new value propositions e.g. met with a new mobile app
 Organizations must change before they have to, stay ahead of trends in customer needs
 Forward thinking and willingness to invest in new capabilities before the old business model fails
 “transient advantage” = development of advantages which drive profitability for a time must be
constantly rethought by new value drivers as old positions of strength quickly decline e.g. Facebook –
desktop to mobile usage

Five concepts of market value

 Useful at different times in deciding and planning
1. Product
 Pro: Product-thinking is useful when making portfolio decisions
 Con: ignores customers and value to them, leads to strategic myopia (kurzsichtigkeit)
2. Customer(-centric)
 Pro: Helps identify whom to focus on (matter more, different needs)
 Con: not focused on value
3. Use case = context in which a customer utilizes the product
 Pro: Value- and customer-centric, helps better with segmentation
 Con: Oversees that customer may have multiple use cases
4. Job to be done = context + customers purpose for using it
 Pro: Value- and customer-centric, helps identify nontraditional competitors
 Con: Lacks concrete specifics
5. Value proposition = benefits received by a costumer from a company’s offering
 Pro: Value- and customer-centric, helps asses’ threats and ideate new innovations outside of
existing products, more concrete and specific
 Especially useful when facing the challenges of adapting and evolving the value to customers in
response to changing needs and new opportunities posed by technologies

Tool: the value propositi on roadmap

 To assess and adapt the value proposition for its customers
 To identify new and emerging threats as well as opportunities to create value for customers
Overall:
1. Identify key customer types distinguished by value received from the business
o Differences in customers motivations, jobs to be done and use cases
2. Define current value for each customer
a. List of value elements = benefits each customer type gains from the relationship

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 b. Distinct overall value proposition – some point may in common but not two completely the same
3. Identify emerging threats that could undermine the current value (substitute or undermining importance)
a. New tech that seems relevant for industry of customer experience
b. Changing needs in habits, lifestyle and social behavior or laws, regulations and environment
c. Competitors and substitutes from asymmetric competitor entering from another industry
Per customer
4. Assess the strength of specific elements of the current value (source of increasing or decreasing value)
5. Generate new potential value elements to offer for the costumer type  examine some of the external
forces that may be weakening the value proposition and use as opportunity to create new value
a. New tech
b. Sociocultural / business trends: customer lifestyle and business trends
c. Unmet needs that no one is fulfilling: need to be observed directly by talking to customers
6. Synthesize everything that was learned into a new forward-looking value proposition for each type
a. Four-tiered elements: Core elements to build on (sources of strength), weakened elements to
force and improve, disrupted elements to deprioritize, new elements to create in the future
b. Overall value proposition
c. Areas for innovation and specific initiatives

Organizati onal challenges of adapting the value propositi on

 Take the view of the customer and imagine a version of the company different from what worked in the
past
1. Dedicating leadership: Need to find someone on charge of acting on the new opportunities
2. Allocating Talent and treasure: allocation of necessary human and financial resources away from
existing areas of business into new unproven ventures
a. need of new managers with appropriate skills and authority
b. Financial resources to support evolution to new value proposition  leverage of revenue and
assets from existing units to finance launch of new ones
3. Avoiding Myopia: looking beyond the conventional wisdom of current business
a. Confirmation bias = when faced with new information, strong tendency to selectively notice facts
that fit the preexisting theories and filter out the ones that conflict
b. Need of customer centric thinking rather than own view  listen to lead users

Chapter: 7 – Mastering disruptive business models

Defi niti on of disrupti on
Business disruption happens when an existing industry faces a challenger that offers far greater value to the
customer in a way that existing firms cannot compete with directly.
 Business disruption / transformation, not changes in culture, society or politics
 Existing industry not a radically innovative new business or product
 Offers far greater value to the customer  wide gap in value due to a suddenly much more attractive
product or service for the customer
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  Cannot compete with directly  key distinction between:
o competition (roughly similar business offering better product features, lower prices, greater
personalization) and disruption (asymmetric competitive threat)
 not every innovation is disruptive as long as the jobs and revenues it creates are entirely additive to the
market  value innovation can create new value and growth by opening up new uncontested space

Disrupti on in digital age

 digital technologies create opportunities for new challengers to take on long profitable business that
have failed to adapt
 Digitization of every industry is leading to ever more battles between incumbents and software-powered
disrupters e.g. craigslist vs. classified ads in newspapers, Airbnb vs. traditional hotel industry
 New digitally powered businesses create great value for the customers while weakening or
undermining the position of the traditional incumbent business  eating into their profits while the
traditional incumbents find themselves unable to respond by competing directly with the same offer
 Offers: new service for free (craigslist), intermediation (GrubHub), substitute solution to a long-standing
customer need (Airbnb)
 Every disrupter is creating new value for the customer

Theories of disrupti on
 Joseph Schumpeter: creative destruction
o Capitalism inherently destroys old industries and economic systems in the process of innovating
new ones
 Clayton Christensen: the innovators dilemma
o Disruptive challengers can unseat long-standing incumbents
o Selling an inferior but cheaper or more accessible product to buyers outside the market 
incumbent ignores offering because it doesn’t steal his customers  challengers product gets
better but remains cheaper or more accessible  becomes good enough as alternative for
incumbents customers  start buying challengers product  incumbent can’t compete
o Limits: made when technology was manly sold B2B and incumbents fond it extremely difficult to
switch from serving their current customers to serving other customers
o Predicted the fail of apple vs. Nokia wrong  apple won, nokia lost
o Must be extended to newer dynamics of disruption driven by consumer purchase behavior

Business Model theory of disrupti on

 Most todays disruptors don’t introduce a fundamental new technology to the market but apply a
established technology to the design of a new business model  asymmetric clash of business models
Business model
= holistic view how a business creates value, delivers it to the market and captures value in return
Components:
customer segments, value proposition, key resources, channels, customer relationships, key activities, key
partnerships, cost structure
Sides:
1. Value proposition = the value the business offers to the customer
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 2. Value network = people, partners, assets and processes that enable the business to create, deliver and
earn from the value proposition
o Includes: Channels, pricing, cost structure, assets, resources and served customer segments
Two differentials of business model disruption
In order to disrupt an existing business, a challenger must possess a significant differential on each side of the
business model:
1. Difference in value proposition that dramatically replaces the value provided by the incumbent
2. Difference in value network that creates a barrier to imitation by the incumbent
 Business disruption only happens when both conditions are met
o Only slightly better value proposition: company can respond with normal competitive tactics to catch
up  value has to be dramatically better, so some customers have no choice but to switch
o Only value network: company could simply imitate the offer by its own
o In Christensen’s new market disruption: value prop: price or access - in network: customer segment

Value proposition differential

= difference in value proposition that dramatically displaces the value provided by the incumbent
Sources of differences: value proposition generative
1. Price: same product or service for substantially lower price
2. Free or freemium offer: free offers simulate many more customer trials or premium paid versions
3. Access: access to content or service anytime, anywhere
4. Simplicity: removing friction from the sales process, decision making and purchase
5. Personalization: more choices that fits their particular needs
6. Aggregation: aggregating many sellers for the customer to choose from
7. Unbundling: splitting apart traditional bundles so customer can buy the part of the bundle they need
8. Integration: bundling together services that are currently separate, value comes from separate items
working together in a seamless way
9. Social: share the experience of a product and service with others
10. Authenticity, freedom from ownership (through rentals),
 Arise from: customers networks behavior, the path to purchase, use of data for personalization etc.
Value network differential
= difference in value network that create a barrier to imitation by the incumbent
Sources of differences: value network components
1. Customer: different customer segments or types
2. Channel: retail or inline distribution, direct delivery, distribution trough intermediaries
3. Partners: sales, manufacturing, supply chains, key network partners
4. Networks: platform business model – established network of customers and partners
5. Complementary products or services provides other products that are essential to the new offer
6. Brand: Reputation, brand image, prior relationship with the customer
7. Revenue model: pricing and profit margin, payment-model
8. Cost structure: fixed and variable costs
9. Skills and processes: unique or differentiated processes and organizational skills
10. Physical assets: factories, equipment, stores
11. Ip assets: Critical intellectual property like patents, rights, licenses, unique technologies
12. Data assets: unique data assets and capabilities form personalized offerings e.g. amazon

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Digital disrupters cases
iPhone vs. Nokia
 Different value proposition: physical design, simplicity of use, integration (music, phone, Mail), Apps
o Nokia was unable imitate the success with a copycat phone
 Different value network: Design capability, Partnership with retailers, App developers, iTunes
integration, Apple itself: design of a simple operating system
Netflix vs. Blockbuster
 Different value proposition: No late fees, Easy Access, wider choice, personalized recommendations
 Different value network: Subscription pricing model, E-commerce website, data assets and
recommendation engine, Warehouse and mail distribution system, No retail costs
 Blockbuster was able to offer a roughly comparable value proposition to customers for a while but it
could not do it as profitable at the same customer price
Warby Parker vs. Luxottica
 Different value proposition: Lower price (95$), Accessibility (online, shipping), social cause
 Different value network: Online channel, low retail costs, vertical integration
 WP poses as a disruptive threat but many customers still willing to pay higher price for brands

Key variables that impact the outcome of business model disrupti on

1. Customer trajectory: Customers that will provide the initial basis for the challenger’s market entry
 Outside-in: disrupter starts by selling to buyers that are not recently served and work their way in
 Christensen’s new market theory of disruption
 Inside-out: from the beginning disrupter sells to incumbents’ current customers (small to large)
 Netflix, Apple
2. Disruptive Scope: how much of the incumbent’s business, products, services will be replaced
 Completely vs. major shift in power vs. some customers segments
 Important influence: network effects  reach of critical mass as value increases by more customers
3. Multiple Incumbents
 Can have different industries or class of companies each challenged by the same new disruptor
 E.g. Whatsapp  facebook, college bars

Tool: the disrupti ve business model map

 To help to asses if the challenger is a disruptor or identify the industry in where you might be one

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 1. Challenger - new competition to own established business
 Key offering: unique products or services bringing to the market that doesn’t exist yet
2. Incumbent - category of related business or leading example of the category
 Can be multiple incumbents  map should be completed once for every incumbent
3. Customer – target customer being served by the challenger
 Can be same customers served by incumbent  one list of every customer type
4. Value propositions – value offered by the challenger to the target customer
 View of the customer - benefits they receive from the challengers offers
5. Value proposition differential – difference between challengers and incumbents value proposition
 Identify unique and different elements in challengers value proposition (benefits and deficits)
6. Value Network – enables challenger to create, deliver and earn value from its offering to the customer
 People, partners, assets and processes
7. Value Network differential – differences between challengers and incumbents value network
 Identify unique and different elements of the challengers network: data sets, specific skills,
channels, pricing models, cost structure
8. Tow-part-test
 Does the challenger pose as a disruptive threat?
1. Does the challengers value proposition dramatically replace the value proposition provided by the
incumbent?
a. No, only slightly better value proposition  No disruptive threat
b. yes, it is either with much better terms or also meets other needs  next question
2. Do any of the differences in value networks create a barrier that will prevent the incumbent from
imitating the challenger?
a. No, no disruptive threat  company can answer with matching strategy
b. Yes  the challenger will dramatically outstrip or undermine the value delivered by the
incumbent and the incumbent will face intrinsic structural barriers that prevent him from
responding directly

Tool: disrupti ve response planner

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  Helps to map out how a disruptive challenger will likely act and gives response strategies

Assessment of the threat in 3 dimensions:

1. Customer Trajectory: which customers are likely to adopt the disrupters offer first?
a. Outside-in – selling to noncustomers and work their way in (product gets better)
vs. inside-out – selling to current customers (incumbent not able to imitate product)
b. Specific type of customer that will likely first adopt the product
i. Inside-out: hurdles to early adoption, current customers that care less about hurdles
ii. Outside-in: Customers that are motivated but unable to afford or access product, hurdles
from buying incumbents product
c. Next customer that are likely to join
i. Inside-out: other subgroup of current customers
ii. Outside-in: when will disrupter change from selling to non- to current customers?
iii. Triggers for next wave: other customers behavior (wait and see), innovation, dropping
price, improving features, visibility (marketing, press, geographical distribution)
d. Implications:
i. Inside-out: keep an eye on current customers that are likely to switch
ii. Outside-in development of a strategy to compete for the same outside customers,
2. Disruptive scope: portion of the market that is likely to switch once the disrupter is established
a. Use case: two lists with disruptors vs. incumbent’s value proposition benefits
i. Situations in which customer purchases offer (where, when etc.)
ii. Situations in which customer utilizes / uses offer (benefits and disadvantages)
b. Customer segments served by the disrupter segmented by their shared needs – List for each
segment why the disruptor is extremely attractive compared to incumbent
c. Network effects  especially important for platform business  snowball effect
3. Identification of other Incumbents
a. Other incumbents in own value train (from originator to distributor)
b. Products or services that get substituted by disruptors offer – where customer spends less
money and time when disrupters product becomes better
c. Laddering: looking ate immediate and higher-order customer needs
i. Needs or problems that disrupter solves and who else does it now
ii. Asking customers “why”  laddering to know immediate motivations of customers
d. Implications: see how other incumbents are impacted and response and find allies to serve
together against the disruptor
Six Incumbent responses to plan the response
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Becoming the disrupter - to occupy the same ground as the disruptor
1. Acquire the disrupter E.g. Facebook and WhatsApp
a. Continue to run it as an independent division and don’t only focus on core business, otherwise
other company will launch similar business and steal disappointed customers
b. Acquisition not always possible and doesn’t have to be 100 %
2. Launch an independent disrupter: launch business on its own to imitate disrupters business model
a. Incumbent must be willing to cannibalize own core business
b. New disruptive initiative must stay independent part of company with only small access to main
company’s resources but stay small and lean
c. Can be launched before the disrupter appears when emerging trend and technology is detected
3. Split the disruptors business model e.g. Google with Samsung, htc etc.
a. If the incumbent lacks core capabilities: intellectual properties, brand reputation, skills, partners
b. Recreation of the disrupters business model by splitting the jobs with other businesses
c. Need to uncover multiple incumbents with their value networks complementary to own
Mitigating losses – to reduce the impact on the core business
1. Refocus on incumbent’s core business and offer more value for the most defensible customers
a. Aim on marketing, messaging and continued product innovation for customers that are less
likely to shift
2. Diversify the portfolio of products, services and business units
a. Repurposing firms’ unique skills and assets in new areas or acquiring smaller firms in desired
areas  dislocation
b. Advantage: leverage of strengths of value network in new business areas, new opportunities for
growth, less likely subject of disruption
3. Plan for fast exit when disruptor will likely take all of the current customers because of strong network
effects or use cases
a. Assessment of all firm assets, especially intangible (patents, brand name etc.) that can be sold
b. Spinning of the indefensible part of the business from other divisions that can survive

Conclusion
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 Digital transformation is fundamentally not about technology but strategic thinking
 Digital Leadership requires ability to reimage and reinvent business itself (value creation, outsourcing,
insourcing, relationship with customers and other organizations)
 Reimaging requires challenging underlying core assumptions and thinking differently about ever aspect
of the strategy – customers, competition, data, innovation, value
 Many institutions struggle to adapt and keep up because of organizational agility
 To develop organizational agility company has to focus on
o Allocating resources: decisions what to invest in, disengaging intitaives from business that lack
future potential, apply resources from old to new businesses
o Changing what you measure: does the measuring process capture different stages of transition,
support new directions
o Aligning Incentives: support behavior that helps new strategy and hold managers accountable
 Helpful to conduct an audit of the business readiness for digital transformation in strategic thinking and
agility
 Need of two different kind of management:
o able to truly develop new ideas, processes, ventures and ways of thinking
o able to spread these ideas or processes throughout the organization
 Shift from incubation to integration = transition from the seeding and nurturing of new strategies into
building the best ones into the fabric of the organization
 Required skills in organizations:
o Incubation: Start-up skills: tolerating risk, seeding diverse ideas, assumptions testing etc.
o Integration: large enterprise skills: building a compelling business case, working with budget
based on business outcomes, being able to scale up operations
 Organization needs to:
o combine the right strategic mindset with the right leadership skill set
o maintain the organizational agility to seize new opportunities
o focus on continuous value creation
o create a customer centric view
o constantly relearn and reinvent their value proposition for the customer

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