P U T T I N G T R A N S F O R M A T I O N B A C K T O

D IG I TA LTRANSFORMAT ION

A c o m p a n i o n t o

DIGITAL TRANSFORMATION BLOG POST

SCENE FROMNETFLIX'S HOUSEOF CARDS

Twitter, blogs, enriched media,

they’re all surface, they’re all fads.

Tom HammerschmidtChief Editor of Washington Herald

Image: Netflixlife

Those who refuse to adapt, will fall behind.

Those that embrace digital transformation(such as the one bringing you House of Cards)

will leap forward.

He believes the newspaper’s only way to survive isto stick to the tradition, to hard news.

Tom got fired afterwards.

Sceptical

Scared/Confused

It-is-not-gonna-happen-to-us

Follow the herd

TYPICALSENTIMENTSTOWARDS DIGITALTRANSFORMATION

There is a high chance thatwhen somebody says “digitaltransformation,” they mean

something else.

Do they mean

This is like putting on fashionable

clothes to look more impressive.

In this case, the “clothes” are cool

digital technologies.

1. DIGITAL DRESS‐UP?

Examples

Building a website for your business

where none exists

Making an online store that lets people

browse products and create orders

without payment or other integrations

DIGITAL DRESS‐UP

Or do they mean

This maintains what the business is

doing but seeks to do it better by

leveraging digital.

Similar to when a person gets a

makeover, it doesn’t necessarily

change who they are underneath.

2. DIGITAL MAKEOVER?

Examples

A marketing department rolling out a new data

analytics platform that allows the company to

customise content & target readers more precisely

An IT division upgrading their systems to the cloud

to reduce maintenance costs and improve efficiency

DIGITAL MAKEOVER

Or do they truly mean

Change needs to happen to the

business model, processes and

people as well as technology stack.

3. DIGITAL TRANSFORMATION?

By choice, businesses don't undergo

They have failed to evolve

Competitors are following too close

Market shifts throw everything into chaos

DIGITAL TRANSFORMATION

Unless:

CASE STUDY ‐ XEROX

Xerox’s margins and market

share were suffering due to

competition from Asia.

By 2000, Xerox’s more

complicated, expensive line of

copiers and printers resulted in

net losses of $273 million.

SITUATIONSYNOPSIS

DUAL TRANSFORMATION PATH

Reposition the core

business to adapt to the

changing environment

Branch out to a digital

offering that will be the

main source of growth

Machines that could

match competitors’ price

and simplicity, and beat

them in technology.

Xerox Global Services

formed to handle document

management and other

back-office processes.

Businesses tend not to considerdigital transformation before it

is too late, i.e. when digitaldisruption is inevitable.

Disruption occurs “when a

business creates or employs a

technology in a new way, forming

a business model that provides

an edge over competitors.”

Digital DisruptionHERE

Read more on

STARTUP VS. ESTABLISHED COMPANIES

Source: McKinsey

HOW THE INCUMBENT WAS DISRUPTED

BLOCKBUSTER NETFLIX

Was comfortable with a

45% market share in 2003,

before going out of

business seven years later.

Shifted its focus to online

streaming, then invested in

content production. Latest

revenue at $6.78 Billion.

Focused on opening new retail

stores and entering new markets.

Gained traction with its mail-

based DVD rental service.

HOW THE INCUMBENT WAS DISRUPTED

BORDERS AMAZON

Being late in the digital

game, the incumbent ceased

its operations in 2011.

Moved to e-books, e-book

readers, and an all-you-can-

get e-store nowadays.

Over-invested in retail stores

and CD sales.

Made its debut as an online

book store in 1995.

Undergo a full blown digital transformationCannibalise their core business to make

way for something new

Self-disruption: Sometimes companies needto go against their corporate instincts and...

European media company wasn’t

satisfied with just a digital

makeover like other newspapers.

From 2005, the business started

acquiring new digital properties

and moved to online classifieds.

Moreover, it also divested some

of its biggest print media

products, accounting for 15% of

its sales in 2013.

AXEL SPRINGER

Today, the mediacompany derives 70% ofits EBITDA from digital.

Once you have opened up to

the possibility of disruption,

the next step is to formulate

a strategy.

It would help detect digital

disruption early on and make

pre-emptive moves.

IDENTIFYINGTHREATS &OPPORTUNITIES

SUPPLY & DEMAND LENS

Source: McKinsey

Examples of disruptors leveraging

iTunes lets customers buy individual

songs rather than whole albums

Travel sites like Expedia makes it easier

to book trips anytime anywhere

UNDISTORTED DEMAND

Airbnb lets consumers become suppliers,

or opens up lodging supply

UNCONSTRAINED SUPPLY

Sites like comparethemarket.com removes

the middleman such as brokerage

NEW MARKET

Domino’s pizza delivery tracking gives real-

time insights

BeerDroid offers connectivity for home

beer brewing hobbyists via a mobile app

NEW VALUE PROPOSITION

Dropbox transformed storage from a

(hardware) product to a digital service

REIMAGINED BUSINESS SYSTEM

Amazon’s Kindle Direct Publishing

connects authors directly with readers

HYPERSCALING PLATFORM

Another way to spot threats and

opportunities is by looking at

how competitors may unbundle

or decouple the components of

your products.

UNBUNDLING &DECOUPLING LENS

Allows consumers to only buy

what they want.

The picture on the next slide

shows how various disruptors

have unbundled the services of a

traditional bank.

Essentially, they zoom in on a

specific consumer need (e.g.

wealth management) and try to

do it better.

UNBUNDLING

UNBUNDLING OF TRADITIONAL BANK

Source: CB Insights

The “separation of consumption

activities that traditionally go

together, hand-in-hand.”

In the diagram below, disruptors

separate the non-value creating

portion from consumption

activities and only focus on the

value creating portion.

DECOUPLING

DECOUPLING EXAMPLES

Source: European Business ReviewSource: European Business ReviewSource: European Business Review

“Companies rarely die frommoving too fast, and they

frequently die from movingtoo slowly.”

REED HASTINGS, CEO of Netflix

T H A N K S   F O R   R E A D I N G

C R E A T E D B Y

Read full blog post at: blog.enabled.com.au/digital-transformation