Welcome to the entrepreneurial age - V1.1

Digital Revolutions and Business Disruptions

William El Kaim Oct 2016 - V 2.3

This Presentation is part of the

Enterprise Architecture Digital Codex

http://www.eacodex.com/Copyright © William El Kaim 2016 2

http://www.eacodex.com/

Plan

The Third Industrial Revolution

• The Entrepreneurial Age

• Digital Revolution and Disruption

• Competing In The Digital Age

• The Networked Brand

• Are You Ready?

Copyright © William El Kaim 2016 3

The 3rd Industrial Revolution

Jeremy Rifkin

• We’re in the first stage of a paradigm shift that is reshaping not only the

economy, but also society at large, and even how we think and perceive our

world.

• The great economic and social revolutions in history occur when two things

happen

• The emergence of a new energy regime that opens the path to a more complex

civilization

• The new energy flows can bring more people together, integrate bigger commercial and social

units, etc.

• To emerge successfully, this new paradigm requires a communication revolution

powerful enough to manage the new energy regime.


The First And Second Industrial Revolutions Scaled

Top-down

• First Industrial Revolution driven by coal and steam power

• When: 19th Century

• Energy: Coal and steam power

• Communication: Print technology became very cheap when steam power into printing

was introduced. That decreased the cost and increased the speed, efficiency and

availability of print material. At the same time public schools in EU and USA were

established.

• Second Industrial Revolution driven by Electricity

• When: 20th Century

• Energy: centralized electricity, elite energies (coal, oil, gas, tar sands) that are only found

in a few places and require significant military and geopolitical investments and massive

finance capital, and that have to scale top down because they are so expensive.

• Communication: mass communication (broadcast – Top to all), telephone and then later

radio and television


The Third Industrial Revolution Favors Lateral

Power

• 3rd = Internet for communication and renewable energy

• When: Now - When millions of small players come together in vast networks to pool /

share their content, risks and their resources.

• Energy: Transition to distributed renewable energy sources found in in every inch of the

world: the sun, the wind, the geothermal heat under the ground, biomass (garbage,

agricultural and forest waste) small hydro, ocean tides and waves.

• Communication: The Internet has been a very powerful communication tool in the last 20

years. What’s so interesting about it is the way it scales. The Internet, by contrast, is a

distributed and collaborative communication medium and scales laterally.

• Disruption comes from lateral power

• Electricity 2.0: everybody will become a producer, smart grids

• Travel 2.0: social, local, mobile in dynamic networks (ecosystem)


If We Had To Summarize Each Revolution By A

Movie


The third revolution …


Plan

• The Third Industrial Revolution

The Entrepreneurial Age




• Are You Ready?


Companies Were Designed like Machines …

• The average life expectancy of a company in the S&P 500 has dropped

precipitously, from 75 years (in 1937) to 15 years in a more recent study.





Copyright © William El Kaim 2016 12Source: Bloomberg

https://www.bloomberg.com/gadfly/articles/2016-08-02/tech-giants-form-fab-five-to-dominate-stock-valuation-chart


• Companies were built on a corporate model of “knowledge stocks”

• Developing a proprietary product breakthrough and then defending that innovative

advantage against rival companies for as long as possible.

• The issue is now, because of the increasingly global nature of business

competition, the value of a major proprietary breakthrough or invention

erodes in value much more quickly than in the mid-20th Century.

• Companies should create broad networks and finding innovation at “the

edge” of their business rather than a proprietary core

Source: John Hagel III Copyright © William El Kaim 2016 13

http://knowledge.wharton.upenn.edu/article/running-faster-falling-behind-john-hagel-iii-on-how-american-business-can-catch-up/

Red Queen Effect

Source: MeedabyteCopyright © William El Kaim 2016 14

http://meedabyte.com/2013/06/26/the-platform-design-canvas-a-tool-for-business-design/


Welcome to a New World

• The transition from new idea to pilot to going well to early market and then

scaling the business impacts the organization itself

• its structure, its business model, and the skills of the people in it.

• Innovation is anything that breaks a constraint vs. strategy which is about the constraints

you embrace.

• Making a new idea work requires three distinct sets of skills (Tim Kastelle):

• Invention phase: creativity and invention to get the new idea to work

• Market creation phase: customer development and problem-solving skills to create a

market with the early adopters

• Scaling business phase: transition to a business model that will scale with mainstream

customers

• The problem is that many organizations don't staff to the three different sets

of skills (see Crossing the Chasm by Geoffrey Moore)

Copyright © William El Kaim 2016 16Source: ConversationAgent

http://www.amazon.com/Crossing-Chasm-3rd-Edition-Disruptive/dp/0062292986/?_encoding=UTF8&tag=converagent-20

http://www.conversationagent.com/2015/11/the-difference-between-innovation-and-strategy.html

Pace of Technology Adoption



Moore's law visualized through the evolution of Lara

Croft face in games

by Elena SilenokCopyright © William El Kaim 2016 19

https://twitter.com/silenok/status/561420493665087488/photo/1

The Entrepreneurial Age Where Re-imagination Is

Crucial

• The Mass customization is accelerated through a rapid adoption pace of

technology

• 1 million IPOD sold in 2 years at the start …

• 1 million of Iphone 5x in … 3 days!

• A large portion of 2020 revenues are likely to come from products and

services that don’t even exist today

• Advances in technology without a change in business model nor traction are mere

productivity gains from the multitude’s standpoint, and are commoditized in the blink of

an eye, preventing the company from differentiating itself.

• The new digital, networked, real-time society forces us to start thinking and

acting as an Ecosystem

• Ecosystem are developed using platforms to glue services via API and Funds to

encourage startups and partners to hook in


http://www.slideshare.net/paulsingh/moneyball-a-quantitative-approach-to-angel-investing-austin-tx-aug-2012

Are You a Digital Barbarian?

• Aggregators redefine the interface between traditional actors and customers, putting pressure on their profit margins. • Answer to customers’ desires for greater transparency around prices and product

features, and may increasingly become the primary interface.

• Innovators use existing technology platforms, but they bring their own innovative sales or customer relationship management approaches.• Companies will then squeeze margins and also take revenues away from traditional

actors, reducing their function to simply processing transactions.

• Example: banks or Travel Management Company just doing fulfillment

• Disruptors seek to redefine the rules of an industry and replace incumbents by providing alternative products and services, often offering a better experience for a targeted customer group.• By freezing out incumbent actors, they take revenues and threaten legacy players

economics in market niches, cherry-picking the most attractive customers.

Source: Bain & CompanyCopyright © William El Kaim 2016 21

http://www.bain.com/publications/articles/building-the-retail-bank-of-the-future.aspx

RE-imagination of Everything

• You should not only re-invent your brand and product, you should re-imagine

everything (Mary Meeker 2012)

• The risk if not doing so? Being victim of innovative disruptions (see

Christensen’s video)

• Christensen predicts also the end of consulting as we know it today.

• This is also the end of the Enterprise Architect, and the tools and process he used!

• The Schumpeter creative destruction theory, is maximized in the digital

business world

• Winner-Take-All Effect + Network effects

• First Time User Experience is key (30/50% of dev), no more documentation!


http://www.kpcb.com/file/kpcb-internet-trends-2012

http://www.claytonchristensen.com/key-concepts/

http://hbr.org/2013/10/consulting-on-the-cusp-of-disruption/

RE-imagination of Everything

• Digital transformation occurs incrementally and from the inside out.

• It requires changing an entrenched culture that’s often characterized by apprehension or

even fear of the disruption (including new skills and job duties) that may follow from new

digital tools.

• Learning how to manage that change will consume substantial time and attention for

executives.

• Reinvention, by contrast, succeeds by taking an outside-in perspective

• Starts with customers’ needs and then tests different innovations that could address

those priorities.

• Of course, the innovation might cannibalize some part of the legacy’s current business,

though better the company cannibalizes itself than allow other companies to take the

lead.

Source: Bain & CompanyCopyright © William El Kaim 2016 23

http://www.bain.com/publications/articles/further-faster-mastering-digital-reinvention-in-retail-banking.aspx

Digital Disruption Has Enabled New Institutional

Options with Distinct Economics

Copyright © William El Kaim 2016 24Source: BCG

http://digitaldisrupt.bcgperspectives.com/

Each Type of Innovations Has Its Problems!

• Neutralization• a product is good enough to achieve parity with the competitive set

• time to market to create competition is critical.

• Productivity• Certain areas of the business are improved to lower cost and compete

• repurposing the resources is a critical aspect of this; many companies resort to layoffs and write-offs, an inefficient, expensive, and highly disruptive method

• Differentiation• When an improvement helps achieve competitive separation in the marketplace

• Calculated investment of resources based on focus and prioritization; many businesses however stop short, or don't go far enough in any one direction, leaders fail to prioritize

• Waste• Any type of innovation that falls short belongs to the waste category.

• This is also where we find the innovation that is not tied to economic value. In many organizations, this category is by far the largest.

Copyright © William El Kaim 2016 25Source: Geoffrey Moore

http://www.amazon.com/Dealing-Darwin-Geoffrey-A-Moore/dp/1841127175?_encoding=UTF8&tag=converagent-20

Every Business Is a Digital BusinessFrom Digitally Disrupted to Digital Disrupter

Source: Accenture Technology Vision 2014Copyright © William El Kaim 2016 26

http://www.accenture.com/microsites/it-technology-trends-2014/Pages/home.aspx

Source:Accenture

Technology Vision 2014


http://www.accenture.com/microsites/it-technology-trends-2014/Pages/home.aspx

Technology Operates on Two Axis

Making Things And Moving Things

Source: Sam Lessin, Facebook Keynote, PhocusWright Conference 2013.


But Value From Bits Grows Faster Than The Value

From Atoms

Value from bits (information content) grows faster than the value from atoms (the physical

product or human-delivered service)

Source: PWCCopyright © William El Kaim 2016 29

http://www.pwc.com/us/en/technology-forecast/2012/issue2/features/feature-creating-openeing-apis.jhtml

Think Long Tail

• Popularized by Chris Anderson in an October 2004 Wired magazine article

(Amazon.com)

• The term gained popularity as a retailing concept describing the niche

strategy of selling a large number of unique items in relatively small

quantities

• Selling small volumes of hard-to-find items to many customers instead of large volumes

of a reduced number of popular items.

• The total sales of this large number of "non-hit items" is called the Long Tail.

• A market with a high freedom of choice will create a certain degree of

inequality by favoring the upper 20% of the items ("hits" or "head") against

the other 80% ("non-hits" or "long tail").

• This is known as the Pareto principle or 80–20 rule.


http://en.wikipedia.org/wiki/Chris_Anderson_(writer)

http://en.wikipedia.org/wiki/Wired_(magazine)

http://en.wikipedia.org/wiki/Amazon.com

http://en.wikipedia.org/wiki/Pareto_principle

Think Long TailFractal Disruption Engine

• The Long Tail vision is then applied in every subset of your market, in a

fractal and lateral way.

• Each small actor is attacking your business in each possible niche and in

each market, putting some order in a global chaos

In the Long Tail Inventory is abundant; choice is

commodity. It’s the customer that’s in short supply.


http://www.wired.com/wired/archive/12.10/tail.html

From Value Chains to Value Networks

• Value Network: value creating system

where all involved stakeholders co-

produce value.

• You will now be judged on your capability

to build, engage and empower a

network.

• Hard to create collective actions: getting

a group of people to work towards a

common goal.

• Do not neglect the inseparable

partnership between hierarchy and

network.


From System of Record to System of Engagement


Successful and Sustainable Enterprises Will

Harness the Stream of Digital Innovation

Source: On Web Strategy BlogCopyright © William El Kaim 2016 34

http://dionhinchcliffe.com/2014/05/28/going-beyond-bolt-on-digital-transformation/

Plan



Digital Revolution and Disruption



• Are You Ready?



• The digital revolution will lead to a profound change of the society. New

usages, new services, in short new businesses are created at a high pace,

with a huge impact.

• The fractal and lateral aspect of the digital revolution are helping new

entrants to create their offer, to market it to the world and to gain market

share and expand globally at an astonishing rate.

• That’s why, the digital revolution is very often correlated to innovation. But as

the adage said, correlation is not causation.

• Kodak, and blockbuster (just to name a few) are examples of incumbents that were not

able to cope with the digital revolution and were put out of business.

• On the other side, some established companies were able to re-imagine their business,

like Apple. And, of course, new entrants did benefit from the digital revolution to become

giants, like Amazon, Facebook or Facebook.



• The environments which are characterized by rapid, systemic and radical

change require flexible, dynamic or emergent approaches to strategy

formulation (for example: disruptive innovation).

• Most of the literature on technological innovation points to established

companies as victims of disruptive innovations, a phenomenon sometimes

called the “incumbent’s curse”.

• On the other hand, some others developed the idea of “dynamic capabilities”

which enables established companies to thrive, whatever the circumstances.


Schumpeter Creative Destruction

• The expression "creative destruction" was popularized by Joseph Schumpeter, particularly in his book “Capitalism, Socialism and Democracy”, first published in 1942.

• Creative destruction describes the "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one."

• In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the disruptive force that sustained economic growth, even as it destroyed the value of established companies and laborers that enjoyed some degree of monopoly power derived from previous technological, organizational, regulatory, and economic paradigms.

• Although Schumpeter explicitly mentioned technology as a driver of Creative Destruction, he also mentioned several other options for entrepreneurs. But after World War II, technology, perceived as the main force behind progress, was going to get most of the attention.

• For Schumpeter incumbents were not supposed to last; they were bound to be marginalized by entrepreneurs.


What is Disruption?Jean-Marie Dru Definition

• Jean Marie DRU first coined the term Disruption in 1992

and registered the word as a trademark!

• Disruption comes from the Latin word “disrumpere,” which

translates in English as “breaking from.”

• Disruption refers to everything that is not gradual change.

• For him there is two kind of innovations incremental

innovation and disruptive innovation.

• Incremental, means marginal progress. A formulaic improvement.

The extension of a range. Entry into an adjacent market.

Incremental innovations obviously feed revenue streams short-term.

• In contrast, disruptive innovation brings radical change and

generate more top-line growth and more profit than do incremental

ones.

Source: Jean-Marie DruCopyright © William El Kaim 2016 39

https://www.linkedin.com/pulse/true-disruption-jean-marie-dru

What is Disruption?Incremental vs. Disruptive (Radical)

Copyright © William El Kaim 2016 40Source: Microsoft

http://www.microsoft.com/GoESP

What is Disruption?Clayton Christensen Definition

• Clayton Christensen, a Harvard Business School professor, defined

“disruption” in The Innovator’s Dilemma.

• A disruptive product addresses a market that previously couldn’t be served

(a new-market disruption) or it offers a simpler, cheaper or more convenient

alternative to an existing product (a low-end disruption).

• An incumbent in the market finds it almost impossible to respond to a

disruptive product. In a new-market disruption, the unserved customers are

unserved precisely because serving them would be unprofitable given the

incumbent’s business model.

• In a low-end disruption, the customers lost typically are unprofitable for the

incumbents, so the big companies are happy to lose them. Thus, the

innovator’s dilemma. Incumbents appropriately ignore the new product

because it is uneconomic to respond, but the incumbents’ quiescence can

lead to their later downfall.


http://www.forbes.com/forbes/2011/0314/features-clayton-christensen-health-care-cancer-survivor.html

https://www.amazon.com/Innovators-Dilemma-Revolutionary-Change-Business/dp/0062060244

What is Disruption?Christensen Definition


Disruption and S-curves

« We’re living in a world wherepeople can become businesses in 60 seconds » B. Chesky (AirBnB)


Evolution vs. Revolution

Source: Mastering 2020 - Rolland Berger Consulting

Example: iPhone

Example: TV moving to LED technologie

Disruption


http://www.rolandberger.com/media/publications/2014-02-25-rbsc-pub-How_to_get_prepared_for_the_VUCA_world.html

Example: Disruption in Travel Industry

1 2 3

1

23


https://holvi.com/

Example: A Bank Without being a bank!


https://holvi.com/

Example: Number26 A New Online Bank

https://number26.de/en/Copyright © William El Kaim 2016 47

https://number26.de/en/

Example: Number26 A New Online Bank


https://www.hioscar.com/

Example: New Insurance, free service


https://www.hioscar.com/

Innovate in Business Models

• Definitions of “business model” vary, but most people would agree that it

describes how a company creates and captures value.

• The features of the model define the customer value proposition and the pricing

mechanism, indicate how the company will organize itself and whom it will partner with

to produce value, and specify how it will structure its supply chain.

• Basically, a business model is a system whose various features interact, often in

complex ways, to determine the company’s success.

• In any given industry, a dominant business model tends to emerge over time.

• In the absence of market distortions, the model will reflect the most efficient way to

allocate and organize resources.

• Most attempts to introduce a new model fail but occasionally one succeeds in

overturning the dominant model, usually by leveraging a new technology.

• If new entrants use the model to displace incumbents, or if competitors adopt it, then the

industry has been transformed.

Copyright © William El Kaim 2016 50Source: HBR

https://hbr.org/2016/10/the-transformative-business-model

Innovate in Business ModelsThe Six Keys to Success

• 1. A more personalized product or service.

• Many new models offer products or services that are better tailored than the dominant

models to customers’ individual and immediate needs. Companies often leverage

technology to achieve this at competitive prices.

• 2. A closed-loop process.

• Many models replace a linear consumption process (in which products are made, used,

and then disposed of) with a closed loop, in which used products are recycled. This shift

reduces overall resource costs.

• 3. Asset sharing.

• Some innovations succeed because they enable the sharing of costly assets

• The sharing typically happens by means of two-sided online marketplaces that unlock

value for both sides.

• Sharing also reduces entry barriers to many industries, because an entrant need not

own the assets in question; it can merely act as an intermediary.




• 4. Usage-based pricing.

• Some models charge customers when they use the product or service, rather than

requiring them to buy something outright. The customers benefit because they incur

costs only as offerings generate value; the company benefits because the number of

customers is likely to grow.

• 5. A more collaborative ecosystem.

• Some innovations are successful because a new technology improves collaboration with

supply chain partners and helps allocate business risks more appropriately, making cost

reductions possible.

• 6. An agile and adaptive organization.

• Innovators sometimes use technology to move away from traditional hierarchical models

of decision making in order to make decisions that better reflect market needs and allow

real-time adaptation to changes in those needs. The result is often greater value for the

customer at less cost to the company.





In theory, the more of

the six features a new

business model has,

the greater its potential

to transform a given

industry should be.

Innovate in Business ModelsBusiness Model Canvas to Help?

Copyright © William El Kaim 2016 54Source: Strategyzer

https://strategyzer.com/

Innovate in Business Models

• From inside-out to outside-in

• Always be open to external ideas

• Personalized offers in a mass market world …

• It’s the age of the platform, use API to sell through (target developers)

• Become a payment operator and offer a digital wallet

• Invest in digital marketing and advertising

• Target business niches and become the leader first and fast

• Be innovative in business models (niche)

• Bundle-unbundle your service offer (“a la carte”)

Excerpted from Big Bang Disruption: Strategy in the Age of Devastating Innovation by Larry Downes and Paul Nunes


http://www.accenture.com/microsites/bigbangdisruption/Pages/index.aspx

The RISE of Unicorns

• “The Unicorns”, the billion-dollar

tech startup was supposed to be

the stuff of myth said Forbes. Now

they seem to be … everywhere.

• AirBnb, GrabTaxi, SpaceX, Lyft,

Uber, to name a few, are already

conquering the world.

• Used to take 20 years for

traditional fortune 500 company to

reach $1B Valuation


http://fortune.com/2015/01/22/the-age-of-unicorns/

More on Disruption

• Clayton Christensen

• Talk given at the Gartner Symposium ITExpo 2011 on October 2011

• How Pursuit of Profits Kills Innovation and the U.S. Economy

• The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail

• The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators

• Consulting on the Cusp of Disruption - Harvard Business Review

• Opponents to Christensen vision

• “The disruption Machine”, Jill Lepore in the New Yorker

• “A Counterargument To Clayton Christensen's Definition Of True Disruption”, JM Dru

• “What Clayton Christensen got wrong”, Stratechery

• “What Killed Michael Porter's Monitor Group? The One Force That Really

Matters” by Steve Denning on Forbes


http://www.claytonchristensen.com/

http://gartner.mediasite.com/mediasite/play/9cfe6bba5c7941e09bee95eb63f769421d?t=1320659595

http://www.forbes.com/sites/stevedenning/2011/11/18/clayton-christensen-how-pursuit-of-profits-kills-innovation-and-the-us-economy/#6dc94f48992a

http://www.claytonchristensen.com/books/the-innovators-dilemma/

http://www.claytonchristensen.com/books/innovators-dna-mastering-skills-disruptive-innovators/

https://hbr.org/2013/10/consulting-on-the-cusp-of-disruption

https://stratechery.com/2013/clayton-christensen-got-wrong/

http://www.newyorker.com/magazine/2014/06/23/the-disruption-machine

http://www.forbes.com/sites/onmarketing/2015/12/17/a-counterargument-to-clayton-christensens-definition-of-true-disruption/#a30df356e3dd

https://stratechery.com/2013/clayton-christensen-got-wrong/

http://www.forbes.com/sites/stevedenning/2012/11/20/what-killed-michael-porters-monitor-group-the-one-force-that-really-matters/#291802bf733c

Plan




Competing In The Digital Age


• Are You Ready?


Competing In The Digital AgeSeven Forces At Work

• New Pressure On Prices And Margins

• Competitors Emerge From Unexpected Places

• Winner-takes-all Dynamics

• Plug-and-play Business Models

• Growing Talent Mismatches

• Converging Global Supply And Demand

• Relentlessly Evolving Business Models At Higher Velocity

Source: McKinsey Strategic Principles for competing in the digital ageCopyright © William El Kaim 2016 59

http://www.mckinsey.com/insights/strategy/strategic_principles_for_competing_in_the_digital_age

Competing In The Digital AgeSeven Forces at Work

• New Pressure On Prices And Margins

• Digital technologies create near-perfect transparency, making it easy to compare prices,

service levels, and product performance: consumers can switch among digital retailers, brands,

and services with just a few clicks or finger swipes.

• This dynamic can commoditize products and services as consumers demand comparable

features and simple interactions.

• Third parties have jumped into this fray, disintermediating relationships between companies

and their customers.

• Competitors Emerge From Unexpected Places

• Digital dynamics often undermine barriers to entry and long-standing sources of product

differentiation.

• At the same time, the expense of building brands online and the degree of consumer attention

focused on a relatively small number of brands are redrawing battle lines in many markets.

• New competitors can often be smaller companies that will never reach scale but still do a lot of

damage to incumbents.

Source: McKinseyCopyright © William El Kaim 2016 60



• Winner-takes-all Dynamics

• Digital businesses reduce transaction and labor costs, increase returns to scale from

aggregated data, and enjoy increases in the quality of digital talent and intellectual

property as network effects kick in.

• Scale economies in data and talent often are decisive. Successful start-ups known for

digital expertise and engineer-friendly cultures become magnets for the best digital

talent, creating a virtuous cycle.

• These effects will accelerate consolidation in the industries where digital scale weighs

most heavily, challenging more capital- and labor-intensive models.

• Relentlessly Evolving Business Models At Higher Velocity

• Digitization isn’t a one-stop journey.

• Combinations of innovations and new usages will lead to new consumption habits …

and new business models




• Plug-and-play Business Models• As digital forces reduce transaction costs, value chains disaggregate.

• Third-party products and services can be quickly integrated into the gaps

• In the travel industry, new portals are assembling entire trips: flights, hotels, and car rentals. The stand-alone offerings of third parties, sometimes from small companies or even individuals, plug into such portals. These packages are put together in real time, with dynamic pricing that depends on supply and demand. As more niche providers gain access to the new platforms, competition is intensifying.

• Converging Global Supply And Demand• Digital technologies know no borders, and the customer’s demand for a unified

experience is raising pressure on global companies to standardize offerings.

• In B2B markets from banking to telecommunications, corporate purchasers are raising pressure on their suppliers to offer services that are standardized across borders, integrate with other offerings, and can be plugged into the purchasing companies’ global business processes easily.




• Growing Talent Mismatches

• Software replaces labor in digital businesses.

• Computers increasingly are performing complex tasks as well. “Brilliant machines,” like IBM’s

Watson, are poised to take on the work of many call-center workers.

• Digitization will encroach on a growing number of knowledge roles within companies as

they automate many frontline and middle-management jobs based upon synthesizing

information for C-level executives.

• At the same time, companies are struggling to find the right talent in areas that can’t be

automated.

• Digital skills like those of artificial-intelligence programmers or data scientists and of people

who lead digital strategies and think creatively about new business designs.

• A key challenge will be to reallocate the savings from automation to the talent needed to forge

digital businesses.



Competing In The Digital AgeFour Principles For The Open World (Don Tapscott)

• The new open connected world will be governed by four principles

• Collaboration

• Transparency

• Sharing

• Empowerment

• Social is more than Facebook and Twitter, and will lead to collective

intelligence. Look at the birds, how collectivity they behave and evolve.

• Video (a must see)


http://on.ted.com/Tapscott

Competing In The Digital AgeAdopting a New Digital Operating Model

• Today’s fastest growing, most profoundly impactful companies are using a

completely different operating model

• Technology – software in particular – has had a destabilizing effect on

traditional business models.

• The proliferation of personal computing power has leveled the playing field in almost

every industry.

• As products and the means to create them have become digitized (often referred to

as software eating the world), production capability has grown more accessible and

portable. And the acceleration of that trend (driven by Moore’s Law) means that every

single day it gets easier for someone else to compete with your product or service, and

to do it better, faster, and cheaper.

• It used to be that the best day to start your business was yesterday.

• Now, tomorrow is almost always a more advantageous starting point.

Source: Aaron Dignan Medium blog PostCopyright © William El Kaim 2016 65

http://www.forbes.com/sites/truebridge/2011/08/29/software-eating-the-world-facts-and-figures/

http://en.wikipedia.org/wiki/Moore's_law

https://medium.com/on-management/d9a3b82a5885

Competing In The Digital AgeCompany as Lean, Mean, Learning Machines

• Intense bias to action and a tolerance for risk, expressed through frequent experimentation and relentless product iteration.

• Hack together products and services, test them, and improve them, while their legacy competition edits PowerPoint.

• Obsessed with company culture and top tier talent, with an emphasis on employees that can imagine, build, and test their own ideas.

• They are maniacally focused on customers.

• They are hypersensitive to friction – in their daily operations and their user experience.

• They are open, connected, and build with and for their community of users and co-conspirators.

• They are comfortable with the unknown – business models and customer value are revealed over time.

• They are driven by a purpose greater than profit!

Source: Aaron DignanCopyright © William El Kaim 2016 66


Adopting a New Digital Operating ModelCompany as Lean, Mean, Learning Machines

• The physical world that we used to value so much (the devices, cars, real

estate, and other infrastructure) are merely inventory for something bigger.

• The value, is in the data, the tools, and the optimization of markets.

• These organizations may start small

• like Medium, Hipchat, Circa, Outbox,and Quirky

• But they can get bigger fast (Growth and Scale are key)

• like Airbnb, Dropbox, Evernote,Uber, Tesla, Square, and Jawbone

• And ultimately dominate markets

• Like Amazon, Google, Twitter, Facebook, and Paypal).


https://medium.com/

https://www.hipchat.com/

http://cir.ca/

https://www.outboxmail.com/

http://www.quirky.com/invent

https://www.airbnb.com/

https://www.dropbox.com/

http://evernote.com/

https://www.uber.com/

http://www.teslamotors.com/

https://squareup.com/

https://jawbone.com/


Adopting a New Digital Operating Model



Adopting a New Digital Operating ModelPurpose: Why Are We Doing This?

• Digital World: Companies are often extremely upfront with investors about

their Purpose-driven nature (see shareholder letters

from Zuckerberg or Bezos) and even structured to protect founder control.

• This is not to say these firms don’t value scale, influence, or profitability.

They aspire greatly in these areas, but only in service of their vision.

• The Shift

• Rom growth as A commercial agenda to growth as A visionary agenda!

• Example

• Google’s purpose is to organize the world’s information and make it universally

accessible and useful


http://www.ft.com/cms/s/2/a2109a54-4d88-11e1-b96c-00144feabdc0.html

https://www.dropbox.com/s/45h1edhstrc3bsv/Amazon Shareholder Letters 97-12.pdf

http://www.google.com/about/company/


Adopting a New Digital Operating ModelProcess: How Will We Do This?

• While an organization’s processes are initially developed to ensure results

and quality, they can easily become inhibitive.

• Digital world: Processes that are adopted tend to be focused on

experimentation, autonomy, and speed.

• Agile, lean, and user-focused dominate the process conversation.

• From Holacracy to Lean Startup Method, these processes are not about

control or risk: they're about getting better every day.

• The Shift

• From Process As Quality Assurance To Process As Iterative Improvement!

• Example

• Quirky’s transparent and rapid r&d process vets products with consumers at every

stage.


http://holacracy.org/

http://theleanstartup.com/

http://www.quirky.com/how-it-works


Adopting a New Digital Operating ModelPeople: Who Will Do This?

• Value great people. Some call them “A Players.” Others call them “stunning colleagues.”• Legacy HR models tend to value “managers”.

• Digital world: the emphasis on People is all about making. • “Makers” are people who have skills (as opposed to credentials). They think by doing:

experimenting, testing, and learning.

• Make decisions about their priorities and workflow, what’s left for the manager is skills development, knowledge sharing, and helping with roadblocks – the Montessori method gone corporate

• The Shift• From people as managers of competitive advantage to people as makers of competitive

advantage!

• Example• Valve hires people that love making games and lets them choose the roles they fill and the

work they do


http://www.forbes.com/sites/drewhansen/2013/05/11/steve-jobs-lost-interview/

http://www.slideshare.net/reed2001/culture-1798664

http://en.wikipedia.org/wiki/Montessori_education


Adopting a New Digital Operating ModelPeople: Who Will Do This?

• The importance of passion and capability to act.

• Previous “passion” definition is outdated

• Somebody who will follow instructions passionately [and] work nights, work weekends, to

get the job done.

• Passion is now “a questing disposition”

• Enthusiasm for pushing the work effort to new experiences and new frontiers, through

activities such as attending conferences, meeting players from outside the company for

lunch or getting involved in social media.



Adopting a New Digital Operating Model Product: What Are We Doing?

• Product is anything that an organization offers its customers and users,

inclusive of services.

• The act of developing products and services used to be limited to a privileged few

• Digital World: the product portfolio is a result of constant experimentation,

creating MVPs (minimum viable products) that can hit the market and begin

soliciting feedback.

• Make small mistakes early and often, and only scale when the fit between product and

market is sound.

• The Shift

• From product built to last to product built to evolve!

• Example

• Dropbox started with a four minute video of a service that didn’t even exist yet


http://venturehacks.com/articles/minimum-viable-product

http://techcrunch.com/2011/10/19/dropbox-minimal-viable-product/


Adopting a New Digital Operating Model Platform: Build The Minimum Enterprise Viable Platform

• Ecosystems are dynamic and co-evolving communities of diverse actors who creates and capture New Value through both Collaboration and Competition

• A “platform” is a powerful type of ecosystem that could not be bought off-the-shelves!

• Need to design and implement one for your business:• Build from scratch: follow the blue ocean

approach

• Leverage & Extend: by reusing and orchestrating the core business services already existing, but no more adapted to new usages and demands.

• And organize the ecosystem around …


Adopting a New Digital Operating Model Platform: To Be Built With IT

Source: CapgeminiCopyright © William El Kaim 2016 75

https://www.fr.capgemini-consulting.com/leadingdigital

Adopting a New Digital Operating Model

Source: PWCCopyright © William El Kaim 2016 76

http://www.pwc.com/us/en/technology-forecast/2012/issue2/features/feature-creating-openeing-apis.jhtml

Plan





The Networked Brand

• Are You Ready?


A New Consumer Reality Is Emerging

• Defined by an any-where/anytime/any device expectation of accessibility and engagement.

• Consumers have the ability to be online all the time and expect persistent digital engagement with whomever they conduct business.

• Companies will need to develop fluency in digital product development and social technologies, and they will need to create collaboration across groups that have often worked separately from one another.

• Enterprises must reorganize in a manner that puts customers at the center of the digital operating model, instead of thinking of them only as end-of-the-chain recipients of delivered value.


The Networked BrandBlast Radius Vision

• Branding is dead and replaced by Networked brand

• Need to create powerful bond between company and travelers and create a Halo effect

to protect your product from commoditization

• Loyalty is when you lock-in customers in powerful ecosystem (Nike, Apple, Starbuck)

• Five Key elements for networked brand

1. Principled: establish their engagement at the value level (belief). Marketing is about

value, creating powerful emotional bonds.

2. Pioneering/experimental – Nike Golf App, Starbuck App

3. Purposeful – content with leg, not dying after 30s. Google Maps

4. Opportunistic – Smart brand, all about data and targeting, and to be in the

conversation, in the air

5. Meticulous – never stop engaging and listening, care of everythingSource: Blast Radius Keynote about Networked Brand in PocusWright Conference 2012


Focus On User Values & Touchpoints

Source: Microsoft 2013Copyright © William El Kaim 2016 80

Focus On User Values & Touchpoints

• By 2020 the customer will manage 85% of the relationship with an enterprise

without interaction with a human

Source: Microsoft 2013Copyright © William El Kaim 2016 81

What Is To Be Done?

• Fix the Basic First!

• Companies are often aware of the problems but are not committed

to solve them

• Look for blind spots in the customer experience!

• Become your own mystery chopper (eat your own dog food)

• Treat your customers like tourists in a new digital country

• Use simple words, and reduce their stress to the maximum by

hiding the complexity of your processes

• Consider each customer as a segment, personalize any

conversations with them

• Requires every part of your organization to be aligned and

engaged

• Inside and Outside at the same time

Source: Get ready for marketing 2020, Steven Van Belleghen


What Is To Be Done?

Source: Steven Van BelleghenCopyright © William El Kaim 2016 83

http://stevenvanbelleghem.com/blog/are-you-ready-for-marketing-2020

What Is To Be Done?Moving Away from the historical sales funnel…

Source: The Robert Report, The Trouble With Travel DistributionRobert CareyAssociate PrincipalMcKinsey & Company

Towards a Customer Decision Journey LensCopyright © William El Kaim 2016 84

Purpose is like Shared ValueIt helps creating Bonds …From annual Plan to 3 months marketing project planAmbition is the pass to success, Execution is the vehicle to succeed

What Is To Be Done?Selling Without Selling!

Source: Steven Van BelleghenCopyright © William El Kaim 2016 85

http://stevenvanbelleghem.com/blog/are-you-ready-for-marketing-2020

What Is To Be Done?Fully Integrated Brand Retailing

• Multichannel retailing is most often associated with retailers that have brick-

and-mortar stores combined with an online retail channel.

• A new concept has emerged, called omni-channel: a channel-agnostic view

of how consumers experience the retailer brand.

• Shoppers increasingly demand a consistent level of experience regardless of

channel or mode by which the retail is accessed.

• Such shoppers avoid retailers who are ill-equipped to deliver a seamless brand

experience online, in-store and across multichannel media, both consistently and

continuously.

• By 2020, the need for a unified consumer omni-channel experience will be

complicated by the need for nearly perfect execution.


What Is To Be Done?Key Ecosystems Are Expanding Across More Screens

It’s no longer just about smartphones

Source: MobileVisionCopyright © William El Kaim 2016 87

What Is To Be Done?Omni-Channel is the New Normal!

With the convergence of physical retail formats, digital services, and eCommerce channels, retailers are currently confronted with the need to correctly deliver a fully integrated shopper experience from start to finish.


What Is To Be Done?Anticipating Competitive Experiences

• Consumers are driven more by the

experiences that companies create than the

individual features that products offer.

• Offerings that connect on an emotional level,

• Frequently substitute experiences across category

• As consumers reframe choice, this reframes

competition.

• Understanding how customers might trade

other experiences for your own gives you a

better handle on your actual competition


What Is To Be Done?Upstream Activities Are Being Commoditized

• Upstream activities (such as sourcing, production, and logistics) are being

commoditized or outsourced

• The traditional upstream view is that as rival companies catch up, competitive advantage

erodes.

• Companies are still organized around their production and their products, success is

measured in terms of units moved, and organizational hopes are pinned on product

pipelines.

• Production-related activities are honed to maximize throughput, and managers who

worship efficiency are promoted.

• Businesses know what it takes to make and move stuff. The problem is, so does

everybody else.

Source: Niraj DawarCopyright © William El Kaim 2016 90

https://hbr.org/2013/12/when-marketing-is-strategy/ar/1

What Is To Be Done?Investing in Downstream Activities To Enable Value Creation

• Downstream activities aimed at reducing customers’ costs and risks are

emerging as the drivers of value creation and sources of competitive

advantage

• Advantage grows over time or with the number of customers served—in other words, it

is accumulative.

• Network effects constitute a classic downstream competitive advantage

• They reside in the marketplace,

• they are distributed (you can’t point to them, paint them, or lock them up), and

• they are hard to replicate. Brands, too, carry network effects.

• Customers and the market (not the factory or the product) now stand at the

core of the business.

• The more data amassed, the further it improves the accuracy of predictions and the

increased advantage relative to competitors.

Copyright © William El Kaim 2016 91Source: Niraj Dawar


What Is To Be Done?Shifting Source Of Competitive Advantage

Often neglectedCostly and time consumingGrowth Hacking techniques could help

Copyright © William El Kaim 2016 92Source: Niraj Dawar


What Is To Be Done?Using Design Thinking


What Is To Be Done?Marketing to win each moment!

• The shift to constant connectivity is one that’s transforming how companies

connect with people, providing access to so many more consumer moments

than ever before, and powerful ways to be relevant and welcome at each

one. The possibilities are incredible and the opportunity is huge – and the

time is now.

• Customers have become increasingly connected and informed, no longer

relying as much on traditional sources such as Google or websites

• Now when they begin a discovery process or look to make an informed decision, they

are using networks, friends and apps for help or direction.

• It’s the shared experiences that define what they do next.

• These moments will become critical to businesses.


https://www.google.com/


What Is To Be Done?Marketing to win each moment!

• Technology leaves consumers trying to choose between a dizzying array of

platforms, networks and apps designed to make their life easier!

• Connected consumers make decisions outside of the sales funnel that companies have

organized themselves around

• 90%of multiple device owners switch between screens to complete tasks

• As a business, you have to look at the people who are sharing their

experiences about your business, product or service and why you should

intentionally design those experiences.

• Concept of shareable experience design offers a simplified model for truly effective

consumer engagement that is at the heart of any future success for a company.

Source: Brian SolisCopyright © William El Kaim 2016 96

http://www.google.com/think/statistics/multiple-device-owners.html

https://www.amazon.com/Whats-Future-Business-Businesses-Experiences/dp/111845653X

What Is To Be Done?Zero Moment Of Truth

• 1. Zero Moment of Truth (ZMOT)

• When the consumer is starting to explore choices

and is just becoming aware of needs and possible

solutions

• Introduced by Google, it’s what people search and

find after encountering the stimulus that directs

their next steps.

• 2. First Moment of Truth (FMOT)

• When the consumer is ready to buy.

• Consumer packaged goods companies have

perfected providing the right experience at this point.

• Introduced by P&G, it’s what people think when

they see your product and it’s the impressions

they form when they read the words describing

your product.

Source: Jim Lecinski

• 3. Second Moment of Truth (SMOT)

• Happens after the consumer purchases, and

includes support and other after-purchase

experiences.

• It’s what people feel, think, see, hear, touch,

smell, and (sometimes) taste as they

experience your product over time. It’s also

how your company supports them in their

efforts throughout the relationship.


https://www.amazon.fr/Winning-Zero-Moment-Truth-Enhanced-ebook/dp/B005B1LBS8

What Is To Be Done?Ultimate Moment of Truth (UMOT)

• Brian Solis added a Fourth one: The Ultimate Moment of Truth (UMOT)• What the consumer shares after

purchasing, fueling other consumers’ journeys.

• A stage that Solis introduces that brings to light the importance of shared experiences and why organizations must first design them rather than just react.

• It’s that shared moment at every step of the experience that becomes the next person’s Zero Moment of Truth (ZMOT).


Digital Darwinism

Source: AltimeterCopyright © William El Kaim 2016 99

http://altimetergroupdigitaltransformation.com/img/dt-report.pdf

Plan






Are You Ready?


Source: TheFamilyCopyright © William El Kaim 2016 101

https://medium.com/welcome-to-thefamily/les-cinq-%C3%A9tapes-du-d%C3%A9ni-a7a06072c9fc

Six Steps of Digital Transformation


Plateau of Productivity

Slope of enlightenment

Peak of Inflated

Expectation

InnovationTrigger

Trough ofDisillusionment

Maturity

Vis

ibili

ty

Source: Extended from Gartner Hype Cycle and Philippe MÉDA (Merkapt)

$$$

Blind Leaders

Impeding Challengers Opportunistic

Leaders

Rambling

Patent, AlgorithmLots of small tests,learning by doing

Building

Co-creation, Design Thinking, API, MVP, platforms, business

models

research tax credit, VCs, Innovation budget

Selling

Selling, marketing, pricing, advertising, ecosystems

Commercial Deployment

Right MarketRight ProductRight TimeRight Business Model


http://www.merkapt.com/

Are You Ready?

• Data: Did you open your data silos and offer data to all ?

• Microservice: Did you leverage innovation by testing often and building

microservices based prototypes validated with clients?

• Platform: Did you adopt a fully digital approach to creating the experience

and the platform first instead of focusing on a product ?

• Mobile: Could a customer buy any of your company product or services

using one finger in less than 15s?

• Big data: Are the data concerning your products and your customers big

enough to not be managed in excel?

• Infrastructure: Did you treat infrastructure as code and leverage continuous

development and deployment (devops)?


Are You Ready?

• Conversation: Could a client engage easily a digital conversation or share

something about your company product/services at any time in different

ways?

• Customer service: Are you offering and end to end service and be able to

track the whole steps of your customer digital journeys?

• Brand reputation: Do you monitor in real time your brand reputation and do

you nurture brand advocates?

• Agile: Are your ready to build and market a product/service in weeks and kill

it after two or three years?


Twitter

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EA Digital Codex


Linkedin

http://fr.linkedin.com/in/williamelkaim

Claudine O'SullivanCopyright © William El Kaim 2016 106




http://fr.linkedin.com/in/williamelkaim

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