Digital Business By Design: Transformative Digital Strategies

Digital Business by Design considers how digital technologies create new business models, services, products and customer experiences.

Gary Fox

Illustration Of Digital Business By Design

Digital Business By Design: Transformative Digital Strategies

Digital business by design is a concept born out of the need to increasingly focus on improving collaboration, communication and leadership within the context of an organisation.

Transforming the business from a set of independent functions working in silos to a network of people that are agile, dynamic and reflexive to changes in markets and customers. That is the power that social business delivers.

But how do you get there? What are the required strategies and changes needed? In this article, I will outline some of the latest thinking and methods to become a social business by design.

Digital Business by Design

Digital Business Model Transformation
Digital Business Model Transformation

Businesses are now learning how to apply digital strategically for significant and meaningful outcomes:

  • driving revenue and sales growth
  • improved customer relationships
  • superior and highly innovative new products
  • higher levels of efficiency and productivity.

Digital business is one of the biggest shifts in the structure and process of our organizations in business history. It harnesses new sources of creative output (everyone on the network), transforms structure and methods of traditional control and decision making in work processes.

Distributed networks now pervade our communication architecture. In fact, this flat, centre-less, distributed structure is the framework from which social media derives its remarkable power.

In the coming years, modes of communication will change more than they have in the previous century as businesses adopt new ways of engaging stakeholders through social networks.

In the hyper-connected world in which business is now conducted, corporations that have integrated the outside-in stakeholder view of their business strategies, policies, governance, and operations have recognized the power of new communication platforms.

Companies who are adapting to the reset in the relationship between business and society cultivate an outside-in culture that proactively seeks to understand and anticipate the stakeholder impact of their business models.

In a previous era, navigating a successful business mean finding the sweet spot where a customer?s unmet need and a product or service intersected. Today, that intersection is more complex but still navigable. It means adding a third circle to the previous two-circle Venn diagram, that of digital.

Some Ways Digital Transforms Businesses

The following are just some of the different ways that social strategies can benefit a business:

  • Optimising Supply Chains.
  • Reorganising Corporate Communication.
  • Enlisting Customers with Social Business to Create Better Support.

How digital disrupts the five forces of industry competition

Michael E. Porter describes the five forces of industry competition as the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among existing competitors.

The Five Forces Model has long been used by corporate strategists to think about the rules of competition and the respective headwinds and tailwinds produced as a company operates and produces products or services in this external environmental context.

Digital Business By Design Five Forces

Key points about Digital Business by Design

  • Digital enables new business models to be designed that are transformative.
  • Understanding upcoming disruptions – with careful analysis of industry trends.
  • Learn to prepare for who, what, where and when disruption can change the established business models.
  • Some of the key value levers organisations can apply to get the most out of their digital business strategies include enhancing the digital customer experience, transforming the digital workplace, gaining insights from analytics, and optimising infrastructure and simplifying management.

Re-thinking and redesigning your business models and processes

The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption.

Clayton Christensen
Digital Business Model By Design

The most exciting opportunities for digital transformation relate to re-thinking and re-designing business models as well as re-thinking and re-designing the underlying business processes that define how these new digital business models operate, how value gets exchanged, how digital products and services are delivered, and how work gets done.

There are a huge number of strategic options for business model innovation in this digital age.

  1. Digitising services
  2. Digitising products
  3. Combining product and service design
  4. Platforms business models
  5. Tapping into the sharing economy and crowdsourcing
  6. Reshaping value networks
  7. Creating new models for monetisation

New digitally based services can also be offered and micro-segmented down to highly granular levels in terms of usage, whether it?s micro-payments, micro-transactions or any other form of measurable usage parameter.

#1. Digitising Products and Services

Digitising products and services, the options range from digitising a physical product or service, to wrapping digital services around a physical product, to unbundling how digital services are provided to make them more customised and specific.

#2. Platform Business Models

Platforms are basically platform-oriented business models that consummate matches between buyers and sellers, producers and consumers, or other marketplace participants. The value being exchanged can be physical, digital or both.

#3. The sharing economy and crowdsourcing

Digital business models in this category are based around offering unused or spare capacity from the utilisation of new or existing resources. This model is often built upon the platform model, in terms of how it operates and matches those that share and those that then ‘rent’ the resource. The ?sharing economy? also taps into new sources of value from new participants.

#4. Reshaping value networks

Reshaping value networks are concerned with how you distribute or re-distribute, the exchange of value among participants in a business ecosystem. This can consist of new players, new roles or changes in existing roles among participants, and changes in the ways participants can connect with one another to exchange value. One of the major strategies used is to move from a pipeline model (that is, a traditional, linear value chain) to a platform model (that is, a digital, inter-connected value chain).

#5. Creating new models for monetisation

Creating new models for monetisation, the options include subscription pricing models, ?freemium? pricing models and free models, to access over ownership, and various on-demand models. The latter two of these are closely aligned with the sharing economy model, where consumers are moving more towards cost-conscious and environmentally friendly approaches where they use just what they need as opposed to buying and storing masses of products they may seldom use.

#6. Creating new sources of value in new ways

If we look across all these options for business model innovation, we find that it?s all about creating new sources of value in new ways. Each strategic option focuses on a slightly different aspect of this value creation and addresses a slightly different strategic question as follows:

  • Digitising products and services ? How can you deliver value through new products and services?
  • Running or participating within industry platforms ? How can you find and exchange value as a market operator or participant?
  • Tapping into the sharing economy and crowdsourcing ? How can you capture new sources of value from new players?
  • Reshaping value networks ? How can you distribute or re-distribute value among participants?
  • Creating new models for monetisation ? How can you offer or pay for value in new ways?

The Digital Customer Experience

There is an increasing number of ways to improve the customer experience through next-generation technologies.

  • IoT ? To enable users and applications to access and physically control IoT devices in both consumer and industrial scenarios.
  • Wearables ? To enable users and applications to take advantage of wearable devices such as smart glasses and smart watches in terms of hands-free process optimisation and convenience.
  • Intelligent automation? To deliver smart services by applying intelligent analytics and algorithms, including artificial intelligence (AI), to understand and anticipate the customers? likely needs based upon their context and historical behaviour.

By addressing a continuum of needs along the customer journey, companies can expand new approaches to market and simultaneously deliver value in terms of the digital customer experience and overall value proposition.

Transformative Digital Business Design

It is the mix of disruptive technologies and platform business models, together with a mastery of digital services ? in terms of how digital services are designed, developed, deployed, managed and continually evolved ? that really sets today?s digital business leaders head and shoulders above the rest of the field. These elements are therefore at the heart of truly mastering digital business and crafting a successful strategy and roadmap for the years ahead.

Technology enablers can dramatically improve the workplace. The workplace is being transformed by digital in terms of the processes and means of communication, collaboration and knowledge management.

By designing the spaces and interfaces for humans and machines, we can re-design business processes to optimise the blend of human-machine participation and interaction. As a result, we can not only complete tasks far more efficiently than either could individually, but also make the workplace more enjoyable.

Strategic Questions That Come From Digital Business by Design

Digital Business By Design Pillars
  • How should innovation programmes be fine-tuned for digital transformation?
  • How can you quickly identify and prioritise opportunities for digital initiatives?
  • How can you time your move into a specific disruptive technology?
  • What are the key elements of the digital customer experience?
  • What are the future human?machine work scenarios?
  • How do you optimise hand-offs between humans and machines in the future workplace?
  • What digital technologies and platforms should an organisation build versus buy?

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