Principles and Practices for Orchestrating Digital Value Chains

Summary This blog is about shifting gears and the ability to offer cars in other colors than T-Ford-black. It is the third and last part of a blog focusing on the importance of translating market and business context into the value proposition offered by IT. You can find the first part   here   and the second part   here .   FedEx and UPS dominate their markets,   again   using slightly different value propositions. Compared to UPS, FedEx offers its customer more flexibility at a slightly higher price point. More price sensitive customers opt for UPS and the more standardized value proposition that comes with it. More pronounced is the difference between Walmart and Amazon. The first has its roots in physical retail outlets while the second started as a native digital business model. Differentiation can also be observed at an operational level. Marketeers want to try new things on a daily basis, while the controllers and bookkeepers of the f...

Summary Markets move at different speeds and in different directions, constantly reshaping the technology-related capabilities required by the business. In the second part, the difference between Customer Intimacy strategy and Operational Excellence strategy is used demonstrate that ‘differentiation’ is more than choosing Agile over Waterfall development. The first part of this blog dedicated to market and business context is  here .   Dell was founded in 1984 and was added to the Fortune 500 in 1992. Its key to success was building direct relationships with the customer via the internet. At the time, most competitors targeting consumers via analogue sales channels, such as brick and mortar shops. Selling directly to the customer also enabled Dell to build-to-order instead of the traditional build-to-stock model. It kept waste to a minimum and allowed the customer to choose from a wide selection of configuration options. Dell’s pursued a customer intimacy strat...

Summary Markets move at different speeds and in different directions, constantly reshaping the technology-related capabilities required by the business. This blog is the first in a series covering the third principle of the Digital Manifesto.   When in New York, searching for a restaurant on your mobile yields those nearest to your current location. If your search history indicates you like Chinese food, the results will highlight those. To create this kind of personalized experience, Google Now, Cortana and Siri combine several data sources, such as location and past usage patterns, to deliver a personalized experience. The capability to show the restaurants in New York instead of Moscow reduces the ‘search stress’ faced by customers and the saved time is a source of customer benefits. The business has a similar expectation. When requesting a new IT solution, the context, such as stable versus emerging market, or having little or intense competition, is at lea...

Summary Digitalization reshapes   business models   and   value chains , requiring a continuous and coherent flow of organizational and technological optimizations to remain ahead of the curve.   Rationally, every executive, manager and employee understands that the company they work for has to remain in touch with market realities and act accordingly. The constant stream of companies struggling with strategic, earnings, liquidity or even a “Chapter 11” crisis is therefore counter intuitive at first sight. However, even at personal level, something similar can be observed. The more ordinary the skill set of the employee, the more likely the job can be automated. Despite the widespread public attention for this trend, many employees still lack a sense of urgency. It is part of human nature to think bad things only happen to others (I). Market and technology shifts don’t affect them or the company they work for. Until, eventually, the pink slip arrives....

  Summary The six principles behind the Digital Manifesto are interdependent. They reinforce each other, creating a positive feedback loop.   Information technology is not a neatly packaged box with a guaranteed return on investment stamped on it. Information Technology is like a kitchen: spending $25.000 on a new kitchen does not automatically result in a great dining experience. You also need a cook. In this case, the cook is the IT professional, embodied by the principle less defensive, more offensive. The IT team no longer delivers a piece of hardware or software to the business, but a solution or even better: a value proposition. A value proposition fulfills a specific want or need of the business, creating value (e.g. additional benefits, less risk). While advanced automation and robots are substituting humans in several service-related areas of the value chain, employees remain necessary for truly added value activities like strategy setting, innovation, p...

Summary The environment in which we live and work today is more uncertain and complex than ever before in history. To survive, let alone thrive, companies have to boost their capability to sense and act on both foreseen and unforeseen events quickly and decisively.   Introduction According to   McGrath  the downfall of Sony, BlackBerry, Blockbuster, Circuit City and even the New York Stock Exchange can be attributed to failing to sense and act on both foreseen and unforeseen events quickly and decisively. “Their downfall is a predictable outcome of practices that are designed around the concept of sustainable competitive advantage. The fundamental problem is that deeply ingrained structures and systems designed to extract maximum value from a competitive advantage become a liability when the environment requires instead the capacity to surf through waves of short-lived opportunities. To compete in these more volatile and uncertain environments, you need to...