I was working on the Digital Transformation Project as I went for some distraction to Facebook. The Financial Times popped up above with the title ‘Transformation is crucial when digital disruption is the norm’. I began reading and, as the title assumed, I found out that the article was in great way related to what I what was doing for the Digital Transformation Project. Instead of zooming in on one company, as we’re doing for the project, the article zooms out and looks at the bigger picture. In this post I want to share some lines of the article about digital disruption and transformation and talk about why so many established companies have difficulties with digital transformation.
Let’s start, where the article starts:
Memories of the last tech bubble, when big companies worried about being “dotcommed” by internet start-ups that wanted to take their trade, have faded. Instead businesses now fear being “Uber-ed”. From taxi drivers to television networks, from filmmakers to restaurants and banks, the ways in which individuals and companies do business is metamorphosing so quickly that many companies find it hard to keep pace. The obsession with digital disruption has reached a flashpoint with the arrival of the smartphone, which is the platform for an invasion of older companies’ hallowed grounds. The success of online lift-sharing company Uber has become an example for entrepreneurs out to attack industries once thought immune to digital upheaval.
So, as we read, obsession with digital disruption is extremely high at the moment. Incumbents are scared, but what can and should they do? That’s where the middle part is about. Eventually, reaching the most important and toughest question that the businesses face: how quickly should they pull back from their traditional, profitable — but nonetheless shrinking — operations to invest in the digital future?
This is the innovator’s dilemma, as described by Clayton Christensen, a Harvard Business School professor. Incumbents can find it hard to respond to newcomers with a good enough product, since doing so often involves turning away from doing profitable things.
For example, Steve Ballmer, the former Microsoft chief executive, by most standards had one of the most effective runs of any chief executive in his 14 years at the top. Its revenues climbed fourfold and it was the world’s second most valuable tech company, though topped by Apple. Since he stepped down last year, however, Microsoft has raced to rebuild its business around the mobile devices and cloud computing.
The key message is that technology leaders evaluating whether to invest in new and immature technologies must do so with a futuristic frame of reference. The key question is, if these technologies found new customers and new markets which may in themselves be small and insignificant (now and in the future), could they mature enough to make inroads into our playing field and have our lunch? And if so, does investing in them today at the risk of cannibalizing ourselves make sense in the longer term? Hence, the innovator’s dilemma.
Have you ever noticed how the ads nowadays are highly customized to your preferences? It is well-known that big companies such as Facebook, use your previously collected data in order to match advertisements of companies to your digital profile. How careful should we be when it comes to leaving a digital footprint? We all have this scary thought that everybody knows everything about us: Big Brother is watching you. However, if you think about it, it has already happened. The most visible parts are the ads that are popping up when you visit a website.
You probably have noticed when you have looked prior to that website to those specific shoes, they seem to pop up in an ad the next time. For marketing purposes it is very clear. However, when we look at other examples of big data usage, there are more examples that are less obvious. How about our GPS? You may find a setting in your iPhone allowing your phone to register your most visited locations. This gives information about where you are, at what time and perhaps reason to look into this. We have all probably heard before that as long as you are not doing anything strange, this won’t hurt. However, what happens when this data is being sold without your apparent permission? Does this include you stating that you have read the terms and conditions and allowing large companies to freely use data about your behavior on the device?
Ads will be accustomed to your location. Are you looking for new shoes and are you living in Rotterdam? Then perhaps that new store in Rotterdam could be suitable for you. That is the general idea, however nowadays more people are starting to use AdBlock. This of course is not being stimulated by companies and individuals whose business model revolves around advertisements. What happens when everybody starts using AdBlock. You will think: Hooray, no ads! On contrary, this will also impact the quality of your favorite daily newspaper or blog reads. Their incomes our based upon showing ads to you. When this stops because of systems such as AdBlock, perhaps one day your online news provider will stop giving free content: Goodbye free reads.
So, what about you. How do you feel about leaving a digital footprint? And companies using this data to target you?
Author: Nini Truong (343320)
A couple of weeks ago, the debate on the usage of ad-blockers intensified when Apple announced that it will permit them on its mobile devices. The impact of ad-blockers on journalism and the advertising industry is likely to be huge. This post explores if Blendle, a Dutch startup backed by The NY Times and Axel Springer, could be the answer publishers are desperately looking for.
Back in the days, journalists used printed media to share news and other content. The business model was simple: readers paid a fee per edition or period of time (subscription). When the internet emerged as a new medium through which content could be shared, a lot of publishers started to provide free content through an ad revenue business model. Instead of the readers, the advertisers became the ones who paid.
345299fw wrote an interesting blog post on the rise of ad-blockers and the effect this could have on companies with a business model that revolves around ad revenues. As pointed out by the author, $22bn of ad revenue is estimated to be lost due to ad blockers this year. There are a couple of ways publishers could respond to this trend.
One of the author’s predictions is an increase in places where you need to pay to access content. Indeed, many traditional publishers (those creating newspapers and magazines) have developed websites where you have to pay to read the full article. A problem for the consumer who wants to read articles from multiple websites, however, is that he/she has to create an account and buy credits or a subscription at every one of those websites. For those people, Blendle could be a solution.
Blendle German edition
Roughly 2 years ago, Dutch startup Blendle launched. Calling themselves the “iTunes of journalism”, Blendle operates a digital kiosk selling individual articles from almost all Dutch newspapers and magazines. This enables anyone to read and share articles from different newspapers and magazines, without having to pay for the entire editions. In September 2015, the company expanded to Germany.
The question is: could this be the solution to publishers’ decreasing revenues? Personally, I buy an article through Blendle only once a week, at most, but that’s because a lot of good content is (still) available for free. If the rise of ad-blockers indeed leads to a huge increase in places where you have to pay to access good content, I could decide to make use of Blendle more often. However, I do not think that all free content will disappear. Therefore, platforms such as Blendle will provide journalism with a nice stream of additional revenues, but I do not expect this to grow out into a stream as substantial as ad revenues.
345299fw (2015) Are you using an ad-blocker?, https://informationstrategyrsm.wordpress.com/2015/09/17/are-you-using-an-ad-blocker/
Cook, J. (2014) The New York Times and Axel Springer invest in a Dutch startup That Fixes The Worst Thing About Paywalls, http://uk.businessinsider.com/new-york-times-and-axel-springer-invest-in-dutch-startup-blendle-2014-10
Klopping, A. (2014) The first 30 days of the iTunes for newspapers,
View at Medium.com
Lichterman, J. (2015) The micropayment platform Blendle is expanding to Germany, http://www.niemanlab.org/2015/09/the-micropayment-platform-blendle-is-expanding-to-germany/
I am always very interested in new business strategies and last year I came across the term: a smart business network. I have decided to dedicate a blog post to this, as I think that we, as information management student, can really benefit from understanding this strategy.
The term of a business network has been presented in our IS lectures. An example was given of the airline industry, wherein airline companies work together, e.g. star alliance, and interconnect their operations and customers.
Companies like SAP and ARM, I believe, are examples of the network strategy that are easier to understand. Using their IT-enabled platforms on which network partners must interact these companies build their competitive advantage. ARM for example builds mobile phone chips, used as core systems that mobile phone companies customise to their own liking/requirements. Nowadays, approximately 60% of all smartphone use this ‘platform’. The same can be seen with SAP systems. SAP builds a community around itself, making the company the platform on which SAP users and developers interact. This allows both companies to truly focus on and understand customers needs because they gain access to all the information of customers, developers, communities and other users that flows into them as the core network player, hence, the network platform.
The benefits of this type of strategy is for a large part due to the information that flows on the platform, that the companies (in my example SAP and ARM) that own the platform control. The more network partners they have, the better access they have to all sorts of information, making them able to anticipate market changes and direction.
In my opinion, these kinds of IT-enabled strategies show great promise for many industries in the future. When engaging in a network strategy, the one most profitable will be the one in possession of the platform other network players use or when the company is the focal company through which all the information flows. These positions will provide the greatest ‘visibility’ within the network due to all its linkages, thereby gaining more access to information of market trends, technologies, customer requirements and other useful information.
An interesting read by van Heck and Vervest (2007) is about how the network wins. They argue companies must be ‘smart’ in their network by rapidly changing and expanding their networks that span multiple industries and parts of the value chain. A true smart network enabled companies to quickly connect and disconnect (Koppius & van de Laak, 2009), meaning that companies can quickly perform transactions/goals with partners, but can also quickly respond to new requirements and disconnect from these transactions. Another key feature is that companies on the network must be able to interoperate; meaning that they must be able to be ‘plugged’. Elements and companies can then be mixed and matched in the network in a modular fashion. It is then the capabilities of different companies that are matched in the network in response to market needs/demand.
A good example of modularity in a value chain is Li and Fung. This company has been mentioned in our lectures before. To refresh your mind: Li and Fung is a Hong Kong based company that splits up its entire value chain. Each part is then optimized in relation to other parts of the value chain to build the most efficient chain for the product they are making. In other words, Li and Fung are utilizing their entire network to make sure they can deliver the best products at the best price. The reason why they can do this is because they have great network visibility (Liere & Koppius, 2007; included in van Heck & Vervest, 2007). With great network visibility they ensure they have a large amount of information on how to organize these value chains, while also actually being able to connect to the companies involved. After the process is finished, Li and Fung disconnects from these partners.
As I was working on the technology of the week assignment, I noticed we again talked about two companies that make use of this strategy: Blendle and Flipboard. Both present themselves as IT-enbaled platforms and make full use of communication systems and the information provided by its users/network partners. It can be stated that every company nowadays is somehow involved in a network. Yet most articles tend to focus on the focal company that receives all the information as they force information to flow through them. This would be the ideal position in that sense in any network.
Would you agree with me that this type of IT-enabled strategies is growing? I definitely do. I see the company responding too late to this development as being left behind as they will increasingly take a less favourable network position. Feel free to discuss your ideas and applications of network below!
Heck, E. V., & Vervest, P. (2007). Smart business networks: how the network wins. Communications of the ACM, 50(6), 28-37.
Koppius, O. R., & van de Laak, A. J. (2009). The quick-connect capability and its antecedents. In The Network Experience (pp. 267-284). Springer Berlin Heidelberg.
Vervest, P., Van Heck, E., Preiss, K., & Pau, L. F. (2005). Smart business networks. Berlin.
Welcome to the adult world. We love sex. And therefore, we love porn. Although reliable public statistics are difficult to find, porn is estimated to be a $97 billion dollar industry (NBCNews 2015). According to The Guardian (The Guardian 2013), traffic on adult sites easily surpasses traffic on social media- or shopping sites in the UK. And at the same time, Mindgeek, exploiter of amongst others PornHub, claims to attract over 100 million visitors a day who consume over 1.5 terabyte per second (The Economist 2015). According to above, one can easily state that the porn industry is still booming. But what makes the porn industry as successful as it is? From an information technology perspective; nerves of steel.
Before the rise of the Internet, porn used to be exclusive. Amongst others, regulations and taboos ensured that porn was not easily available, which drove the price of porn up. When the Internet got widely available, many traditional industries faced a massive challenge – yet the professional porn industry, contrary to many other industries, quickly picked up the opportunities presented by the Internet to enhance and enrich their business model. The porn industry proved to be extremely technology-driven; according to CNN, many nowadays widely-used online technologies, such as credit-card verification and streaming video, can all “be traced back to innovations designed to share, and sell, adult content” (CNN 2010). Business Insider even states that “the concept of e-commerce (…) owes much of its early existence to porn” (Business Insider 2013). And not only did the porn industry experiment with different types of technologies; several online sales methods can be traced back to the adult industry as well.
On the other hand, the Internet has posed challenges to the professional porn industry, mainly in the form of porn tubes. A massive surge in availability of amateur porn partly contributed to the shift of porn from a speciality good to a commodity good, hence significantly lowering the price of porn. Although professional porn producers have found ways to strategically use tubes to draw customers to their sites, this industry still suffers from lower profits than before.
The porn industry tries to restore its profits by, again, embracing technological innovations and models. PornHub recently announced a crowdfunding initiative for a porn movie (shot in space); an add-free Netflix-like streaming service has been introduced; and options as Virtual Reality and robotics are currently heavily explored.
We all love sex. How do you think that the porn industry should modify its business model through information technology, in order for it to increase profits? What is the future of the porn industry?
Business Insider 2013, Porn: The hidden engine that drives innovation in tech [online]. Available at: http://www.businessinsider.com/how-porn-drives-innovation-in-tech-2013-7?IR=T [Accessed 1 October 2015].
CNN 2010, In the tech world, porn quietly leads the way [online]. Available at: http://edition.cnn.com/2010/TECH/04/23/porn.technology/ [Accessed 1 October 2015].
NBC News 2015, Things are looking up in America’s porn industry [online]. Available at:
www.nbcnews.com/business/business-news/things-are-looking-americas-porn-industry-n289431 [Accessed 1 October 2015].
The Economist 2015, Naked capitalism [online]. Available at: http://www.economist.com/news/international/21666114-internet-blew-porn-industrys-business-model-apart-its-response-holds-lessons [Accessed 1 October 2015].
The Guardian 2013, Porn sites get more internet traffic in UK than social networks or shopping [online]. Available at: http://www.theguardian.com/technology/2013/jul/26/porn-sites-internet-traffic-uk [Accessed 1 October 2015].