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The Challenge of Digital Transformation: Karim R. Lakhani - Harvard Business School

This document discusses how digital transformation is impacting businesses. It provides examples of companies like AT&T, Blackberry, Nokia, and Domino's that failed to adapt to digital changes and new technologies. The rise of smartphones and the iPhone in particular disrupted many industries by proving assumptions about products, business models, and technologies wrong. Digital transformation is turning every company into a software and services company and fundamentally changing business models, organizations, and ecosystems. Executing successful digital transformation requires new capabilities like data analytics, software development, and strategies like shifting to services, developing platforms, and cultivating new talent.

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Amitabh Anand
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199 views19 pages

The Challenge of Digital Transformation: Karim R. Lakhani - Harvard Business School

This document discusses how digital transformation is impacting businesses. It provides examples of companies like AT&T, Blackberry, Nokia, and Domino's that failed to adapt to digital changes and new technologies. The rise of smartphones and the iPhone in particular disrupted many industries by proving assumptions about products, business models, and technologies wrong. Digital transformation is turning every company into a software and services company and fundamentally changing business models, organizations, and ecosystems. Executing successful digital transformation requires new capabilities like data analytics, software development, and strategies like shifting to services, developing platforms, and cultivating new talent.

Uploaded by

Amitabh Anand
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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1

The Challenge of Digital Transformation


Karim R. Lakhani | Harvard Business School
Most Technological
Predictions Are
Wrong
In 1982 - AT&T asked McKinsey to
forecast US cell phone market in year
2000
McKinsey noted:
Heavy handsets
Low battery power
Patchy coverage
Exorbitant prices per minute
Forecasted 900,000 subscribers by 2000
Delayed serious entry into market by
AT&T for several years
3

By 1992 - AT&T Had It Figured


Out?
What
Happened?
All key innovations were forecasted by
AT&T
Core assumption was that AT&T would
deliver both devices and services
Major business model impediment of
providing “pipes”
Major missed opportunities
Yet - $127B in revenue & $7.2B in
profits in 2012
5

RIP Blackberry & Nokia


6
Rigid Assumptions About Product and
Business Model Killed Blackberry
Keyboard —> Touch
Small (black & white screens) —> Large Color
GPRS —> 3G to LTE
Conserve Bandwidth —> Bandwidth is Free
Limited Web —> Full Web Experience
Business —> Consumer
Data Center —> Cloud/Apps
Channel Love —> Channel Tension
Revenue Sharing —> Subsidy/Data Plan
“The iPhone did many amazing things, but what stands out in my mind was how
it proved that these assumptions were flat-out wrong beyond any reasonable
doubt. Apple pretty much gave everyone the finger and said, "Fuck you guys we
can build your distant impossible future today."
All the
Technology
Replaced
by the
iPhone
8

Is a Pizza Company a Tech


Firm?
9
Domino’s Invests in Massively in
Digital Technologies to Re-invent
Firm
IT is the largest department in the company
“Ordering pizza is Domino's entire business. What we saw
then and continue to see now, is consumers prefer digital
ordering over any other type. "It’s got better repeat, higher
spending, customer satisfaction is higher, they order new
products at a two-to-one ratio, and then there’s all the data to
learn from.”
New technologies improve same store sales by 14%
$2B in digital sales (35% mobile)
10

The Future of Pizzas?


11

Digital Communities Drive Creative Destruction in


Advertising
12

Impacting the Auto Industry


Signs of a Deep
Transformation
“My own theory is that we are in the middle
of a dramatic and broad technological and
economic shift in which software
companies are poised to take over large
swathes of the economy.

More and more major businesses and


industries are being run on software and
delivered as online services—from movies
to agriculture to national defense.”

-Marc Andreessen (2013)


14

More Than Four Decades of


Investment
15

More and More Digital Devices


16

Declining Computation Costs


17

Leading to an Explosion in Digitized


Information
18
Digital Transformation is Making Every
Company into a Software and Services
Company
Digital transformation re-architects transactions and processes…
Digitizing process components
Distributing transactions more easily
Connecting with other businesses, forming large digital networks,
accumulating and communicating lots of data
Generating opportunities for powerful analytics

… ultimately transforming business models, organizations, cultures


and ecosystems
19

New Capabilities & Strategies


Needed To Execute Digital
Transformation
New Strategies
New Capabilities
Shift from products to
Data gathering and
services + products
management
Cultivating platforms &
Advanced analytics
ecosystems
Realtime monitoring and
Developing new revenue &
control
business models
Software development
Talent and new business
excellence
incubation

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