CHAPTER 3

Business models in digital ecosystems

Learning Outcomes
Analyse new business models in digital ecosystems:

Disruption
Determine the strategies businesses can use to survive digital disruption and build disruptive and resilient
business models.
Ways to build disruption and resilient business models
Analyse strategies to build disruptive business models using the build, buy, partner, invest, and
incubate/accelerate models.
Creating digital operating models.
Analyse strategies to create digital operating models.
Types of digital operating models.
Analyse the steps to build a digital workforce including attract and retain talent, become an employer of
choice, create a workforce with digital skills, bring leadership into the digital age, foster a digital culture, create
environments where humans and robots can work together, integrate on-demand workforce.

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Disruptive technology
Disruptive Technology

Digital disruption describes the change that happens when new digital
technologies, services, capabilities, and business models affect and change the
value of the industry's existing services and goods

Disruptive technology relates to where technology is used to fundamentally

change and disrupt the existing business model in an industry.

Data Internet of
AI 3D printing Mobile tech Robots Drones
analytics Things
•Car industry •Healthcare •Taxi and car •Energy •Lifestyle and •Oil – drilling •Logistics –
– semi- – rentals companies home and Amazon
autonomous personalised (Uber) increased products – exploration plans to
vehicles hearing output from Google Nest costs deliver using
aids, wind farms and expected to drones
personal partners can fall by 20%
prosthetics, deliver due to
dental connected automation
crowns and houses
surgical
implants

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 Surviving digital disruption

Key trends (Accenture Technology Vision 2015)

To survive digital disruption, management should focus on five emerging trends shaping the digital
landscape

The internet The

of Me(user Platform workforce
at centre) (r)evolution reimagined

The
Outcome
intelligent
economy
enterprise
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The roles and responsibilities of the board and senior leadership

Inspirational Establishing a
Competitive
strategic
leadership edge
direction

Influence
external Collaboration
parties

Business Use of the

Building talent
model technologies

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Strategies to Build Disruptive Business Models
Digital Business Model

KPMG Business model description:

o How the firm is structured

o The markets in which it operates
o How it engages with those markets
o Its main products and services
+ Technology
o Its main categories of customers
o Its main distribution methods

Disruptive technology relates to where

technology is used to fundamentally change and
disrupt the existing business model in an industry

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Strategies to Build disruptive business models
Digital enterprises
o Strive continuously to enable new and leaner operating models underpinned by agile business
processes, connected platforms, analytics and collaboration capabilities that enhance the
productivity of the firm.
o A digital enterprise searches out, identifies and develops new digital business models, always
ensuring that customers and employees are at the center of whatever it does.

Areas that many companies will need to reassess and reform if they are to become digital enterprises:
1. Digital business models (what companies need to do);
2. Digital operating models (how they can do it);
3. and Digital talent and skills (who they need to work with to succeed).

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Methodologies to develop new Business Models

Forms business models by

challenging existing industry logic
Scenario- and company cliché.
Mirrored
based Unorthodox
Creates future design Based on the finding
business models in
response
design design that 90% of new
business models are
to disruptive not actually new, this
industry trend
Epicenter Customer creatively imitates
business model

driven -center patterns from other

industries

design design
Uses strengths and Builds business models
weaknesses of the through
existing business customers’ eyes based
model to on the question: Does
generate ideas. this solve their problems

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Strategies to build disruptive business models
Digital business
models (what
companies

Leadership
need to do)

Culture
Digital talent
Digital
and skills
operating
(who they
models (how
need to
they can do
work with to
it)
succeed).

Companies need to fundamentally change:

(1) Identify (2) Develop (3) Launch

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Digital Transformation Strategies

Incubate /
Build Buy Partner Invest
accelerate

Building a new Buying another Partnering with a Investing in Investing but closer
business model company digital disruptor interesting startups relationship

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 Digital Transformation Strategies

Incubate /
Build Buy Partner Invest
accelerate

o When opportunity o When there's strategic o To learn about the o Valid option to allow o Similar to
imperative to own the market and digital a well-established
is related to investment but
market and may be disruptor’s business company to connect
company's core model and develop and represent a closer
the only viable option with the right skills
business deploy digital solutions. relationship to the
when: and capabilities
o Maximises control a. a significant market
o Learn about the
aligned with their funding company,
emergent opportunities deploying
and minimizes change is imminent.
with an eye for deeper
digital transformation
costs in the market b. Hiring the right talent partnerships or
objectives. corporate internal
o Can bring is not possible. acquisition future o Avoids hindering capabilities,
creativity and c. The new opportunity o Important role in digital entrepreneurial infrastructure and
bears little relation to transformation- forces with a setup resources to the
develop new the firm's current focused on internal
companies must be
products or business model. players and flexible and governance and
start up
services open to partnerships reporting.
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Digital Operating Models
“HOW they can do it’
Digital Operating Models

Strategy
Digital Digital
Business Operating Digital Skills
Model Model

The successful adoption of new technology and integrating it into a

company’s operations and value chain has considerable potential to
bring about efficiencies.

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Digital Operating Models

Combination

Customer Data- Open

centric powered and liquid

Extra-
Skynet
frugal

Technology, data, processes, partners, employees, customers

(World Economic Forum – Digital Transformation Initiative)

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Digital talent and skills
Leadership and Culture

The World Economic Forum project on the Digital Transformation of Industries(DTI) proposed a 7-step
process to build a “digital workforce”

Attract and retain talent

Become an employer of choice for millennials

Create a workforce with digital skills

Bring leadership into the digital age

Integrate on your demand workforce

Create environments where humans and robots can work successfully together

Foster a digital culture in the enterprise

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Culture
Efforts to disrupt will also need to be underpinned by a culture that is
open to innovation.
Culture: the shared set of beliefs, values and mind-sets that guide a group’s behaviours. The
way we do things round here Attracting and retaining talent
What factors distinguish a in the digital age
digital culture from others?
o Having a strong mission Two key trends
statement and a clear o Greater transparency about
sense of purpose opportunities and more ‘inside-
o Lean business structures, information’
with small, cross- o Greater competition for digital
functional teams as talent
opposed to individual
divisions working as Responses
separate siloes o Foster a culture of transparency
o A diverse workforce with rather than resisting it
good digital skills. o Take note of what staff are
saying
o Introduce a referral programme
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 Fostering a digital culture
Key areas for leaders to focus on

COMMUNICATION JOURNEY MAKE VISIBLE CONTINUOUS

MANAGEMENT CHANGES CHANGE
MONITORING

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