1. The document discusses strategic lessons that can be learned from studying "digital titans" like software and platform companies. 2. Some key lessons include embracing digital customers and using data from digital replicas of products, managing ecosystems around product consumption, and implementing dynamic decision architectures. 3. The digital titans have also mastered approaches like experimenting with APIs, delivering services using a "everything as a service" model, and operating as platforms at the center of interconnected ecosystems.

1. Digital Strategy: Learning
from the Digital Titans
Prof. Bala Iyer
@BalaIyer
November 30, 2017

2. Changing of the Guard
• Most theories and concepts taught today come from studying companies in the
auto industry
• Entering the age of digital titans
• Many of their strategic decisions contradict what we know
• We have closely observed their moves for the last several years and
summarized them into a compact set of strategic moves

3. Software is eating the world
• .. 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 [Andreessen]
• Every company is a software company - ecosystem
• Software + Sensors + Connectivity  Transformation

5. Data Explosion!
• Every day, we create 2.5 quintillion bytes of
data — so much that 90% of the data in
the world today has been created in the last
two years alone.
• Trapped treasure trove

6. Digital Strategy
• Is an action plan that uses ecosystems, technology and information to
augment organizational/individual performance to achieve business goals.
• Delivering smart, adaptable and personalized products and services using
digital technologies
• Create novel, personalized digital experiences

7. Platforms are dominating

8. LINEAR PIPE VS. TRIANGULAR PLATFORM
Elements of value exchange
Source Content Edit/ Curate Create Bundles Multiple channels
RAW
MAT’LS PRODUCTION ASSEMBLY DISTRIBUTION
CONSUMERSPRODUCERS
PLATFORM
2016 Parker & Van Alstyne, with Choudary – licensed under Creative
Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).

9. Here come the Digital Titans
• Multi-billion dollar companies operating as
platform-based business models (5 out of top 6)
• Have mastered the art and science of managing
the digital technologies
• Mastered the data asset and taken it into different
domains
• Multi-purpose platforms with wide applicability

10. Incumbents in every industry feel the threat

11. Digital Titans are Commoditizing the
incumbents
Hardware
Software
Services
User
Conversational Commerce

12. What have the Digital Titans taught us?
1. Embrace the Digital Customer
2. Create digital replicas
3. Track consumption ecosystem
4. Learn from Agile experiments with APIs
5. Use digital engines
6. Implement dynamic decision architectures
7. Orchestrate an ecosystem
8. XaaS

13. 1. Who is a digital customer?
• A digital customer is one who consumes smart products, or products that
have in-built sensors, information processing and connectivity capabilities. In
doing so, the digital customer generates information upon product use, and
enables third party access to that information [HBR, 2014].
• When effectively served, these digital customers add to novel informational
assets with regard to how products are consumed or used.
• Data can be used to make better products

14. 2. What is a digital replica?
• Digital representation of physical assets owned by a company along with its
current state. The current state and environmental information is provided
by sensors that are embedded on the physical assets.
• Digital replicas allow companies to provide real-time monitoring, predictive
maintenance and other outcome based services.
• The digital thread provides the connection logic between the conceptual
design, production scheme and the actual usage of a product or service.

15. 3. Manage position in the Consumption Ecosystem
• Consist of interdependencies that evolve
after a product is sold or a service is offered,
and as it is being used or consumed.
• When using a product, consumers connect a
product with other products and services to
deliver unique value that meets their needs.
Such inter-connectivity is referred to as
consumption ecosystem
• User-driven innovation and APIs facilitate
such connections

16. 4. Learn from agile experiments (APIs)
• Innovation requires two things: the ability to try a lot of experiments, and
not having to live with the collateral damage of failed experiments.
• “Experiments are by their very nature prone to failure. But a few big
successes compensate for dozens and dozens of things that didn’t work.”
• “We have to take more risk…to try more crazy things…we should have a
higher cancel rate overall.”

17. 5. Use digital engines
• Cloud computing (AWS)
• AI-as-a-service
• Core assets-as-a-service
• Explainability
• Smart digital assistants
• Learning objects

18. 6. Implement dynamic decision architectures
Where do you place decision rights?
• When do you service a car?
• Determine best route?
• Where to stop for gas?
Centralized, decentralized or distributed
Products that learn and adapt while in-use

19. 7. Be Part of an Ecosystem
From resource control to resource orchestration
• Platform
• Integrator
• Component provider
• Orchestrator
Interlocking Ecosystems
Amazon in healthcare, entertainment, retail and infrastructure

20. 8. XaaS: Everything as a service
• The internet changed that, by allowing companies to wrap physical goods in
digital services that can be sold again and again, at much higher margins.
• Makers of thermostats, baby monitors and other household gadgets “extend
the value chain” by charging customers a monthly fee for information about
their home energy use or their babies’ sleep patterns.
• CAC, LTV, Churn vs. revenues, profits
November 9, 2017

21. Strategic Options in Digital Ecosystems

22. Major considerations
• Data Privacy
• Ethics of data use
• Security
• Bias in algorithms

24. What can you do?
• Learn from the titans
• Create own list of lessons
• Learn how to learn
• Create a digital identity
• Become a digital innovator
24
Become Digital Innovators