Digital Disciplines
Description
How does Information Technology enable competitive advantage? Digital Disciplines details four strategies that exploit today's digital technologies to create unparalleled customer value. Using non-technical language, this book describes the blueprints that any company, large or small, can use to gain or retain market leadership, based on insights derived from examining modern digital giants such as Amazon, Netflix, and Uber, established firms such as Burberry, GE, Nike, and Procter & Gamble, and lesser-known innovators such as Alvio, Fruition Sciences, Opower, and Quirky.
Companies can develop a competitive edge through four digital disciplines--information excellence, solution leadership, collective intimacy, and accelerated innovation--that exploit cloud computing, big data and analytics, mobile and wireline networks, social media, and the Internet of Things. These four disciplines extend and update the value disciplines of operational excellence, product leadership, and customer intimacy originally defined by Michael Treacy and Fred Wiersema in their bestselling business classic The Discipline of Market Leaders.
* Operational excellence must now be complemented by information excellence--leveraging automation, information, analytics, and sophisticated algorithms to make processes faster, better, and more cost-effective, seamlessly fuse digital and physical worlds, and generate new revenue through techniques such as exhaust data monetization
* Product leadership must be extended to solution leadership--smart digital products and services ranging from wind turbines and wearables to connected healthcare, linked to each other, cloud services, social networks, and partner ecosystems, focused on customer outcomes and creating experiences and transformations
* Customer intimacy is evolving to collective intimacy--as face-to-face relationships not only go online, but are collectively analyzed to provide individually targeted recommendations and personalized services ranging from books and movies to patient-specific therapies
* Traditional innovation is no longer enough--accelerated innovation goes beyond open innovation to exploit crowdsourcing, idea markets, innovation networks, challenges, and contest economics to dramatically improve processes, products, and relationships
This book provides a strategy framework, empirical data, case studies, deep insights, and pragmatic steps for any enterprise to follow and attain market leadership in today's digital era. It addresses improved execution through techniques such as gamification, and pitfalls to beware, including cybersecurity, privacy, and unintended consequences.
Digital Disciplines can be exploited by existing firms or start-ups to disrupt established ways of doing business through innovative, digitally enabled value propositions to win in competitive markets in today's digital era.
All prices
More details
Other editions
Additional editions
Persons
Content
FOREWORD xvii
PREFACE xix
ACKNOWLEDGMENTS xxiii
PART ONE-Overview and Background
CHAPTER 1 Digital Disciplines, Strategic Supremacy 3
From Value Disciplines to Digital Disciplines 4
Information Excellence 7
Solution Leadership 8
Collective Intimacy 9
Accelerated Innovation 10
Exponential Value Creation 11
The Leadership Agenda 13
Information Technology in Context 15
Notes 17
CHAPTER 2 Value Disciplines and Related Frameworks 21
Value Disciplines 22
Operational Excellence 23
Product Leadership 24
Customer Intimacy 25
Importance of Focus 26
The Unbundled Corporation 27
Business Model Generation 30
Michael Porter and Competitive Advantage 31
Blue Ocean Strategy 33
Innovation: The "Fourth" Value Discipline 34
Notes 36
CHAPTER 3 Digital Disciplines 39
Information Excellence 40
Solution Leadership 42
Collective Intimacy 43
Accelerated Innovation 45
All of the Above? 47
Notes 49
CHAPTER 4 Digital Technologies 51
The Cloud 52
Big Data 54
Mobile 57
The Internet of Things 59
Social 60
Notes 61
PART TWO-Information Excellence
CHAPTER 5 Operations and Information 65
Processes 66
Process Advantage 67
Process Optimization 72
Asset Optimization 74
Business Value of Information 76
The Role of Information Technology 78
Caveats 79
Notes 80
CHAPTER 6 The Discipline of Information Excellence 83
From People to Machines 85
From Physical to Virtual 87
From Virtual to Digical 88
From Processes to Experiences 89
From Operations to Improvement 90
From Static Design to Dynamic Optimization 91
From Mass Production to Mass Personalization 92
From Cost Reduction to Revenue Generation 92
From Direct to Indirect Monetization 93
From Touchpoints to Integration 94
From Firms to Networks 95
From Data to Actionable Insight 97
From Answers to Exploration 98
Notes 99
CHAPTER 7 Burberry-Weaving IT into the Fabric of the Company 103
Operational Excellence and Product Leadership 105
From Operational Excellence to Information Excellence 105
From Physical to Virtual 106
From Virtual to Digical 107
From Processes to Experiences 109
From Mass Production to Mass Personalization 110
From Cost Reduction to Revenue Generation 111
From Touchpoints to Integration 112
From Firms to Networks 113
Notes 114
PART THREE-Solution Leadership
CHAPTER 8 Products, Services, and Solutions 119
Competitive Strategy 120
Product Elements 121
The Experience Economy 125
Pricing and Business Models 126
Notes 129
CHAPTER 9 The Discipline of Solution Leadership 131
From Products and Services to Solutions 135
From Generic and Expected to Augmented and Potential 136
From Transactions to Relationships 138
From Sales Results to Customer Outcomes 139
From Standard Products to Custom Solutions 142
From Products and Services to Experiences and Transformations 143
From Standalone to Social 144
From Product to Platform 145
From Engineered to Ecosystem 146
Notes 148
CHAPTER 10 Nike-A Track Record of Success 151
From Products to Solutions 153
From Generic and Expected to Augmented and Potential 154
From Transactions to Relationships 155
From Sales Results to Customer Outcomes 155
From Standard Products to Custom Solutions 156
From Products to Experiences and Transformations 156
From Standalone to Social 158
From Engineered to Ecosystem 158
Nike and the Other Digital Disciplines 159
Notes 163
PART FOUR-Collective Intimacy
CHAPTER 11 Customer Experience and Relationships 167
Customer Intimacy 171
A Broad Spectrum of Relationships 173
Dimensions of Interaction 174
Collaborative and Content Filtering 176
Notes 178
CHAPTER 12 The Discipline of Collective Intimacy 181
From Transactions to Relationships 182
From Relationships to Intimacy 184
From Physical to Virtual 185
From Virtual to Digical 187
From Company to Community 188
From People to Algorithms 188
From Individual to Collective 191
Notes 194
CHAPTER 13 Netflix-Entertaining Disruption 197
Information Excellence 199
Accelerated Innovation 200
Solution Leadership 201
From Relationships to Intimacy 202
From Physical to Virtual 203
From Virtual to Digical 204
From Company to Community 205
From People to Algorithms 205
From Individual to Collective 207
Notes 209
PART FIVE-Accelerated Innovation
CHAPTER 14 Innovation and Transformation 213
Successful Commercial Innovation 215
The Innovation Process 219
Innovation Principles 221
Innovation of Products, Processes, Relationships, and Innovation 225
Business Model Innovation and Corporate Transformation 227
Notes 230
CHAPTER 15 The Discipline of Accelerated Innovation 233
From Solitary to Collaborative 235
From Internal to External 237
From Closed to Open 239
From Inside-Out to Outside-In 241
From Products to Platforms 242
From Linear to Agile 243
From Employees to Crowds 245
From Salaries to Prizes 247
From Theoretical to Data-Driven 248
From Human to Machine 250
From Incremental to Transformational 251
Notes 252
CHAPTER 16 Procter & Gamble Cleans Up 255
From Solitary to Collaborative 257
From Internal to External 258
From Closed to Open 260
From Inside-Out to Outside-In 262
From Employees to Crowds 263
From Incremental to Transformational 264
Notes 265
PART SIX-Successful Execution
CHAPTER 17 General Electric-Flying High 269
Digital Disciplines at GE 271
Software at GE 273
Information Excellence 274
Solution Leadership 276
Collective Intimacy 277
Accelerated Innovation 279
Notes 281
CHAPTER 18 Human Behavior and Gamification 283
Human Behavior 285
Gamification 289
Gamifying Information Excellence 290
Gamifying Solution Leadership 291
Gamifying Collective Intimacy 292
Gamifying Accelerated Innovation 293
Gamification across Disciplines 294
Notes 295
CHAPTER 19 Opower-The Power of the Human Mind 299
Human Behavior and Energy Consumption 301
Opower, Information, and Intimacy 303
Notes 305
CHAPTER 20 Digital Disasters 307
Strategic Errors 308
Cyberattacks 310
Software Design and Development Challenges 312
Operational Issues 314
Unintended Consequences 315
Erratic Algorithms 316
Politics and Pushback 319
Digital Disappointments 319
Notes 323
PART SEVEN-What's Next?
CHAPTER 21 Looking Forward 329
The Exponential Economy 329
Future Technologies 333
Opportunities 336
Critical Success Factors 337
Next Steps 340
Notes 342
ABOUT THE AUTHOR 345
INDEX 347
Preface
In 1993, two management consultants named Michael Treacy and Fred Wiersema wrote a popular Harvard Business Review article titled "Customer Intimacy and Other Value Disciplines." They further detailed their insights in the best-selling The Discipline of Market Leaders. Based on a multiyear study of dozens of companies, they argued that to be successful, firms needed to create unique value for customers through operational excellence, product leadership, or customer intimacy.
Operational excellence focuses on developing differentiated processes, for example, those that offer lower prices or greater convenience. For example, Dell had rethought the PC business, replacing store-based channels that pushed standard make-to-stock configurations with a direct-to-consumer model for assemble-to-order products, increasing convenience while lowering price-points.
Product leadership involves leading-edge products and services. Treacy and Wiersema highlighted Johnson & Johnson's Vistakon unit, which rapidly acquired the rights to and scaled up production of an innovative disposable contact lens technology branded Acuvue.
Customer intimacy entails better relationships, driven by a deep understanding of customer problems and a willingness to solve them, enabled by flexible processes, systems, people, and culture. Treacy and Wiersema pointed out that Home Depot clerks are happy to spend whatever time a customer needs to solve a home repair problem; the same for IBM sales teams.
The insights of the value disciplines approach are as true today as they were then, but the implementation details have changed-significantly. Treacy and Wiersema were well aware of the opportunities inherent in information technology, highlighting, for example, how General Electric used a system called "Direct Connect" to enable independent dealers to utilize a stockless distribution model and sell from virtual inventory, simultaneously giving GE better visibility into customer orders, dealers higher profits, and customers better service.
However, the IT of that era largely involved enterprise systems. The web was in its infancy and mobile data was nonexistent. Now we live in an era where even three-year-olds play with smartphones and tablets more powerful than the mightiest supercomputers of those bygone times. Today, the Internet permeates our lives, with massive bandwidth increases enabling new services, such as home movie streaming and mobile social networking. Sensors can detect heartbeats and tremors, GPS can track vehicles, the cloud can apply sophisticated algorithms against enormous sets of not just numerical data, but videos, speech, and images.
This book attempts to answer a simple question: How should the Treacy and Wiersema value disciplines framework be updated for this new world of cloud computing, big data and analytics, social networks, broadband wireless and wireline connections, and smart, connected things ranging from thermostats to jet planes? In other words, how do digital technologies impact value disciplines to become digital disciplines?
Simply put: Everything stays the same, yet everything changes.
Better processes can still drive a competitive edge, but mere (physical) operational excellence is no longer sufficient. It must be enabled, complemented, and extended through information excellence, including real-time dynamic optimization algorithms and the seamless fusion of physical and virtual worlds.
Better products and services are still desirable, but it is no longer sufficient to improve a standalone product. Today, products are not just digital and smart but connect to back-end cloud services, and from there onward to social networks and infinitely extensible ecosystems. The same goes for the physical embodiment of services-for example, healthcare services increasingly involve pills, pacemakers, and equipment connected to patient data repositories, diagnostic systems, and hospital asset management systems.
Better customer relationships are no longer just about caring, empathetic customer service employees or dedicated account teams willing to spend time on the golf course to get to know the customer. They are also about better meeting each individual customer's needs, by deriving subtle insights based on big data from all customers collectively. Examples include upsell /cross-sell in retail, more targeted recommendations in entertainment, and personalized medicine.
Finally, in today's hypercompetitive world, innovation is a critical imperative: delivering higher-quality results, faster, and more cost-effectively. Innovation encompasses not just products and services but also processes and relationships, and can benefit from new cloud-enabled constructs such as idea markets and challenges, which extend the innovation team beyond the company to the entire world.
After researching dozens of firms, the successful ones all seem to have exploited one or more of these themes; the fallen ones have largely failed to do so. Amazon.com versus Borders, Netflix versus Blockbuster, Wikipedia versus Encyclopedia Brittanica, WhatsApp versus telco-based texting, and dozens of other cautionary tales offer object lessons in harnessing information technology to disrupt and reimagine industries and outmaneuver competitors, or be overtaken by those who can.
This book offers what I hope will be valuable insights to boards and senior executives such as CEOs, CIOs, CDOs, CFOs, and CMOs (chief executive, information, innovation, digital, financial, and marketing officers), middle management, and line personnel in and outside of information technology. It is a book squarely at the intersection of business and technology, yet largely nontechnical. In a world where virtually all consumers are digital natives or digital immigrants, IT is no longer the province of the glass-house datacenter but an important weapon that virtually any enterprise-in business or government-must wield to be successful.
An implicit theme of the book is that winners win, not just due to random luck, but due to repeatable, structured principles. These principles align with and complement each other. For example, a focus on customer outcomes requires a continuous relationship with the customer, one that is hard to achieve with a standalone product, but one that can be enabled through a connected solution.
The book is structured to be readable from cover to cover, yet each chapter is also self-contained. As a by-product, this necessitates a bit of repetition. The book provides an introduction to some key technologies for those who are more business oriented, and an introduction to some key business strategy concepts for those who are more technology oriented.
The first few chapters provide an overview of the key insights in the book, background on Treacy and Wiersema's value disciplines framework and related strategy models, a more detailed overview of the digital disciplines, and an overview of the five key technologies-cloud, data, social, networks, and things-which, together, are the enabling platform for this new wave of competitive strategies.
Following the introductory and overview matter, there are four main sections, one to address each of the four digital disciplines: information excellence, solution leadership, collective intimacy, and accelerated innovation. Each section has three chapters: an introduction or refresher on essential background ideas such as Porter's Five Forces model or the elements of innovation, the key themes and trends defining the discipline, and a specific case study. Case studies for Burberry, Nike, Netflix, Procter & Gamble, and General Electric provide real examples of how companies are applying the disciplines.
Because successful execution and customer adoption happen largely through people, two chapters focus on human behavior and gamification; one addresses general principles, the other provides a case study on Opower, a company that is heavily leveraging principles of human motivation in conjunction with information technology to simultaneously achieve customer, business, and societal objectives.
Finally, as with any initiative, there can be challenges and caveats in successful implementation. These range from strategic alignment and project management to concerns over privacy and security.
Technology marches forward. Twitter, Facebook, Instagram, WhatsApp, Snapchat, iPads, iPhones, and many of the other elements of the modern digital age didn't exist a few years ago, and change is speeding up, not slowing down. The last chapter addresses technologies on the horizon, and offers thoughts on how to apply the book's insights.
I have attempted to capture the intent of what Treacy and Wiersema eloquently and insightfully articulated, but it's hard to interpret one's own thoughts two decades later, much less someone else's. Any errors or misinterpretations are, of course, my fault.
It is a standing curse on books like these that companies that are held up as paragons can succumb to market turbulence, which has done nothing but increase, in no small part due to information technologies. In fact, during the time it took to write this book, the companies highlighted have adjusted strategies, divested brands, made acquisitions, discontinued products and initiatives, and faced new global competitors. However, the case studies represent a point-in-time snapshot of the issues, approaches, and successes of real companies facing turbulent markets, applying the strategies herein.
A number of books covering...
