The main goal of this thesis is to thoroughly investigate what digital transformation is and which general success factors exist for businesses. It then collates in a concise way whether and to what extent selected German car manufacturers comply with
these success factors.
"Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road"“ - Stewart Brand
This metaphor skillfully illustrates what happens to businesses that do not take part in technological progression: they get obliterated. In addition, the cycle of new technologies is spinning faster and faster ever since, making it increasingly difficult for
companies to survive and flourish. As evidence for this situation the average longevity of businesses in the S&P 500 index can be adduced. While in 1964, in average, a business would stay 33 years in the index, the duration went down to 24 years
in 2016. It is estimated that this number will be cut in half by the year 2027.
The major force behind this in the recent past is the digital transformation. Just a few years ago it was common standard to rent a movie in a video rental store, buy books at the local book store and to take pictures with analogue cameras. Among
the most famous businesses in these markets were Blockbuster, Borders and Kodak. Nowadays, they are immaterial. The first two filed for bankruptcy and the latter is still trying to salvage itself. All of them share the same fate: they underestimated
the change that came with digital innovations. In their place digital champions now
reign: Netflix, Amazon and Samsung.
If a similar fate would befall the German automotive industry, it would be devastating for the whole economy as over 1.8 million jobs are directly or indirectly dependent on it. In fact, among the four highest grossing companies in Germany 2017
were three car manufacturers. The extreme significance of this industry is evident.
Table of content
List of illustrations
List of attachments
List of abbreviations
1 Introduction
1.1 Prelude
1.2 Structure of this paper
2 Definition of terms and concepts
2.1 Digital transformation
2.2 Success
2.3 Success factors
3 Success factors for digital transformation
3.1 Business purpose
3.1.1 Strategy
3.1.2 Business model
3.1.3 Finance
3.2 Customer focus
3.2.1 New markets
3.2.2 Data-driven satisfaction of customer needs
3.2.3 Open innovation
3.3 Information technology
3.3.1 Big data and advanced analytics
3.3.2 Artificial intelligence and deep learning
3.3.3 Digital twin
3.4 Organizational capacity
3.4.1 Human capital
3.4.2 Organization
3.4.3 Business culture
4 Digital transformation at German car manufacturers
4.1 Examined businesses
4.2 Current status of transformation process
4.2.1 Business purpose
4.2.2 Customer focus
4.2.3 Information technology
4.2.4 Organizational capacity
5 Conclusion
Attachments
List of references
List of illustrations
Figure 1: Balanced Scorecard - Strategy Map
Figure 2: Strategy by organizational level
Figure 3: Customer touchpoints during customer experience
Figure 4: Closed and open innovation
Figure 5: Subsets of artificial intelligence
Figure 6: Levels of Culture
List of attachments
Attachment 1: Differentiation of the strategy construct by organizational level
Attachment 2: The Business Model Canvas
List of abbreviations
Abbildung in dieser Leseprobe nicht enthalten
1 Introduction
1.1 Prelude
„O n c e a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road.“ 1
Stewart Brand
This metaphor skillfully illustrates what happens to businesses that do not take part in technological progression: they get obliterated. In addition, the cycle of new tech- nologies is spinning faster and faster ever since, making it increasingly difficult for companies to survive and flourish.2 As evidence for this situation the average lon- gevity of businesses in the S&P 500 index can be adduced. While in 1964, in aver- age, a business would stay 33 years in the index, the duration went down to 24 years in 2016. It is estimated that this number will be cut in half by the year 2027.3
The major force behind this in the recent past is the digital transformation. Just a few years ago it was common standard to rent a movie in a video rental store, buy books at the local book store and to take pictures with analogue cameras. Among the most famous businesses in these markets were Blockbuster, Borders and Kodak. Nowadays, they are immaterial. The first two filed for bankruptcy and the latter is still trying to salvage itself. All of them share the same fate: they underestimated the change that came with digital innovations. In their place digital champions now reign: Netflix, Amazon and Samsung.4
If a similar fate would befall the German automotive industry, it would be devas- tating for the whole economy as over 1.8 million jobs are directly or indirectly de- pendent on it. In fact, among the four highest grossing companies in Germany 2017 were three car manufacturers. The extreme significance of this industry is evident.5
The main goal of this thesis is to thoroughly investigate what digital transformation is and which general success factors exist for businesses. It then collates in a concise way whether and to what extent selected German car manufacturers comply with these success factors.
1.2 Structure of this paper
In the first instance it is important to generate an understanding for the substantial terminology used in this paper. Therefore, chapter 2 defines the terms digital trans- formation, success and success factors. In the subchapter for the latter, a methodol- ogy will be used to establish the categorization for the success factors shown in the following chapter.
Chapter 3 is the main chapter of this thesis and the most focus will be put on it, as it presents generally applicable success factors for digital transformations. To be able to do so, an extensive literature research has been conducted to present quali- tative results. It largely relies on expertise of management consulting companies and companies that are pioneers in digital transformation. However, to keep it con- cise, only the three most important success factors are stated within each category. Most commonly, the subchapters begin with a definition of the term, followed by use cases and examples. In the course of this paper it will be shown that it is almost impossible to verify individual success factors as just that. Therefore, all listed suc- cess factors shall be seen as hypotheses that could not be empirical proven. Their proof is an open research question that science needs to embrace.
As previously mentioned, chapter 4 briefly screens two prestigious German car manufacturers, BMW and Daimler, to what extent they comply with the success factors for digital transformation. The evaluation is based on business websites, re- ports and analysis. However, as some factors are hardly verifiable, the evaluation is of qualitative nature and just wants to give an impression of the status quo.
Lastly, chapter 5 summarizes the findings from previous chapters. It provides as- sessments about digital transformation, which aspects are most important to suc- cessfully undertake it and how the German car industry is performing.
2 Definition of terms and concepts
2.1 Digital transformation
As this paper revolves around digital transformation, a thorough understanding of this topic is key. Usually, a definition for a term helps to understand the meaning and concept of it. Unfortunately, to this date no consistent and holistic definition exists for digital transformation. This became obvious during the literature research, where different terms (digitalization, Industry 4.0, digital transformation, etc.) were used to name and describe the same topic. In the following paragraphs several def- initions from different sources will be revealed. This gives insight to the topic from different angles. At the end of this subchapter a summary will be given.
A very broad definition is given by the German Federal Ministry of Economics and Technology (Bundesministerium für Wirtschaft und Energie). It does not only fo- cus on transformation of businesses but sees an impact on politics, science and so- ciety as well. All players shall live the interconnection among each other. This should enable them to act smarter, by gathering and analyzing information.6
The World Economic Forum also points out the interaction of businesses and soci- eties in this case. Furthermore, they highlight the increasing significance of tech- nology itself. While in the past technology was often used to increase efficiency, it nowadays is a force for disruptions and innovations. That is a reason why business leaders have to incorporate this understanding into their long-term decision making. Consequently, this affects not only one company but inevitable whole industry eco- systems and supply chains.7
The scientists Jung and Kraft confirm the importance of digitally interconnected supply chains in their book. They describe the importance and possibilities of ex- change of data and information via the internet across company boundaries. Re- garding the value chain, they show the importance to include all parties: customers, employees and suppliers.8
Capgemini Consulting describes digital transformation as “the use of technology to radically improve performance or reach of enterprises”9. By relying on data analyt- ics and improvements of existing technologies they see ways to improve business models, internal processes, products, services and relationships with customers.10
For the leaders of Roland Berger Strategy Consultants (Bouée and Schaible) digital transformation is the universal interconnection of all economic players. Hence, all of them face the necessity to adapt to the new digital economy. In this process, exchange of data is fundamental according to Bouée and Schaible. Data becomes a key element to assess courses of action when it gets analyzed and computed. The gained knowledge then can be used to take action. In their eyes business models and value creation processes can not only be improved by relying on data, quite the contrary is the case: if they do not get adapted they might become obsolete.11
Dominic Mazzone, managing partner of the Canadian consulting company Smash- box, defines the term in a nutshell: “Digital Transformation is the deliberate and ongoing digital evolution of a company, business model, idea, process, or method- ology, both strategically and tactically”12.
Knowing that the presented definitions are just a few of many, it becomes obvious that digital transformation is a copious topic that is difficult to define in a short and complete manner. Nevertheless, the following summary attempts to do just that but makes no claim to being complete:
Digital transformation describes the interconnection between all economic players across all levels of economic ecosystems, supply chains and value chains.13 This interconnection relies on the usage of modern technologies and exchange of data.14
In turn, data becomes a key resource for businesses that needs to be analyzed and computed to gain knowledge out of it.15 Business leaders need to use that knowledge to weigh possible decisions and take actions.16 In that case they can profit from new opportunities, improve their performance and increase their reach.17 On the other hand, digital transformation is a potentially disruptive force that impacts all busi- nesses of all industries on an ongoing basis in their entirety: business model, eco- systems, products / services, internal processes and customer relationships.18
2.2 Success
Now that the term digital transformation has been defined, it is necessary to under- stand what success factors are. However, in this context it is utterly important to first understand what is meant by success in this case.
In its purest form the word success stands for “accomplishment of an aim or pur- pose”19 or “achieving […] results wanted or hoped for”20. It is evident that success can only occur when previously set goals have been achieved.
In a value-based business environment the goal is to increase the company value on a long-term basis. To do so, this goal gets further broken down into several other financial goals with different emphasis: liquidity, profitability, security, growth and independence. When goals are set, it is apparent that not all financial goals can be maximized at the same time (e.g. liquidity and profitability are contrary to each other). This involves the risk of conflict of interests.21
Between the shareholders, directors and management exist multi-level principal- agent relationships.22 Jensen and Meckling first described this kind of relationship “as a contract under which one or more persons (the principal(s)) engage another person (the agent) to perform some service on their behalf which involves delegat- ing some decision making authority to the agent”23. Furthermore, they argued that each party usually acts in its own favor. This again potentially rises conflicts of interest and shows that success can vary, depending on which party is assessing it. To prevent deviations, principals (stakeholder towards directors and directors to- wards management) have to set intertwining goals and establish fitting incentives to guarantee collaborative effort.24
Only then success can be understood for the entity as a whole, instead of individual parties. This is also the key perception for the following subchapter, where success factors will be explained for businesses.
2.3 Success factors
The first time, the term (critical) success factors 25 got published, was in the Harvard Business Review Magazine in 1979. John Rockart stated in his article that “Critical success factors […] are, for any business, the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization”26.
Further, he continued to list four characteristics that help to conceive these factors:27
1. Each industry has their own certain success factors. They are derived from the structure of an industry and are relevant for each business in it.
2. They can change depending on long-term variations within the competitive or industrial situation. Moreover, a business may reveal other success fac- tors compared to similar opponents that are, in fact, in the same competitive and industrial situation but based in a different location.
3. They are subject to enduring economic and political trends a business faces. Therefore, a business cannot just concentrate on its current success factors but has to adapt them, depending on outside factors.
4. Contrary to what has been implied in his previous claims, success factors can also be temporary if they address a short-term problem.
To summarize his findings, one could say that success factors can be generic for multiple businesses; they depend on the internal and external situation of the busi- ness; they are not fixed for eternity but possibly need to be adapted and some of them might even be just temporal.28
When the above characteristics are met, an object of investigation qualifies as a success factor. This is a key take-away for chapter 3 (from page 10) where success factors for digital transformation are listed.
But before that, it is important to get a perception of what Rockart meant with sat- isfying results that enable competitive performance. Delivering satisfying results indicates that previously set goals have been achieved successfully (see success in chapter 2.2 from page 5). It seems apparent that in order to accomplish competitive performance, the previously set goals have to orient themselves on rival businesses. This leads to another important assertion.
A success factor on its own just highlights an important area that needs to be man- aged. It is important to set measurable goals within this areas to assess the perfor- mance and act accordingly.29 The results of these measurements are so called key performance indicators (KPI).30 Focusing on them is “most critical for the current and future success of the organization”31. KPIs can be compared to own set goals, own past results or results of competitors and peers.32 In terms of competitive per- formance, it is recommended to benchmark against leading organizations.33
Despite the undeniable value success factors offer for businesses, science could not yet conclusively name them. Only two concepts exist that have proven their own assertions to be verifiable: the experience curve concept and the PIMS (Profit Im- pact of Market Strategies) survey. The latter offers valuable insight that will help to develop a framework to structure the success factors in this thesis. PIMS was ini- tially started by General Electric in 1960 to identify success factors that affected their profits and cash flows. Since 1975, the PIMS program is under the direction of the Strategic Planning Institute. Around 500 key figures from over 450 enter- prises with more than 3,000 business units are monitored. This extensive data set indicated that a small number of business variables (product quality, market share, investment intensity…) have a remarkable impact on the success of a business (ROI). Furthermore, it can be proven that the majority (70 percent) of all observed business variables are of strategic nature. This emphasizes the importance of busi- ness strategy.34
A well proven management concept to implement and operationalize a business strategy is the Balanced Scorecard. Its rationale states that the strategy needs to be broken down into several measurable objectives that can be found in different di- mensions. In turn, the dimensions and objectives need to mutually support each other to achieve the strategic (financial) goals, as the example in figure 1 shows.35
Abbildung in dieser Leseprobe nicht enthalten
Figure 1: Balanced Scorecard - Strategy Map36
In its original form the Balanced Scorecard consists of four dimensions: financial, customer, internal processes and organizational capacity.37 It can be conjectured that the business variables, found in the PIMS survey, can be represented in the four dimensions of the Balanced Scorecard. This demonstrates that success factors can be found in these dimensions.38
Therefore, the success factors in this thesis will be grouped into the four original Balanced Scorecard dimensions – even though two of them will be slightly amended. The financial dimension is broadened in its scope so it can incorporate strategy and business model – hence, its name: business purpose. The dimensions customer focus and organizational capacity preserve their label and idea. As digital transformation heavily relies on information technology, the internal processes di- mension will focus on just that and renamed accordingly to information technology.
3 Success factors for digital transformation
3.1 Business purpose
3.1.1 Strategy
To be able to hit a target, it is necessary to set it beforehand. For businesses to do so, they first need to specify their vision and mission. Both together set a course to pursue. On this basis, long-term goals can be derived, with the overriding one being to ensure the viability of the business itself. Additional goals that serve the same purpose get set in the strategic planning process. Its output is the business strategy, which has the following particular characteristics:39
1. It has a long term-character and describes a bundle of specific measures that shall get achieved. An example for a measure might be to increase the mar- ket share to a specific level in a defined time frame. In turn, each measure consists of individual tasks. For measures and tasks it is crucial to clearly specify the purport, extent and temporal extent.
2. The positioning of the business in its market environment is made clear. This shows how products / services satisfy market needs. In this context it also includes the competition, whose action it takes into account. Eventu- ally, it determines the business areas in which a company is active.
3. As resources (finances, people and assets) are needed to realize measures, the strategy inevitably affects their extent.
4. Ideas, desires and attitude of the business’ leaders are incorporated.
It is obvious that the strategy plays a vital role in the business’ future development. To operationalize it, the strategy usually gets broken down and adapted to lower administrative levels, like shown in figure 2. Big corporations develop a corporate strategy. Each business in the corporation creates its own strategy that does not contradict but complement the corporate strategy. After all, the strategy should move the entity as a whole forward. From the business level, the strategy gets fur- ther refined to suit individual functional areas (e.g. strategies for procurement, pro- duction, sales, etc.). Again, these functional strategies have to work together in benefit of the business strategy. In this process, problems regarding the resource allocation can occur. The superior level then has to decide in the best interest of the whole entity.40
Abbildung in dieser Leseprobe nicht enthalten
Figure 2: Strategy by organizational level41
A strategic management process involves three phases. It begins with the strategic analysis. Here the main goal is to create an information basis on which the follow- ing phases build upon. Internal and external analysis are progressed that show the “current and future position of a business in its environments, in its industry and in proportion to its customers and competitors”42. In the second phase the strategy for- mulation and selection takes place. Usually, more than one strategy is developed that will help to achieve the business’ goals. The most promising then gets chosen. Finally, the s trategy implementation ensures that the right measures are undertaken to fulfil the chosen strategy. The whole process is very complex and involves sev- eral tools and techniques that cannot be further specified – it would exceed the scope of this thesis.43 Yet, an understanding of the process is very important, as the fol- lowing paragraphs will discuss the influence of digital transformation on it.44
During strategic analysis, businesses have to thoroughly screen their external and internal situation. They need to see and accept the changes that came due to the digitalization. Customer behavior and expectations have drastically changed in the past (see chapter 3.2 from page 17). In each business transaction they demand high pace and the use of digital capabilities. Combined with new technological possibil- ities (see chapter 3.3 from page 26), market definitions vanish and new market play- ers enter them – or even create whole new ones. This development affects all in- dustries. Even if an industry has not yet been disrupted, it is merely a question of time until it happens, due to rapid technological developments and new market players. That is why businesses have to act fast. In an inward view, businesses have to see how they are currently constructed (see chapter 3.4 from page 34).45
Based on that, a strategy needs to be developed and picked that allows a business to achieve its goals and incorporates all insights of the strategic analysis. The strat- egy needs to put the customers and new technologies at its center. However, the key is not to solely focus on new technology but to integrate it in a meaningful way into the business.46 This idea needs to be incorporated in the overarching strategy. It must not be an additional, accompanying plan. Isolated solutions and initiatives are not allowed to happen in any way or at any organizational level. The whole entity needs to be trimmed on the new alignment.47
One intention a strategy nowadays needs to address is agility. Rigid structures, pro- cesses and mindsets have to be broken up. Furthermore, businesses need to digitize themselves and the ecosystem they are in, by relying on data.48 A company that had success in strategically realigning itself is General Electric, who many see as a role model in this aspect now. The company trimmed itself down from a cumbersome conglomerate to the digital industrial company.49
Strategic changes inevitably question current business models, as shown in the next subchapter.
3.1.2 Business model
For the term business model a number of definitions exist. A very prominent one originates from Timmers. In his eyes it can be described as “an architecture for the product, service and information flows, including a description of the various busi- ness actors and their roles and a description of potential benefits for the various business actors and a description of the sources of revenues”50.
To put it more simply, the definition of Magretta can be consulted. It compresses Timmers’ approach in an easy way to understand. According to Magretta, a busi- ness model is the story that tells how a business works by answering the following questions: “Who is the customer? And what does the customer value? […] How do we make money in this business? What is the underlying economic logic that ex- plains how we can deliver value to customers at an appropriate cost?”51
The knowledge of the strategic analysis process (see previous chapter) is very im- portant to rethink and adapt business models, as it has to answer the above ques- tions. This implies that strategy and business model are closely tied. Similar to its strategy, a business needs to scrutinize its current business model – no matter how successful it might be.52 A good management tool to analyze and (re)develop a busi- ness model is the Business Model Canvas. It contains nine elements and each one of it focuses on a relevant topic (e.g. customer segments, value proposition, key activities, key resources) that is important to derive a business model, based on re- source and market-based view. The interplay of all elements represents the business model. An exemplary canvas template can be found in attachment 2 on page 54.53
No matter which management tool gets used, during the (re)design process a busi- ness must not be reluctant to disrupt its current own business model. If they do not do it, competitors may fill the blank and be even more disruptive.54
Two general results may arise from this process: adapting the current business model or creating a completely new one. Although different nuances between both paths exist, in the following only the two extremes will be considered.55 This facil- itates the understanding of both of them. To see if there is a need to adapt the busi- ness model, an entity first assesses its current situation, environment and prospec- tive outlook. Kreutzer / Neugebauer / Pattloch recommend to combine the results of SWOT analysis, Porter's five forces analysis and future forecasts to create a con- clusive decision basis. If one or more of the following warning signals can be de- duce from the results, the business model may indeed need to be adapted: 56
1. Decline of established income streams and / or margins.
2. New competitors from different environments or other markets.
3. Recognition of new digital alternatives that jeopardize the current competi- tive advantage.
4. Prospect of digital resources that will allow new competitors to easily breach current market access barriers.
Often as a result, certain parts of the value chain become optimized. However, adapting the business model permanently only will not be sufficient in the long run. Sooner or later it will be necessary to be bold and create a new business model. The foundation to create a new business model lies within ground-breaking new ideas for products / services or internal processes. They have to differ drastically from current ones. Only then they promise the opportunity to change the value proposi- tion of the business and grant sustainable competitive advantage for a longer term. It is in the best interest of a business to constantly balance the efforts of adapting the current business model (for short-term success) and developing new ones (for long-term success). However, in subversive times a focus on the latter can be vital.57
In almost every industry, a predominant business model exists that all businesses in it use – albeit in slightly different variations.58 Businesses that are able to recognize potential changes in its industry’s predominant business model in a timely fashion, can achieve a cutting edge against the competition. A good methodology to spot such changes comes from the consultancy company McKinsey: The long-held be- liefs that bear the foundation of the predominant business model need to be dis- sected and each element thoroughly questioned. For individual elements new and radical hypothesis may be conceived or captured from other industries. Subse- quently, the elements then have to be checked if they work together and make sense. If this is the case, the newly compound business model might indeed predict a change for the whole industry. An individual business then can focus to adapt itself accordingly – even though, such an endeavor is very demanding.59 However, if done right, it might increase the competitive advantage intensively. A great example in this context is Uber, as they endanger all taxi providers with their newly conceived idea of individual passenger service.60
Whenever a new business model is in development, the following aspects should be incorporated if possible, as they have been proven to be value drivers:61
1. Novelty: Unprecedented ideas that never existed before and highly satisfy customer needs (e.g. Uber).
2. Lock-in: High but unobtrusive switching costs for customers that want to switch their provider or ecosystem (e.g. costs and effort when switching from an Apple smartphone to an Android smartphone or vice versa).
3. Complementarities: Achieving a “value-enhancing effect of the interde- pendencies among business model elements”62 (e.g. offering settlement ser- vices on e-commerce websites that effortlessly allow online payments).
4. Efficiency: Attain cost savings in operations and among business model el- ements (e.g. Wal-Mart has a very sophisticated logistics system that helps them to save costs and strengthen their competitive cost advantage).
For both above mentioned transformation schemes (strategy and business model), finance is a crucial element that will be observed in the following subchapter.
3.1.3 Finance
It is estimated that US$ 1.3 trillion will be spent on digital transformation initiatives worldwide in 2018.63 With such enormous amounts of money at stake, deliberate financing and investment strategies are vital.
When committing to a long-term transformation, it is crucial to adapt and align short-term financial goals. Most prominent ones in this case are: EBIT, EBITDA, Cash flows and EVA.64 Their results might suffer when costly transformation initi- atives are decided on and / or changes in strategy / business model take place. Therefore, it is important to inform stakeholders in time about potential setbacks. This may prevent disappointment among them.65
As digital transformations extend over longer periods of time, not only short-term financial goals need adjustments but the business portfolio of an entity as well. Es- pecially in combination with changes in – or termination of – business activities (see chapter 3.1.2 from page 12), divestitures are often used to finance digital initi- atives. This allows businesses to streamline themselves, while at the same time cut- ting down unwanted assets that do not fit the future alignment. Freed-up capital can not only be used for initiatives but also for mergers and acquisitions. This way is often taken when current digital in-house capabilities are not deemed sufficient to match a business’ strategic path. External knowledge then needs to be purchased and integrated. A recent survey from Ernst & Young found out that over two thirds of all questioned businesses plan to use M&A to help them fulfill their digital agenda. This implies that the digital capabilities and knowledge are not adequate for the majority of businesses at the moment. Entities that do not want to invest heavily have the opportunity to cooperate with other businesses or establish joint ventures. General Electric and Microsoft are good examples for working together. The former relies on the cloud computing capabilities of the latter. In turn, this al- lows General Electric to offer their own customers added value. In chapter 3.3.3 (from page 32) it will be explained how General Electric uses Microsoft’s cloud computing. It is to conclude that the portfolio management has to be continuously monitored and fitted to the digital strategy and progress of an entity.66
Finance departments have to comply with that and at the same time adapt to new requirements. The strong focus on compliance and control will slightly cease. Nev- ertheless, in the future it will still be important to show transparency and perform good risk management – which is especially crucial in uncertain environments. In terms of insights and efficiency, finance departments have to change and improve the most. Insights concern the predictive and timely flow of information and anal- ysis from and to stakeholders (internal and external). Efficiency is all about the costs of a finance department. They have to be appropriate compared to what the depart- ment offers in value adding processes. A way to do this is to use “the latest business intelligence and visualization technology to analyze more data while ensuring that the outputs are more focused, accessible and actionable for users”67. Finance de- partments that already do this, are able to operate at only 60 % of costs compared to their counterparts that do not do this.68
As finance departments are assisting in many aspects that will be covered in the course of this thesis, their overall scope will change accordingly. The pace of to- day’s environment will not allow them to spend long time on budgets and forecasts anymore. Instead, they have to become more flexible and fast to support other de- partments in their doings – for example assessing the advantageousness of business models or new products and services. PwC comes to the conclusion that in the near future, tasks of finance departments will become very similar to today’s venture capitalists, as they already focus on the bigger picture.69
Chapter 3.1 put its focus on how businesses holistically have to align themselves in current uncertain environments, to be able to successfully proceed. In the next sub- chapter another important success factor will be examined: customer focus.
3.2 Customer focus
3.2.1 New markets
In their 2005 published book, Kim and Mauborgne used a metaphoric way to de- scribe markets. They labeled already existing markets as red oceans and new mar- kets as blue oceans. The latter are far-reaching and wait to be perambulated with rarely any competitors in the way, while existing markets are bloodily fought over – hence, red oceans. The authors came to the conclusion that “[t]he only way to beat the competition is to stop trying to beat the competition”70 and instead search for new markets. However, in the long-run it is inevitable that these new markets get entered by competitors as well. Still, for some time the demand can get com- pletely captured. In the time of digital transformation, such an endeavor is neces- sary, even though it is very challenging.71 In some cases new markets are not even opened up on purpose by businesses but by consumers that “unexpectedly adopt a digital technology into a new use context”72. The following example will demon- strate where a company successfully entered a blue ocean.73
[...]
1 Brand, S. (1987), p. 9.
2 Cf. Meffert, J./Meffert, H. (2017), p. 30ff.
3 Cf. for this paragraph Anthony, S. et al. (2018), p. 2.
4 Cf. for this paragraph Meffert, J./Meffert, H. (2017), p. 18ff and 33f.
5 Cf. for this paragraph Seiwert, M./Reccius, S. (2017).
6 Cf. for this paragraph Bundesministerium für Wirtschaft und Energie (2015), p. 3ff.
7 Cf. for this paragraph World Economic Forum/Accenture (2016), p. 3.
8 Cf. for this paragraph Jung, H.H./Kraft, P. (2016), p. VIIf, 57ff, 71ff and 143ff.
9 Capgemini Consulting/MIT Center of Digital Business (2011), p. 5.
10 Cf. for this paragraph Capgemini Consulting/MIT Center of Digital Business (2011), p. 5; Capgemini Con- sulting (w/o Y).
11 Cf. for this paragraph Bouée, C.-E./Schaible, S. (2015), p. 6.
12 Mazzone, D. (2014), p. 8.
13 Cf. Bundesministerium für Wirtschaft und Energie (2015), p. 3ff; World Economic Forum/Accenture (2016), p. 3; Jung, H.H./Kraft, P. (2016), p. VIIf, 57ff, 71ff and 143ff.
14 Cf. World Economic Forum/Accenture (2016), p. 3; Capgemini Consulting/MIT Center of Digital Business (2011), p. 5.
15 Cf. Capgemini Consulting/MIT Center of Digital Business (2011), p. 5; Bouée, C.-E./Schaible, S. (2015), p. 6.
16 Cf. Bouée, C.-E./Schaible, S. (2015), p. 6.
17 Cf. Capgemini Consulting/MIT Center of Digital Business (2011), p. 5.
18 Cf. World Economic Forum/Accenture (2016), p. 3; Jung, H.H./Kraft, P. (2016), p. VIIf, 57ff, 71ff and 143ff; Capgemini Consulting/MIT Center of Digital Business (2011), p. 5; Capgemini Consulting (w/o Y); Bouée, C.-E./Schaible, S. (2015), p. 6; Mazzone, D. (2014), p. 8.
19 Oxford Dictionaries (w/o Y).
20 Cambridge Dictionary (w/o Y).
21 Cf. for this paragraph Pape, U. (2011), p. 14ff.
22 Cf. Onetto, Andres E. (2007), p. 415.
23 Jensen, M.C./Meckling, W.H. (1976), p. 5.
24 Cf. for this paragraph Jensen, M.C./Meckling, W.H. (1976), p. 5ff.
25 Please note: For reasons of simplicity this paper addresses critical success factors just as success factors. This shall not reduce their importance in any way.
26 Rockart, J.F. (1979).
27 Cf. for the following enumeration Rockart, J.F. (1979).
28 Cf. for this paragraph Rockart, J.F. (1979).
29 Cf. Parmenter (2007), p. 22.
30 Cf. Parmenter (2007), p. 3ff.
31 Parmenter (2007), p. 3.
32 Cf. Charifzadeh, M./Taschner, A. (2017), p. 251.
33 Cf. Parmenter (2007), p. 16.
34 Cf. for this paragraph Welge, M.K./Al-Laham, A./Eulerich, M. (2017), p. 247ff.
35 Cf. for this paragraph Kaplan, R.S./Norton, D.P. (1997), p. 7ff.
36 Balanced Scorecard Institute (w/o Y).
37 Cf. Kaplan, R.S./Norton, D.P. (1997), p. 8.
38 Cf. van Veen-Dirks, P./Wijn, M. (2002), p. 424.
39 Cf. for this paragraph and the following enumeration Vorbach, S. et al. (2015), p. 139ff.
40 Cf. for this paragraph Hungenberg, H. (2014), p. 15ff.
41 Own illustration. Idea based on Welge, M.K./Al-Laham, A./Eulerich, M. (2017), p. 470 – original image can be found in attachment 1 on page 53. Terminology based on Vorbach, S. et al. (2015), p. 141ff.
42 Hungenberg, H. (2014), p. 9 – translation from German by the author of this thesis. Original phrase: “ge-genwärtige und zukünftige Stellung eines Unternehmens in seinen Umfeldern, in seiner Branche und im Verhältnis zu seinen Kunden und Wettbewerbern”.
43 Cf. Vorbach, S. et al. (2015), p. 143ff; Hungenberg, H. (2014), p. 85ff.
44 Cf. for this paragraph Hungenberg, H. (2014), p. 9f.
45 Cf. for this paragraph Meffert, J./Meffert, H. (2017), p. 17ff.
46 Cf. Kane, G.C. et al. (2015), p. 5.
47 Cf. for this paragraph Dörner, K./Meffert, J. (2017), p. 286ff.
48 Cf. for this paragraph Boston Consulting Group (2018); Dold, D./Mies, H. (2018), p. 2.
49 Cf. for the last two sentences Immelt, J.R. (2017).
50 Timmers, P. (1998), p. 4.
51 Magretta, J. (2002).
52 Cf. Meffert, J./Meffert, H. (2017), p. 41f.
53 Cf. for this paragraph Kreutzer, R.T./Neugebauer, T./Pattloch, A. (2017), p. 63ff.
54 Cf. for this paragraph Boston Consulting Group (2018).
55 Cf. Meffert, J./Meffert, H. (2017), p. 65.
56 Cf. for this paragraph and the following enumeration Kreutzer, R.T./Neugebauer, T./Pattloch, A. (2017), p. 79 ff.
57 Cf. for this paragraph Kreutzer, R.T./Neugebauer, T./Pattloch, A. (2017), p. 73ff.
58 Cf. Kreutzer, R.T./Neugebauer, T./Pattloch, A. (2017), p. 65.
59 Cf. Kreutzer, R.T./Neugebauer, T./Pattloch, A. (2017), p. 84ff.
60 Cf. for this paragraph de Jong, M./van Dijk, M. (2015).
61 Cf. for this paragraph and the following enumeration Zott, C./Amit, R. (2017), p. 21ff.
62 Zott, C./Amit, R. (2017), p. 21.
63 Cf. IDC (2017).
64 Cf. Fischer, D. (2009), p. 58.
65 Cf. for this paragraph Dahlström, P./Desmet, D./Singer, M. (2017).
66 Cf. for this paragraph EY (w/o Y); EY (2018), p. 3ff.
67 PwC (2015), p. 6.
68 Cf. for this paragraph PwC (2015), p. 6f.
69 Cf. for this paragraph PwC (2015), p. 24.
70 Kim, W.C./Mauborgne, R. (2005), p. 4.
71 Cf. Venugopalan, S. (2016).
72 Nylén, D./Holmström, J. (2015), p. 63.
73 Cf. for this paragraph Kim, W.C./Mauborgne, R. (2005), p. 1ff.
- Citar trabajo
- Johannes Schmidt (Autor), 2018, Success factors for digital transformation, Múnich, GRIN Verlag, https://www.grin.com/document/491935
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