Disruptive Technologies & Business Model Innovation in the Digital Age

Posted on May 17, 2024 in Other subjects

Lesson 5: Disruptive Technologies

A) Blockchain

Blockchain is a public and distributed registry shared among all participants in a peer-to-peer network. Each block is linked to the previous one, making it impossible to edit one block without editing the following one, thus having no single point of failure.

a) Structural Features:

  • Distributed ledger
  • Consensus
  • Cryptography
  • Flexibility

b) Two Kinds of Blockchain:

  1. Permissionless or public blockchain
  2. Permissioned (public or private) blockchain

c) Blockchain Components:

  • Smart contracts
  • Tokens items (fungible and non-fungible)

d) Digital Identity Evolution:

  1. Centralized identity
  2. Federated identity
  3. Self-sovereign identity (SSI): A digital identity approach that gives people control over their digital identities.
Advantages of SSI:
  • Data sovereignty
  • Privacy
  • Openness
  • Cost reduction
  • Efficiency in data exchange
  • Network

B) Artificial Intelligence and Robotics

a) Artificial Intelligence:

A field of science primarily concerned with getting computers to do tasks that would normally require human intelligence.

b) Machine Learning:

A set of algorithms that allows computers to learn from data without being explicitly programmed.

c) Deep Learning:

Detects patterns by using artificial neural networks that contain multiple layers.

d) Robotics/Automation:

A discipline in engineering that studies and develops methods that allow an automated machine to perform specific tasks, reproducing human work.

C) Internet of Things and Industry 4.0

The Internet of Things (IoT) is a network of physical objects containing embedded technologies to communicate and sense or interact with their initial states or the external environment. It has the potential to transform operations and business models and is driven by AAA (Anytime, Anywhere, Any Device).

D) Big Data

Big data refers to a large and complex amount of data that requires specific technologies to be managed across the following phases: collection, storage, processing, and visualization.

E) Immersive Technologies

Immersive technologies integrate virtual content with the physical environment in a way that allows the user to engage naturally with the blended reality (augmented reality, virtual reality, mixed reality).

Lesson 6: The Effects of COVID-19 on Megatrends

The advent of COVID-19 has modified and, in some cases, disrupted megatrends, causing sudden acceleration or braking in the sectors involved. Four macro-areas and their respective megatrends have been identified as the most impacted:

  1. Demographics
  2. Digital trends
  3. Globalization
  4. Environment

Many business sectors will have to face various factors:

  1. Evolution of consumption habits
  2. Regulatory/organizational frameworks
  3. Geopolitical phenomena
  4. Epidemiological health management skills

A) How Will COVID-19 Change Business Models?

To capitalize on the opportunity for digitalization, firms need to be agile and rapidly develop dynamic capabilities related to specific strategic and organizational processes:

  1. Reduction of efforts in core business and expansion towards new horizons
  2. Review of the customer experience
  3. Adoption of new go-to-market channels
  4. Re-thinking of the product portfolio
  5. Review of operating models

B) The Digital Transformation’s Impact on Business Models

Digital disruption will be analyzed according to its impact on five fundamental areas of business:

  1. Offering
  2. Go-to-market
  3. Operating model
  4. Talent
  5. Innovation

C) Offering

Digitalization has broadened and redefined not only the range of products/services but also the “components” supporting their use. It has also significantly influenced the price of products. Companies with an offering focused on digital products/services generally adopt a “free” pattern business model. To respond to consumer needs, companies continuously adapt their offer by improving existing products/services or introducing new products/services embedding new technologies according to four macro-directions:

  1. Product accessibility
  2. Usability
  3. Ultra-custom product
  4. Additional services

From Product Purchase to Pay-Per-Use: For improving flexibility, it is better to “hire” an asset rather than buying it. Some players have a business model based on facilitating user access to the products/services they need.

D) Hybrid Business Models

The number of market players with a business model based on digital content aggregation is increasing: the over-the-top (OTT). The profitability of the business has attracted other players in the supply chain, including those at the bottom.

E) Product Tailoring (Industry 4.0 vs. Tailoring)

Industry 4.0 is the answer to the flexibility demanded by many customers today.

Lesson 7: Target

A) Target Market Analysis

  1. The Description and Outlook of the Industry:

    Start with a description of your company’s industry. Must include:

    • Industry, category, and characteristics
    • Trends, best practices, lessons learned

  2. Your Target Market:

    Specify how you have narrowed your target market down to a more workable size. Must include:

    • Customer segments
    • Customer buying habits and interests
    • Market size and a focus on your value

  3. Competitive Analysis:

    Identify your competitors and their target markets. Must include:

    • Direct competitors
    • Competition dynamics
    • Status quo and entry barriers
    • The uniqueness of your product/service

  4. Regulatory Restrictions and Barriers:

    Identify any barriers to entering the market and note any regulatory restrictions that might affect your business.

B) Go-to-Market

a) New Sales Channel:

The digital revolution has pushed retailers and sellers to use digital channels to commercialize products. Online selling reaches a greater number of customers and allows companies to know their clients better.

b) Targeted Offering:

The feedback and data that companies gather allow them to understand clients, identify their needs, and improve the offer within a continuous improvement process.

c) How the Channels Evolved with Digital Innovation:

Continuous innovations generate new operating models for traditional offline channels and increase the importance of online channels. Companies reach consumers through different channels (omnichannel approach), generating more information (big data). Many retailers and e-tailers are taking measures to offer their customers a truly personalized, dynamic, and valuable experience using advanced analytics from new data management brought about by technologies that allow recording, tracking, and tracing routes, choices, and buying behavior.

C) Operating Model

The operating model describes how a company organizes and manages resources to create value for its clients. In some cases, the components of the operating model are organized according to the different steps of the value chain (e.g., production, distribution…).

a) Transformation of the Operating Model:

  1. Rent Not Own/Shared Services: Leasing, shared services, not owning assets.
  2. Service-Driven Model: Products with innovative features linked to the service component force companies to build complex networks that allow the integration of technologies into new services.
  3. Marketplace: Connecting demand and offer (client-focused, technology-driven, operationally flexible).
  4. Knowledge of the Client + Optimization of the Value Chain
  5. Hub & Spoke: The hub and spoke model represents a rationalization of the production system with a concentration of complex activities in the hub and the use of branches for flexibility/customization.

D) How Industry 4.0 Is Going to Change Operating Models

Industry 4.0 places the factory at the center of a self-adaptive ecosystem connected internally and with the outside world, leveraging digital technologies and systems for managing and analyzing vast amounts of data.

  • Sensors that allow the control and optimization of products and processes in real-time
  • Intelligent machines with immediate information exchange
  • Analysis of massive data and extrapolation of key information
  • Autonomous integration of different processes

The change involves every aspect of companies’ assets: people, processes, equipment, tools, and systems. The evolution of the operating model can reverse the industrial ecosystem’s decline, determined by the limits of “simple” automation, contracting investments, and production relocation.

  • The fourth industrial revolution guarantees a productive setup consistent with the personalization and flexibility requirements of current consumers (mass customization).
  • Industry 4.0 will allow overcoming the limits of the current production model, obtaining a premium price and reducing production costs, accompanied by personalization and quality.

Mass customization allows for providing highly customized products or services on a large scale without losing the benefits of mass production.

Technological Innovations Impact the Value Chain at All Stages:

Design and Industrialization

  1. Virtual Designs:
    • Software for developing new products and creating prototypes in a 2D/3D digital environment
    • Reduction of development costs and evaluation of alternative solutions
  2. Big Data:
    • Data collected in the field directs research on new functions and changes necessary to existing products
    • Wide-ranging virtual experimentation and low costs thanks to digital datasets
  3. Collaboration Platforms:
    • Software that adds to the core capabilities of social networking to maximize collaboration
    • Sharing information in all business processes
  4. Digital Skills:
    • Using software and complex algorithms, statistical analysis, etc., often requires additional skills beyond vertical techniques in their industry

Manufacturing and Operations

  1. Robotics and Automation:
    • Robotics, already introduced in the third industrial revolution, increases its potential with the interconnection between machinery and external ecosystems
  2. Big Data:
    • “Plant big data” is widely used for forecasting production quantities and monitoring plant performance
  3. 3D Printing:
    • 3D printing brings enormous advantages compared to traditional production methods: it is more versatile (easy to implement new designs), faster, and relatively cheaper
  4. Cloud Manufacturing:
    • Production resources (e.g., software tools, machinery) are “encapsulated” in cloud services and managed centrally, according to customer and production needs
  5. Predictive Maintenance:
    • Maintenance is based on preventive and planned interventions, defined starting from the automated analysis of historical and current data

Logistics, Distribution, and Sales

  1. Tracking and NFC:
    • Automated and real-time tracking allows constant and timely control of the logistics chain, both to sellers and customers, through technologies for product identification (of which NFC (near-field communication) is one of the main)
  2. E-commerce:
    • Electronic commerce conquers ever more significant market shares, revolutionizing the purchasing experience and the distribution chain, for example, through using drones to reduce, among other things, the role of third-party carriers
  3. Fleet Management:
    • Commercial fleet management information systems optimize costs by considering types of use, locations, and delivery times, minimizing human intervention
  4. Smart Grid:
    • The energy required is managed by software to maximize efficiency and energy savings, taking into account loads and times of use and envisaging the use of non-traditional sources

Customer Management

  1. Big Data:
    • The knowledge and prediction of customer behavior are increasingly based on predictive algorithms of customer behavior
    • The reduction of the churn rate is pursued through the identification of behavioral patterns
  2. Enhanced Browsing Experience and Augmented Reality:
    • Increasing attention to the pleasantness of virtual communication (e.g., sites, apps) and innovative experiences of use (augmented reality), which substantially contribute to the overall customer experience
  3. Internet of Things:
    • The ubiquity of sensors and the capillarity of connections will allow collecting huge amounts of data from an ever-larger number of consumers; information that is organically exploited within CRM systems

The Continuous Improvement Process:

The collection and analysis of data throughout the process enables a virtuous cycle of continuous improvement of the product and production processes.