BUSINESS RESEARCH

Digital Business Models

Digital business models increasingly distinguish between those organisations that create compelling customer experiences and those that don’t. Without the ability to deliver a value-creating online and mobile strategy, customers will seek out those competitors that deliver seamless and engaging digital experiences.

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May 2013

Customers want to interact with companies anywhere and anytime – one recent study found that 72% of customers said they would replace some traditional channels with mobile apps given the choice.

But the stakes are high when designing a digital business model. For instance, Netflix angered many of its customers when it separated its delivery via mail and digital delivery – alongside big price hikes. The company’s share price dropped 79% between July and November 2011. But when companies get their digital business models right, the results can be remarkable. For example, Amazon sold more e-books than physical books for the first time in May 2011. Moreover a new study found that organisations in the top third in terms of digital customer experience had 8.5% higher net margins and 7.8% higher revenue growth than industry rivals.

Research shows that three components of a digital business model – content, experience, and platform – can combine successfully to create a unique customer value proposition:

(1) Content (What is consumed?)

Information: Product information, price and use details, etc.

Product: Digital products, such as e-books, e-saver accounts, movies, software.

(2) Experience (How is it packaged?)

Experience can include customer-facing digitised business processes, community and customer input, expertise for informed decision making, recommendations, tools, and interface.

(3) Platform (How is it delivered?)

Internal: Other business processes, customer data, technology.

External: Proprietary hardware, public networks, partners.

Referenced techniques

Technique

Types of Innovations

Innovations may manifest in a variety of forms and are a critical competitive capability of most firms. Case study evidence presented alongside practical implementation steps, assist business leaders to understand how different types of innovation help to build an innovation culture.

Technique

Innovation Management

The concept determines the critical factors of innovation management. It reviews the managerial practices of successful innovators and summarises the strengths and limitations of innovative approaches.

Technique

Digital Marketing

The concept explores how digital technology can increase the effectiveness of campaign management and product/marketing design and execution. It includes case studies that illustrate real-life digital technology scenarios and reviews benefits of adopting digital marketing.

Technique

Skunkworks

The concept has been designed to assist managers and business owners to set groups of experts who drop out of mainstream company operations in order to develop something new in secrecy or at speed. This theory provides an overview on how skunkworks groups work and how to implement them in an organisation.

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