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As part of the campaign for the new B.Sc. program in Haifa University, on Data Sciences, led by Prof. Mor Peleg, (who recently won the rector’s award for research,) Prof. Sivan will discuss the emerging nature of the Data Scientists.
More details about the program.
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Find the full e-book (Hebrew) on the e-Vrit application.
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Most organizations have embarked, this way or another, on a journey to transform themselves into digital businesses adapted to the challenges of the new digital era. It is a challenging journey that should be planned carefully, monitored all the way, and with a high level of top management commitment.
Digital Maturity is one of the most important practical tools which helps organizations assess their current situation. There is no standardized well-accepted model for Digital Maturity, but there are some leading models and organizations should select one of them to measure their current digital stage.
In our new e-book (Hebrew) titled “Doing Digital: Digital Transformation – Background, Theory, and Practice; Hitchhiker’s Guide to the Journey,” published in 2018 on the e-Vrit application for mobile and desktop, we devote chapter 10 to this vital tool. We cover several Digital Maturity models to enable organizations a broad view and understanding so that, eventually, they select the model that best suits their needs.
Find the full e-book (Hebrew) on the e-Vrit application.
To receive chapter 12 (PDF), fill the form below.
“Value Vampires” sounds quite frightening!! As a matter of fact, there is a good reason to be frightened of them. This is the new breed of digital companies that are sucking the profit pool dry of the incumbent’s companies, companies challenged by the digital economy. Often, the “value vampires” provide products and services cheaper than yours, their global reach is unmatched, and their consumer experience is better than yours.
“Value Vampires” is a term introduced by Prof. Michael Wade, an innovation and strategy professor at the IMD business school and the Director of the Global Center for Digital Business Transformation. He names “value vampires” companies like Uber, Airbnb, and Amazon, companies that have managed to be “winners of everything” due to their digital platforms. These companies scale quickly and almost without any limits; they expand their business from one area into new areas (e.g., Uber expanded from taxi hailing to food deliveries, Amazon from books selling to selling almost everything, to cloud computing, e-book readers, and much more).
The customer experiences and the prices they offer are unmatched, sometimes even free of charge, their service levels are better, they disrupt the markets in which they operate and drive down the profits of almost all the market leaders. Sometimes the market leaders surrender and close their business (e.g., Borders, Blockbuster, and others).
The “value vampires” wipe billions of dollars from the revenues of the incumbents in many industries. An example of a “value vampire” is WhatsApp – they sucked billions of dollars from the revenues of the mobile operators in a very short period. They use the platform business model that competitors can’t match; they have a global presence making it very easy for customers to reach them.
For “value vampires,” even the sky is not a limit!
As Prof. Wade says “Not only is Uber cheaper than most taxi companies they are competing with, but the quality is also better because the way you can hail them via an app, and their service is good. They also offer platform value in that you can hail an Uber almost anywhere in the world via the same app. They use their network to introduce other services.”
A link to the interview of Prof. Wade’s by the Norwegian business magazine Kapital: https://bit.ly/2GTJpeuProf.
Wade is also the author of “The Digital Vortex,” a book we have cited in Chapter 8 of our e-book “Doing Digital“. The book introduces the concept of the digital vortex, a tornado-like behavior of the digital force that is impacting all type of industries.
The combination of the tornado-like behavior and the arrival of the ‘value vampires’ is the perfect example of why companies must make their digital transformation a strategic move, and start their digital journey as soon as possible. This journey is challenging not just due to the need to transform the business employing digital technologies. It is challenging also because of the need to transform your organization into an innovative and agile business, that offers new value to its customers and can respond quickly to the new attackers.
To understand the challenge of becoming an agile organization, we invite you to download our article from Cutter Consortium’s web site (requires registration) at the following link: https://www.cutter.com/offer/agilifying-your-organization-6-steps-get-started
Don’t wait for the ‘value vampires’ to arrive at your market.
Start your digital and agility journey ASAP.
Innovation is a must, and most companies recognize this need. The challenge is the source of new and fresh innovations. Many companies believe that innovation must come from internal sources (like R&D labs) and external sources (like Hackathons and startup incubators). Only a few companies use crowdsourcing to find and introduce new and fresh innovations. The famous Danish Carlsberg brewery is one of them. Let’s have a look at how they do it.
For a number of years, the Carlsberg Group has been an honorary partner of Copenhagen Business School’s (CBS) annual Case Competition, which is one of the largest university case competitions for undergraduates, attracting students from top universities around the world.
Carlsberg has defined a strategy based on the assumption that digital has an important role to play and has set a strategy titled SAIL’ 22 as a multi-year digital transformation of the brewery group. Digital has a powerful role to play in fueling the company’s traditional business with innovative growth opportunities and smart operational efficiencies.
Carlsberg has decided to leverage the 2019 CBS Case Competition as a response to the increasingly digitalized world. More than 3,000 undergraduate students from 61 countries have signed up to participate in the Global 2019 online competition through CBS Case Competition’s own online platform.
Through this competition, the students will contribute ideas and concepts for how Carlsberg can further leverage digital innovation to disrupt the on-trade scene and transform its partnership with bars, restaurants, and cafes in Western Europe. The top three teams will be invited to Copenhagen to compete in the finals.
“From a strategic perspective, the rationale to invest in digital products and services is simple: if Carlsberg is able to provide insightful and valuable experiences and services to its customers alongside its great beer and beverage portfolio, it will enhance Carlsberg’s value as a successful, professional and attractive business partner and not just as a legendary brewery group,” says Nancy Cruickshank, Senior Vice President, Digital Transformation.
”We’re investing heavily in digital transformation activities across our business, and we were intrigued by the Global 2019 online competition to learn how the world’s best undergraduate students would prioritize if they ran this brewery group. We want to learn from digital natives how they would address high-impact, strategically important areas with multi-market potentials, such as customer engagement, distribution or e-commerce. The goal is to improve Carlsberg’s competitive position, and to stay at the forefront of innovation within our industry,’’ says Nancy Cruickshank.
Unlike the incubator model used by many large corporations, in which small teams are tasked with disrupting traditional business almost as an external start-up, the lighthouse projects are intended to be deeply embedded in the brewery group. This is to ensure the relevance of the business issue in question and to minimize integration and roll-out difficulties.
One of the projects already rolled out in markets such as Denmark, Sweden, Norway, Finland, the UK and lately also Switzerland is Carlsberg Online. With Carlsberg Online, the Carlsberg Group became an international front-runner on the brewery scene, which is still characterized by being relatively analog. In addition to online ordering, the team behind Carlsberg Online is constantly expanding the platform, improving content with do-it-yourself videos and providing insights never before available for on-trade customers on markets, consumer behaviors, new trends, etc.
By participating in the CBS Case Competition, Carlsberg aims to harness even more innovative ideas that can potentially be applied to the business, while providing an opportunity for students to apply theory to a real-life business case.
Link to the WebWire news site that published the article
In Chapter 5 of our e-book (Hebrew) “Doing Digital,” we describe the importance of innovation, and we show several models and ways companies innovate. The idea of “Innovating innovating” we love to use, is the idea behind the need to innovate the way companies innovate. Using crowdsourcing and competitions is a great example of this idea. Not all good ideas can be created internally or even by hackathons with startups. Using a well-established competition, as the CBS one, provides the company access to many students who are digital natives, and can provide new and outstanding ideas for digital innovation. That’s the world they are living in.
“The pace of change has never been this fast, yet it will never be this slow again” – what a great line from Justin Trudeau, Canada’s Prime Minister’s speech at the Davos 2018 World Economic Forum meeting. The pace of change and disruption is accelerating and will continue to accelerate in the future. To cope with this challenge, organizations will have to rely more and more on innovation and agility.
Innovation by itself has to change, what we call “Innovating innovating.” One of the changes in the innovation process and management was highlighted by Steve Blank, the developer of the methodology that, eventually, became the foundation of the Lean Startup movement and he’s currently an adjunct professor of entrepreneurship at Stanford University and lecturer at other universities. On February 2019 He published an HBR (Harvard Business Review) article titled “McKinsey’s Three Horizons Model Defined Innovation for Years. Here’s Why It No Longer Applies.”
McKinsey’s experts published in 2016 a model of three-time horizons for managing the innovation portfolio, in their article “Now, New, Next: How Growth Champions Create New Value.” The model describes the idea that companies should manage their innovation portfolio in three-time horizons (time-buckets):
This model was also described in chapter 5 of our e-book “Doing Digital” (https://bit.ly/2odl5th). Steve Blank now claims that in the 21st century, this model has a fatal flaw that risks making companies lag behind their competitors. His main claim is that the focus on the horizons is based on time-frame of each horizon. The Horizon 1 focused on innovations that could be delivered in a short term of 3 to 12 months. Horizon 2 could be delivered in 24 to 36 months and Horizon 3, focused on creating new disruptive business models, could be delivered in 36 to 72 months. This time-based definitions made sense in the past, but are no longer valid in our current and future dynamic business environment. Today, Horizon 3 innovations could be delivered as fast as Horizon 1 innovations.
To make his point Steve Blank uses some examples. Companies like Uber, Airbnb, Lyft, Tesla, Netflix built their disruptive business models using existing technologies (smartphones, GPS, Mobile internet, Big Data and many more) and deployed their solutions in extremely short periods of time. They have used the Minimum Viable Product concept to enter the market with barely finished, iterative, and incremental prototypes (what we call agile working methods). Incumbent companies can’t wait 36 to 72 months to deploy their counter solutions. It’s too late! Therefore organizations must find ways to shorten the Horizon 3 innovations.
Steve Blank provides some ways that incumbent organizations can deal with that challenge:
None of the above alternatives are easy for incumbents, but waiting 36 to 72 months for Horizon 3 innovations to be deployed is not an option, in some cases.
In chapter 9 of the e-book “Doing Digital” Raz Heiferman & Prof. Yesha Sivan propose organizations to understand the five platforms for innovation. This conceptual framework provides some ideas of how organizations can speed up their innovation processes (e.g., using ready-made digital components for innovation).
Agriculture is one of the most interesting sectors regarding digital transformation. Our perception, which proved to be wrong, is that digital technologies are disrupting many industries and main sectors like finance, media, retail, technology and more. One sector which until recently, was under our radar, is agriculture. The reality proves that this sector is using technology quite aggressively to optimize every known aspect of agriculture. AI, Drones, Big Data, IoT, Satelite data, GPS, precise weather forecasting models, and other technologies, are penetrating quickly into almost every aspect of the agriculture value chain and business models. And this is good news – the world needs more food and more effective ways to deal with the global population growth. By 2050 the world will need to produce 70% more food to the expected 9 billion population.
One of the latest terms, in this regard, is “Precision Agriculture,” a hot topic for over many years that started to deliver exciting results in recent years. Some of the published case studies are almost science fiction – drones patrolling over crop fields and monitor the crop conditions, photographing and analyzing soil conditions, identify issues and instantly deliver chemicals or fertilizers as require. Precision agriculture is using advanced machine learning algorithms that recommend the farmer when to harvest based on data received from many sensors and much more.
A fascinating case study is the Israeli start-up SeeTree which developed an end-to-end intelligence network that collects data from the many trees in the far. It makes use of Artificial Intelligence, Machine Learning combined with boots-on-the-ground, multi-dimensional sensing imaginary utilizing drones and specialized vehicles to collect precise data to provide farmers visibility and monitoring of their trees health, whiled recommending actions (e.g., alter irrigation parameters, etc.)
A recent Forbes article titled “How This Company is Transforming the AgriTech Industry by Blending AI, Drones” published on their website on January 16, 2019, is describing SeeTree and how they are transforming the farming and tree management by the use of advanced digital technologies.
In Chapter 2 of our e-book “Doing Digital” (Hebrew) Raz Heiferman and Prof. Yesha Sivan describe some of the exciting digital technologies which, they claim, are part of the Third Digital Age technologies. Some of these technologies are the ones that SeeTree is using to disrupt and transform tree management. In chapter 5, they extend the discussion and describe innovation. We provide some case studies of companies (e.g., John Deere) that used digital technologies to transform the company from a product-oriented company selling farming equipment, into a solution-oriented company that sells solutions for farm management.
Link to our e-book (Hebrew) on the e-Vrit application: https://bit.ly/2odl5th
NVP (NewVantage Partners), a strategic consulting company focused on data-driven business innovation, has published its 2019 survey on Big Data and Artificial Intelligence. The 2019 survey main theme was to understand how Big Data and Artificial Intelligence (AI) are accelerating the business transformation. They first started to survey this topic in 2012 when they sought to understand the potential impact of Big Data and its implications on businesses.
Prof. Thomas Davenport and Randy Bean wrote the foreword to the current survey. Prof. Davenport is a Professor in Management and Information Technology at Babson College, and one of the world-renowned thought-leaders and gurus in the areas of management practices, analytics, and its impact on competitive advantage on organizations. Mr. Randy Bean is the Founder and CEO of NewVantage Partners – a recognized thought-leader in the areas of Big Data, AI, and business innovation.
As explained in the foreword, the 2019 edition of the survey results is a reason for celebration. 65 Fortune1000, as well as other leading organizations, are represented in the 2019 survey- with a high level of C-executives participation.
The main findings of the survey, which is a worthwhile read for anyone dealing with Big Data and AI, are the following:
NewVantage Partners full survey
Looking at the finding of this interesting survey, you may conclude that Big Data and AI are on their way to significantly impact the business environment, and every organization should seek how to implement these technologies for their benefit.
Raz Heiferman and Prof. Yesha Sivan have introduced the concept of “Data is the Oil of the Digital Era” in chapter 7 of their e-book “Doing Digital” emphasizing the importance of managing the data as a strategic asset that can be leveraged for improving the competitive advantage, and monetized to create new revenue streams. Data and Artificial Intelligence, and specifically Machine Learning, have become a must for most organizations that want to thrive in the digital era.
According to Yuichi Itabashi, GM of Fujifilm’s e-Strategy Management Office (Jan 2019 Interview).
Fujifilm is a living example that disruptive innovation can be an opportunity as well as a risk. The company not only survived the disruption of the film and analog photography, but it also executed a successful transformation by taking its in-house expertise in chemical compounds and applied it in new ways entering new markets like cosmetics, healthcare products, pharmaceutical products, computer tapes for datacenters back-up, and of course for digital cameras.
In Heiferman & Sivan’s e-book “Doing Digital,” (Hebrew) they also describe (in chapter 5) the disruptive innovation model as defined by Prof. Clayton Christensen and use the Kodak vs. Fujifilm case studies as examples of how different approaches to the disruptive innovation led Kodak to miss the digital opportunity and Fujifilm to take this opportunity and thrive in the long-term.
Yuichi Itabashi, Fujifilm
How did they do it? In an interesting interview titled “How Fujifilm lives by the maxim: never stop transforming” published on January 2019 by the i_CIO magazine, Yuichi Itabashi, the general manager of Fujifilm’s e-Strategy Management Office, provides some insights to this challenging journey. As he says, it was not an easy transformation and sometimes even a terrifying nightmare. But the bold reaction of Fujifilm’s executive management saved the company from a similar destiny as Kodak’s that had to close its photographic operation in 2012. Fujifilm has transformed from a photographic oriented company into a diversified technology company with about 283 subsidiaries and a wide range of product lines.
As a diversified technology company, new challenges raised “how can it best gain visibility in the market for this vast array of products?” They decided to implement a bold digital marketing strategy and started by establishing the e-Strategy office in 2011 as part of the company’s headquarter. With so many subsidiaries and different product lines, the creation of joined-up thinking in digital marketing was necessary. From there they moved on to the e-commerce operations and worked to tie together the wide range of digital marketing activities and tools. They applied marketing automation tools and much more. As Itabashi says, he’s a great believer in the message he first heard from Prof. Philip Kotler, “Digitize or die.”
The new business environment and the pace of penetration of the new digital technologies into every aspect of modern organizations require companies to adopt a different attitude to strategy. Speed and agility have become the new values that have to be implemented by organizations worldwide, and China with its vibrant economy is not an exception. The agile strategy requires Chinese companies to stop for a moment and reflect on how their mindsets should be changed. People in China, however, tend to move too fast and do not have time to stop and reflect.
The modern topic of Agility and how it is reflected in China’s business environment were the main topics of an interview with Prof. Michael Zhang (Associate Dean Innovation and Impact) and Prof. Yesha Sivan (Visiting Professor Digital, Innovation and Venture), both from the Department of Decision Sciences and Managerial Economics at the CHUK Business School.
The interview, titled “Welcome to Agilification”, was selected as one of 2018 Top 10 popular articles published by China Business Knowledge @CHUK.
Prof. Sivan believes that being agile is the key-to-success for modern companies today. “Gone are the days that an organization could plan for a five-year, or even three-year strategic plan in today’s chaotic, dynamic and disruptive business environment. Agility is the new capability to develop a transient competitive advantage with shorter planning and execution cycles,” says Prof. Sivan who is also the founder and CEO of i8 Ventures.
According to Prof. Michael Zhang, the Eastern world will have a slight edge over the Western world. “With the underlying philosophy of yin and yang, the East often values high-level epiphanies. The West, on the other hand, often depend on scientific discoveries to guide their decisions”. Prof. Zhang also said that “In regard to agile strategy, once the companies from the East understand the philosophy behind agile development, they will be able to execute it effectively. However, it’d take longer for Western firms which are more skeptical to accept such strategy, and would need to see concrete returns before adopting it.” Prof. Zhang also thinks that the agile strategy fits particularly well with technology industries, and among startups in China: “Startups in China typically do not follow a well-established structure, and their fast-moving nature will benefit from agility well.”
However, Prof. Zhang explains that as the agile strategy aims to speed up the product development cycle through a slowed down a strategy-development process, this seemingly contradictory insight also becomes the biggest challenge in China, where speed is everything. “Agile strategy requires Chinese companies to stop for a moment and reflect on how their mindsets should be changed. People in China, however, tend to move too fast and do not have time to stop and reflect,” he says. For Chinese companies to take advantage of agility and succeed in such a strategy, Prof. Zhang suggests they need more strategic thinking.
In an article published by Prof. Sivan and Raz Heiferman, Senior Digital Transformation Advisor at i8 ventures, they consider the first step of agilification as being able to accept the mental challenge of building flexible buildings.
“The goal of the modern organization is to rebuild itself all the time,” says Prof. Sivan. This ‘innate mental challenge’, he adds, will likely face many barriers among team members who are used to years of organizational culture supported by fixed systems. “Any attempt to design a building for change – let alone many changes – will not be appreciated, to say the least,” he comments.
Prof. Sivan thinks it is crucial for people to discard this mental objection and to truly understand agility, and to arrive at various different structures, processes, and business models in order to match the needs of the ever-changing market. The goal of the modern organization is to rebuild itself all the time. In terms of digital abilities, Prof. Sivan thinks organizations should consider taking advantages of cloud computing, building a data warehouse, capturing business value from the data they received, as well as various information systems. Non-digital abilities include aspects such as branding, business models and market resources. “Digital abilities should be groomed using specific actions. Actions are specific endeavors that both create business value and build long-term abilities,” he says.
You can download the full article from Cutter Consortium‘s website (registration required).
A new and interesting article written by Taneja and Maney and titled “The end of scale” was published in the Spring issue 2018 of the MIT Sloan Management Review. The two authors write about the exciting and challenging change in the new business environment – the change from the well known and popular concept of economies of scale to the new concept of economies of unscale.
They write: “For more than a century, economies of scale made the corporation an ideal engine of business. But now, a flurry of important new technologies, accelerated by artificial intelligence (AI), is turning economies of scale inside out. Business in the century ahead will be driven by economies of unscale, in which the traditional competitive advantages of size are turned on their head.”
For decades we were taught that there are advantages of scale due to mass production, distribution, and marketing, meaning that the marginal cost of production is getting lower the more units we produce. This was the rationale behind the investments of companies in scale – larger factories, mass production, mass marketing, and more. Organizations of all kinds spent the 20th century seeking scale. That’s how we ended up with giant corporations, and universities with 50,000 students, and multinational healthcare providers. Scale was also a barrier for new entrants.
And then came the digital technologies and turned everything their head. These technologies (big data, artificial intelligence, machine learning, robotics, 3D printing, drones, and more,) the emergence of new types of business models (e.g., the platform business model, freemium, the XaaS – Everything as a Service, digitization of physical products, virtualization of markets and their transformation to e-commerce and virtual markets, etc.) reversed the relationship between fixed costs and output which is the foundation of the economies of scale. Suddenly you can sell to new customers for very low prices or free of charge (e.g., the marginal cost of Apple to sell a new song with iTunes is close to zero, the cost of selling e-books by Amazon on their Kindle platform is close to zero). Companies have developed platform business models by matching demand with supply and generate money from the fees they charge the involved parties (look at Airbnb, Uber, Lyft, Waze, Booking.com, etc.) Some services are now free of charge for the customer while the advertisers are paying the bill (Google, Facebook, and others). The marginal cost for serving an additional customer is zero or close to that.
In this new economic order, David beats Goliath and small is beautiful – small companies benefit the advantage of unscale. As a matter of fact, these companies can scale up to unheard scale (hundreds of millions of customers) without having to scale their investments accordingly in equipment, employees and marketing channels.
As this article emphasized, digital transformation is a massive change and companies must understand the new business environment with all the new opportunities and risks.
You can find more on this exciting phenomenon in our e-book https://bit.ly/2odl5th
