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2
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
Table of Contents
Executive Summary .......................................................... 1
PART I, DIGITAL TRANSFORMATION, A MACRO OVERVIEW 3
1. Introduction................................................ 3
2. Digital Transformation – « Qu’estǦce que c’est ? » 4
a) The fundamental changes in companies....... 5
b) Performance of Leaders in Digital Transformation 10
3. Digital Transformation in France ................ 12
4. Digital Transformation and the Tourism Industry in France 13
5. Digital Transformation through the Lens of Strategic Frameworks 16
a) PESTEL....................................................... 17
b) Porter’s Five Forces...................................... 24
c) VRIO Competency Assessment .................... 30
6. The Customer Journey Map: a Mirror on Digital Transformation 32
PART II, VAL DIGITAL and COMPAGNIE DES ALPES .... 36
7. Digital Transformation of French Ski Stations of Compagnie des Alpes 36
8. Benchmark................................................. 44
a) Compagnie des Alpes Ski Resorts ................. 44
b) Val Thorens, social networks’ leader in France 47
c) Whistler Blackcomb, a world leader for digital ski resorts 49
9. Val Digital Project....................................... 53
a) Project Overview ......................................... 53
b) SubǦProjects................................................ 61
10. KPIs for Val Digital...................................... 75
11. Recommendations for Val Digital after 1 year of Existence 76
3
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
PART I
DIGITAL TRANSFORMATION
A MACRO OVERVIEW
1. Introduction
Digital transformation is one of the hottest topics of our times if it is not the topic, given its
widespread influence and impact. It is a global phenomenon, its scope and maturity level
not always in line with the development levels of different countries: It is possible to find a
country such as Korea ahead of its peers in terms of WiͲFi quality, or the usage of social
networks more widespread in some developing countries than developed ones. The impact
on business is huge, as it disrupts many givens and barriers to entry that protected different
industries or vendors for decades. This has led to the writing of Chapter 5, the analysis of
change brought about by digital transformation in the context of strategic frameworks,
because it really changes the rules of the game. Digital transformation is a vast subject, of
which it will not be able to discuss all aspects in this paper; and moving extremely fast,
which means that some ideas or practices discussed in this paper may have become
obsolete by the time it is handed in.
Source reliability and change are the main complexities of the research for this paper, as
the traditional books as primary sources are replaced by white papers, presentations, web
sites and blogs. There is an extremely important number and variety of publications
available. However, the claims therein need to be checked carefully and compared against
other resources given the ease with which any idea or claim can find itself out there,
without preͲvalidation by “authorities”. The new ere has also its proper way of validation:
peer reviews and reader views become the next best thing to affirm or discredit new
information sources. Therefore, the resources that have been chosen are those which are
crossͲreferenced, appearing in reliable editors’ pages, or introducing new or interesting
concept and ideas although they may not have been proven so far.
The case example of this paper is the work that the author is doing at the moment, the
project management of Val Digital and its evangelisation. Val Digital is the code name for
the Compagnie des Alpes1
pilot digital transformation project, taking place at Val d’Isère.
Basically, it is the ambition of digital transformation of a whole ski resort.
1
world leader in management of ski resorts & amusement parks
4
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
In order to understand the facts and the stakes, the author will start by taking a look at the
digital transformation in general: What is it and what does it englobe? What does it impact?
Who does it impact? As the case is taking place in France, the digital transformation taking
place in France will be studied, with a special focus on the tourism sector.
To illustrate the “game changing impact”, strategic frameworks will be used in order to
identify what changes are/will be taking place at different strategic dimensions.
Before focusing in on the Val Digital project, the client journey as a structuring element of
the transformation will be studied. A brief analysis of the results of a survey among main ski
resorts in France to identify where they stand on the digital transformation, and an
outstanding example from France and the world will end this section.
The Val Digital project, its development and its different parts will be the object of thorough
description and analysis, before concluding with brief recommendations.
2. Digital Transformation – « Qu’estǦce que c’est ? »
The dictionary definition of « transformation” is “transmutation, shift”. Howard King
defines it in his The Guardian article in the business sense as “Transformation is a whole
scale change to the foundational components of a business: from its operating model to its
infrastructure. What it sells, to whom and how it goes to market.”i
This definition is in line
with the comprehension of the essence of this paper, so will be used for the purpose of this
paper. As for “digital”, he defines it as “any technology that connects people and machines
with each other or with information”, which is again a workable definition as it is sufficiently
overarching the whole of the concepts that will be mentioned.
“Digital Transformation”, on the other hand, is a concept that is interpreted in many ways,
with different approaches discussing it in terms of its benefits, drivers, elements, attributes,
or the fields it impacts. In order to pave the route for the strategic approach that will be
discussed in Chapter 5; the broadest sense will be the most helpful. In light of all the
research and insight, the author has come to the following definition of digital
transformation for this paper:
“The totality of the fundamental changes in companies by way of digital elements,
including and affected by the change in consumers’ attitudes and way of life brought
about by the same elements.”
Concretely, what does it mean? Let’s start by looking at “the fundamental changes in
companies”.
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7
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
The emergence of the World Wide Web, reputation websites, social media and the mobile
technology which gave access to all of these everywhere and all the time, the consumer
became active instead of passive. Before the digital era, an advertising claim was put
forward by a brand and the consumer had no way of knowing its truthfulness or
effectiveness unless he used the product or was exposed to wordͲofͲmouth from his
entourage. With the arrival of social media and evaluation websites, consumers could give
their opinions and read that of others; and more importantly, in large numbers.
Web 2.0 was the revolution of interactivity and “wordͲof mouth marketing” gained
importance more than ever, though virtually. Thus, the consumer became active and the
monologue from a brand to its consumers quickly became a dialogue or an exchange “oneͲ
toͲmany” as it is called today, with exchange creating the foundation for the new world.
With the introduction of identifiable masses of individuals giving their opinions, consumers
have the chance to make choices based not only on the official claims of a brand, but also
on the views and critiques of others who are similar to them. The digital opinions are given
via a screen (computer, telephone, …) but the consumer can know more about the persons
giving the opinion than the person standing next to him (same age group, with or without
children, similar tastes,… ). Thus, peer influence contributes to consumer decisions,
replacing part of brands’ persuasion power, and becoming a subject that they need to
address and services they need to pay more attention to than before (brand reputation,
after sales problem solving, consumer complaints…).
The easy access to information also brought about the possibility to choose between many
offers, with a lot of information on the content and quality of the offer and the possibility of
delivery to and from places impossible before: country barriers are evicted as more and
more international easy delivery options are available, and even the small honey producer
in the country can send off his goods easily to four corners of the world.
Intermediation has also undergone tremendous changes: on the one hand, huge platforms
like booking.com integrate an enormous variety of different hotel and lodging offers; on the
other hand, each individual with an offer can meet its clientele directly; or, as in the case of
Airbnb, single offers are united to create a big and more active market.
And finally, the most important notion that rises with the digital era is the consumerͲ
centrism: the real period of consumer as king has begun. The customer journey is a concept
that the brands are paying extreme attention to as well as the touch points because the
marketers have become aware that the decision making of the purchase is no longer made
solely during the act of purchase. As such, all the different contact points with the customer
gain importance as each gives a possibility to influence him/her to take that vital decision:
“buy”. Since marketers now know that a loyal consumer costs much less than a new one,
the question becomes how can repeatͲpurchase behaviour be “programmed”? Better, how
8
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
can he become the brand’s “ambassador”, to persuade others in behalf of the brand? Then
there’s the issue of creating new or incremental business: if I know what my customer is
doing, how can I induce crossͲselling or upselling behaviour to increase my business, his
likelihood of buying and his total spending?
ii. The Operational Processes
Looking back at the definition retained in the introduction, digital is “any technology that
connects people and machines with each other or with information”. As such, it is only
natural that it also improves the operational processes or the way of doing things.
One of the first and foremost advantages of digitization is the elimination of double entries:
by enabling communication between different machines, people and data; it helps
eliminate the errors stemming from manual entry or multiple entries, saves time and
energy on the simple processes. On top of that, the complex surveillance capabilities
brought forward by these intelligent systems help reduce waste and increase automation.
The increasing number of direct relations between producers and buyers, the evolution of
delivery systems and the birth of rating systems bring about changes in the cost and
profitability models: increasing transparency calls for lower margins; thus new processes
aiming higher productivity and lower costs. On the other hand, as a result of the same
changes, the existing processes or production methods become obsolete and put
enterprises in danger (Kodak), or completely change the environment and question the
legal frameworks (taxis vs Uber). A new model of competition is born.
On a more general level, performance management is simplified: more data is available and
easily interpretable to define key performance indicators and install automatic monitoring
processes. As such, even small details can be detected and improved, broadening the
horizons for innovation and higher efficiency.
iii. The Business Models
The digital era is questioning the existing business models and their sustainability, too. This
is happening in a variety of ways:
Ǧ “GAFA” (Google, Amazon, Facebook, Apple) are becoming active in many sectors
previously considered outside of their activity and the lines of core business are
blurring.
9
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
Ǧ New actors, called “pure players” are born, active only on the web and focused on
one idea. In the midst of this ever changing landscape, existing businesses are
questioning their viability, their profitability and their future business models: will
they still be making money with their products or is “services” their future? How will
the production, delivery and maintenance costs change? Most importantly, what is
the shape and form of tomorrow’s market in which they’ll be required to compete?
Ǧ Societal phenomena are changing the rules of the game: new concepts like
crowdsourcing or crowdfunding provide access to rare resources in yesterday’s
world. Key competences can be assembled by the way of crowdsourcing. Otherwise
hidden ideas come to light thanks to crowdfunding: micro participations enabling
the creation of business from individual ideas. Consumers become developers
through coͲcreation platforms, and everybody can sell much less anything via social
commerce or eͲcommerce sites.
In short, new usages and new habits are questioning the business models as we know them.
In Chapter 5, the impact of the digital will be unveiled further using basic strategic
frameworks.
iv. The Empowerment of Employees
The digital era is also changing the employee power, employeeͲemployer relationships, and
the management schemes. As Karel Dörner and David Edelman of McKinsey say:
” Being digital is about using data to make better and faster decisions, devolving decision
making to smaller teams, and developing much more iterative and rapid ways of doing
things. Thinking in this way shouldn’t be limited to just a handful of functions. It should
incorporate a broad swath of how companies operate, including creatively partnering with
external companies to extend necessary capabilities. A digital mindͲset institutionalizes
crossͲfunctional collaboration, flattens hierarchies, and builds environments to encourage
the generation of new ideas. Incentives and metrics are developed to support such decisionͲ
making agility.”iv
Given the flattening of hierarchies, and the importance of the clientͲemployee interaction
at all levels, employee empowerment becomes a must: no brand manager will be able to
handle all contacts for a brand on all of its social platforms, in all its stores and after sales
points. The consumer, however, expects the same level and mentality of service at all of
these touchͲpoints. On top of all this, major innovations come from the field and from
knowing the consumers. Therefore, it is essential that employees integrate brand values,
display them and take part voluntarily in processes surpassing what their job calls for.
10
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
The digital age has additional challenges, from an employee and employer perspective. As
the management guru Gary Hamel puts it:
“…I’ll outline three of the most formidable challenges that confront companies in this new
century.
1. Dramatically accelerating the pace of strategic renewal in organizations large and
small
2. Making innovation everyone’s job, everyday
3. Creating a highly engaging work environment that inspires employees to give the
very best of themselves.”v
Roland Berger, in a study in France, found that employee satisfaction is higher in highly
digitized companies: “the companies the most matures in terms of digitization increase their
turnover 6 times faster than their less mature counterͲparts, and as importantly, employees
in the mature companies have employee wellͲbeing ratings 50% superior. Companies with
digital cultures give a large place to the human factor: they have understood that
employees may be the source of continuous improvement and even innovation. Once
trained, employees become a real force of digital transformationvi
.”
b) Performance of Leaders in Digital Transformation
Cap Gemini Consulting has realised a study with MIT to measure the link between the
digital maturity of companies and their financial performance among 391 companies in 30
countries, interviewing 469 directorsvii
. They have measured the maturity along two axes:
Ǧ The Digital Intensity
Technology enabled initiatives in customer experience and internal operations
Ǧ Transformation Management Intensity
Leadership capabilities including vision, governance, engagement and ITͲBusiness
Relationships
11
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
This work has led them to classify companies on 4 digital groups:
FASHIONISTAS
Ǧ Several separate digital projects
Ǧ Not guided by a vision that would
introduce synergies between different
departments and in different functions
Ǧ Even though some departments may be
mature, it needs a central governance
DIGIRATI
Ǧ A good global vision of the potential of
a digital transformation
Ǧ Solid governance with sufficient
investments to capture value adding
opportunities
Ǧ Strong digital culture
BEGINNERS
Ǧ Even though some may be mature in
ERP or online sales, no profound
thinking on digital
Ǧ Beginners by choice but mostly because
they ignore the real potential of digital
CONSERVATIVES
Ǧ Under exploited global digital vision
Ǧ Structured governance to ensure good
digital project management
Ǧ Dubitative on the added value of digital
Ǧ Prudent investments, sometimes to the
point of missing on opportunities to
competition
Ǧ
According to their findings, the Digirati outperform their competition on average by 26%.
Fashionistas will perform Ͳ11% less than their competition, beginners Ͳ24% versus their
competition and conservatives 9% better.
In terms of revenue generation, Digirati will be 9% better than their counterparts whereas
this figure will only be 6% for the fashionistas, Ͳ4% for beginners and Ͳ10% for conservatives.
Digirati’s market evaluation will be 12% better than their competitors whereas the
fashionistas will be Ͳ12%, and conservatives will be at 7% vs beginners at Ͳ7%.
It suggests that there is a real relation between digital maturity and overall performance, an
important message to heed by all companies asking themselves if they should take the path
to digital transformation or not.
1.DigitalIntensity
2. Transformation Management Intensity
12
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
3. Digital Transformation in France
According to the September 2014 study by McKinsey, the value added of the digital is
equivalent to 5.5% of the GDP (110 billion €), and it generates 3.1% of all jobs (1.5Million) in
France. On line sales have tripled since 2007, and 80% of the French population use internet.
As such, the penetration of digital in France is in the average of comparable countries.
However, there is an important difference between the private consumption and
investments. Whereas France is 4th
in terms of private consumption, its private investment
in digital is only 9th
among 13 countries. This phenomenon is further demonstrated by
online sales: Only 14% of French companies have received online orders in 2013 (compared
to 26% in Germany) and only 65% have websites (compared to 89% in Sweden). viii
The Roland Berger study of the same period shows that France occupies only the 25th
place
in the world, according to the NRI indicator (Network Readiness Indicator) and adds some
more figures about the digital progress in France:
Ǧ Less than 30% of companies use online data,
Ǧ Only 15% of companies have developed a mobile application,
Ǧ Only 13% of companies have developed APIs (Application Programming Interface).
Ǧ 1 French person out of 6 has made purchases online but only 1 French company out
of 10 sells online.
French companies seem to understand that digital transformation is an important element
of the future: 57% of French companies identify digital as a major strategic axis, but only 1
out of 3 has a formalised digital strategy (36%)ix
.
The majority of the businesses in France claim that the digital has already led to or is
leading to an evolution of their business model (86%). Surprisingly, they see it more as a
threat than an opportunity as 84% estimate that there is a risk, of which 71% think that it’s
important or very important. For majority of the respondents, digital will require
reinventing the consumer experience (94%), create an evolution of the existing
management models (82%) and transform operational processes (81%)x
.
Those who lead the change have a head start: enterprises mature in their digital
transformation have a growth rate 6 times superior to others, and their employees are 50%
more satisfied with their professional environments than those in companies less maturexi
.
What’s keeping the French companies from performing better? McKinsey has studied 500
companies and has identified 4 principal reasonsxii
:
13
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
Ǧ Organisational difficulties
45% of the companies mentioned structural rigidities, especially the well separated
identities of different functions in the company.
Ǧ Lack of digital competencies
31% of the companies have a real difficulty hiring digitally talented people.
Ǧ
Ǧ Insufficient profitability
French companies lag behind their European counterparts in profitability (average
gross profit margin for French companies at 28% vs 38% for UE28), making it
impossible to invest in digital for 30% of them
Ǧ Management involvement
28% of them mentioned the need for more and visible implication from their
managers and leaders to be able to bring about the digital transformation and the
cultural change that comes with it.
These results show that some of the French companies have become their digital
transformation and profit from it, although the majority haven’t taken the necessary steps
yet and a cautious approach is hindering faster development.
4. Digital Transformation and the Tourism Industry in France
France is the first touristic destination worldwide, and the tourism industry in France makes
up 7.4% of the GDP and 156.9billion € of the revenues of the country in 2013, according to
the BPI studyxiii
(Accommodation providers, travel agencies, transports, catering and
restaurants are included in this total). Even though it is not stated clearly, it seems that side
industries such as ski lift companies, locations of equipment, sales of equipment and
apparel related to touristic activities are not included in these figures, and as such the
figures are understated in terms of their potential impact on the country’s economic
welfare.
In 2013, 1 reservation out of 2 was made online and 62% of voyagers used internet to
prepare their trips in France, a performance not far from other mature European
countriesxiv
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terms of digital transformation, recalling that only 1 company out of 10 proposes online
sales in France. Unfortunately, mostly front office elements have benefited from this
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Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
The traditional actors change as well, putting more resources on online activities
whereas small agencies and tourͲoperators who have not taken the digital turn lose
market share. The emergence of the final client as an independent holiday creator
online, who can buy individually all the elements of a package, is an important
danger facing the travel intermediaries, both in terms of the offer and the prices.
It is becoming increasingly important to know the consumer and assure good client
relations, pushing traditional companies to improve direct sales platforms.
The emergence of peerͲtoͲpeer economies such as Airbnb, Uber,… also have an
important impact on the competition in the tourism industry, as illustrated by the
following article from Le Figaro (editor’s note). http://bit.ly/1N3XfVh
2. A multichannel client experience
Internet sales represented 33% of sales in 2013 vs. 23% in 2012; mobile reservations
are expected to increase threefold between 2012 and 2015. Given the increasing
usage of tablets, it is essential to provide highͲperforming applications to users and
profit from the advantages of such usages like geoͲlocalisation, and to account for
the social aspect of travelling.
Clients also expect to be able to continue their reservations or have replies to their
questions in a continuum between different interaction points. The seamless
continuity of the experience is also a determining factor for customer satisfaction.
For a well highlighted illustration, watch David Edelman, McKinsey partner leading
Digital Marketing Strategy Practice: http://bit.ly/1R2l2ql
3. Innovative products and services
As in other sectors, digital technologies make it possible to offer products with
higher added value for clients.
Perhaps the most interesting is a selfieͲtour of the city by Mandarin Oriental Paris, as
it shows not only the impact of social networks on the tourism but also illustrates
that they are for all ages and all levels of income (editor’s note).
http://bit.ly/1LsREFo
4. Better informed decision making
The massive amount of data available on clients and the interpretation of such data
thanks to digital technologies give birth to new practices. The first and best known is
the “yield management”, making it possible to adjust prices and optimise revenues
according to demand and supply. The increase in available data on clients also leads
the way to make suggestions to clients based on their preferences, and even adjust
the proposed options to their consumption methods, enabling “personalisation” of
products, offers and reductions.
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Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
5. A digital transformation of processes from end to end
Three distinct processes are concerned by this phenomenon:
o Transferring some acts to clients
Novelties such as direct bag dropͲoffs, selfͲcheckͲin and dematerialised
boarding tickets and eͲvouchers have transformed the acts and
organisational needs in the tourism industry.
o Automation of processes
One of the major outcomes of automation of processes is moving from
“static”, meaning preconceived and fixed offers in terms of contents and
price to “dynamic” packages where the package is created during the
reservation, and its contents defined according to the demands of the client.
Another implication of this change is the evolution of laws and regulations,
as some of the existing texts were based on the concept of packages (editor’s
note).
o Diffusion of digital equipment to staff
Some companies have equipped their staff with mobile tablets or other
digital equipment that contribute to service quality, efficiency and
economies.
5. Digital Transformation through the Lens of Strategic Frameworks
Given the importance of digital in the new world and the changes it brings about, a final
proof of its importance would reside in its capacity to change strategy, or rather a study of
impact of digital in strategic analysis. The inspiration for this analysis has come from the
teachings of Mr. Thomas Lawton at EM LYONxvii
.
There exist many strategic frameworks that can be used for analysis. In this paper, the
changes brought about by the digital transformation will be studied in the light of 3
frameworks:
Ǧ PESTELxviii
Ǧ Porter’s Five Forcesxix
Ǧ VRIO Competency Assessment
These three have been chosen for their complementarity: PESTEL helps understand the
environment and the forces of change in which an industry operates. Porter’s Five Forces is
a tool that is very easy to use in order to analyse the different competitive forces within an
industry. Finally, the VRIO competency assessment is helpful to identify the core
competencies within a company and look at the changes going on with them to assess
competitiveness. A change sufficiently important to be called a revolution would have
impacts at these three levels, from the most general to the most specific.
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18
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
dangerous way, people on the streets may be proͲUberpop, seeing it as liberation of choice
and prices. What is, and what could be the position of politicians? How do such
confrontations change politics and expectations? In a similar fashion, should politicians be
striving to integrate possible new economic models (Uber, Airbnb …) or insist that they
abide by the old rules? The attitudes of many users are in these cases in contradiction with
existing laws and structures, introducing new political questions: Both taxi drivers (and their
families etc.) and Uberpop users are voters, whom will the politician try to please? What is
the place of this subject within his agenda? What are the forces of the “Uberists” and “Taxi
drivers” and what is their nuisance capacity? This is of course just an example, as similar
cases can and will arise on the subject of Airbnb & hotels, Amazon & libraries and others
that we do not know yet. In this context, thanks to the communication power of the new
digital world, people will have more access to information to hear, question and judge
politicians, necessitating taking a stance.
The second question stems from a competitive issue: digital transformation being an
important element of economic welfare of countries, what should be the politics in terms
of digital transformation and development of countries, and what is the role of politicians
and government agencies? Mc Kinsey, in their paper dealing with accelerating the digital
mutation of companies, estimates that the contribution of digital to the French economy
will continue to grow regularly to potentially reach 280 billion € in 2020 if France could
attain the digitization level of the UKxxi
. In this context, how should economic and
educational policies be created to favour the creation of digital innovation and
transformation? What infrastructural investments should find themselves on top of political
agendas? The choices and actions of politicians will play a major role in the development of
any industry related even remotely to the digital economy.
The observation of politicians, political and related institutions shows the increasing impact
of the digital transformation and the new questions it introduces in the political arena.
ii. Economic
The changes brought about by the digital in economic terms may be grouped under three
types:
x those impacting the relationship between business and the final consumer (B2C),
x those impacting businesses selling to other businesses (B2B), and
x those impacting the transactional economic relations between consumers (C2C).
At the consumer level, the digital revolution is certainly one of information. He/she has
easy access to much more information and choice and this modifies his relationship with
19
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
any provider of products or services. Because of this greater knowledge, he has the
possibility to compare prices between different offers, distributors and steps in the
production cycle. This knowledge increases his force, and, via the lower prices, his
purchasing power. According to the Mc Kinsey study, an internet user in France brings
about 20€ of economies by month to its householdxxii
.
Among the digitally induced B2C changes is the creation of giant distributors, with a very
wide offer. Amazon is a global vendor selling everything from clothes to books to gym
equipment, and has even started distributing fresh fruits and vegetables. With its fast
delivery, competitive prices and performant customer service, it has brought an end to
many local stores. Marketplaces replace separate vendors. The dematerialization of offers
has also led the markets to evolve towards big aggregators selling differently, as the music
sector witnessed with the arrival of iTunes, Deezer or Spotify; or the travel agencies with
online sales and booking.com.
On the B2B scheme of things, greater integration of processes has been possible thanks to
digital improvements, leading to way to less stocks and better delivery times, by integrating
the systems of different contributors to production. The improvement of costs, thanks to
the management of great amounts of data and their interpretations to reduce waste has
also been an outcome of digitization.
The digital transformation has created a whole new jargon in economy and perhaps the
most important result of the digital transformation on economy has been the creation of a
whole “new” economy, the sharing economy, without intermediation (C2C). The impact is
so vast and so allͲencompassing that it brings about a revolution:
o The sharing of consumption and direct offers (Airbnb, Uber, blablacar, homeaway,
couchsurfing, lessons via internet...),
Thanks to internet and the possibility to “connect” with potential consumers, each and
every person who has a potential sellable or rentable service or object can do so, freely and
easily. It goes from renting out one’s flat to one’s couch, renting out lessons, the car or the
possibility to use a service with other people that one does not know to have access to an
offer that wouldn’t be possible otherwise. This new possibility creates a big disruption for
industries concerned: hotels have suddenly new competitors that they did not see coming,
it may become easier to travel renting only a couch instead of a room increasing the
number of travellers, taxi prices may be questioned… Many new elements are to take into
account making a business plan.
20
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
o The sharing of creation (crowdsourcing,…)
Let’s start with the definition of crowdsourcing from Wikipediaxxiii
: Jeff Howe and Mark
Robinson, editors at Wired Magazine, coined the term "crowdsourcing" in 2005 after
conversations about how businesses were using the Internet to outsource work to
individuals. Howe and Robinson came to the conclusion that what was happening was
like "outsourcing to the crowd," which quickly led to the portmanteau "crowdsourcing."
Howe first published a definition for the term "crowdsourcing" in a companion blog post
to his June 2006 Wired magazine article, "The Rise of Crowdsourcing," which came out
in print just days later:
"Simply defined, crowdsourcing represents the act of a company or institution taking a
function once performed by employees and outsourcing it to an undefined (and
generally large) network of people in the form of an open call. This can take the form of
peerͲproduction (when the job is performed collaboratively), but is also often
undertaken by sole individuals. The crucial prerequisite is the use of the open call format
and the large network of potential labourers."
The impact is enormous: no longer bound by geographical boundaries or dependant on
inͲhouse teams, companies no longer have the same resource constraints. The
crowdsourcing as it is seen today (writing code, creating publicity,…) is evolving at a
great pace, as new forms of delivery are being mentioned; for instance, people going
home from work can deliver packages on their route if they want to. The developments
on a large scale of these evolutions will have major impacts on costs and reach,
changing forever the economical equations.
o The sharing of financing (crowdfunding).
First things first, another definition from Wikipediaxxiv
: Crowdfunding is the practice of
funding a project or venture by raising monetary contributions from a large number of
people, typically via the internet. Crowdfunding is a form of alternative finance, which
has emerged outside of the traditional financial system.
The crowdfunding model is fuelled by three types of actors: the project initiator who
proposes the idea and/or project to be funded; individuals or groups who support the
idea; and a moderating organization (the "platform") that brings the parties together to
launch the idea. In 2013, the crowdfunding industry grew to be over $5.1 billion
worldwide.
Once again, a new model is born which permits people with a new idea or business model
to bypass the hard and long roads of classic financing and get what they need from a large
number of people, to realise their projects. Many startͲups form in this manner and
21
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
threaten existing companies in many industries with their agility and novelty among other
advantages.
As can be seen with the above descriptions and illustrations, digitization has a huge impact
on the economic scales of any strategy and calls for a new way of thinking.
iii. Social
The societal changes that accompany the digital transformation are so many that it would
be necessary to write another paper to explain in detail all of them. For the purpose of this
paper, please find below the major effects that have been observed by the writer, knowing
that the list is certainly not complete.
• The “connected age”: All the social networks that are a major part of the digital era
create a connection between people who previously didn’t know each other and would
never cross paths, while it leaves less time for less human interaction with family and
friends. A new type of “friendship” is born, bringing with it new rules of conduct and trust.
• Andy Warhol was right when he said “In the future, everybody will be worldͲfamous for
15 minutes.” Thanks to the social networks; anybody can become famous and very fast.
• People are more informed, and informing. Anybody can find information about the
product/service he wanted to buy or give his opinion on it, and opinions of “strangers like
me” shape the buying decisions. As consumers they have new power and they will use it.
• Consumer needs are evolving as well: reactivity, individual attention, quality of service
fluidity in interactions with the vendor/brand and integrating consumers into the creative
processes are among the newly emerging norms.
• Citizens are also becoming more active in their demands and how they voice them
thanks to the power of social networks which help amplify simple messages.
• Thanks to the sharing economy, it is much easier to become a creator or make
commerce without needing a heavy structure.
• The digital era is also a better “equal rights employer” as it creates the possibility to be
educated online or to work from home.
• The work/private life borders are shifting, with the rise of smart phones and tablets
which make it possible to join anyone anytime; and thus ask something of them.
• The expectations of workers are shifting as well; they want more participative
management, being included in innovation projects, responsibility and autonomy.
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Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
iv. Technological
The digital era is about technology. Whereas information systems were just one of the
support systems of a company not so long ago, now they are in all the departments of the
company. Starting from the top, the management uses key indicators and performance
reports supplied by its information systems. HR needs IS to calculate the hours worked, the
pay, the personal development followͲup,... Production needs IS to follow production
numbers, efficiency, breakdown rates, raw material needs, production
schedules,…Commercials need IS to take orders, to propose repeat orders, to keep track of
client information and propose new products or deliveries,…Logistics needs IS to calculate
costs, prepare deliveries, to handle delivery schedules, to define the routes,…Marketing
needs IS to see which products sell, to define new products, to calculate prices, to learn
about consumers’ opinions, to communicate on the product, to exchange with consumers.
All these departments which were once autonomous now depend on and are tied together
with information systems as data is at the heart of all digital systems and information
systems provide this. New job titles such as Chief Technology Officer or Chief Digital Officer
are created, including responsibilities of the old IS guys and marketing, and maybe more
and more of everything in the future with the further usage of Big data. At a strategic level,
this shows the importance of digital to attain success and the importance that should be
attributed to it.
v. Environmental
Even though the digital revolution will not have the same environmental impact as the
industrial revolution, it will be important in the sense that the communication capacity that
it gives to everyone may help act on environmental destruction. People may connect and
fight against damage to the environment, and companies who invest on green practices
may receive the applause that they merit thanks to the fast spread of information thanks to
social networks and internet. The possibility to publish photos and videos is especially
helpful, as it reinforces the claims or truth, and may stir a stronger emotional involvement
than words alone.
vi. Legal
Amongst the trademarks of the digital transformation, we can count the disappearance of
borders, the creation of new forms of transactions and the availability of personal
information at a larger and easier level. These elements have very important legal
implications.
23
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
One of the first legal issues to come to light with the increase in eͲcommerce was that of
jurisdiction: If one buys in France a product from an American eͲcommerce website
produced in China and shipped from Turkey, the legal framework to be respected is that of
which country? In which country does the client take his complaint to court? The rules of
which country apply? For instance, in the case of the “AntiͲAmazon” law in France which
forbid adding the 5% price decrease and free delivery, Amazon responded just the day after
by proposing delivery at 1 centimes of € and thus sidestepping the intention of the lawxxv
.
Also related to this subject are the questions about tax, legal and economic issues. The
transactions between companies and companies (B2B) or between companies and
individuals (B2C) are well defined. However, which are the rules that apply between two
individuals (C2C)? When an individual rents a house for 25 persons, does the house comply
with the rules and regulations of a hotel (as is the law in France), or can he compete with a
hotel of the same size having no constraints whatsoever because it is technically not a hotel.
And would this be considered unjust competition (competition déloyale) or not, or at which
point it becomes so?
There is also the question of privacy: which rules and regulations about personal
information apply? The most recent case of Google against CNILxxvi
illustrates brilliantly this
subject: End of July, Google informed CNIL, guardian of private life in France, that it
wouldn’t be following CNIL’s recommendations concerning the “right to forget” (droit à
l’oubli). What this means is that if an individual in France asks that an offensive content be
removed from search engines because it is offensive, it will be removed from only French
search engines and not of other countries. This may seem shocking because anybody can
access other countries’ search engines. According to Bertrand de le Chapelle, who shared
his thoughts in the same article, there is a certain balance to be found between the
protection of private life and the right to information, and take into account the territorial
rights: how is it possible or acceptable to impose French laws in US or vice versa? He gives
the example of Thailand, where it is a crime to criticize the king. If the logic of no territorial
law is pursued, this would mean erasing all negative comments about the Thailand king all
around the world, which would be another extreme.
These insights show the complexity of the new legal landscape facing the digital era, and
this will certainly have an impact on strategy making.
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ht even be h
extinction:
pinions on l
ormed: spee
ervices; the
s NOW and
op trend as
their advert
ven anymo
ents.
uin 2015, Travail
me 2014/2015
gapore mig
s much chea
clients to
Initiative Pro
t informatio
hink it did.
in terms of
higher. The
internet is
ine, so the n
ed and relia
ey ask quest
WELL. They
well as the
tising claim
re because
de groupe MBA
ght become
aper for the
amazon be
Seam
Easy
oject, Novem
on about yo
Bearing in m
digital adap
force that
a vast reso
new king is
ability are be
ions, they m
y no longer
creation of
s: defending
it is visible,
A Marketing et C
the next co
e same pric
ecause there
mless exper
ber 2015
our offers
mind that,
ptation, it
brands or
urce, and
really the
ecoming
make
want
f a real
g justice
a new
Commerce sur
ompetitor
e and the
e is more
ience
26
choi
hote
Ube
web
chan
Ano
chan
(rea
78%
they
befo
actio
time
the
This
mer
othe
The
Bran
othe
Gayé
ice. Transac
el in Paris
erpop. On th
bsite becaus
nging in term
ther precio
nnels. They
lͲtime, mob
% in a very im
y have mor
ore. Ford Fr
onco.fr in a
es in the Fo
new vision
s is an enor
rely years a
er good and
power of i
nds’ and ve
er clients tu
DELAHOUSS
ctional barri
may be los
he other han
se having a
ms of barrie
us informat
asked “Did
bile, partne
mportant m
e informati
ance’s Gene
n interview
rd store bef
of Ford is to
mous chang
go, now th
d successful
nfluence of
ndors’ repu
rn more tow
E Executive M
iers and the
sing blood t
nd, any hot
access to a
ers to entry,
tion coming
d digital cha
r websites,
manner. The
on, but als
eral Manag
w on Septem
fore making
o make the
ge of vision
he “real” sto
examples o
f customers
utation depe
ward peers’
MBA EM LYO
e protection
to the Airb
el’s sales m
ll in one p
, and custom
g from the C
ange the w
recommen
e decision m
o in a diffe
er responsi
mber 10th
th
g their decis
brick and m
n, whereas
ores are be
of this new v
s is the new
ends much
’ ideas than
ON Strategic I
n of big gro
bnb apartm
may be made
lace is easi
mers have t
CSC study is
way your clie
ndations…).
making proc
erent way a
ble for sale
at their clie
sion compar
mortar store
it was ques
ecoming ext
vision, like B
w force tha
on what th
n brands. Th
Initiative Pro
ups are gon
ent in Mar
e more on b
ier. The rul
he last wor
s about con
ents have a
96% replie
cess has cha
and from di
s, Bertrand
ents now sto
red to 4 to 5
es an extens
stioned to h
tensions of
Burberry for
t has risen
heir clients s
he rise of tri
oject, Novem
ne as well: T
rais and the
booking.com
les of the g
d.
tact points
access to yo
ed that they
anged for th
fferent sou
Lessard, re
op by on av
5 timesxxviii
.T
sion of their
have websit
websites. T
r luxury goo
with the d
say about t
padvisor.co
ber 2015
The 5 star
e taxis to
m than his
game are
and sales
our offers
y did, and
he clients:
rces than
evealed to
verage 1.5
Therefore,
r website.
tes or not
There are
odsxxix
.
igital era:
hem, and
om and all
27
the
of p
figu
find
buyi
i
The
the
In r
trad
disru
a t
com
sear
Build
com
Sou
Gayé
similar web
eer influenc
res on the s
them usef
ingxxx
.
iii. Thre
digital age
ease of inte
return, all
ditional chan
uption. Indi
hreat to t
mpetitors wi
rch for disru
ding a strat
me, as no on
rce: http://w
DELAHOUSS
bsites on dif
ce as a new
subject are
ful for thei
eat of Subs
makes it po
eraction tha
products th
nnels or ven
viduals’ flat
taxis. How
th the digita
uption in on
tegy for tom
e is safe fro
wetpaintǦm
E Executive M
fferent subj
w element to
imposing: 9
ir purchase
titutes
ossible to de
anks to digit
hat can be
ndors. Uber
ts did not se
wever, prev
al age. Ther
e’s own ind
morrow nee
om an outsid
ena.com/
MBA EM LYO
jects that fo
o be taken i
90% of the
es, and 68%
evelop prod
al tools, eve
e bought d
r and Airbnb
eem a threa
viously unt
re is an imp
dustry befor
eds to take
der anymor
ON Strategic I
ollow is a cle
nto conside
French peo
% consult o
ducts adapt
en a coͲcrea
differently a
b are once
at to hotels,
thoughtͲof
ortant lesso
re a new en
e into accou
e. As Tom G
Initiative Pro
ean indicato
eration in br
ple read on
on line opin
ted to client
ation with t
are no long
again good
, as private
options m
on for brand
trant comes
unt the pot
Goodwin pu
oject, Novem
or of the im
randing stra
nline comme
nion websit
ts’ needs. B
he clients is
ger bought
examples t
cars had no
may becom
ds: there is
s and takes
tential disru
ts itxxxi
:
ber 2015
mportance
ategy. The
ents, 86%
te before
ecause of
s possible.
t through
to market
ot seemed
me viable
a need to
the place.
uptions to
28
29
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
iv. Bargaining Power of Suppliers
The effects of the digital transformation are more visible downstream than upstream.
However, the changes downstream may influence the businesses upstream in different
ways. One of these is the distribution of profits. There are three possible ways in which this
can happen:
1. With the need for more personalisation, the product specifications at production
level may become more different, thus increasing production posts, without the
possibility to increase final product price.
2. As new intermediaries are being created downstream Ͳ meaning the big vendors
such as booking.com which force new and higher commission rates on
accommodation owners – the producers and historical direct sellers lower their
marginxxxii
.
3. The access to further and cheaper producing countries may put local producers in
peril.
The digital transformation is an ever changing process and its exact evolution is not yet
known. For the time being, it seems to decrease the power of suppliers rather than increase
them.
One final question remains to be clarified: “Who is a supplier?” Before the digital age, it was
clear to see who played in which industry. Today, with google entering new segments such
as tourism, health or automobile, it is difficult to evaluate their role in relation to an
industry. Yesterday, for tourism, google was a supplier of visibility in search engines. Today,
they are an intermediary selling accommodation. What will their role be tomorrow and
how will it change the power structures within industries? This is the unknown with the
future of the digital age.
v. Competitive Rivalry within an Industry
BPI underlines an important potential outcome of the digital transformation in its February
2015 report: « By allowing, through its immaterial character, competition on a multiplied
geographical zone, the digital can weaken local historical actors and induce a brutal and
massive movement of profits. Only the services carried out by nature in proximity with the
client are an exception, but all the upstream segments may share this fatexxxiii
. The change
in profit distribution is one outcome of the digital age, but it is not the only one.
Among the current rivalry within any industry, new dynamics are at play because of the
digital transformation. The transformation capability of different actors determines their
future, as all industries are open to attack by inside or outside players. Let’s take a look at
the music industry: Justine Bieber, Taylor Swift, Madonna… and countless other artists are
com
mus
lives
anot
very
as b
subj
or p
all n
Spot
thei
c
Sou
Onc
adva
usin
of a
Gayé
mpeting for t
sic, the num
s were the
ther eleme
y important
before, and t
ject for them
ulling all he
new emerg
tify, vine…
r presence.
c) VRIO Co
rce: http://b
e the comp
antage at co
ng strategic
company. L
DELAHOUSS
the attentio
mber of albu
elements w
nt, combine
element to
the returns
m, as seen b
er work out
ing artists w
; making it
ompetency
bit.ly/1P3cK
petitive anal
ompany lev
framework
Let us recall
E Executive M
on of the glo
ums, the to
with which t
ed with pro
o their prom
on Spotify
by Taylor Sw
of Spotifyxxx
who can co
even more
y Assessme
KB5
ysis of an in
vel. At this l
ks, we will lo
l the 4 comp
MBA EM LYO
obal music a
ours and the
they played
oximity and
motion. But t
or Deezer o
wift’s refusa
xiv
. Artists co
ome out m
e important
ent
ndustry is m
last part stu
ook at the i
ponents of c
ON Strategic I
audience. U
e interest t
d. Today, th
d interactio
that’s not a
or Apple mu
al of putting
ompete am
much more
t for existin
made, the ne
udying the i
impact of d
core compe
Initiative Pro
ntil recently
hey provide
eir social m
n with fans
ll: music is n
usic is a new
g her new a
ong themse
easily now
ng ones to
ext level is a
impact of d
igitization o
etenciesxxxv
:
oject, Novem
y; the qualit
ed with the
media prese
s, adding a
no longer d
w and very i
lbum on ap
elves but als
thanks to
continue a
assessing co
igital transf
on the com
ber 2015
ty of their
eir private
nce is yet
new and
istributed
mportant
pple music
so against
YouTube,
nd renew
mpetitive
formation
petencies
30
31
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
Valuable: Does it clearly contribute to your value proposition?
Rare: Is it scarce within the sector?
Inimitable, immobile, nonͲsubstitutable: Can it be easily copied or obtained by rivals? Can
a different capability or competency deliver the same effect?
Organization: Is the firm organized, ready and able to exploit the resource/capability?
At the company level, the effect of digitization is the changes on the competencies that can
be considered valuable, rare and hard to imitate.
Coming back to the tourism sector, let’s imagine a hotel chain renowned for its service
quality: they take pride and advertise on responding to all requests of clients in a fast,
relevant and impeccable manner throughout. It clearly is valuable and contributes to its
value proposition. It can be assumed that it is rare as they are using it as an advertising
claim. It is not easily imitable or substitutable because it requires a certain mindͲset and a
certain organization, the last element of the VRIO framework. Now let’s look at the
adaptation of this hotel chain to the digital age:
Ǧ The new demands will require instant and highͲdebit WiͲFi. Not hard to do, but
necessitating a new mindͲset and investment.
Ǧ Other material needs may follow : chargers, headphones, cables,…As above,
possible
Ǧ The guests will be leaving their comments on online evaluation websites such as
tripadvisor.com, or through mentions on Twitter, Facebook, etc. It gets more
complicated at this level because :
o First of all, the chain has to have thought of this evolution and hired at least
one community manager.
o Which would not suffice because clients now everything NOW so there may
be a need for a community manager around the clock.
o Then again, the community manger must be able to figure out who the
person behind the comments is (not everybody use their real names).
o One more step: the hotel chain organization must have evolved in such a
way that employees from all levels can accept demands coming from the
community manager, technically at the same level or at a lower hierarchical
level than themselves.
o And further: the guests, who have already stayed with the hotel, reckon that
the hotel knows all about them and should have everything as they want for
their next stay, requiring a CRM system.
Ǧ The hotel chain must also realize that comments offline are less visible today, and
find a way to transfer negative comments to positive online.
2
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
Table of Contents
Executive Summary .......................................................... 1
PART I, DIGITAL TRANSFORMATION, A MACRO OVERVIEW 3
1. Introduction................................................ 3
2. Digital Transformation – « Qu’estǦce que c’est ? » 4
a) The fundamental changes in companies....... 5
b) Performance of Leaders in Digital Transformation 10
3. Digital Transformation in France ................ 12
4. Digital Transformation and the Tourism Industry in France 13
5. Digital Transformation through the Lens of Strategic Frameworks 16
a) PESTEL....................................................... 17
b) Porter’s Five Forces...................................... 24
c) VRIO Competency Assessment .................... 30
6. The Customer Journey Map: a Mirror on Digital Transformation 32
PART II, VAL DIGITAL and COMPAGNIE DES ALPES .... 36
7. Digital Transformation of French Ski Stations of Compagnie des Alpes 36
8. Benchmark................................................. 44
a) Compagnie des Alpes Ski Resorts ................. 44
b) Val Thorens, social networks’ leader in France 47
c) Whistler Blackcomb, a world leader for digital ski resorts 49
9. Val Digital Project....................................... 53
a) Project Overview ......................................... 53
b) SubǦProjects................................................ 61
10. KPIs for Val Digital...................................... 75
11. Recommendations for Val Digital after 1 year of Existence 76
It ill
cust
phys
ever
plac
whe
follo
type
imp
dicti
is at
emo
the
curio
purp
expe
of th
The
wom
man
Gayé
ustrates the
tomer has to
sical and d
rything on
ce is conside
ereas screen
ow a certain
e of the bra
lication, the
ionary defin
t the heart
otions gene
placement
osity, other
pose of eac
ected. It is i
he custome
customer jo
man looking
n looking fo
DELAHOUSS
e different
o engage or
digital touc
a screen an
ered. In this
ns in a stor
n temporal l
and/produc
e duration o
nition, depe
t of any di
rated (or so
in the cus
rs creating c
ch touchͲpo
important t
r journey an
ourney is no
g for buying
r a VTT. The
E Executive M
contact or
r interact w
chͲpoints a
nd which ca
s context, m
re will be c
ogic, it will
ct, dependin
of the time
endant on m
gital strate
ought to be
tomer jour
comfort, an
oint depend
o note that
nd their pur
ot unique to
g a bike on t
erefore, it is
MBA EM LYO
touch point
with a brand,
are differen
an be cons
mobile ads o
considered
have a time
ng on the d
line may va
machines; it
egy. Therefo
e generated
rney, some
nd yet other
s on its pos
t some touc
rpose may d
o all custom
the road wi
s imperative
ON Strategic I
ts, online a
, even brief
ntiated. Th
ulted regar
or YouTube v
physical. T
eline which
difficulty of
ary. In spite
ts capacity t
ore, special
d) at differe
touchͲpoin
rs supplying
sitioning in
ch points ma
depend upo
mers. The cu
ll definitely
e that brand
Initiative Pro
nd offline.
fly, is a touc
he distinctio
rdless of ph
videos will
The custom
will depend
decision m
of the fact
to create bo
l attention
ent touchͲp
nts will be d
g informatio
the timelin
ay be prese
on the partic
ustomer jou
be differen
ds create pe
oject, Novem
Each occasi
ch point. Qu
on is quite
hysical pres
be consider
mer journey
d on the pur
making and
t that digita
onding and
is dedicate
oints. Acc
dedicated t
on, and so f
ne, and the
ent at multip
cular mome
rney of a 45
nt from a 26
ersonas aro
ber 2015
ion that a
uite often,
e simple:
ence in a
red digital
map will
rpose and
customer
al is, as its
emotions
ed to the
cording to
to stirring
forth. The
outcome
ple points
ent.
5 yearͲold
6 yearͲold
ound their
33
mos
of th
see
diffe
The
impo
poin
ope
sale
Sour
The
illus
to t
intro
spite
Gayé
st represent
hem. At on
if there are
erentiation
customer j
ortant to g
nts and the
rational pur
s at basket
rce for visual
two examp
trate the fle
the brand’s
oduces the
e of not bei
DELAHOUSS
tative custo
e point, it
e overlappin
according to
ourney map
get to know
emotions t
rposes to re
level or not
s pages 33 &
ples of differ
exibility pos
s essence
concept of
ng able to m
E Executive M
omers and t
may be inte
ng points tha
o the perso
pping is an
w the custo
that they n
einforce or
t leaving the
& 34: http://b
rent brands
ssible in ma
and needs
f “unmanag
manage the
MBA EM LYO
that they cr
eresting to
at need add
na.
indispensab
omer before
eed to gen
eliminate a
e website to
bit.ly/1PbqJC
s above, one
apping the c
s. Another
ged touchͲp
m directly.
ON Strategic I
reate custo
merge the
ditional atte
ble element
e working o
erate. How
a certain be
o look for co
Ch
e from Rail E
customer jo
example b
points”, imp
Initiative Pro
mer journe
different c
ention or, o
t of the digit
on the mes
ever, they
ehavior (for
omments).
Europe and
ourney and
below, this
portant for
oject, Novem
y mappings
ustomer jo
n the contr
tal strategy,
ssages of th
can also be
example co
the other f
the need to
s time from
the brand
ber 2015
s for each
urneys to
ary, more
, it is very
he touchͲ
e used for
oncluding
from Lego,
o adapt it
m luxury,
image in
34
Sourc
Gayé
ce: Gregory Po
DELAHOUSS
ouy, The Futu
E Executive M
re of the Luxu
MBA EM LYO
ury Shopping E
ON Strategic I
Experience, Ja
Initiative Pro
nuary 21st
, 20
oject, Novem
015 http://bit
ber 2015
t.ly/1JX0Rol
35
79
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
i
What is digital transformation, Howard King, The Guardian, November 21st, 2013
ii
P. 9, Roland Berger en collaboration avec capǦdigital, du rattrapage à la transformation, l’aventure
numérique, une chance pour la France, Septembre 2014
iii
George Westerman, Didier Bonnet and Andrew McAfee, MIT Sloane Review, The Nine Elements
of Digital Transformation, January 7th
, 2014
iv
Mc Kinsey & Company, What “digital” really means, Karel Dörner and David Edelman, McKinsey
Digital, July 2015
v
P. 40, Gary Hamel with Bill Bree, The Future of Management, Harvard Business School Press, 2007.
vi
P. 3, Roland Berger en collaboration avec capǦdigital, du rattrapage à la transformation,
l’aventure numérique, une chance pour la France, September 2014
vii
Cap Gemini Consulting, Digital Transformation : Définition, Enjeux, Illustrations, November 2014
viii
McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance
et de compétitivité pour la France, September 2014
ix
Roland Berger en collaboration avec capǦdigital, du rattrapage à la transformation, l’aventure
numérique, une chance pour la France, September 2014
x
CSC, Barometre de la Transformation Digitale, Les Secrets des Super Héros du Digital, 2015
xi
Roland Berger en collaboration avec capǦdigital, du rattrapage à la transformation, l’aventure
numérique, une chance pour la France, September 2014
xii
McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance et
de compétitivité pour la France, September 2014
xiii
Key Facts on Tourism, Direction Générale des Entreprises, Ministère de l’Economie, de l’Industrie
et du Numérique, Edition 2014.
xiv
McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance
et de compétitivité pour la France, September 2014
xv
Roland Berger en collaboration avec capǦdigital, du rattrapage à la transformation, l’aventure
numérique, une chance pour la France, September 2014
xvi
McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance
et de compétitivité pour la France, September 2014
xvii
Thomas Lawton, Foundations of Strategic Thinking Course (XESST), EM Lyon Executive MBA
Module, November 13th
Ǧ15th
, 2014.
80
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
xviii
Gerry Johnson, Richard Whittington, Kevan Scholes, Duncan Angwin, Patrick Regnér et
Frédéric Fréry, Stratégique (10e édition), Pearson, 2014, pp. 37Ǧ43.
xix
M.E. Porter, The Five Competitive Forces that Shape Strategy, Harvard Business Review 57
(January 2008), p57Ǧ71
xx
http://www.lemonde.fr/economie/live/2015/06/25/laǦgreveǦdesǦtaxisǦcontreǦuberpopǦprovoqueǦ
desǦincidentsǦaǦparis_4661266_3234.html
xxi
McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance
et de compétitivité pour la France, September 2014, p 5
xxii
McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance
et de compétitivité pour la France, September 2014, p 2
xxiii
https://en.wikipedia.org/wiki/Crowdsourcing
xxiv
https://en.wikipedia.org/wiki/Crowdfunding (mention on the page as article being outdated
already in April 2014, but the definition is valid for the purpose of this paper)
xxv
Banque Populaire d’Investissement, le Lab, Le Numérique Déroutant, February 2015, p 39
xxvi
http://rue89.nouvelobs.com/2015/08/17/fautǦcourǦinternationaleǦlinternetǦ260768
xxvii
CSC, Barometre de la Transformation Digitale, Les Secrets des Super Héros du Digital, 2015
xxviii
http://www.actionco.fr/Thematique/businessǦ1018/Breves/FordǦStoreǦcommentǦpoursuivreǦ
parcoursǦdigitalǦclientǦconcessionǦ258843.htm
xxix
http://www.forbes.com/sites/scottdavis/2014/03/27/burberrysǦblurredǦlinesǦtheǦintegratedǦ
customerǦexperience/
xxx
EǦtransformation du Parcours Client, Présentation du 25 juin 2015, Travail de groupe MBA
Marketing et Commerce sur Internet, Institut Leonard de Vinci (#MBAMCI), La Défense, Promo
Part Time 2014/2015
xxxi
The Battle is for the Customer Interface, Tom Goodwin, TechCrunch, 3 March 2015
http://techcrunch.com/2015/03/03/inǦtheǦageǦofǦdisintermediationǦtheǦbattleǦisǦallǦforǦtheǦ
customerǦinterface/#.ntdj8f:0sCd
xxxii
Banque Populaire d’Investissement, le Lab, Le Numérique Déroutant, February 2015
xxxiii
Banque Populaire d’Investissement, le Lab, Le Numérique Déroutant, February 2015
xxxiv
http://www.billboard.com/articles/news/6605541/taylorǦswiftǦpensǦopenǦletterǦexplainingǦ
whyǦ1989ǦwontǦbeǦonǦappleǦmusic
81
Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015
xxxv
Thomas Lawton, Foundations of Strategic Thinking Course (XESST), EM Lyon Executive MBA
Module, November 13th
Ǧ15th
, 2014, the VRIO criteria derive from the work of Barney (1991 and
2005).
xxxvi
Digital Transformation and the Customer Experience, Overcoming Barriers & a Framework for
Success, May 23rd
, 2014, http://fr.slideshare.net/MFiddy/digitalǦtransformationǦandǦtheǦcustomerǦ
experienceǦ35052981?qid=d3ac9fccǦ033aǦ4466Ǧac70Ǧe4caf0561369&v=default&b=&from_search=1
xxxvii
Roland Berger Strategy Consultants, Impacts et mise en œuvre de la transition numérique à la
Compagnie des Alpes, Document de synthèse, Avril 2015.
xxxviii
Office de Tourisme de Val Thorens, Val Thorens United – Un Plan pour Une Action Globale,
April 2012
xxxix
Cap’com, Val Thorens Invente un nouveau modèle de marketing intégré, 2 juin 2014.
http://www.capǦcom.org/content/valǦthorensǦinventeǦunǦnouveauǦmod%C3%A8leǦdeǦmarketingǦ
int%C3%A9gr%C3%A9
xl
Roland Berger Strategy Consultants, Impacts et mise en œuvre de la transition numérique à la
Compagnie des Alpes, Document de synthèse, Avril 2015.
xli
http://www.origindesign.ca/whistlerǦblackcombǦ2014Ǧ15ǦwinterǦcampaign
xlii
http://twentytengroup.com/caseǦstudies/whistlerǦblackcomb/
xliii
Val d’Isère Téléphériques Sales Statistiques, obtained by asking all clients buying a ski pass of 2
days or more: « Where do you come from ».
xliv
GfK Baromètre de Satisfaction 2014Ǧ2015.
xlv
GfK Baromètre de Satisfaction 2014Ǧ2015.

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Major Digital Transformation Challenges for the Tourism Industry in the 21st Century

  • 1. a th a Ma he D DIGI ajor C igital ITAL Challe V l Tran TRAN enge VAL D nsfor NSFO for t DIGIT rmati ORMA the 2 TAL ion o ATIO 1st c of Val EM Stra N centu l d’Isè Gayé M LYON Ex ategic Init No ury ère DELAHOU xecutive M tiative Pro ovember 2 USSE MBA oject 2015
  • 2. Exe This obse the The digit with fund digit chan prel oblig succ to a to a mos the Fran whe seei The activ poss com the the The reso Whi The Tran gene sugg Gayé ecutive Sum s strategic in erve digital 21st century first part o tal transform h the de damental c tal elemen nge in cons iminary res gatory for c cess of com dapt to the accompany st important capacity to nce is not a erever it is, ng some of strategic fr vity, the no sible, to st mpanies. 3 a macro impa VRIO to ass second par orts and es stler Blackc last chapt nsformation eral project gestions afte DELAHOUSS mmary nitiative pro transform y. of the pape mation at a efinition: “ changes in nts, includin sumers’ atti search quick companies mpanies dep e changes in this change t success fa persuade a a leader in is one of th the most tu ameworks a ovelty brou tudy the im nalyses hav act, Porter’s sess the cha rt of this pa pecially for comb as ex ter is conse n of the Com t and descr er 1 year of E Executive M oject aims t ation, the er strives to a macro lev “The total companies ng and affe itudes and w kly shows t as the cons ends on the n their activ e. The chan actor is the nd implicat all aspects e most adv umultuous c are habitua ught about mpacts of ve been cho s Five Force nge in the v aper studies r Compagni xemplary in ecrated to mpagnie de ribes and an f existence o MBA EM LYO to define an revolution o understan el and begi lity of th s by way fected by th way of life hat the dig sumers hav eir capacity vity and mak nges are tec human fact e staff are k s of digital vanced indu changes and lly used to a by this pa digital tran osen in a top s to study t value propo s more spec ie des Alpe the digital the Val Di es Alpes by nalyses all of the proje ON Strategic I nd of nd ns he of he brought ab gital revolut ve already b y to underst ke the nece chnological tor, as top m key factors f transforma stries in ter d disruption assess the p per is thei nsformation pͲdown ma he changes osition. cifically the es, with a b l transform gital projec Val D’Isère of its comp ct. Initiative Pro bout by the tion is one been transf tand these essary chang but eviden managemen for change. ation, but th rms of digita n. performance r usage in n at a stra nner: The P brought ab digital tran benchmark ation in Fra ct, the pilo Télépheriq ponents bef oject, Novem same elem where the formed. As changes, th ges in their ce suggests nt champio he tourism al, as well a e of a comp the broade ategic level PESTEL to un bout in indu sformation of Val Tho ance and th ot project f ques. It desc fore conclu ber 2015 ments”. A change is such, the heir agility structure s that the nship and industry, as the one pany or an est sense for B2C nderstand stries and in the ski orens and he world. for Digital cribes the ding with 1
  • 3. 2 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 Table of Contents Executive Summary .......................................................... 1 PART I, DIGITAL TRANSFORMATION, A MACRO OVERVIEW 3 1. Introduction................................................ 3 2. Digital Transformation – « Qu’estǦce que c’est ? » 4 a) The fundamental changes in companies....... 5 b) Performance of Leaders in Digital Transformation 10 3. Digital Transformation in France ................ 12 4. Digital Transformation and the Tourism Industry in France 13 5. Digital Transformation through the Lens of Strategic Frameworks 16 a) PESTEL....................................................... 17 b) Porter’s Five Forces...................................... 24 c) VRIO Competency Assessment .................... 30 6. The Customer Journey Map: a Mirror on Digital Transformation 32 PART II, VAL DIGITAL and COMPAGNIE DES ALPES .... 36 7. Digital Transformation of French Ski Stations of Compagnie des Alpes 36 8. Benchmark................................................. 44 a) Compagnie des Alpes Ski Resorts ................. 44 b) Val Thorens, social networks’ leader in France 47 c) Whistler Blackcomb, a world leader for digital ski resorts 49 9. Val Digital Project....................................... 53 a) Project Overview ......................................... 53 b) SubǦProjects................................................ 61 10. KPIs for Val Digital...................................... 75 11. Recommendations for Val Digital after 1 year of Existence 76
  • 4. 3 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 PART I DIGITAL TRANSFORMATION A MACRO OVERVIEW 1. Introduction Digital transformation is one of the hottest topics of our times if it is not the topic, given its widespread influence and impact. It is a global phenomenon, its scope and maturity level not always in line with the development levels of different countries: It is possible to find a country such as Korea ahead of its peers in terms of WiͲFi quality, or the usage of social networks more widespread in some developing countries than developed ones. The impact on business is huge, as it disrupts many givens and barriers to entry that protected different industries or vendors for decades. This has led to the writing of Chapter 5, the analysis of change brought about by digital transformation in the context of strategic frameworks, because it really changes the rules of the game. Digital transformation is a vast subject, of which it will not be able to discuss all aspects in this paper; and moving extremely fast, which means that some ideas or practices discussed in this paper may have become obsolete by the time it is handed in. Source reliability and change are the main complexities of the research for this paper, as the traditional books as primary sources are replaced by white papers, presentations, web sites and blogs. There is an extremely important number and variety of publications available. However, the claims therein need to be checked carefully and compared against other resources given the ease with which any idea or claim can find itself out there, without preͲvalidation by “authorities”. The new ere has also its proper way of validation: peer reviews and reader views become the next best thing to affirm or discredit new information sources. Therefore, the resources that have been chosen are those which are crossͲreferenced, appearing in reliable editors’ pages, or introducing new or interesting concept and ideas although they may not have been proven so far. The case example of this paper is the work that the author is doing at the moment, the project management of Val Digital and its evangelisation. Val Digital is the code name for the Compagnie des Alpes1 pilot digital transformation project, taking place at Val d’Isère. Basically, it is the ambition of digital transformation of a whole ski resort. 1 world leader in management of ski resorts & amusement parks
  • 5. 4 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 In order to understand the facts and the stakes, the author will start by taking a look at the digital transformation in general: What is it and what does it englobe? What does it impact? Who does it impact? As the case is taking place in France, the digital transformation taking place in France will be studied, with a special focus on the tourism sector. To illustrate the “game changing impact”, strategic frameworks will be used in order to identify what changes are/will be taking place at different strategic dimensions. Before focusing in on the Val Digital project, the client journey as a structuring element of the transformation will be studied. A brief analysis of the results of a survey among main ski resorts in France to identify where they stand on the digital transformation, and an outstanding example from France and the world will end this section. The Val Digital project, its development and its different parts will be the object of thorough description and analysis, before concluding with brief recommendations. 2. Digital Transformation – « Qu’estǦce que c’est ? » The dictionary definition of « transformation” is “transmutation, shift”. Howard King defines it in his The Guardian article in the business sense as “Transformation is a whole scale change to the foundational components of a business: from its operating model to its infrastructure. What it sells, to whom and how it goes to market.”i This definition is in line with the comprehension of the essence of this paper, so will be used for the purpose of this paper. As for “digital”, he defines it as “any technology that connects people and machines with each other or with information”, which is again a workable definition as it is sufficiently overarching the whole of the concepts that will be mentioned. “Digital Transformation”, on the other hand, is a concept that is interpreted in many ways, with different approaches discussing it in terms of its benefits, drivers, elements, attributes, or the fields it impacts. In order to pave the route for the strategic approach that will be discussed in Chapter 5; the broadest sense will be the most helpful. In light of all the research and insight, the author has come to the following definition of digital transformation for this paper: “The totality of the fundamental changes in companies by way of digital elements, including and affected by the change in consumers’ attitudes and way of life brought about by the same elements.” Concretely, what does it mean? Let’s start by looking at “the fundamental changes in companies”.
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  • 7. How “wh a re elem Afte foun “The i i i The they impa emp i. The know give and and som Gayé wever, this at” of the “ evolution. T ments since er reviewing nd the defi e Nine Elem i. The ii. The iii. The above segm y have bee act of hum ployees und The Con consumer i w it started en the consu the possibi heard beca me of the ma DELAHOUSS is just a vie “transforma The difficulty inseparable g the first 1 nition of th ments of Dig Consumer E Operationa Business M mentation h n defined i mans, the a er the head nsumer Exp is at the hea d with the c umers the p ility to be h ause of the ajor changes E Executive M ew of the fi ation”, in or y of the ex e interconne 11 referenc hree key ar ital Transfo Experience al Processes Models has been re n the refer author has ding “Emplo perience art of the di changes in possibility to eard: reliab e increasing s that have MBA EM LYO irst part, th der to unde xercise is de ectedness is ces of the b eas of digit rmation”iii t s etained but rred text. In s decided t oyee Empow igital chang consumer b o have easie ble because oneͲtoͲma influenced ON Strategic I he digital. It erstand how efining the s a part of t bibliography tal transfor to be the mo t the conten n addition, to study se werment”. e, because behaviour. er and faste of multiplic any commu consumers Initiative Pro t is also imp w and why t borders be he new digi y of this pa mation des ost exhaust nts of the a given the eparately a the digital t The emerg er access to city of sour nication. In greatly can oject, Novem portant to this transfor etween the ital world. aper, the au scribed in t tive and mea areas vary f importance all that tou transformat ence of int o reliable inf ces and inte the diagra be observe ber 2015 study the rmation is different uthor has he article aningful: from how e and the uches the tion as we ernet has formation eractions, m below, ed. 6
  • 8. 7 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 The emergence of the World Wide Web, reputation websites, social media and the mobile technology which gave access to all of these everywhere and all the time, the consumer became active instead of passive. Before the digital era, an advertising claim was put forward by a brand and the consumer had no way of knowing its truthfulness or effectiveness unless he used the product or was exposed to wordͲofͲmouth from his entourage. With the arrival of social media and evaluation websites, consumers could give their opinions and read that of others; and more importantly, in large numbers. Web 2.0 was the revolution of interactivity and “wordͲof mouth marketing” gained importance more than ever, though virtually. Thus, the consumer became active and the monologue from a brand to its consumers quickly became a dialogue or an exchange “oneͲ toͲmany” as it is called today, with exchange creating the foundation for the new world. With the introduction of identifiable masses of individuals giving their opinions, consumers have the chance to make choices based not only on the official claims of a brand, but also on the views and critiques of others who are similar to them. The digital opinions are given via a screen (computer, telephone, …) but the consumer can know more about the persons giving the opinion than the person standing next to him (same age group, with or without children, similar tastes,… ). Thus, peer influence contributes to consumer decisions, replacing part of brands’ persuasion power, and becoming a subject that they need to address and services they need to pay more attention to than before (brand reputation, after sales problem solving, consumer complaints…). The easy access to information also brought about the possibility to choose between many offers, with a lot of information on the content and quality of the offer and the possibility of delivery to and from places impossible before: country barriers are evicted as more and more international easy delivery options are available, and even the small honey producer in the country can send off his goods easily to four corners of the world. Intermediation has also undergone tremendous changes: on the one hand, huge platforms like booking.com integrate an enormous variety of different hotel and lodging offers; on the other hand, each individual with an offer can meet its clientele directly; or, as in the case of Airbnb, single offers are united to create a big and more active market. And finally, the most important notion that rises with the digital era is the consumerͲ centrism: the real period of consumer as king has begun. The customer journey is a concept that the brands are paying extreme attention to as well as the touch points because the marketers have become aware that the decision making of the purchase is no longer made solely during the act of purchase. As such, all the different contact points with the customer gain importance as each gives a possibility to influence him/her to take that vital decision: “buy”. Since marketers now know that a loyal consumer costs much less than a new one, the question becomes how can repeatͲpurchase behaviour be “programmed”? Better, how
  • 9. 8 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 can he become the brand’s “ambassador”, to persuade others in behalf of the brand? Then there’s the issue of creating new or incremental business: if I know what my customer is doing, how can I induce crossͲselling or upselling behaviour to increase my business, his likelihood of buying and his total spending? ii. The Operational Processes Looking back at the definition retained in the introduction, digital is “any technology that connects people and machines with each other or with information”. As such, it is only natural that it also improves the operational processes or the way of doing things. One of the first and foremost advantages of digitization is the elimination of double entries: by enabling communication between different machines, people and data; it helps eliminate the errors stemming from manual entry or multiple entries, saves time and energy on the simple processes. On top of that, the complex surveillance capabilities brought forward by these intelligent systems help reduce waste and increase automation. The increasing number of direct relations between producers and buyers, the evolution of delivery systems and the birth of rating systems bring about changes in the cost and profitability models: increasing transparency calls for lower margins; thus new processes aiming higher productivity and lower costs. On the other hand, as a result of the same changes, the existing processes or production methods become obsolete and put enterprises in danger (Kodak), or completely change the environment and question the legal frameworks (taxis vs Uber). A new model of competition is born. On a more general level, performance management is simplified: more data is available and easily interpretable to define key performance indicators and install automatic monitoring processes. As such, even small details can be detected and improved, broadening the horizons for innovation and higher efficiency. iii. The Business Models The digital era is questioning the existing business models and their sustainability, too. This is happening in a variety of ways: Ǧ “GAFA” (Google, Amazon, Facebook, Apple) are becoming active in many sectors previously considered outside of their activity and the lines of core business are blurring.
  • 10. 9 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 Ǧ New actors, called “pure players” are born, active only on the web and focused on one idea. In the midst of this ever changing landscape, existing businesses are questioning their viability, their profitability and their future business models: will they still be making money with their products or is “services” their future? How will the production, delivery and maintenance costs change? Most importantly, what is the shape and form of tomorrow’s market in which they’ll be required to compete? Ǧ Societal phenomena are changing the rules of the game: new concepts like crowdsourcing or crowdfunding provide access to rare resources in yesterday’s world. Key competences can be assembled by the way of crowdsourcing. Otherwise hidden ideas come to light thanks to crowdfunding: micro participations enabling the creation of business from individual ideas. Consumers become developers through coͲcreation platforms, and everybody can sell much less anything via social commerce or eͲcommerce sites. In short, new usages and new habits are questioning the business models as we know them. In Chapter 5, the impact of the digital will be unveiled further using basic strategic frameworks. iv. The Empowerment of Employees The digital era is also changing the employee power, employeeͲemployer relationships, and the management schemes. As Karel Dörner and David Edelman of McKinsey say: ” Being digital is about using data to make better and faster decisions, devolving decision making to smaller teams, and developing much more iterative and rapid ways of doing things. Thinking in this way shouldn’t be limited to just a handful of functions. It should incorporate a broad swath of how companies operate, including creatively partnering with external companies to extend necessary capabilities. A digital mindͲset institutionalizes crossͲfunctional collaboration, flattens hierarchies, and builds environments to encourage the generation of new ideas. Incentives and metrics are developed to support such decisionͲ making agility.”iv Given the flattening of hierarchies, and the importance of the clientͲemployee interaction at all levels, employee empowerment becomes a must: no brand manager will be able to handle all contacts for a brand on all of its social platforms, in all its stores and after sales points. The consumer, however, expects the same level and mentality of service at all of these touchͲpoints. On top of all this, major innovations come from the field and from knowing the consumers. Therefore, it is essential that employees integrate brand values, display them and take part voluntarily in processes surpassing what their job calls for.
  • 11. 10 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 The digital age has additional challenges, from an employee and employer perspective. As the management guru Gary Hamel puts it: “…I’ll outline three of the most formidable challenges that confront companies in this new century. 1. Dramatically accelerating the pace of strategic renewal in organizations large and small 2. Making innovation everyone’s job, everyday 3. Creating a highly engaging work environment that inspires employees to give the very best of themselves.”v Roland Berger, in a study in France, found that employee satisfaction is higher in highly digitized companies: “the companies the most matures in terms of digitization increase their turnover 6 times faster than their less mature counterͲparts, and as importantly, employees in the mature companies have employee wellͲbeing ratings 50% superior. Companies with digital cultures give a large place to the human factor: they have understood that employees may be the source of continuous improvement and even innovation. Once trained, employees become a real force of digital transformationvi .” b) Performance of Leaders in Digital Transformation Cap Gemini Consulting has realised a study with MIT to measure the link between the digital maturity of companies and their financial performance among 391 companies in 30 countries, interviewing 469 directorsvii . They have measured the maturity along two axes: Ǧ The Digital Intensity Technology enabled initiatives in customer experience and internal operations Ǧ Transformation Management Intensity Leadership capabilities including vision, governance, engagement and ITͲBusiness Relationships
  • 12. 11 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 This work has led them to classify companies on 4 digital groups: FASHIONISTAS Ǧ Several separate digital projects Ǧ Not guided by a vision that would introduce synergies between different departments and in different functions Ǧ Even though some departments may be mature, it needs a central governance DIGIRATI Ǧ A good global vision of the potential of a digital transformation Ǧ Solid governance with sufficient investments to capture value adding opportunities Ǧ Strong digital culture BEGINNERS Ǧ Even though some may be mature in ERP or online sales, no profound thinking on digital Ǧ Beginners by choice but mostly because they ignore the real potential of digital CONSERVATIVES Ǧ Under exploited global digital vision Ǧ Structured governance to ensure good digital project management Ǧ Dubitative on the added value of digital Ǧ Prudent investments, sometimes to the point of missing on opportunities to competition Ǧ According to their findings, the Digirati outperform their competition on average by 26%. Fashionistas will perform Ͳ11% less than their competition, beginners Ͳ24% versus their competition and conservatives 9% better. In terms of revenue generation, Digirati will be 9% better than their counterparts whereas this figure will only be 6% for the fashionistas, Ͳ4% for beginners and Ͳ10% for conservatives. Digirati’s market evaluation will be 12% better than their competitors whereas the fashionistas will be Ͳ12%, and conservatives will be at 7% vs beginners at Ͳ7%. It suggests that there is a real relation between digital maturity and overall performance, an important message to heed by all companies asking themselves if they should take the path to digital transformation or not. 1.DigitalIntensity 2. Transformation Management Intensity
  • 13. 12 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 3. Digital Transformation in France According to the September 2014 study by McKinsey, the value added of the digital is equivalent to 5.5% of the GDP (110 billion €), and it generates 3.1% of all jobs (1.5Million) in France. On line sales have tripled since 2007, and 80% of the French population use internet. As such, the penetration of digital in France is in the average of comparable countries. However, there is an important difference between the private consumption and investments. Whereas France is 4th in terms of private consumption, its private investment in digital is only 9th among 13 countries. This phenomenon is further demonstrated by online sales: Only 14% of French companies have received online orders in 2013 (compared to 26% in Germany) and only 65% have websites (compared to 89% in Sweden). viii The Roland Berger study of the same period shows that France occupies only the 25th place in the world, according to the NRI indicator (Network Readiness Indicator) and adds some more figures about the digital progress in France: Ǧ Less than 30% of companies use online data, Ǧ Only 15% of companies have developed a mobile application, Ǧ Only 13% of companies have developed APIs (Application Programming Interface). Ǧ 1 French person out of 6 has made purchases online but only 1 French company out of 10 sells online. French companies seem to understand that digital transformation is an important element of the future: 57% of French companies identify digital as a major strategic axis, but only 1 out of 3 has a formalised digital strategy (36%)ix . The majority of the businesses in France claim that the digital has already led to or is leading to an evolution of their business model (86%). Surprisingly, they see it more as a threat than an opportunity as 84% estimate that there is a risk, of which 71% think that it’s important or very important. For majority of the respondents, digital will require reinventing the consumer experience (94%), create an evolution of the existing management models (82%) and transform operational processes (81%)x . Those who lead the change have a head start: enterprises mature in their digital transformation have a growth rate 6 times superior to others, and their employees are 50% more satisfied with their professional environments than those in companies less maturexi . What’s keeping the French companies from performing better? McKinsey has studied 500 companies and has identified 4 principal reasonsxii :
  • 14. 13 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 Ǧ Organisational difficulties 45% of the companies mentioned structural rigidities, especially the well separated identities of different functions in the company. Ǧ Lack of digital competencies 31% of the companies have a real difficulty hiring digitally talented people. Ǧ Ǧ Insufficient profitability French companies lag behind their European counterparts in profitability (average gross profit margin for French companies at 28% vs 38% for UE28), making it impossible to invest in digital for 30% of them Ǧ Management involvement 28% of them mentioned the need for more and visible implication from their managers and leaders to be able to bring about the digital transformation and the cultural change that comes with it. These results show that some of the French companies have become their digital transformation and profit from it, although the majority haven’t taken the necessary steps yet and a cautious approach is hindering faster development. 4. Digital Transformation and the Tourism Industry in France France is the first touristic destination worldwide, and the tourism industry in France makes up 7.4% of the GDP and 156.9billion € of the revenues of the country in 2013, according to the BPI studyxiii (Accommodation providers, travel agencies, transports, catering and restaurants are included in this total). Even though it is not stated clearly, it seems that side industries such as ski lift companies, locations of equipment, sales of equipment and apparel related to touristic activities are not included in these figures, and as such the figures are understated in terms of their potential impact on the country’s economic welfare. In 2013, 1 reservation out of 2 was made online and 62% of voyagers used internet to prepare their trips in France, a performance not far from other mature European countriesxiv . In this perspective, tourism seems to be one of the most mature sectors in terms of digital transformation, recalling that only 1 company out of 10 proposes online sales in France. Unfortunately, mostly front office elements have benefited from this transformation:
  • 15. Ǧ Ǧ Ǧ This revo leve and Sour In a defi 1 Gayé Ǧ only 7% Ǧ only 19% Ǧ only 7% s is very imp olution, mak els. The BPI s suppliers ch rce : Banque quite exten ned 5 big ev 1. Increase The com such as: o P o Y o I DELAHOUSS % of compan % propose d % think of inv portant beca king it neces study illustr hange: Populaire d’ nsive study o volutions of e in compe mpetitive la : PureǦplayer Young start Internet gia E Executive M ies have de digital traini vesting in Bi ause tourism ssary to kee rates a new Investisseme of the touris f the digital titive inten andscape ha rs tǦups ants who en MBA EM LYO materialise ing, ig Dataxv . m is one of t ep engaging value chain ent, le Lab, L sm sector in transforma nsity as changed ter the tour ON Strategic I d their proc the sectors g in continuo n, where the e Numérique n France am ation in tour with digita rism industr Initiative Pro cesses, most affect ous digital t e interaction e Déroutant, mong others rismxvi : l technolog ry oject, Novem ted by the d ransformat ns between February 20 s, Mc Kinsey gies, with ne ber 2015 digital ion at all n clients 015 y has ew actors 14
  • 16. 15 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 The traditional actors change as well, putting more resources on online activities whereas small agencies and tourͲoperators who have not taken the digital turn lose market share. The emergence of the final client as an independent holiday creator online, who can buy individually all the elements of a package, is an important danger facing the travel intermediaries, both in terms of the offer and the prices. It is becoming increasingly important to know the consumer and assure good client relations, pushing traditional companies to improve direct sales platforms. The emergence of peerͲtoͲpeer economies such as Airbnb, Uber,… also have an important impact on the competition in the tourism industry, as illustrated by the following article from Le Figaro (editor’s note). http://bit.ly/1N3XfVh 2. A multichannel client experience Internet sales represented 33% of sales in 2013 vs. 23% in 2012; mobile reservations are expected to increase threefold between 2012 and 2015. Given the increasing usage of tablets, it is essential to provide highͲperforming applications to users and profit from the advantages of such usages like geoͲlocalisation, and to account for the social aspect of travelling. Clients also expect to be able to continue their reservations or have replies to their questions in a continuum between different interaction points. The seamless continuity of the experience is also a determining factor for customer satisfaction. For a well highlighted illustration, watch David Edelman, McKinsey partner leading Digital Marketing Strategy Practice: http://bit.ly/1R2l2ql 3. Innovative products and services As in other sectors, digital technologies make it possible to offer products with higher added value for clients. Perhaps the most interesting is a selfieͲtour of the city by Mandarin Oriental Paris, as it shows not only the impact of social networks on the tourism but also illustrates that they are for all ages and all levels of income (editor’s note). http://bit.ly/1LsREFo 4. Better informed decision making The massive amount of data available on clients and the interpretation of such data thanks to digital technologies give birth to new practices. The first and best known is the “yield management”, making it possible to adjust prices and optimise revenues according to demand and supply. The increase in available data on clients also leads the way to make suggestions to clients based on their preferences, and even adjust the proposed options to their consumption methods, enabling “personalisation” of products, offers and reductions.
  • 17. 16 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 5. A digital transformation of processes from end to end Three distinct processes are concerned by this phenomenon: o Transferring some acts to clients Novelties such as direct bag dropͲoffs, selfͲcheckͲin and dematerialised boarding tickets and eͲvouchers have transformed the acts and organisational needs in the tourism industry. o Automation of processes One of the major outcomes of automation of processes is moving from “static”, meaning preconceived and fixed offers in terms of contents and price to “dynamic” packages where the package is created during the reservation, and its contents defined according to the demands of the client. Another implication of this change is the evolution of laws and regulations, as some of the existing texts were based on the concept of packages (editor’s note). o Diffusion of digital equipment to staff Some companies have equipped their staff with mobile tablets or other digital equipment that contribute to service quality, efficiency and economies. 5. Digital Transformation through the Lens of Strategic Frameworks Given the importance of digital in the new world and the changes it brings about, a final proof of its importance would reside in its capacity to change strategy, or rather a study of impact of digital in strategic analysis. The inspiration for this analysis has come from the teachings of Mr. Thomas Lawton at EM LYONxvii . There exist many strategic frameworks that can be used for analysis. In this paper, the changes brought about by the digital transformation will be studied in the light of 3 frameworks: Ǧ PESTELxviii Ǧ Porter’s Five Forcesxix Ǧ VRIO Competency Assessment These three have been chosen for their complementarity: PESTEL helps understand the environment and the forces of change in which an industry operates. Porter’s Five Forces is a tool that is very easy to use in order to analyse the different competitive forces within an industry. Finally, the VRIO competency assessment is helpful to identify the core competencies within a company and look at the changes going on with them to assess competitiveness. A change sufficiently important to be called a revolution would have impacts at these three levels, from the most general to the most specific.
  • 18. a Sour The ope digit will mea i. Two polit The polit Whe Gayé a) PESTEL rce: http://b PESTEL an rates. In the tal transform seek to ill aning the po Politica o kinds of im tical structu first one i ticians or th en taxi driv DELAHOUSS L bit.ly/1LlEM alysis seeks e case of th mation in t ustrate this olitical, econ al mportant fac ures, when e is the cont he governm vers go on E Executive M MVX s to describ his paper, th he global b s impact o nomic, socia ctors spring evaluating t trast betwe ment agents strike beca MBA EM LYO be the com he idea is to usiness env n the 6 dim al, technolo to attentio the changes een existing position th ause of Ube ON Strategic I petitive env o look at the vironment t mensions t gical, enviro n in terms o s brought ab g rights and hemselves w erpopxx ; or Initiative Pro vironment e changes b today. In th hat the PE onmental an of the impac bout by digit d new prac with regards worse, pro oject, Novem in which a brought abo e following STEL mode nd legal dim ct on politic tal transfor ctices, and s to these s otest in a p ber 2015 company out by the lines, we el studies, mensions: cs or mation. how the situations. potentially 17
  • 19. 18 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 dangerous way, people on the streets may be proͲUberpop, seeing it as liberation of choice and prices. What is, and what could be the position of politicians? How do such confrontations change politics and expectations? In a similar fashion, should politicians be striving to integrate possible new economic models (Uber, Airbnb …) or insist that they abide by the old rules? The attitudes of many users are in these cases in contradiction with existing laws and structures, introducing new political questions: Both taxi drivers (and their families etc.) and Uberpop users are voters, whom will the politician try to please? What is the place of this subject within his agenda? What are the forces of the “Uberists” and “Taxi drivers” and what is their nuisance capacity? This is of course just an example, as similar cases can and will arise on the subject of Airbnb & hotels, Amazon & libraries and others that we do not know yet. In this context, thanks to the communication power of the new digital world, people will have more access to information to hear, question and judge politicians, necessitating taking a stance. The second question stems from a competitive issue: digital transformation being an important element of economic welfare of countries, what should be the politics in terms of digital transformation and development of countries, and what is the role of politicians and government agencies? Mc Kinsey, in their paper dealing with accelerating the digital mutation of companies, estimates that the contribution of digital to the French economy will continue to grow regularly to potentially reach 280 billion € in 2020 if France could attain the digitization level of the UKxxi . In this context, how should economic and educational policies be created to favour the creation of digital innovation and transformation? What infrastructural investments should find themselves on top of political agendas? The choices and actions of politicians will play a major role in the development of any industry related even remotely to the digital economy. The observation of politicians, political and related institutions shows the increasing impact of the digital transformation and the new questions it introduces in the political arena. ii. Economic The changes brought about by the digital in economic terms may be grouped under three types: x those impacting the relationship between business and the final consumer (B2C), x those impacting businesses selling to other businesses (B2B), and x those impacting the transactional economic relations between consumers (C2C). At the consumer level, the digital revolution is certainly one of information. He/she has easy access to much more information and choice and this modifies his relationship with
  • 20. 19 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 any provider of products or services. Because of this greater knowledge, he has the possibility to compare prices between different offers, distributors and steps in the production cycle. This knowledge increases his force, and, via the lower prices, his purchasing power. According to the Mc Kinsey study, an internet user in France brings about 20€ of economies by month to its householdxxii . Among the digitally induced B2C changes is the creation of giant distributors, with a very wide offer. Amazon is a global vendor selling everything from clothes to books to gym equipment, and has even started distributing fresh fruits and vegetables. With its fast delivery, competitive prices and performant customer service, it has brought an end to many local stores. Marketplaces replace separate vendors. The dematerialization of offers has also led the markets to evolve towards big aggregators selling differently, as the music sector witnessed with the arrival of iTunes, Deezer or Spotify; or the travel agencies with online sales and booking.com. On the B2B scheme of things, greater integration of processes has been possible thanks to digital improvements, leading to way to less stocks and better delivery times, by integrating the systems of different contributors to production. The improvement of costs, thanks to the management of great amounts of data and their interpretations to reduce waste has also been an outcome of digitization. The digital transformation has created a whole new jargon in economy and perhaps the most important result of the digital transformation on economy has been the creation of a whole “new” economy, the sharing economy, without intermediation (C2C). The impact is so vast and so allͲencompassing that it brings about a revolution: o The sharing of consumption and direct offers (Airbnb, Uber, blablacar, homeaway, couchsurfing, lessons via internet...), Thanks to internet and the possibility to “connect” with potential consumers, each and every person who has a potential sellable or rentable service or object can do so, freely and easily. It goes from renting out one’s flat to one’s couch, renting out lessons, the car or the possibility to use a service with other people that one does not know to have access to an offer that wouldn’t be possible otherwise. This new possibility creates a big disruption for industries concerned: hotels have suddenly new competitors that they did not see coming, it may become easier to travel renting only a couch instead of a room increasing the number of travellers, taxi prices may be questioned… Many new elements are to take into account making a business plan.
  • 21. 20 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 o The sharing of creation (crowdsourcing,…) Let’s start with the definition of crowdsourcing from Wikipediaxxiii : Jeff Howe and Mark Robinson, editors at Wired Magazine, coined the term "crowdsourcing" in 2005 after conversations about how businesses were using the Internet to outsource work to individuals. Howe and Robinson came to the conclusion that what was happening was like "outsourcing to the crowd," which quickly led to the portmanteau "crowdsourcing." Howe first published a definition for the term "crowdsourcing" in a companion blog post to his June 2006 Wired magazine article, "The Rise of Crowdsourcing," which came out in print just days later: "Simply defined, crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call. This can take the form of peerͲproduction (when the job is performed collaboratively), but is also often undertaken by sole individuals. The crucial prerequisite is the use of the open call format and the large network of potential labourers." The impact is enormous: no longer bound by geographical boundaries or dependant on inͲhouse teams, companies no longer have the same resource constraints. The crowdsourcing as it is seen today (writing code, creating publicity,…) is evolving at a great pace, as new forms of delivery are being mentioned; for instance, people going home from work can deliver packages on their route if they want to. The developments on a large scale of these evolutions will have major impacts on costs and reach, changing forever the economical equations. o The sharing of financing (crowdfunding). First things first, another definition from Wikipediaxxiv : Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet. Crowdfunding is a form of alternative finance, which has emerged outside of the traditional financial system. The crowdfunding model is fuelled by three types of actors: the project initiator who proposes the idea and/or project to be funded; individuals or groups who support the idea; and a moderating organization (the "platform") that brings the parties together to launch the idea. In 2013, the crowdfunding industry grew to be over $5.1 billion worldwide. Once again, a new model is born which permits people with a new idea or business model to bypass the hard and long roads of classic financing and get what they need from a large number of people, to realise their projects. Many startͲups form in this manner and
  • 22. 21 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 threaten existing companies in many industries with their agility and novelty among other advantages. As can be seen with the above descriptions and illustrations, digitization has a huge impact on the economic scales of any strategy and calls for a new way of thinking. iii. Social The societal changes that accompany the digital transformation are so many that it would be necessary to write another paper to explain in detail all of them. For the purpose of this paper, please find below the major effects that have been observed by the writer, knowing that the list is certainly not complete. • The “connected age”: All the social networks that are a major part of the digital era create a connection between people who previously didn’t know each other and would never cross paths, while it leaves less time for less human interaction with family and friends. A new type of “friendship” is born, bringing with it new rules of conduct and trust. • Andy Warhol was right when he said “In the future, everybody will be worldͲfamous for 15 minutes.” Thanks to the social networks; anybody can become famous and very fast. • People are more informed, and informing. Anybody can find information about the product/service he wanted to buy or give his opinion on it, and opinions of “strangers like me” shape the buying decisions. As consumers they have new power and they will use it. • Consumer needs are evolving as well: reactivity, individual attention, quality of service fluidity in interactions with the vendor/brand and integrating consumers into the creative processes are among the newly emerging norms. • Citizens are also becoming more active in their demands and how they voice them thanks to the power of social networks which help amplify simple messages. • Thanks to the sharing economy, it is much easier to become a creator or make commerce without needing a heavy structure. • The digital era is also a better “equal rights employer” as it creates the possibility to be educated online or to work from home. • The work/private life borders are shifting, with the rise of smart phones and tablets which make it possible to join anyone anytime; and thus ask something of them. • The expectations of workers are shifting as well; they want more participative management, being included in innovation projects, responsibility and autonomy.
  • 23. 22 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 iv. Technological The digital era is about technology. Whereas information systems were just one of the support systems of a company not so long ago, now they are in all the departments of the company. Starting from the top, the management uses key indicators and performance reports supplied by its information systems. HR needs IS to calculate the hours worked, the pay, the personal development followͲup,... Production needs IS to follow production numbers, efficiency, breakdown rates, raw material needs, production schedules,…Commercials need IS to take orders, to propose repeat orders, to keep track of client information and propose new products or deliveries,…Logistics needs IS to calculate costs, prepare deliveries, to handle delivery schedules, to define the routes,…Marketing needs IS to see which products sell, to define new products, to calculate prices, to learn about consumers’ opinions, to communicate on the product, to exchange with consumers. All these departments which were once autonomous now depend on and are tied together with information systems as data is at the heart of all digital systems and information systems provide this. New job titles such as Chief Technology Officer or Chief Digital Officer are created, including responsibilities of the old IS guys and marketing, and maybe more and more of everything in the future with the further usage of Big data. At a strategic level, this shows the importance of digital to attain success and the importance that should be attributed to it. v. Environmental Even though the digital revolution will not have the same environmental impact as the industrial revolution, it will be important in the sense that the communication capacity that it gives to everyone may help act on environmental destruction. People may connect and fight against damage to the environment, and companies who invest on green practices may receive the applause that they merit thanks to the fast spread of information thanks to social networks and internet. The possibility to publish photos and videos is especially helpful, as it reinforces the claims or truth, and may stir a stronger emotional involvement than words alone. vi. Legal Amongst the trademarks of the digital transformation, we can count the disappearance of borders, the creation of new forms of transactions and the availability of personal information at a larger and easier level. These elements have very important legal implications.
  • 24. 23 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 One of the first legal issues to come to light with the increase in eͲcommerce was that of jurisdiction: If one buys in France a product from an American eͲcommerce website produced in China and shipped from Turkey, the legal framework to be respected is that of which country? In which country does the client take his complaint to court? The rules of which country apply? For instance, in the case of the “AntiͲAmazon” law in France which forbid adding the 5% price decrease and free delivery, Amazon responded just the day after by proposing delivery at 1 centimes of € and thus sidestepping the intention of the lawxxv . Also related to this subject are the questions about tax, legal and economic issues. The transactions between companies and companies (B2B) or between companies and individuals (B2C) are well defined. However, which are the rules that apply between two individuals (C2C)? When an individual rents a house for 25 persons, does the house comply with the rules and regulations of a hotel (as is the law in France), or can he compete with a hotel of the same size having no constraints whatsoever because it is technically not a hotel. And would this be considered unjust competition (competition déloyale) or not, or at which point it becomes so? There is also the question of privacy: which rules and regulations about personal information apply? The most recent case of Google against CNILxxvi illustrates brilliantly this subject: End of July, Google informed CNIL, guardian of private life in France, that it wouldn’t be following CNIL’s recommendations concerning the “right to forget” (droit à l’oubli). What this means is that if an individual in France asks that an offensive content be removed from search engines because it is offensive, it will be removed from only French search engines and not of other countries. This may seem shocking because anybody can access other countries’ search engines. According to Bertrand de le Chapelle, who shared his thoughts in the same article, there is a certain balance to be found between the protection of private life and the right to information, and take into account the territorial rights: how is it possible or acceptable to impose French laws in US or vice versa? He gives the example of Thailand, where it is a crime to criticize the king. If the logic of no territorial law is pursued, this would mean erasing all negative comments about the Thailand king all around the world, which would be another extreme. These insights show the complexity of the new legal landscape facing the digital era, and this will certainly have an impact on strategy making.
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  • 30. 29 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 iv. Bargaining Power of Suppliers The effects of the digital transformation are more visible downstream than upstream. However, the changes downstream may influence the businesses upstream in different ways. One of these is the distribution of profits. There are three possible ways in which this can happen: 1. With the need for more personalisation, the product specifications at production level may become more different, thus increasing production posts, without the possibility to increase final product price. 2. As new intermediaries are being created downstream Ͳ meaning the big vendors such as booking.com which force new and higher commission rates on accommodation owners – the producers and historical direct sellers lower their marginxxxii . 3. The access to further and cheaper producing countries may put local producers in peril. The digital transformation is an ever changing process and its exact evolution is not yet known. For the time being, it seems to decrease the power of suppliers rather than increase them. One final question remains to be clarified: “Who is a supplier?” Before the digital age, it was clear to see who played in which industry. Today, with google entering new segments such as tourism, health or automobile, it is difficult to evaluate their role in relation to an industry. Yesterday, for tourism, google was a supplier of visibility in search engines. Today, they are an intermediary selling accommodation. What will their role be tomorrow and how will it change the power structures within industries? This is the unknown with the future of the digital age. v. Competitive Rivalry within an Industry BPI underlines an important potential outcome of the digital transformation in its February 2015 report: « By allowing, through its immaterial character, competition on a multiplied geographical zone, the digital can weaken local historical actors and induce a brutal and massive movement of profits. Only the services carried out by nature in proximity with the client are an exception, but all the upstream segments may share this fatexxxiii . The change in profit distribution is one outcome of the digital age, but it is not the only one. Among the current rivalry within any industry, new dynamics are at play because of the digital transformation. The transformation capability of different actors determines their future, as all industries are open to attack by inside or outside players. Let’s take a look at the music industry: Justine Bieber, Taylor Swift, Madonna… and countless other artists are
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  • 32. 31 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 Valuable: Does it clearly contribute to your value proposition? Rare: Is it scarce within the sector? Inimitable, immobile, nonͲsubstitutable: Can it be easily copied or obtained by rivals? Can a different capability or competency deliver the same effect? Organization: Is the firm organized, ready and able to exploit the resource/capability? At the company level, the effect of digitization is the changes on the competencies that can be considered valuable, rare and hard to imitate. Coming back to the tourism sector, let’s imagine a hotel chain renowned for its service quality: they take pride and advertise on responding to all requests of clients in a fast, relevant and impeccable manner throughout. It clearly is valuable and contributes to its value proposition. It can be assumed that it is rare as they are using it as an advertising claim. It is not easily imitable or substitutable because it requires a certain mindͲset and a certain organization, the last element of the VRIO framework. Now let’s look at the adaptation of this hotel chain to the digital age: Ǧ The new demands will require instant and highͲdebit WiͲFi. Not hard to do, but necessitating a new mindͲset and investment. Ǧ Other material needs may follow : chargers, headphones, cables,…As above, possible Ǧ The guests will be leaving their comments on online evaluation websites such as tripadvisor.com, or through mentions on Twitter, Facebook, etc. It gets more complicated at this level because : o First of all, the chain has to have thought of this evolution and hired at least one community manager. o Which would not suffice because clients now everything NOW so there may be a need for a community manager around the clock. o Then again, the community manger must be able to figure out who the person behind the comments is (not everybody use their real names). o One more step: the hotel chain organization must have evolved in such a way that employees from all levels can accept demands coming from the community manager, technically at the same level or at a lower hierarchical level than themselves. o And further: the guests, who have already stayed with the hotel, reckon that the hotel knows all about them and should have everything as they want for their next stay, requiring a CRM system. Ǧ The hotel chain must also realize that comments offline are less visible today, and find a way to transfer negative comments to positive online.
  • 33. 2 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 Table of Contents Executive Summary .......................................................... 1 PART I, DIGITAL TRANSFORMATION, A MACRO OVERVIEW 3 1. Introduction................................................ 3 2. Digital Transformation – « Qu’estǦce que c’est ? » 4 a) The fundamental changes in companies....... 5 b) Performance of Leaders in Digital Transformation 10 3. Digital Transformation in France ................ 12 4. Digital Transformation and the Tourism Industry in France 13 5. Digital Transformation through the Lens of Strategic Frameworks 16 a) PESTEL....................................................... 17 b) Porter’s Five Forces...................................... 24 c) VRIO Competency Assessment .................... 30 6. The Customer Journey Map: a Mirror on Digital Transformation 32 PART II, VAL DIGITAL and COMPAGNIE DES ALPES .... 36 7. Digital Transformation of French Ski Stations of Compagnie des Alpes 36 8. Benchmark................................................. 44 a) Compagnie des Alpes Ski Resorts ................. 44 b) Val Thorens, social networks’ leader in France 47 c) Whistler Blackcomb, a world leader for digital ski resorts 49 9. Val Digital Project....................................... 53 a) Project Overview ......................................... 53 b) SubǦProjects................................................ 61 10. KPIs for Val Digital...................................... 75 11. Recommendations for Val Digital after 1 year of Existence 76
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  • 37. 79 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 i What is digital transformation, Howard King, The Guardian, November 21st, 2013 ii P. 9, Roland Berger en collaboration avec capǦdigital, du rattrapage à la transformation, l’aventure numérique, une chance pour la France, Septembre 2014 iii George Westerman, Didier Bonnet and Andrew McAfee, MIT Sloane Review, The Nine Elements of Digital Transformation, January 7th , 2014 iv Mc Kinsey & Company, What “digital” really means, Karel Dörner and David Edelman, McKinsey Digital, July 2015 v P. 40, Gary Hamel with Bill Bree, The Future of Management, Harvard Business School Press, 2007. vi P. 3, Roland Berger en collaboration avec capǦdigital, du rattrapage à la transformation, l’aventure numérique, une chance pour la France, September 2014 vii Cap Gemini Consulting, Digital Transformation : Définition, Enjeux, Illustrations, November 2014 viii McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance et de compétitivité pour la France, September 2014 ix Roland Berger en collaboration avec capǦdigital, du rattrapage à la transformation, l’aventure numérique, une chance pour la France, September 2014 x CSC, Barometre de la Transformation Digitale, Les Secrets des Super Héros du Digital, 2015 xi Roland Berger en collaboration avec capǦdigital, du rattrapage à la transformation, l’aventure numérique, une chance pour la France, September 2014 xii McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance et de compétitivité pour la France, September 2014 xiii Key Facts on Tourism, Direction Générale des Entreprises, Ministère de l’Economie, de l’Industrie et du Numérique, Edition 2014. xiv McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance et de compétitivité pour la France, September 2014 xv Roland Berger en collaboration avec capǦdigital, du rattrapage à la transformation, l’aventure numérique, une chance pour la France, September 2014 xvi McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance et de compétitivité pour la France, September 2014 xvii Thomas Lawton, Foundations of Strategic Thinking Course (XESST), EM Lyon Executive MBA Module, November 13th Ǧ15th , 2014.
  • 38. 80 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 xviii Gerry Johnson, Richard Whittington, Kevan Scholes, Duncan Angwin, Patrick Regnér et Frédéric Fréry, Stratégique (10e édition), Pearson, 2014, pp. 37Ǧ43. xix M.E. Porter, The Five Competitive Forces that Shape Strategy, Harvard Business Review 57 (January 2008), p57Ǧ71 xx http://www.lemonde.fr/economie/live/2015/06/25/laǦgreveǦdesǦtaxisǦcontreǦuberpopǦprovoqueǦ desǦincidentsǦaǦparis_4661266_3234.html xxi McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance et de compétitivité pour la France, September 2014, p 5 xxii McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance et de compétitivité pour la France, September 2014, p 2 xxiii https://en.wikipedia.org/wiki/Crowdsourcing xxiv https://en.wikipedia.org/wiki/Crowdfunding (mention on the page as article being outdated already in April 2014, but the definition is valid for the purpose of this paper) xxv Banque Populaire d’Investissement, le Lab, Le Numérique Déroutant, February 2015, p 39 xxvi http://rue89.nouvelobs.com/2015/08/17/fautǦcourǦinternationaleǦlinternetǦ260768 xxvii CSC, Barometre de la Transformation Digitale, Les Secrets des Super Héros du Digital, 2015 xxviii http://www.actionco.fr/Thematique/businessǦ1018/Breves/FordǦStoreǦcommentǦpoursuivreǦ parcoursǦdigitalǦclientǦconcessionǦ258843.htm xxix http://www.forbes.com/sites/scottdavis/2014/03/27/burberrysǦblurredǦlinesǦtheǦintegratedǦ customerǦexperience/ xxx EǦtransformation du Parcours Client, Présentation du 25 juin 2015, Travail de groupe MBA Marketing et Commerce sur Internet, Institut Leonard de Vinci (#MBAMCI), La Défense, Promo Part Time 2014/2015 xxxi The Battle is for the Customer Interface, Tom Goodwin, TechCrunch, 3 March 2015 http://techcrunch.com/2015/03/03/inǦtheǦageǦofǦdisintermediationǦtheǦbattleǦisǦallǦforǦtheǦ customerǦinterface/#.ntdj8f:0sCd xxxii Banque Populaire d’Investissement, le Lab, Le Numérique Déroutant, February 2015 xxxiii Banque Populaire d’Investissement, le Lab, Le Numérique Déroutant, February 2015 xxxiv http://www.billboard.com/articles/news/6605541/taylorǦswiftǦpensǦopenǦletterǦexplainingǦ whyǦ1989ǦwontǦbeǦonǦappleǦmusic
  • 39. 81 Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015 xxxv Thomas Lawton, Foundations of Strategic Thinking Course (XESST), EM Lyon Executive MBA Module, November 13th Ǧ15th , 2014, the VRIO criteria derive from the work of Barney (1991 and 2005). xxxvi Digital Transformation and the Customer Experience, Overcoming Barriers & a Framework for Success, May 23rd , 2014, http://fr.slideshare.net/MFiddy/digitalǦtransformationǦandǦtheǦcustomerǦ experienceǦ35052981?qid=d3ac9fccǦ033aǦ4466Ǧac70Ǧe4caf0561369&v=default&b=&from_search=1 xxxvii Roland Berger Strategy Consultants, Impacts et mise en œuvre de la transition numérique à la Compagnie des Alpes, Document de synthèse, Avril 2015. xxxviii Office de Tourisme de Val Thorens, Val Thorens United – Un Plan pour Une Action Globale, April 2012 xxxix Cap’com, Val Thorens Invente un nouveau modèle de marketing intégré, 2 juin 2014. http://www.capǦcom.org/content/valǦthorensǦinventeǦunǦnouveauǦmod%C3%A8leǦdeǦmarketingǦ int%C3%A9gr%C3%A9 xl Roland Berger Strategy Consultants, Impacts et mise en œuvre de la transition numérique à la Compagnie des Alpes, Document de synthèse, Avril 2015. xli http://www.origindesign.ca/whistlerǦblackcombǦ2014Ǧ15ǦwinterǦcampaign xlii http://twentytengroup.com/caseǦstudies/whistlerǦblackcomb/ xliii Val d’Isère Téléphériques Sales Statistiques, obtained by asking all clients buying a ski pass of 2 days or more: « Where do you come from ». xliv GfK Baromètre de Satisfaction 2014Ǧ2015. xlv GfK Baromètre de Satisfaction 2014Ǧ2015.