Digital matrix is very useful is analysing how your digital platforms is enhancing your business

1. The digital matrix
Scale, Scope and Speed

2. Drivers of the Four Key Themes of
Digital Business Strategy

3. Key Questions on Digital Business
Strategy Themes
Bharadwaj et al./Introduction: Digital Business Strategy
Table 1. Key Questions on Digital Business Strategy Themes
Scope of Digital Business Strategy
• What is the extent of fusion and integration between IT strategy and business strategy?
• How encompassing is digital business strategy, and how effectively does digital business strategy transcend traditional
functional and process silos?
• How well does digital business strategy exploit the digitization of products and services, and the information around them?
• How well does digital business strategy exploit the extended business ecosystem?
Scale of Digital Business Strategy
• How rapidly and cost effectively can the IT infrastructure scale up and down to enable a firm’s digital business strategy to
bolster a strategic dynamic capability?
• How well does digital business strategy leverage network effects and multisided platforms?
• How well does digital business strategy take advantage of data, information, and knowledge abundance?
• How effective is digital business strategy in scaling volume through alliances and partnerships?
Speed of Digital Business Strategy
• How effective is digital business strategy in accelerating new product launches?
• How effective is digital business strategy in speeding up learning for improving strategic and operational decision making?
• How effectively does digital business strategy bolster the speed of dynamic supply chain orchestration?
• How quickly does digital business strategy enable the formation of new business networks that provide complementary
capabilities?
• How effectively does the digital business strategy speed up the sense and respond cycle?
Sources of Value Creation and Capture
• How effective is digital business strategy in leveraging value from information?
• How effective is digital business strategy in leveraging value from multisided business models?
• How effective is digital business strategy in capturing value through coordinated business models in networks?
• How effective is digital business strategy in appropriating value through the control of the firm’s digital architecture?

4. The Nexus of Scale,Scope,Speed.
• Tesla motors is an best example
for new breed of companies
born in Digital Era.
• Digital companies show
patterns of SCALE expansion
and SCOPE extension at a
SPEED wildly different from
Industrial age.
• Digital companies show
mastery over non-linear,
exponential expansion in scale
and scope.

5. SCALE
• Lets take example of Google:
In 1999 - 1 billion search queries.
In 2012 – 1.2 Trillion search queries
In 2015 - 1.5 Billion devices were running OS.
• That’s Google’s non linear, exponential scale
with search and mobile.
• Every year there is increase in 50 percent.

6. SCALE
• Comparison between traditional incumbent
companies and their digital counterparts.
Long standing Marriott
Hotels had about 7,60,000
rooms available in 2015.
Airbnb started in 2008 has 2
million listings in more than
190 countires by 2016

7. Scale
• Ford and GM’S scale depends on the number of cars produced by
them, but Uber’s scale is defined by the number of cars it has in its
network on a global basis as well as locally in every one of the four
hundred– plus cities in which it operates.
• Whereas Nokia’s scale depended on the number of feature phones
it manufactured and sold globally, Google’s scale advantage, as the
architect of the Android mobile operating system, depends on the
number of devices produced by its hardware partners in the
ecosystem and the number of software apps written by the
developers for its operating system.
• In the industrial age, scale is the result of what a firm does by itself
using the assets that it controls and the units it produces. In the
digital world, scale is the result of what it may produce by itself plus
what it can achieve with its partners in the ecosystem.

8. SCALE
• Historian Alfred Chandler strongly
believes that modern Industrial
corporation exploited the economies of
scale.
• The Digital- era is based on “ Three-
pronged investment in production,
distribution and management.
• Uber, Airbnb, Netflix and Google have
amassed detail data of their operations.
• Netflix knows our preferences
compared to the cable and television
companies.
• Airbnb believes in providing experience.

9. SCALE
• Operating at an
assumption that scale
means the number of
products manufactured
or sold is an old concept.
• If you still believe in
higher market share by
selling more than
competitors you maybe at
the scale of disadvantage
in the digital world.

10. SCOPE
• How did Apple transform from a
company that sells personal
computers in 2001 to dominating
the music industry by 2011?
• How did Google parlay its
supremacy in search into mobile
web( android ) and media web
(Youtube).
• How did Amazon go from e-
commerce bookseller to being a
towering giant on the cloud in
just twenty years?

11. SCOPE
• Companies traditionally expanded
their scope incrementally and
relatively methodically by testing.
• Later they extended their core
competencies in new geographical
areas by gradually adding new
products and services to their core.
• With machine learning and artificial
intelligence Google, Netflix and
Amazon can take huge volume of
data and study the patterns.

12. Scope
• In industrial, the relationship between a company’s core area and
its adjacencies had to be pretty close for customers to accept the
link; in digital, data as a core area is infinitely malleable so that
companies that collect data can more easily apply it across a wide
range of platforms, as in mobile platforms.
• With their core mobile software— Apple’s iOS and Google’s
Android— digital giants can logically extend their scope with
different apps. Payment apps, such as Apple Pay and Android Pay,
supported by merchants and global retail banks create an
ecosystem that allows Apple and Google’s parent company,
Alphabet, to move into the seemingly unrelated area of retail
finance.
• But they do so for different reasons— Apple to enhance the use of
its phone and watch but explicitly not using the information on such
transactions, and Google to better target its advertisements by
using that information.

13. Scope of Digital Business Strategy
• Digital Business Strategy Transcends
Traditional Functional and Process Silos
• Digital Business Strategy Includes Digitization
of Products and Services and the Information
Around Them
• Digital Business Strategy Extends the Scope
Beyond Firm Boundaries and Supply Chains to
Dynamic Ecosystems That Cross Traditional
Industry Boundaries

14. Scale of Digital Business Strategy
• Rapid Digital Scale Up/Down as Strategic
Dynamic Capability
• Network Effects Within Multisided Platforms
Create Rapid Scale Potential
• Scale with Digital Business Strategy Will
Increasingly Take Place under Conditions of
Information Abundance
• Scale Through Alliances and Partnerships

15. SPEED
• “Move fast and break
things…Unless you are breaking
things, you are not moving fast
enough”, Mark Zuckerberg’s motto.
• Digital world its not about being
reckless but continuous
improvement and iteration.
• Tesla maintains and Upgrades its
cars through over-the-air software
updates.
• Google develops products in
open,adds features daily by closely
observing the customer preference.

16. SPEED
• Companies that meet the need of the customers
faster than competitors grow faster and
profitable.
• The digital players are dictating the pace of
customer service.
• There is a need to calibrate the speed of the
Delivery.
• Speed Disadvantage: assumption speed means
being the first to move into market.
• Advantage is to be the fasted to capitalize on the
opportunities.

17. Speed
• In the digital world, everyone in an ecosystem
has to move at more or less the same speed.
• Sony PlayStation has succeeded over the past
decade because it has mobilized its game
development partners with the pace of
successive console developments.

18. Speed of Digital Business Strategy
• Speed of Product Launches
• Speed of Decision Making
• The Speed of Supply Chain Orchestration
• Speed of Network Formation and Adaptation

19. The combinatorial advantages of
Scale-Scope-Speed
• As your industry digitizes you
must look into the three
dimensions of the business as
being interconnected.
• Scale at Speed creates fast-
mover advantage.
• Scale at Scope also reflects fast
mover advantage
• With data analytics and
connectivity you can go beyond
your traditional core business to
tap into extended ecosystems.

20. Ecosystem
• Whereas scale advantage arose in the
industrial world from assets that a single firm
controlled and the units that it produced, in
the digital world, scale advantage comes from
being part of an ecosystem that includes key
partners that play complementary roles.

21. The ecosystem advantage
• Ford and GM scale depend on
the number of cars they produce
,but Uber and Ola depend on the
number of cars it has in its
network.
• Nokia’s scale depends on the
features a mobile can have, but
Google creates architect for the
OS.
• Tap into the scale advantage
conferred by your ecosystems.

22. The ecosystem advantage
• Apples’ ios and Googles’s Android can logically
extend their scope with different apps.
• Apple Pay and Google Pay can use the global
banks for transactions.
• Use the scope advantage for the ecosystem.
• Structure your relationships to profit from the
speed advantage of your ecosystem.
• Connect with different ecosystems to gain
advantages to craft your winning strategies

23. The learning advantage
• Important characteristic of speed-
scope-scale is adapting changes to
serve the specific needs.
• McDonalds counts the number of
patties shipped to locations, but
Starbucks uses the app and loyalty
programs the understand customers.
• Learn from products in use at scale to
glean early warning signals.
• Learn from customers that use
complementary products to proactively
improve key features.

24. Mastering your exponential trajectory
• Ecosystem helps you scale further; you gain
more opportunities.
• Ecosystems helps you expand the scope of
your business footprint.
• Nexus of scale-scope and speed is a new focus
on a non-linear, exponential trajectory.
• IOT, wearable technology,drones,3-D printers
are the future opportunities.

25. Shift to Ecosystem-Centric Platforms
for the Connected Car
• Automakers, such as GM, Ford, Toyota, BMW, Mercedes-Benz,
Audi, have all gone through various iterations of digital business
innovation as internal process to differentiate their automobiles
and deliver greater value to customers through technology
connectivity (safety and convenience) and data-driven insights
(communication and entertainment).
• Beginning in 1995 when GM Introduced OnStar on its 1996
Cadillac model, GM has continually innovated to deliver a wide
range of value-added services through OnStar to over 5 million
customers today.
• Ford responded to GM’s innovation in partnership with
Microsoft (Ford Sync powered by Microsoft) after a brief ill-fated
initiative with Qualcomm. By the end of December 2013, Ford
Sync was installed in nearly 2 million cars.
• And as of 2014, every major automaker has telematics-driven
services (e.g., BMW Connected Drive, Audi Connect, Mercedes-
Benz Mbrace) with varying levels of deployment.

26. Digital Business Innovation (DBI)
• These initiatives represent(DBI —focused on technology inter-operability
(by embedding modules within the automobile itself) and data-driven
insights (delivering services such as remote diagnostics and preventive
maintenance as in the case of GM OnStar). Automakers differentiate from
each other based on the level of services related to the car itself (e.g.,
remote lock/unlock of cars using 4G cellular networks; remote slowdown,
directions sent to the car dashboard, etc.), and services delivered to the
driver (e.g., turn-by-turn navigation, messages read out and voice
commands for texting and communication) or passenger (entertainment).
• This perspective reflected firm centric innovations, different from the
ecosystem view reflected in our conceptualization. Here, the scale of
innovation platform was limited by deployment only to automotive
models belonging to one company and till recently, most automakers had
not ‘opened’ their innovations to attract complementary services.

27. DBI – Ecosystem progress
• GM only recently invited developers to write apps for
OnStar Advanced Telematics Operating Systems
(ATOMS) and Ford’s AppLink for Sync is still in beta.
• The scope of the innovation platform in this
perspective was limited to automotive use and possibly
extended to related services in the vicinity of
automobiles.
• The speed of platform deployment was a function of
the resources available for this digital innovation within
the different firms and their belief in the importance of
digital functionality to differentiate their cars in the
marketplace.

28. DBI - Scale
• Google-sponsored Open Automotive Alliance
“dedicated to accelerating innovation in the car with an
approach that offers openness, customization and
scale” with support of car makers such as Audi, Honda,
Volvo, Ford, Chevrolet, Nissan, VW and others. Beyond
automakers, this innovation ecosystem included
technology companies such as Google, Delphi
Electronics, NVidia, Pioneer, LG, Harman and others.
• So, this ecosystem has greater scale than the scale of
firm-centric initiatives from GM OnStar or Ford Sync.

29. Scale-Scope-Speed
• Now, as we look at the composition of the Android-driven automotive
alliance, we see that GM (Chevrolet) and Ford are members of this
ecosystem, reflecting the need to tap into scale effects (beyond GM’s
portfolio of cars). Beyond the scale of automobiles, this ecosystem could
tap into the scale of complementors who could port their apps from
mobile devices (smartphones and tablets) to automobiles with greater
sensitivity to safety and ease-of-use within automobiles.
• The scope of such platforms—although focused on the services to be
delivered in cars—was architecturally connected to the larger Android
ecosystem, thereby enhancing the potential scope of innovations where
car was located as a node within a network of services to individuals and
company fleets.
• The speed of deployment of this platform was to be assessed relative not
to proprietary platforms of car markers but to other cross-industry
platforms from companies such as Microsoft (Windows for Automobiles)
and Apple (CarPlay).

30. Conceptual Frameworks and
Propositions
pabilities in ecosystems (Figure 1). Figure 1 is a simplified framework that has focused at this stage
pturing the effects of DBI platform properties and ecosystem capabilities.
Figure 1: Our Conceptual Frameworks and Propositions

31. • DBI platform has high degree of scale when it has
both high potential adopters (customer network
effects) and a large number of potential co-
creators (complementary network effects).
• Settings as diverse as Amazon Kindle digital
publishing ecosystem, mobile operating systems
(Android and iOS), videogame consoles and
games, Uber in transportation, media and
entertainment with YouTube, Netflix and HBO,
Apple Pay in mobile payments and others.

32. • Amazon Kindle explored both hardware and software as options for its
customer base to access digital content, which increased the customer
adoption scale and enhanced its attractiveness to digital content
providers.
• Rapid acceptance of Netflix has been due to their focus on making
every screen (mobile, tablet, PC, monitors) capable of receiving its
content through multiple different set-top boxes and their variants.
• In videogames, Microsoft introduced XNA middleware in 2004 to
enable Windows PC game developers to port their games to
Microsoft’s Xbox, thereby increasing the number of available titles for
its platform.
• Apple’s newly announced Apple Pay, as an innovation, has potential
value through the installed base of over 800 million iTunes users, but
the platform needs complementor scale in terms of acceptance and
adoption of this functionality by banks, merchants and global credit
card networks.

33. • P1a: Digital business innovation platforms that
leverage customer scale and complementor
scale together create greater potential value
from innovations than comparable platforms
that leverage one without the other.

34. • Uber has leveraged detailed information on
demand patterns to introduce dynamic
pricing, with additional premium fees shared
with the drivers that are integral within the
ecosystem.
• Similarly, ratings of drivers and consumers
both provide useful information value for
Uber to fine-tune its offerings in the future.

35. THANK YOU