This document provides a summary of a lecture on digital transformation. It discusses how retail is being disrupted by online shopping and digital platforms. Traditional brick-and-mortar retail is declining as online sales grow and delivery services expand. Software is becoming the driving force behind changes in many industries like retail, shipping, banking and more. The lecture also covers topics like how technology has increased processing power tremendously over the past 50 years, the rise of user-generated content, and how marketing is shifting to focus more on conversation in the digital age.

1. LECTURE L11
DIGITAL TRANSFORMATION

3. Resource Outline

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8. LECTURE L11
DIGITAL TRANSFORMATION

9. Broadcasting

14. Is retail dying…?

15. The evidence suggests its just a matter of time

16. Sales at US retail stores on Black Friday fell to $10.4 billion
this year, down from $11.6 billion in 2014
Source: ShopperTrak
image: Huffington Post Canada

17. On-line sales are growing
Source: BI Intelligence

18. IBM said spending was up
17.8% from Cyber Monday
2014, and more customers
than ever opted to browse
deals on their mobile
devices.

19. According to Amazon’s holiday
period stats, there were 10 times
as many same-day deliveries this
year in comparison to two years
ago.

20. And delivery services are exploding…

21. “Retail guys are going to go out of business and
ecommerce will become the place everyone buys. You
are not going to have a choice. We’re still pre-death of
retail, and we’re already seeing a huge wave of growth.
The best in class are going to get better and better. We
view this as a long term opportunity.”
— Mark Andreessen

22. Retail is fundamentally implausible economic structure
You combine the fixed cost of real estate with inventory
Every retailer is put in a highly leveraged position
Few can survive a decline of 20 to 30 percent in revenues
There is fundamentally a better model

23. What is happening to retail is not only online offering of
products and services
It the transformation of old established physical way of
doing business into new ways that are optimized around
real-time software systems
This is called Digital Transformation
Digital Transformation

24. Software is becoming the change agent of all business
If the internet has not disrupted a business, it will
Traditional industries like retail, shipping, banking,
insurance, law firms, health and the list goes on…
Digital Transformation

25. UBER PROTESTS

26. UBER PROTESTS

27. What is going on?

28. 1900
REVOLUTION IN SCIENCE – EINSTEIN,
CURIE, FREUD, BOHR, TURING
BROADCAST CULTURE – RADIO,
MOVIES, TV, SITCOMS
ANALOG – RECORDS, CASETTES, FILM,
BOOKS, CD, DVD
INDUSTRIAL
FACT BASED EDUCTION
2000 2100
THE FOURTH INDUSTRIAL REVOLUTION
END OF CONTROL
EVERYTHING IS DIGITAL
THE RISE OF SOFTWARE
ARTIFICIAL INTELLIGENCE
INFINITE COMPUTING
ROBOTICS
3D PRINTING
SYNTHETIC BIOLOGY
DIGITAL MEDICINE
NANOMATERIAL
ABUNDANCE
SUPERMAGNETS

29. PDP-8
Picture from UT messa
Computer from DEC in
March 1965
32K memory
0,5 MIPS
MIPS: millions instruction per second
12 bit architecture
Costed 18.500 USD
50.000 machines sold

30. iPhone 6
Smartphone from
september 2015
128GB “capacity”
25.000 MIPS
MIPS: millions instruction per second
64 bit architecture
Costs $649
Sold 10 million phones
in 3 days
Heimild: apple, apple insider

31. From PDP-8 to the iPhone 6
MIPS: millions instruction per second Heimild: apple, apple insider
50.000 times faster and fits in your pocket
50 years
And has camera, sensors, speakers, wifi, etc…

32. INTELLINGENT
REAL-TIME
SOFTWARE

33. SOFTWARE AND DATA
ARE IN THE CLOUD

34. INTERNET – 3 BILLION PEOPLE +
3 BILLION COMING ONLINE

35. COMPUTERS,
PHONES,
DEVICES
ARE
JUST
GATEWAYS
TO THE
CLOUD

36. UNIVERSAL
ACCESS TO
KNOWLEDGE,
SERVICES AND
OTHER PEOPLE

37. END
OF
CONTROL

38. FUNDAMENTAL
SHIFT
IN
PEOPLE’S
BEHAVIOUR

39. WE TEND TO
OVERESTIMATE
TECHNOLOGY BUT IGNORE
THE IMPACT ON
BUSINESSES AND
DAILY LIFE

40. HOW WILL TECHNOLOGY CHANGE
PEOPLE’S BEHAVIOR AND VIEWS?

42. Monty Payton goes to War

45. YouTube Monty Python
Videos Boost
DVD Sales 23,000%

46. CAN BANKS SURVIVE 40%
DROP IN REVENUES

48. TRADITIONAL PRODUCTION OF CONTENT
"1984"

49. TRADITIONAL PRODUCTION OF CONTENT

50. TRADITIONAL PRODUCTION OF CONTENT
Benchmark:
Production budget: $900,000
Audience: ~ 50,000,000

51. USER
GENERATED
CONTENT

52. USER GENERATED PRODUCTION OF CONTENT

53. USER GENERATED PRODUCTION OF CONTENT
Benchmark:
Production budget: $0
Audience: 814,105,854

60. A) People that just steals, they will never pay
B) People that want to try before buy - if they like they pay
C) People that want something but it is not available
D) Copyright laws don’t apply anymore - its not piracy
Reasons for Piracy

62. Should we tax the Internet to pay musicians?

63. CONTENT CREATION IN THE
20TH CENTURY (BG)
Image from Jyrki J.J. Kasvi

64. 21ST CENTURY – OUCH!
Image from Jyrki J.J. Kasvi

65. Can this delivery
method compete?

66. “Every industry that becomes digital
becomes free”
- Chris Anderson, Editor WIRED
Freeconomics

67. The Economy of the Free
Source: Free! Why $0.00 Is the Future of Business
Subsidising Products is well known
Cross-subsidy
Now, a different sort of free has emerged
The new model is based on the fact that the cost
of products themselves is falling fast

69. ZERO

70. THE
ECONOMY
OF
THE FREE

71. A Taxonomy of Free
"Freemium"
What's free: Web software and services, some content
Free to whom: users of the basic version
Subscription model of media
Varying tiers of content, from free to
expensive, or a premium "pro" version
The 1% Rule
F2P in the video games industry

72. A Taxonomy of Free
Advertising
What's free: content, services, software, and more
Free to whom: everyone
Examples
Yahoo's pay-per-pageview banners
Google's pay-per-click text ads,
Amazon's pay-per-transaction "affiliate ads"
Paid inclusion in search results
Paid listing in information services
Lead generation

74. A Taxonomy of Free
Cross-subsidies
What's free: any product that entices you to pay for something else
Free to whom: everyone willing to pay eventually, one way or another
Examples
Give the music, sell concerts

75. A Taxonomy of Free
Zero marginal cost
What's free: things that can be distributed
without an appreciable cost to anyone
Free to whom: everyone
Examples
On-line music
Digital reproduction and peer-to-peer
distribution, the real cost of distributing
music has truly hit bottom

76. A Taxonomy of Free
Labor exchange
What's free: Web sites and services
Free to whom: all users, since the act of using these sites and
services actually creates something of value
Examples
Free porn if you solve a few captchas
Rating stories on Digg, voting on Yahoo Answers,
or using Google's 411 service

77. A Taxonomy of Free
Gift economy
What's free: the whole enchilada, be it open source software
or user-generated content
Free to whom: everyone
Examples
Wikipedia
Zero-cost distribution has turned
sharing into an industry

78. Economy of Abundance
Traditional products exist in the economy of scarcity
When the cost of copying and distributing becomes
close to nothing, the economy shifts
You can’t sell copies – their worthless
It’s not only about money - time and respect are also
important
So is you digital footprint

79. You can’t sell
copiesthey’re worthless

80. 25
Videostores, DVD,
late fees, clutter
Everything, anywhere,
anytime (almost)
BEFORE NOW
CHANGE IN CONSUMER BEHAVIOR

81. Printed books, magazines
Digital, automatically
delivered, interactive
BEFORE NOW
CHANGE IN CONSUMER BEHAVIOUR

82. Own, store, clutter Rent, subscribe, stream
OWNERLESS LIFESTYLE
BEFOE NOW

85. Oliver Lukket, theAudience

87. What can you
sell?and make money?

88. Accessibility

89. Immediacy

90. Personalization

91. Authenticity

92. Patronage

93. Interpretation

94. Embodiment

95. Findability

96. How can you
marketyour Products?

97. TRADITIONAL MARKETING

98. Use the medium people use
From marketing to conversation

99. Oliver Luckett, theAudiance

101. MARKETING IS LIKE JAZZ

102. CONVERSATION

103. CONVERSATION

104. Discoverability
Online web sites and
product reviews
Social media, Facebook,
Pinterest, Twitter etc
Youtube, Vimeo etc
Buying
Buying online
Show rooming and buying
online
Buying in-store has to be an
experience - shareable
Rating
Social media, Facebook,
Pinterest, Twitter etc
If it is not shareable, it did
not happen
Use the medium people use

106. $3,500 Taylor Guitar

107. UNITED BREAKS GUITARS

109. The YouTube video was posted on July 6, 2009
It amassed 150,000 views within one day, prompting United to
contact Carroll saying it hoped to right the wrong
13.3 million by September 2013
http://en.wikipedia.org/wiki/United_Breaks_Guitars

110. Within 4 days of the video being posted online, United
Airlines' stock price fell 10%, costing stockholders about
$180 million in value

112. STARBUCKS KNOWS THE CONVERSATION

117. CONVERSATION

119. Gary Vaynerchuk, 2014

121. LEARNING IS NOT
MANDATORY,
NEITHER IS
SURVIVAL

122. NEXT
The Innovator’s Method