Lecture 3

lecture 3: digital strategy

1. Traditional Business (Firm as an Integrator):

   • The firm uses its resources (R_F) to create value (V-C_F) and meet the needs (N_F) of customers directly.

2. Ecosystems (Firm as a Collaborator):

   • Here, two firms collaborate. Each firm uses its resources (R_1 and R_2) to create value (V-C_1 and V-C_2), addressing the needs of their respective customers (N_1 and N_2). This model reflects interdependencies where the value created by one firm complements the value offered by another.

3. Multi-Sided Platforms (Firm as a Transaction Enabler):

   • An example given is Uber. The platform facilitates transactions between different user groups: drivers provide a resource (R_1), which, through the platform (F), creates value (V-C_1) for riders (N_1). Simultaneously, riders provide a resource (R_2) that creates value (V-C_2) for drivers (N_2).

4. Firm as a Bridge Provider (e.g., Google Users-Ads):

   • In this model, the firm bridges two different user groups, such as users (R_1) and advertisers (R_2). Google creates value for users (V-C_1) by meeting their information needs (N_1), and at the same time creates value for advertisers (V-C_2) by providing access to potential customers (N_2). The platform itself (F) manages the needs of its own firm (N_F) by generating revenue (G) from the interaction between these two groups.

Identifying and matching new needs and resources:

1. identifying the owners of resources and selling (Airbnb, Uber..).

   = identify which people have empty houses or empty cars, then they select them using.

1. observing and synthesizing customers needs (A-B Testing, multiple channels)

   = you’re experimenting with features all the time (after identifying needs) and make them available

1 → enabled by digital product

2 → enrich the interaction, bringing both sides closer. We’re talking about data

bottleneck: Firm 1 provides something for 2 but 3 cant handle it, so 4 & 5 are more unproductive then they could be, so solving bottleneck in 3 could increase productivity for 3 but also 4 & 5.

Firm 3, since it innovated to solve its problem, it now has the control (bargaining power)

The slide outlines a process for integrating Artificial Intelligence (AI) into organizational strategy making:

1. AI Strategy?: The company begins by questioning whether AI should be part of its strategy.

2. Diagnose & Forecast: The next step involves conducting an "Exposure Analysis" to understand how AI can impact the business and to forecast future trends or outcomes.

3. Search & Choose: Based on the insights, the company then considers "Redesign and reallocate tasks" to incorporate AI effectively into the business processes.

4. Commit & Monitor: After deciding on a strategy, the company commits to it and monitors the implementation to ensure "Fair and transparent adoption" of AI.

5. Evolve: The company's strategy is not static; it should evolve as the business and AI technology develop further.

This process indicates a data-driven approach to strategic decision-making, emphasizing the need for ongoing evaluation and adaptation as AI technologies and market conditions change.