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Advances in the area of technology have skyrocketed in this digital age. Digital business management is now a standard embraced by industries in order to survive the fast-growing changes in the world of commerce.
In this article, we outline:
If you are looking to revamp your business model to be in-line with companies that use big data and analytics to make their businesses more competitive - if not ahead of others – this article is for you.
Table of contents
Section 1: 11 Characteristics Of Successful Digital Business Models
Section 2: How to Create Digital Business Strategies In 7 ways
Section 3: 9 Benefits of Learning Digital business management
Conclusion: What Business Management & Digital Innovation Mean For Your Business
In the service industry, the phrase, “the customer is king” is often used. Now, in the digital age, this saying applies across all industries. The customer is primarily in mind during the creation, development or innovation of a product or service. Dedicated teams are assigned to research and analyze big data about customer wants so they can then be integrated in designing products and services.
Time and resources are invested in data analysis to be able to give the kind of customer experience that the market is looking to pay for.
Start following market research reports and analysis in your specific area of business on a monthly or quarterly basis. From reviewing these reports, note the effectiveness of sales, quality of products, and services people are looking for, and identify opportunities to grow your customer base.
Traditionally, organizations focused on how they should measure their outcomes rather than thinking about what outcomes they wanted to achieve and how they could go about achieving those outcomes. If measuring the outcome is the main focus of an organization, they lose sight of the potential to create lasting impact and become distracted into simply getting the job done.
Employees will be more empowered to think on their own creatively, as well as taking up more accountability because they know and understand the impact they can contribute. They are not “just doing their jobs” because that’s what is expected of them. To be outcome-focused is also to be future-focused. It is finding out what will lead your business to success and working towards achieving that.
Start assigning tasks to your employees without instructing how to complete them. Just share where you currently stand, and clarify the results you are hoping to get. Let them use their knowledge and expertise to approach the task from their own angle.
Transparency and openness can be feared by a lot of organizations in today’s social media dominated world. Forward-thinking companies have embraced this business model to help their organization in the digital world. Being open and transparent about relevant information to the right people, with the right means, and at the right time, can attract more clients. On the other hand, employees who feel that the company they work for trusts them are more engaged and will develop stewardship and loyalty towards their employer.
Give employees access to important financial statements that clearly state how the organization is performing. Share and compare sales and income statements from the current month and the same month from prior years. This transparency should be done by conducting monthly meetings as well as in open forums.
In any organization, higher efficiency, better productivity, innovation and a stronger, more engaged workforce are always sought after. These are direct benefits of collaboration. Whether it is a multinational firm or a small start-up, collaboration in an organization will ensure that better ideas are generated because there is more input from employees with different views and experiences. Digital technologies particularly allow a company to be more aligned and connected, as employees are able to collaborate even when they are in different locations because the proper tools and systems are in place.
Providing customizations on products or services is a value-add that a business can give to their customer base. With the advancement in today’s digital technologies, customers can now transact directly with businesses eliminating middle-men for different transactions. Data on customer specifications and personalized preferences can easily be collected by businesses using cloud technology investment, without the worry of where to store unlimited data. Companies can now analyze business-relevant customer information and be able to move their business in a direction in-line with the needs of the majority of their customers.
Economies of scale can be seen as a byproduct of some of the characteristics of successful digital business models outlined above. Collaboration, transparency and being outcome-focused create a stronger more engaged workforce. Being customer-centric, giving customers control and embracing transparency attract more customers which, in turn, creates more business. The stronger, more engaged workforce then produces more and better products and services. All of these, combined with digital transformation, which increases overall efficiency, will reduce the cost of doing business in the long run. For online businesses such as eBay, any additional revenue from a new customer increases the overall profit but it does not add much cost to running the business.
The onslaught of online business requires companies engaging in e-commerce and digital marketing to acquire good, real-time data processing infrastructure with ideally zero to low latency. In today’s culture, customers - as well as organizational stakeholders - want information to be available immediately and it is crucial to be able to meet this want in order to be competitive. Fast and real-time data processing is even more important to the organization with the online platforms becoming available to more and more people. A business needs to be able to process huge amounts of information internally in order to have real-time insights about significant events and have analysts on top of any crisis that may arise.
Successful omni-channel has become a new standard for many businesses as customers want to purchase products and services through their phones, tablets and laptops as well as the traditional stores or offices. Customers have more options as more businesses provide omni-channel retail marketing; they feel more informed, connected and empowered. When you are able to provide different avenues to access your service or product and allow customers access anytime and anywhere, you enhance customer satisfaction and increase customer loyalty.
There is almost always an after sales service added on to purchased products these days. When you purchase a laptop from Apple or a car from Honda, they will offer the customers a free limited service warranty and an offer to purchase an added warranty. As companies innovate products, more value should be added for the customer to pick them among so many other competitors offering the same product.
Some organizations are geared towards the focus of improving customer relations and have offshored most of their manufacturing to other countries with lower cost to produce to even-out the cost of the added value they are offering along with their products.
Digital innovation is a continuous effort. When companies successfully innovate and improve their product, they then think about more ideas to challenge their current innovation, knowing that the competition will have most likely innovated their products as well.
Executives will continue to look for new ways to move their business to a better position. What is important is for all these innovative ideas to be implementable and should make sense for both the producers and the consumers. Digital innovation is encouraged throughout the organization. New ideas can come from across the ranks in an organization, not just its top tier. Some of the best innovative ideas may even come from those at the bottom to the middle of the organization that have hands-on experience in testing the products.
Companies can use customer feedback to redesign and improve their products. Customers that are convinced that the product’s improvements are what they need - and is worth paying for - will eventually pay for these products.
The organization then has delivered the value they advertised. In the historical account of the mobile phone according to knowyourmobile.com, the first cellphones were sold to the public in 1983. They were way more expensive at $4000 than today’s iPhone at $1200. They were designed to function as “just” a mobile phone.
With all the digital innovations and changes in market demographics, consumers drove changes from what used to be a simple product to what you can now almost consider a hand-held computer. The cell phone today comes at a much lower cost to produce but is delivered with so much more value to the user than when it was first sold.
Every organization has a vision of what they would like to achieve. As you lead your business to move towards digitization and digital innovation, the vision you set must come clearly across the organization. The vision should be trickled down from the top in a well-defined cohesive message that will be fully understood within your business so that the execution will be evident in the company’s culture, products and services.
Run an executive management team meeting and set clear and specific target objectives. List the things that need to be achieved that are in line with the corporate vision for digital innovation. Allocate funds that will accomplish the specified target objectives and will improve the existing business. Communicate the target objectives and the corporate vision, empowering digitization to all employees across the business organization.
Driving your business to digitization involves a cultural change within the organization. People will have to unlearn old processes that worked with the traditional business but will not fit the new digitized environment. Going paperless, for example, will not be an easy transition for someone who’s used to taking notes on every single plan of action.
Strict rules may have to be put in place in the beginning to ensure adherence to such changes until the practice becomes engrained in the organization. Day in and day out your employees will have to embrace the new culture towards becoming a digital business and this dedicated mindset will make your transition successful.
Create and conduct learning programs that will develop deep understanding and appreciation for digitalization. Programs can vary from simple digital awareness to teaching more specialized knowledge about digital innovation. Interpersonal skills as well as communication skills should also be taught in the learning and development program.
Any organization will recognize that KPIs are an important measure of success. These need to be measurable and must be clear to those whose work will be measured against them. When you set KPIs for your company, be sure that they are realistic and attainable. You will have to continually raise the bar as the KPIs are surpassed, but they should be possible to achieve. Lastly, they have to be the right KPIs for your business. If you are measuring the wrong KPIs then all effort is destined to be useless, and you will almost certainly fail in your attempt to digitize your business.
Create and identify critical success factors that a specific employee, department or work group must focus on in order to satisfy business goals and corporate objectives. Use action words such as “attract”, “perform”, “manage”, “expand” or “monitor.” These key activities must be measurable and must have a specific duration.
Automation is an integral part of digital businesses. Automation enhances the efficiency of the company’s processes and will help employees veer away from the redundancy of irrelevant process steps. Automation of a process will allow for results to be truly consistent. It is important for leadership to identify which processes can be automated as it can significantly cut costs. When automation is in place, in manufacturing for example, it will allow employees to focus more on the quality of the output, as the production process can be dealt with on autopilot. One has to keep in mind that automation is not a one-step process. It is a continuous endeavor that the organization needs to constantly invest in.
As you enter the digital business world, you will be faced with much more data from your customers than you could ever collect in a non-digital business set-up. It is important to optimize the data collection and use it to benefit the business through good analysis. Artificial intelligence can be your best tool in processing the enormous amount of data you collect from your end-users. You can study upward and downward consumer purchase trends and possibly the causes and influencers of those trends, giving insight into the issues that cause the negative trends your AI has captured. Since you have the ability to get this information real-time, you can address a crisis much faster.
Companies working to become digitized will benefit from creating a Center of Excellence (CoE) team. This team is dedicated to focusing their efforts on process improvement. Most CoEs use the Lean Six Sigma (LSS) methodology which identifies the causes of defects or process variations and finds ways to remove the defects or limit those process variations. Organizations that have a CoE team enjoy a streamlined process across multiple departments, even across geographies.
CoE is the organization’s channel of continuous improvement initiatives. Ideally, members of the CoE are experts that have different experiences and backgrounds so the ideas that are generated will be multifaceted and will be beneficial to all areas of the organization.
The amount of data that a digital business can accumulate may be overwhelming and without intelligent and proper data analytics, the company may be stuck with over analysis (analysis paralysis). Data can either make or break a digital business. Executives need to know the impact of big data on their organization, and how to manage it in order to optimize its use.
The key to using data in your company’s favor is to ensure that your analysts understand what the information can do for your business and how to properly allocate resources where needed. Data analytics can be a very powerful driver of your organization’s success in the digital world. It should be the heart that pumps so all other parts of your business can function properly.
Learning the science of digital business management will drive you to focus on making the customer a priority. This will enhance the experience of your customer base as your organization provides better customer service. The more superior your customer experience, the more your organization will be a top consumer choice. You will learn to design your digital applications and business processes to improve the overall satisfaction of the end users. Your internal customers (employees and shareholders) will also benefit from the enhanced customer service that will come as a result of your success in digital business management.
Executives who are equipped and educated on digital business management can enhance their company’s brand reputation as they are trained under a set standard and know how to properly package the company’s message.
As previously discussed, digital business management is customer-centric which is achieved because the correct digital management strategies are practiced in the organization where leaders have been formally trained. The enhanced customer experience provides a boost to your brand reputation as customers will freely endorse your company’s products and services. In today’s social media dominated society, good word of mouth such as online reviews and tweets will easily raise up your brand reputation above that of your competitors.
An organization whose leaders are educated in digital business management should have streamlined company processes. A practice emphasized in digital business management as discussed earlier is having a center of excellence team that looks into process optimization and continuous improvement of business processes.
Proper training across the organization on all relevant changes to foster digitization will create a streamlined culture from top to bottom. It aligns not just the processes, but everyone’s outlook towards the strategies that the business will entail to ensure that the organization’s vision is achieved.
Business managers need to learn new digital technologies and digital marketing strategies to augment sales using technology as their medium. Smart use of data analytics is one method to raise e-commerce sales. Executives are taught to better understand their customers’ buying patterns in e-commerce management programs in digital business management schools. Learning the drivers that influence a customers’ decision to click purchase at checkout versus abandoning their virtual shopping carts is good data to study. You need to also understand the data in order to overhaul your strategy for selling and marketing products online. It can also help develop an effective e-commerce management program for your corporate entity. The goal is for customers to become actual buyers rather than just online window shoppers.
Training courses will teach you to identify the best strategies that fit your business needs. You will know what tools and resources you need to leverage in order for your business to focus on customers. If customers are satisfied, they will feel valued and that they are getting the best value for their money when they purchase your products and services.
When the correct digital business management strategies are put in place because they have been studied as well as tested and implemented carefully, customers will have a great overall buying experience. When customers see added value to their purchase that they cannot get elsewhere, this can easily convert to higher customer retention rate and brand loyalty.
Valuable and practical lessons on how to market your company’s products through online content are essential for a digital business management learner. Knowing what content is palatable to your target customers as backed up by data analytics regarding your market, will definitely expand your campaign reach. Being able to create a single digital ad that is market relevant and wisely channeled to the right market segment at the right time can extend your campaign reach more than a hundred poorly designed ads.
7. Improved management decisions
Executives and employees who are formally educated on digital business governance will definitely benefit an organization holistically. With the right execution of digital business management strategies, executives are able to explore all areas of their business that need digital transformation. Leadership will know which areas to focus on. Since the vision is made clear to the whole organization, processes are in place, strategies are well planned and organized. In addition, leaders know how to tackle issues head-on, business executives in a successful digitized business can make informed and improved management decisions as needed and especially so during crisis management.
Equipped with theoretical knowledge on digital business management, executives are able to develop an effective digital strategy, solid vision and a good plan of action that can be disseminated to the whole organization. Learning digital business management teaches leaders that to succeed in the digital industry is not merely having the right digital technologies. It is also about getting their staff ready for all the changes that the organization’s digital transformation brings. When both people and technology are set up properly for the task, together with all the practices put in place for the business to move to the digital world, the result will be speedier service and good product development.
As business executives try to be at the top of the very competitive digital business arena, enrolling in digital business management courses - thoughtfully designed by business experts - will drive the digital innovation and creativity of their organization to the next level. Experienced and educated digital business managers know how to identify the drivers that the business needs at every level to create that atmosphere where employees are engaged enough to perform their best. When executives know how to properly fuel their staff’s creativity, their products and services will be placed in a good position against the competition.
Being successful in the digital transformation of your business model is about more than just investing in the latest digital technologies or ensuring a presence on the worldwide web. More importantly, it requires a forward-thinking approach for the organization, from top to bottom. A digital culture should be created in order for the vision to be embedded in the entire organization.
All stakeholders should be ready to embrace the changes and business transformation that will be brought about by the lengthy and not so easy process of digital transformation.
Visit IMD.org to learn more about bringing your digital enterprise and corporate organization to the digital future and investigate their digital business management training programs.
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IMD business school rankings
Our executive education programs are ranked highly by the world's most influential business publications.