Digital Business Vol II: Business Strategy for the Digital Era (3rd ed): Hardcopy

Welcome to Business Strategy for the Digital Era, Volume II in the Digital Business series. This is a thrilling new text on strategic business responses to the fourth industrial revolution and digital technology. It is aimed at practitioners, managers, and other non-technical professionals whose lives are increasingly affected by digital technologies.

The other volumes in this series are:

Digital Business Vol I: Introduction to Digital Business & Technology, now in its third edition

Digital Business Vol III: Digital Transformation & Maturity, now in its second edition

It has become practically axiomatic that technology is a pervasive and accelerating influence on organizations, with wide-reaching impacts on every level of management and business function, from product design and customer experience to human resource management, finance and all other areas of organizational functioning.

However, there are so many unknowns and underdeveloped areas of knowledge within the arenas of digitalization and the fourth industrial revolution. What do these things refer to in the first place? What really are the implications for organizational strategy – does strategy change fundamentally, or rather adapt traditional thinking and models to new realities? How do organizations effectively and correctly transform themselves in response to these forces, in order to thrive in our new realities? It is these questions that are addressed in the three-book Digital Business series.

This second volume in the series, Business Strategy for the Digital Era addresses some of these questions, focusing on the changing theory and practice of strategy, in three parts comprising 14 chapters:

Part I gives a broad-ranging introduction to digitalization and digital business.

• Chapter 1 discusses core concepts in digitalization, essentially asking the question “what is digitalization”? It presents technological change as a powerful driver of social and economic change over the ages, with digitalization as the most recent and arguably the most dramatic wave of technological change in human history. Digitalization is invariably associated with a number of key trends which are introduced in this chapter and expanded on in detail elsewhere in this book, namely acceleration, convergence, exponential growth patterns, abundance of some things and scarcity of others, and industry concentration.
• Chapter 2 discusses some of the key ingredients for technological change to create truly disruptive change in markets and business. These include the concepts of convergence; the intersection of technological change, social change and business model change; and the drivers of adoption of new technologies.
• Chapter 3 covers various topics regarding how technological and digital disruptions occur and have occurred, ranging from trends on technology and society to organizational and individual trends which help us to predict future technological disruptions.
• Chapter 4 discusses the case for formulating strategic responses to digital technological change – in essence, the case for digital transformation. Given the difficulty, cost and effort of strategic digital transformation programmes, it is important to have a very clear rationale for making the change. We present six broad rationales for deliberate strategic responses, namely a technical rationale; a broad contextual rationale; an organizational success rationale; a number of specific business objectives rationales; a societal improvement rational; and an individual, personal relevance and success rationale.

Owners of the first volume in this series (Digital Business Vol I: Introduction to Digital Business & Technology, by Lee & Armstrong) will note that this Part I is a slightly condensed version of material from Part I that book. We have included this condensed material here in order to serve readers of Vol II who do not own Vol I. Readers who have read Vol I can therefore proceed to Part II of this book.

Part II consists of four chapters focused on traditional perspectives of strategy and how the digital era affects these views, namely:

• Chapter 5 takes an in-depth look at the core concepts of organizational strategy, including a brief history of business strategy, the importance of organizational ideology, strategy and growth, strategy as a multi-layered concept, the intersection between strategy and leadership, and strategy and stakeholder management.
• Chapter 6 turns its attention to market-based perspectives of strategy. It starts with the relationship between the firm’s strategy and its environmental context, and presents some approaches to deal with the uncertainty inherent in forward-looking practices like strategy. It then explores segmentation, industry structure, notably in terms of Porter’s 5-forces model, and blue ocean strategy.
• Chapter 7 examines the resource-based perspective, starting with a review of the sources of cost and differentiation advantages as being located primarily inside the organization. This lays the foundation for a review of strategic approaches to resources and capabilities, and then core competencies and dynamic capabilities.
• Chapter 8 discusses other traditional perspectives of strategy, including emergent strategy, the learning organization and entrepreneurial strategy.

Part III is a directed more specifically at strategy for the digital era. This section unpacks the following topics:

• Chapter 9 discusses how digitalization is fundamentally changing the organizational environment and context, demanding strategic responses. We explore a number of facets of how technology has changed the macro socio-economic landscape around the world, how the absorptive capacity of an organisation helps it respond, and how great levels of digital maturity leads to superior organizational financial performance.
• Chapter 10 discusses disruption and strategy, starting with a review of the innovation and disruption literature. This lays the foundation for the introduction of a model to help explore the sources and modes of disruption of firms and industries.
• Chapter 11 expands the discussion on exponentials, abundance, and convergence presented in Part I. It goes on to probe the influence of digital transformation on markets structure, and concludes with a review of the implications of all the preceding on traditional perspectives of business strategy.
• Chapter 12 discusses business models, including some new business model thinking in the fourth industrial revolution. This covers entry strategies for disruptive innovations, new frameworks for revenue models, and a discussion on alternative financing models.
• Chapter 13 unpacks platform businesses in detail. We identify the main types of platforms and explore their respective critical success factors and how to achieve them. We then discuss some practical aspects of building a new platform business, or converting an existing business into a platform business.
• Chapter 14 covers the notion of ‘exponential organizations’ (ExOs) as introduced by Ismail et al (2014). We review the key tenets of ExOs, discuss how large firms can embrace some ExO principles, and the benefits of doing so. We relate this to traditional strategy before concluding with some cautions and critiques of ExOs.

There are several challenges with writing a book such as this. One of these is the sheer breadth of the ground that needs to be covered. We endeavor here to provide sufficient breadth and depth on the key topics of business in the digital era. However, it is clearly impossible to cover all of the material in great depth, and so we provide extensive references for readers interested in particular areas to explore further.

Another challenge is the rate of change of most of the topics we address. Most of them are very ‘live’ areas of current research. The definitive body of knowledge has not been completed. Technology is evolving ever more rapidly, and organizational responses to that process of change are therefore always dynamic and accelerating. We acknowledge that many of the specifics covered herein will therefore date reasonably quickly. Nevertheless, we believe that the underlying principles will be more durable and provide a solid foundation for business leaders contemplating the transformation of their organizations for a digital future. This text is essential reading for our time.

Intended Audience

Business Strategy for the Digital Era has a wide potential audience. It seeks first and foremost to present an holistic view of business and other organizations in the digital and fourth industrial revolution era. When we say organizations, we mean a wide array of organizational forms ranging from for-profit businesses and firms to non-profit, government, and other public organizations (see Appendix A at the end of the book for some of these definitions). When we say ‘business’, too, we mean both for-profit business activities as well as others (the business of government, the business of philanthropy, and so forth).

Therefore, this book is appropriate and important for managers and members of all types of organizations, business owners, business students, consultants, 4IR experts, government leaders, and others who are affected by the ongoing technological revolution of our age. The text not intended to be a technical guide to digitalization, and, therefore, is not targeted at technical experts in any field. Although the book does seek to demystify the technological elements of our time and place them into a business and organizational context, these discussions are aimed at organizational leaders and others mentioned above for the purposes of equipping them to lead and manage the wide range of organizational projects that involve and are affected by digitalization.

This edition of Business Strategy for the Digital Era makes extensive reference to this topic within the context of the South African economy and its organizations, while still employing a wide variety of developed world examples. These geographic specificities mean that this version will be especially relevant to South African readers, although the nature of the South African economy suggests strongly that these local elements could be extremely relevant to other emerging market contexts. An international edition will be forthcoming shortly for those wishing an greater emphasis on developed world contexts and illustrations.