Karolin Frankenberger - The Digital Transformers Dilemma: How to Energize Your Core Business While Building Disruptive Products and Services

1. Introduction
2. Chapter 1
3. Chapter 2
4. Chapter 3
5. Chapter 4
6. Chapter 5
7. Chapter 6
8. Chapter 7
9. Chapter 8
10. Chapter 9
11. Part 3
12. Resources

Karolin Frankenberger, Hannah Mayer, Andreas Reiter, and Markus Schmidt

Copyright 2021 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress CataloginginPublication Data:

Names: Frankenberger, Karolin, author.

Title: The digital transformers dilemma : how to energize your core business while building disruptive products and services / Karolin Frankenberger, Hannah Mayer, Andreas Reiter, Markus Schmidt.

Description: Hoboken, New Jersey : John Wiley & Sons, Inc., [2021] | Includes index.

Identifiers: LCCN 2020025476 (print) | LCCN 2020025477 (ebook) | ISBN 9781119701309 (paperback) | ISBN 9781119719472 (adobe pdf) | ISBN 9781119719489 (epub)

Subjects: LCSH: Information technologyManagement. | Organizational effectiveness. | Organizational change. | Strategic planning. | New products.

Classification: LCC HD30.2 .F727 2021 (print) | LCC HD30.2 (ebook) | DDC 658.4/038dc23

LC record available at https://lccn.loc.gov/2020025476

LC ebook record available at https://lccn.loc.gov/2020025477

Cover image: Wiley

Cover design: sorbetto/Getty Images

TO ALL DIGITAL TRANSFORMERS

This book starts with a bit of bad news (which you already know) and some good news. The bad news, of course, is your legacy business is like a dinosaur, and threatened with the same fateextinction. New startups, powerful tech companies, and other game changers are threatening the existence of every successful organization (see ). The good news is that firms (unlike literal dinosaurs) can prepare for drastic changes. This book is designed to help organizations prepare to meet the threat and succeed, by guiding them along the path of transformation.

The takehome message is, you actually have to transform twice: legacy firms need to transform their core, legacydriven business while in parallel setting up new, disruptive (digital) businesses. That is, all firms. Irrespective of their industry, geography, or size, companies will need to strike that balance between two very different worlds. Large, wellknown companies like Michelin, Volkswagen, AB InBev, Nestl, Novartis, and BNP Paribas are just as much affected as smaller, hidden champions such as Ohiobased manufacturer of precision instruments MettlerToledo, Swissbased diversified tech conglomerate Bhler, or BTPN of Indonesia. We interviewed all of these and many more only to find that there is no safe haven for any particular kind of organization. Our apologies.

Dinosaur companies won't survive

Why is that, though? In essence, it's wrong to distinguish based on size or geography when it comes to digital transformation. Though some differentiation based on industry is possible due to differing sector maturity and the resulting differences in urgency to transform, the most relevant distinguishing factor is the age of the organization in question, making this a startup versus legacy firm competition. Startups can launch disruptive innovations more easily than legacy firms because they are not bogged down by past (infra) structural or mindset baggage. Legacy firms, on the other hand, cannot act as quickly because the organizational realities they face are more complex and harder to overcome. For them to continue to be successful in the old world while at the same time succeeding in a new world is a challenge no holistic consultant model captures so far. We are trying to tackle the problem in this book.

The good news is, the digital world order that organizations need to brave is not as dystopian as one might think. On the contrary it bears great potential that firms can tap into when they open their minds to disruptive innovations, including business model innovation paired with or based on the use of artificial intelligence, platformbased businesses, productasaservice, digitized customer journeys, and many more of those alltoowellknown buzzwords. We go beyond the buzzword hype, though, to illustrate how organizations not only can understand but can master the challenge of creating a radically new business which will rely on fundamentally different success factors than the core business.

Avid management literature readers will know that some books and concepts have addressed the necessity for disruptive innovations already. Think Blue Ocean Strategy, which talks about how companies can create new demand in previously untapped market spaces rather than fight over a shrinking profit pool with fierce competitors. Or think Three Horizons, which depicts innovation as occurring on three time horizons, with these time horizons gradually shortening, thus disadvantaging bureaucratic incumbents and advantaging nimble attackers well positioned to act swiftly. Yet one thing is missing: a concrete guide to the differing success factors in the core business versus those in the new disruptive business, particularly as relates to the implementation of such a transformation, and to how the tension inherent in the coexistence of these two businesses can best be managed. This is where we come in the book at hand guides digital transformation practitioners from all sorts of organizations and across all career levels along the implementation of a holistic, twotier digital transformation.