Digital business is a holistic business – Why digitizing a business model may start with a homepage but should not end there

Digitalisation is no longer a megatrend of our time, but rather a normality. Companies implement digital features like homepages or even an own app, to hop on the new norm. Covid-19 has even underscored this need, for according to a recent study 80 percent of the respondents stated that they plan to accelerate their efforts on digital transformation (Chakraborty, Charanya, de Laubier & Mahesh 2020).

Picture: Digital Business city (pixabay.com)

However, a common way of thinking seems to be that implementing something digital within a business structure is sufficient to call the business model digital, and hence the “mission” provisionally done. Some may think this is just a semiotic problem with no further consequences, but seen within a strategic perspective, this misunderstanding can cause internal conflicts. This view is enlightened in a Forbes article (Badharudeen 2018), that explains how the technologies and methods of digitalisation develop with a broad scale, hence demanding the businesses to re-think their strategy, customer base and processes. Thus, to embrace and benefit from change, one must holistically transform the right elements of the business model.

Platform, experience and content

The holistic transformation can be decomposed with three key areas of a digital business: first the platform, i.e. the place where business takes place, second the experience, meaning how the customers experience the service and third the content, i.e. the actual content that is delivered (Weill & Woerner, 2013). The first component, the platform, includes both the digitized processes, data, and infrastructure. So, for example in a case of a web shop, the platform includes the web shop-software but also the back-end processes of collecting and packing the order. The second component, experience, then in turn includes all the functionality and processes which affect on the customer experience. For example, the payment options of a web shop, the assistance provided, and communications are part of the experience. The content component is then the product or service that is sold, whether it is in digital form or not (Weill and Woerner 2013.) It is notable that the content also includes the expertise that the company provides, e.g. in the form of white papers or blog posts.

Based on the above decomposition, one can get an estimate of the digitization of the business by asking three times the same question: How digital is the platform of my business? How digital is the experience that is provided? And finally, how digitalisation is exploited in the content we deliver? Then the fourth question should be: How customer-centric are all the three forementioned components?

Is two out of three enough?

A German book shop, KLEIN Buch+Papier GmbH,an example of a partly implemented digital transformation. The company sells mainly books and stationery as well as items for school use. At its peak, the company had five branches spread all over the region. Then came the digital change. The business owners thought that presence on the Internet is sufficient together with a web shop for business customers. Thus, the owner fulfilled the criterion of platform and few aspects of the experience. Unfortunately, the company forgot to think about the customers and the specific contents the customers would want. Customers expected, for example, e-books, but they were never added to the shop. As a result, the company suffered a loss of a local paper and book shop.

To summarize, the company was unable to identify the customers’ needs, such as accessing a product digitally and anywhere. This inability then led to wrong choices for the content. Eventually high fluctuation of customers hit the company hard and pioneers like Amazon (Audible, Kindle) paved the way and Klein Buch&Papier was left behind. The end of the story was marked by the closure of two branches and the discontinuation of some of the articles in the range. A holistic approach for digitalization could have helped the company to connect their customers with digital touchpoints and therefore strengthen the core of the business.

References:

Chakraborty, S., Charanya, T., de Laubier R & Mahesh, A. (2020). The Evolving State of Digital Transformation. Boston consulting group. Retrieved 1 December 2020: https://www.bcg.com/publications/2020/the-evolving-state-of-digital-transformation

Badharudeen, S. (2018). How To Succeed With Your Holistic Digital Transformation Journey. Forbes Technology Council. Retrieved 1 December 2020: https://www.forbes.com/sites/forbestechcouncil/2018/06/25/how-to-succeed-with-your-holistic-digital-transformation-journey/

Weill, P. & Woerner. S. (2013). Optimizing Your Digital Business Model. MIT Sloan Management Review March 19, 2013. Retrieved 1 December 2020: https://sloanreview.mit.edu/article/optimizing-your-digital-business-model/

Lena Joerg, Karlshochschule International University, Lena.Joerg@gmx.net.

Lena Joerg is a student of International Management at the Karlshochschule International University in Germany. She is specialized in Marketing and Media/Communications. Currently she studies business as an exchange student in the Jyväskylä University of Applied Sciences.

Riikka Ahlgren, PhD (Econ.), Jyväskylä University of Applied Sciences. riikka.ahlgren@jamk.fi

The second author of this article, Riikka Ahlgren is a PhD in information system sciences. She works in the Jyväskylä University of Applied Sciences as a Senior Lecturer, specialising in digital business. This article is a joint effort with her student in the course “Digital business models and agile methods”.