Digital Factory of the Incumbent – Innovation Excellence

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by Alex Chenevier

Digital Factory of the Incumbent

Introduction

Technological changes are one of the leading advocators to shape customer value. They are characterized by a process of social technological variations, rooted in different disciplines e.g., economics, sociology, and psychology.

It implies that the competitive advantage is increasingly shaped by the management of the polysemic nature of the customer value. This cross roads of understanding drives how shoppers use various channels (offline, online, and mobile) across temporal stages (pre-purchase, purchase and post-purchase.

In this holistic playfield, we are attempting to simplify this discipline by seizing a definite space of instruments of measurement.

As such, “digital factory” can be simplified by structuring metathemes, articulating a “software of the mind” for digital practitioners. This is an expression coined by a Dutch Management Professor Geert Hofstedewish, designed in the context of culture, to provide guide for humans on how to think and behave.

Metathemes are researched and practioner theoretical factors assembled and organized vertically and horizontally to help the comprehension of an organic magnitude of interrelationships at the right angle. Intimately, this graph is designed to help positioning your digital innovation progresses within a framework of capabilities.

The first one, encapsulating all type of realities [identified in the retail industry], are the customer motivations which can be utilitarian, hedonic and social (Grecu, 2016).

The second zone of actions is relating to choosing the corporate digital mode of absorbing innovation. It includes heterogeneity, generativity, convergence, digital materiality, and also pace and locus (Yoo, Lyytinen, Boland, Berente, Gsakin, Schutz, Srinivasan, 2010).

Later -as of the third- , these findings are subject to fusing with the right(s) technological standard(s). They are represented by a major technical advance that shape improvements over existing technologies (Chen, 2011).

At last -as of the fourth-, these social technological designs can be marketed upon digital long lasting proven practioner toolkits listed exhaustively by Dr Dave Chaffey on this website [smartinsights.com].

Indeed in this sphere of one’s firm knowledge, incumbent social technological gravitations are instrumental to try to govern punctuated equilibria (Eldredge and Gould, 1972) i.e. click and mortar vs. cross-channel vs. omni-channel. Altogether, they are defining the spectrum of strategic moves among digitalization categories and technological standards (Chen, 2011).

By innovation, we mean the creation and adoption of an idea, a product, a technology, or a program that is new to the adopting unit. (Gupta et al., 2007)

By digital innovation, we mean an innovation enabled by digital technologies that leads to the creation of new forms of digitalization. By digitalization, we mean the transformation of socio-technical structures that were previously mediated by non-digital artifacts or relationships into ones that are mediated by digitized artifacts and relationships. Digitalization involves organizing new socio-technical structures with digitized artifacts as well as the changes in artifacts themselves (Yoo et al., 2010).

PART ONE: An intertwined process of the customer motivations

“Marketers face the challenge of resource allocation across the range of touch points” (Baxendale et al., 2015). Nowadays, shoppers are looking for more than fair prices and convenience within their shopping journey, therefore retailers who understand the variety of motives for shopping have the greatest possibilities to create value.

The first one, encapsulating all type of realties [identified in the retail industry], are the customer motivations which can be utilitarian (reflected from monetary savings and convenience), hedonic (reflected by entertainment and exploration) and social value (reflected by status and self-esteem) (Grecu, 2016).

Grecu contextualized that utilitarian shoppers are those seeking to fulfill their basic needs.

Contrary to this, hedonic shoppers seek to fulfill a psychological need to make them feeling good.

This variety of motives opens the greatest possibilities to create value for the customer incl. “work” mind-set for utilitarian products; “play” mind set for hedonic products (Babin, Darden, and Griffin, 1994). Social motivations complete the loop, while offering a symbolic meaning and/or symbolic benefit. (Firat and Vendkatesh, 1993).

Rintamäki (2006) extracted the same three foundations of the customer value. According to him, its elements extended by “the social standpoint” i.e. its symbolic meaning “have some characteristics from both utilitarian and hedonic traditions”.

PART TWO: The four dimensions of digital innovation

Historically, digitalization takes place in three stages.

The first wave of digitalization involves the technical digitization of converting analog contents and services into digital ones without fundamental changes in the industry structure e.g. transition to 1G to 2G.

In the second wave, we begin to see the separation of devices, networks, services and contents that have been tightly coupled in the past. For example, voice service becomes completely independent and be delivered using a fixed line phone, a desktop computer or mobile phone.

In the third wave, we begin to see the emergence of novel products and services through the mash up of different media across different product architectural boundaries. Devices, network, services and contents that were created for specific purposes are now being re-mixed in order to repurpose their usage e.g. a chip into running shoes enabling runner to collect data.

In an attempt to comprehend these transformations, Yoo, Lyytinen, Boland, Berente, Gaskin, Schutz, Srinivasan (2010) identified six dimensions. They are not mutually exclusive. Rather, they interact and reinforce each other in an ongoing virtuous cycle of digitization, increasing the complexity of innovation outcomes and processes.

Heterogeneity
Heterogeneity is the integration of diverse forms of data, information and knowledge and tools. It is responding to the intensified need to coordinate across multiple social and technical worlds. It aims to increase the horizontal integration across different stacks of digital service architecture.

In the past, much innovation was centralized. Digital technologies, however, enable multiple forms of distributed intelligence as diverse autonomous actors co-produce innovation.

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A firm can control the level of heterogeneity through architectural control points which create different forms of innovation networks with different degrees of heterogeneity [drawing a physical tree of the digital network e.g. facebook application incl. photo, video, groups].

Generativity
Generativity is an iterative process aiming at finding new ways of organizing and new ways of doing things. Generativity refers to the way actors, who were not directly involved in the original creation of a technology, begin to create products, services, and content that may not be consistent with
the original purpose of the artifacts.

It represents a high degree of equivocality, enabling continual reinterpretations, expansions and refinements of products and services; design characteristics of digital representations that foster unbounded innovations through incessant recombination and modification of different elements in digital architectures. (Yoo and al., 2010)

A possible interpretation is the well known example of women who use the Android camera functionality as a means of a mirror to do their make up in public areas.

Convergence
Digital convergence enables the combination and re-combination of devices, networks, services and contents that were originally created for different purposes. Through this recombination process, digital convergence creates a space for previously unforeseen combinations of digital representations and capabilities to emerge.

As the four layer digital architecture becomes more loosely coupled, digital representations within and across these layers can be manipulated and re-combined in ways that create new families of representations ad infinitum (Yoo and al., 2010).

For example, the so called “quadripule play” [broadband internet, phone, tv, mobile] is an outcome of digital convergence in media content, storage and distribution mechanisms. Digital convergence has created major innovations such as youtube.

Digital materiality
Digital and physical materiality become intertwined. Accordingly, the study of digital innovation needs to address forms of organizing that enable seamless integration across the social, physical and digital world.

Embedding digital materiality into products and services requires designing and managing digital service architecture and establishing architectural control points.

An architectural control point refers to “a system component that enables or constraints the design of complementary components through visible information e.g. interface that can be manipulated by designers”.

A spectacular example is the smart mirror available within luxury boutiques and homes.

Pace
Yoo and al., 2010 are adding this as part of the innovation process. Yet, the essence of the graph is a specific time picture of the possible executions. Therefore, its pace can be spotted by comparing two assessments.

Locus
It offers the opportunity to introduce the concept of a unique [for each incumbent] innovation space. In the same vein, we can refer to my paper published in 2017 in Taiwan, on the International Journal of Systematic Innovation. At this junction, locus -at least on the principle-, is meaningful to be contextualized into a space of interdependencies.

PART THREE: Technological standards

A technological standard can be viewed as “a set of specifications to which elements of products, processes, formats, or procedures under its jurisdiction must confirm” (Tassey, 2000).

Researchers have pointed out that the establishment of a de facto standard defines key facets of emerging social-economic institutions, whereby the winning design dictates “rules of engagement” (Chen, 2011).

Essentially, a technological standard represents the collective choice resulting from a balance between utility of consumers, technical possibilities and cost structure of manufacturers, and constraints of political, social, and economical institutions (Chen, 2011).

Technology standards are cyclic processes of “punctuated equilibria” (Eldredge and Gould, 1972).

Standards add value to products by combining two main functions: allowing interoperability and incorporating innovation from multiple technology developers.

Interoperability, or compatibility, allows products from different manufacturers to share components and operate together in networks.

Standards may also add value by guiding and incorporating innovation – coordinating technological developments, selecting new proprietary and non-proprietary technologies, and anointing a dominant design. (Teece, 2017)

PART FOUR: From digital innovation to practioner toolkits

Smartinsights is a leading provider of actionable marketing advices. An integrated actionable and overlapping approach [10 categories] gives you a complete system of audits, templates, guides and e-learning to help you rapidly review, improve and drive growth-fast.

Digital marketing strategy and planning
It is composed of an actionable plan incl. [1] Plan, Create a plan using our workbook while you complete the course, [2] Reach, build awareness, demand and attracted targeted visitors to your site], [3] Act, define customer journeys for your personas and maximise leads, [4] Convert, persuade prospects to convert through online and offline channels, [5], Engage, Develop long-term customer value using email and social media marketing.

Content marketing
Content marketing is incentivizing how to grow your leads and sales. It includes [1] Create outstanding, engaging shareable content, [2], Make your content visible on the first page in Google using SEO, [3], Research which content your audience personas need and will share, [4], Use content to convert to lead and sale, [5], Get creative to find the content that resonates with your audience, [6] Create the best quality creative and formats, [7] Plan an editorial calendar, [8] Plan integrated content distribution campaigns across paid, owned and earned media, [9] Outreach to influencers and partners to increase sharing of content, [10] Evaluate content ROI using analytics and research.

Digital experience management
It is designed to help improving your website by crafting a better user experience, customer mistakes experience, customer persona, website conversation and revenues models calculator, landing page conversion guide, conversation rate optimization, persona research, inbound marketing, website and ecommerce personalization and customer onboarding.

Email marketing and automation
Email marketing and marketing automation include email marketing trends, sequence contact strategy, campaign calculator, automation practice, broadcast campaign.

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Google analytics
To drive quality visitors, apply [1] Opportunity [2] Strategy [3] Action methodology i.e. set your goals, create your strategy, and grow your business.

Marketing campaign planning
It is based on helping you create an integrated inbound marketing campaign with digital marketing at their heart of maximizing campaign reach, interaction, response and ROI. The templates can be used either for the digital parts of campaigns or for a full integrated marketing campaign plan. The campaign planning toolkit will help you to [1], Set clearer goals and track them more clearly through analytics [2.], Define target audiences more clearly, [3], Develop a clearer message hierarchy, [4], Review and select the right types of media for your campaign, [5], Improve campaign integration between digital and non-digital channels.

Marketing Strategy and planning
The marketing fundamentals are crucial to be known in the digital area. It includes:
[Situation], Where are we now?, [Objectives], Where do we need to get to?, [Strategy], How do we get there?, [Tactics], Which marketing techniques should we use?, [Action], How should we manage plan implementation and resourcing? [Control], How do we stay on track and improve?

Paid media
Paid media provides everything you need to create, launch and refine a winning strategy. It includes:
[1] Google AdWords and Google Display Network, [2], Behavioural retargeting to encourage site visitors to return to your site, [3] Affiliate marketing for transactional e-commerce sites using affiliate networks, [4], Programmatic Advertising, [5], Social media advertising (see our Social Media toolkit)

Search engine optimization
The answer is a continuous update of the google analytics, applying Smartinsights specifics.

Social media marketing
It is consisting in harnessing the power of social media using a planned and creative approach by [1] auditing your social media marketing to identify improvements [2] structuring a plan to take control of the opportunities and threats of social [3] Give tips on the latest best practices on all of the ‘BIG 6’ social networks

Conclusion

The tentative purpose of this graph is to offer an instrument to position your unique corporate digital endeavors among a mind mapping i.e. “software of the mind”.

Indeed, digital innovation are self referential (Yoo and al., 2010) for example in the form of a “trading zones” (Boland et al. 2007), a “boundary object” (Carlile 2002), an “adopting unit” (Gupta et al., 2007), “interface”, “platform” etc. It means that the ultimate findings can be extensively appreciated retrospectively, reinforcing the opportunity to [sense] the status, before [seizing] new progresses within the aforementioned multidimensional space. As such, the “software of the mind” is designed to assess organic time-based entrepreneurial choices, within an intuitive definite sphere of choices.
Yet, it is critical to label digital innovations as discontinuous in nature. As Lavie (2006) notes, “referring to technological change as an exogenous event is a conventional assumption in technological discontinuities research”.

However, technological opportunities may not be completely exogenous to industry “…” because technological opportunities are often fed by innovative activity itself. (Teece, 1997)

References
Baxendale, S., Macdonald, E., and Wilson, H. (2015), The impact of different touch points on brand consideration. Journal of Retailing, 91(2), PP 235-253.

Babin, B.J, Darden, W.R and Griffin, M. (1994). Work and/or fun: measuring hedonic and utilitarian shopping value, Journal of consumer research, vol. 20 N°4, pp 644-56.

Boland, R.J., K. Lyytinen, Y. Yoo. (2007). Wakes of innovation in projects networks: The case of digital 3-D representations in architecture, engineering and construction. Organization Science 18 (4) 631-647.

Carlile,P.R., (2002). A pragmatic view of knowledge and boundaries. Boundary objects in new product development. Organization Science 13 (4) pp. 442-455.

Chaffey, D., (2018). 10 Digital marketing tool kits, Smartinsights Company, www.smartinsights.com,

Chen T., (2011), Dominant designs, new firm survival and competitive dynamics in nascent technologies, Drexel University, pp 1, 4, 12-14.

Chenevier, A., (2017). Disruptive Innovation Absorption Methodology: K3.P.I Extension of Clayton Christensen Principles, International Journal of Systematic Innovation.

Eldredge, N., Gould S.J. (1972). Punctuated equilibiria: an alternative to phyletic gradualism. In T.J.M. Schopf (Ed.), Models in Paleobiology, PP 82-115. San Francisco: Freeman, Cooper& Co.

Firat, F.A, and Venkatesh, A., (1993). Postmodernity: the age of marketing, International Journal of Research in Marketing, Vol 10 N°3, pp 227-48.

Gupta, A.K., P.E. Tesluk, M.S. Taylor (2007). Innovation at and across multiple levels of analysis, Organization science 18(6) 885-997.

Grecu, A., (August 10, 2016). Omni channel retailing-towards factors which affect a shopping journey, Aalborg University, pp 31,58.

Lavie, D., (2006). Capability reconfiguration: An analysis of incumbent responses to technological change, Academy of Management Review, p 154.

Rintamaki, T., (2016). Managing customer value in retailing, an integrative perspective, Tampere University, p 20.

Tassey, G.J., (2000). Standardization in Technology-based Markets, Research Policy, 29 (4-5), p 588.

Teece, D.J., (1997). Dynamic capabilities and strategic management, Strategic Management Journal, Vol. 18:7, p 523.

Teece, D.J., (2017). Standards of today -Innovation and interoperability, Tusher Center for management of intellectual capital, working paper series N°19. p 3.

Yoo, Youngjin, Lyytinen, Kalle J., Boland, Richard J. and Berente, Nicholas (2010). The Next Wave of Digital Innovation: Opportunities and Challenges, available at SSRN: https://ssrn.com/abstract=1622170, pp. 6-25.

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NOTE: This article was initially published on smartinsights.com, the 11th of September

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Alex ChenevierAlex Chenevier, is Founder or managiTecha and a DBA candidate. He can be reached at [email protected]



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