Lecture 1: 12-11-2025
Digital businesses are transforming how value can be created, captured, shared, and
delivered with significant inequality.
Our economy is being re-architected from separate industries into a massive network or
‘ecosystem’ of related businesses.
The network economy
Xiaomi mindset: we know how to compute a phone, so we can compute a car as well.
Ant-Financial Platform: they are engaged in retail (Ayden/Alibaba), social media
(WeChat), banks (Mybank), and insurance plans (General/Automobile)
An example for a massive ecosystem is the Ant Group, a platform that organizes
different participants around a common hub.
,What is digital transformation?
Why should we care about it?
A company can outperform rivals only if it can establish a difference that it can
preserve. It must deliver greater value to customers or create comparable value at a
lower cost or do both.
Operation effectiveness (efficiency and best practices) is necessary, but it is not a
strategy. Efficiency is imitable, so it is hard to differentiate yourself when it comes to
efficiency. It is easy for the competition to react. What is your uniqueness in the market.
→ Create a mini monopoly
→ Special type of raw material
→ Location
→ Faster service
Digital transformation means a change at the strategic level that affects a company’s
entire business model. Is of larger magnitude, requires more change.
Definitions
- Digitization = the process of making information digitally available and
accessible.
- Digitalization = the process of considering how digitized information can best be
used to simplify certain operations.
- Digital transformation = the process of devising new business model
opportunities that integrate digitized data and digitalized applications.
Digitization → digitalization → digital transformation
To understand the strategic element of digital transformation, we need to reflect on
firms’ business and operating model
- Business model is about value creation, value capturing, and value delivery
- Operating model is about scale, scope and learning (digitalization)
In general, a business model relates to how firms create, capture, and deliver value.
,In the ‘old’ economy, scale, scope, and learning are the key drivers of business
performance.
Value creation = solving a problem for a customer (something you as a customer are
willing to pay for, because it makes your life easier) → innovation differentiation
Value capture = about capturing the largest market share → competition isolating
mechanisms
Value deliver = about innovation how you will get the value to the customers → sales
channels bundling and unbundling
Scale = about spreading the fixed costs (you want to spread the fixed costs about the
different units) → volume, complexity, customers
Scope = variety, range
Learning = R&D, continuous improvements, IP generation
Value creation: exceptional, increasing consumer value driven by personalization and
engagement
Value capture and delivery: N (number of users) x E (user engagement) x M
(monetization) across many related markets, it is multisided
Scale: zero marginal costs, network effects
Scope: aggregation and modularity across markets
Learning: constant innovation and AI/ML driven improvement
, Monetization = the process of converting something into money
Running traditional and digital businesses requires different logics regarding
organization, processes and KPI’s
What happens when a digital firm collides with a traditional product/service industry?
‘The old vs new business logic
What happens when a firm that has competed in a product market starts to compete
with a digital firm, targeting the same consumer needs in a different way?
AI is not a business model, but a technology
Lecture 1: 19-11-2025
In the last decades, we have witnessed a radical transformation of major industries, this
is called the platform phenomenon.
Digital businesses are transforming how value can be created, captured, shared, and
delivered with significant inequality.
Our economy is being re-architected from separate industries into a massive network or
‘ecosystem’ of related businesses.
The network economy
Xiaomi mindset: we know how to compute a phone, so we can compute a car as well.
Ant-Financial Platform: they are engaged in retail (Ayden/Alibaba), social media
(WeChat), banks (Mybank), and insurance plans (General/Automobile)
An example for a massive ecosystem is the Ant Group, a platform that organizes
different participants around a common hub.
,What is digital transformation?
Why should we care about it?
A company can outperform rivals only if it can establish a difference that it can
preserve. It must deliver greater value to customers or create comparable value at a
lower cost or do both.
Operation effectiveness (efficiency and best practices) is necessary, but it is not a
strategy. Efficiency is imitable, so it is hard to differentiate yourself when it comes to
efficiency. It is easy for the competition to react. What is your uniqueness in the market.
→ Create a mini monopoly
→ Special type of raw material
→ Location
→ Faster service
Digital transformation means a change at the strategic level that affects a company’s
entire business model. Is of larger magnitude, requires more change.
Definitions
- Digitization = the process of making information digitally available and
accessible.
- Digitalization = the process of considering how digitized information can best be
used to simplify certain operations.
- Digital transformation = the process of devising new business model
opportunities that integrate digitized data and digitalized applications.
Digitization → digitalization → digital transformation
To understand the strategic element of digital transformation, we need to reflect on
firms’ business and operating model
- Business model is about value creation, value capturing, and value delivery
- Operating model is about scale, scope and learning (digitalization)
In general, a business model relates to how firms create, capture, and deliver value.
,In the ‘old’ economy, scale, scope, and learning are the key drivers of business
performance.
Value creation = solving a problem for a customer (something you as a customer are
willing to pay for, because it makes your life easier) → innovation differentiation
Value capture = about capturing the largest market share → competition isolating
mechanisms
Value deliver = about innovation how you will get the value to the customers → sales
channels bundling and unbundling
Scale = about spreading the fixed costs (you want to spread the fixed costs about the
different units) → volume, complexity, customers
Scope = variety, range
Learning = R&D, continuous improvements, IP generation
Value creation: exceptional, increasing consumer value driven by personalization and
engagement
Value capture and delivery: N (number of users) x E (user engagement) x M
(monetization) across many related markets, it is multisided
Scale: zero marginal costs, network effects
Scope: aggregation and modularity across markets
Learning: constant innovation and AI/ML driven improvement
, Monetization = the process of converting something into money
Running traditional and digital businesses requires different logics regarding
organization, processes and KPI’s
What happens when a digital firm collides with a traditional product/service industry?
‘The old vs new business logic
What happens when a firm that has competed in a product market starts to compete
with a digital firm, targeting the same consumer needs in a different way?
AI is not a business model, but a technology
Lecture 1: 19-11-2025
In the last decades, we have witnessed a radical transformation of major industries, this
is called the platform phenomenon.
