Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation
Digital technology is increasingly important in achieving business goals, and its pervasive effects have resulted in the radical restructuring of entire industries. Consequently, managers' extensive interest in handling digital innovation is not surprising. Recent research has illustrated how digital technologies give rise to a vast potential for product and service innovation that is difficult to control and predict. Therefore, firms need dynamic tools to support themselves in managing the new types of digital innovation processes that emerge. The nature of these processes forces firms to challenge prior assumptions about their product and service portfolio, their digital environment, and ways of organizing innovation work. In this article, we present a managerial framework that supports firms in this undertaking. The framework, geared at supporting ongoing improvements in digital innovation management, covers five key areas: user experience, value proposition, digital evolution scanning, skills, and improvisation. We also present a diagnostic tool that can be utilized as firms begin the process of implementing the framework. Finally, we conclude with our thoughts on the managerial implications of the framework when going forward in a rapidly changing digital innovation landscape.
Swot Analysis of "Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation" written by Daniel Nylen, Jonny Holmstrom includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Digital Innovation facing as an external strategic factors. Some of the topics covered in Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation case study are - Strategic Management Strategies, Strategy, Technology and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation casestudy better are - – increasing government debt because of Covid-19 spendings, there is backlash against globalization, increasing transportation and logistics costs, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, technology disruption,
challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Digital Innovation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Digital Innovation operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation can be done for the following purposes –
1. Strategic planning using facts provided in Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation case study
2. Improving business portfolio management of Digital Innovation
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Digital Innovation
Strengths Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Digital Innovation in Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation Harvard Business Review case study are -
Learning organization
- Digital Innovation is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Digital Innovation is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Digital Innovation is present in almost all the verticals within the industry. This has provided firm in Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Strategy & Execution industry
– Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation firm has clearly differentiated products in the market place. This has enabled Digital Innovation to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Digital Innovation to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Digital Innovation has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Digital Innovation has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Analytics focus
– Digital Innovation is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Daniel Nylen, Jonny Holmstrom can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Digital Innovation has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to recruit top talent
– Digital Innovation is one of the leading recruiters in the industry. Managers in the Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Digital Innovation has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Training and development
– Digital Innovation has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– Digital Innovation is one of the most innovative firm in sector. Manager in Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Digital Innovation are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation are -
High cash cycle compare to competitors
Digital Innovation has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Digital Innovation supply chain. Even after few cautionary changes mentioned in the HBR case study - Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Digital Innovation vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Digital Innovation is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Digital Innovation needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Digital Innovation to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Digital Innovation is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Digital Innovation, firm in the HBR case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Digital Innovation needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to strategic competitive environment developments
– As Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation HBR case study mentions - Digital Innovation takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Products dominated business model
– Even though Digital Innovation has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation, it seems that the employees of Digital Innovation don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Interest costs
– Compare to the competition, Digital Innovation has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation, is just above the industry average. Digital Innovation needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Digital Innovation can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Digital Innovation can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Leveraging digital technologies
– Digital Innovation can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Using analytics as competitive advantage
– Digital Innovation has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Digital Innovation to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Digital Innovation can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Digital Innovation to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Digital Innovation to increase its market reach. Digital Innovation will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Building a culture of innovation
– managers at Digital Innovation can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Creating value in data economy
– The success of analytics program of Digital Innovation has opened avenues for new revenue streams for the organization in the industry. This can help Digital Innovation to build a more holistic ecosystem as suggested in the Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation case study. Digital Innovation can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Digital Innovation in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Digital Innovation to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Manufacturing automation
– Digital Innovation can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Digital Innovation can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Digital Innovation can use these opportunities to build new business models that can help the communities that Digital Innovation operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation, Digital Innovation may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Digital Innovation will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Digital Innovation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Digital Innovation is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Digital Innovation.
Increasing wage structure of Digital Innovation
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Digital Innovation.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Digital Innovation with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Digital Innovation high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Digital Innovation needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Digital Innovation in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology acceleration in Forth Industrial Revolution
– Digital Innovation has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Digital Innovation needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Digital Innovation demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Digital Innovation needs to make to build a sustainable competitive advantage.
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