How does changing a long-term path increase a company’s digital transformation? TOU

How does changing a long-term path increase a company’s digital transformation?


How does changing a long-term path increase a company’s digital transformation?

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A new study has found that companies with a solid and consistent business model can improve digital transformation by identifying paths of less resistance.

The research paper, co-authored with the Boise Business School, suggests that businesses can effectively adopt one of two strategies to change a company’s environment, structure, strategy and leadership by following a path that provides fewer barriers. It depends on the amount of changes required to achieve digital change.

Decision makers can choose between horizontal (direct) reconstruction, which involves moving from one structure to another or involving vertical reconstruction, which involves increasing the complexity of the current structure by merging, acquiring, or integrating another structure through organic development.

The authors have found through a study by the Department of Digital Games that horizontal reconstruction makes sense if the “distance” between the initial and target configurations is “reasonable”. However, as the distance increases, increasing the complexity of the current configuration may be a less costly alternative, especially when the restructuring targets a company’s core capacity. The same approach has been used successfully by some co-authors in the field of biopharmaceuticals.

How Sony and Nintendo are modifying business models

In this paper, the authors sampled 67 business models using data from 32 enterprise types, including console manufacturers including Sony, Nintendo and Microsoft, arcade game makers including Atari, publishers including Sega and Ubisoft, and development studios including Activision. And riot games.

An example of a horizontal business model change is Absidian Entertainment. It was founded in 2003 to create new types of games that were not yet attractive to large publishing companies at the time. By creating worlds and stories, the goal was to create games in which players who could change in each game could create their own unique stories and experiences. The company shifted its business model from third-party development to crowdfunding, with Microsoft acquiring its stellar reputation and loyalty to its supporters; Then the second party switches back to development. Although no longer an independent company, it shows a successful journey for their founders, starting with a small, crowd-funded studio before being acquired by Microsoft.

XBOX is an example of a vertical business model change. Microsoft initially underestimated the importance of a strong library of video games to support console sales and lost significant space to its competitor SONY. By investing heavily in acquiring new development studios and publishers — especially Zenimax for $ 7.5 billion and Activision Blizzard for $ 69 billion — the largest acquisition in the industry’s history, it creates a library of unparalleled video games to support Game Pass. – Based release model.

The history of a company is important

Finally, the history of a company’s resource structure needs to be carefully considered in order to transform business models, because path bias often poses significant challenges for companies when transforming strategically. The authors highlight the case of Adari, which has been in the entire history of the industry, and its business model has been substantially designed with its own organizational practices and traditions in response to industrial change.

Professor Feng Li, head of information management and co-author at the Boise Business School, believes that digital transformation is not just a privilege for digital companies or start-ups.

“This paper systematically identifies paths for companies to restructure their resources and implement new business models.

“Current companies in all sectors need to consider the opportunities and challenges in using digital technologies to transform their business models. It’s one thing to come up with new ideas, but most companies will fail if you take the company where you want it.”

“How to Overcome Route Dependence Through Resource Restructuring” has been published Journal of Business Research.

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                                                                                            <strong>More info:</strong>
                                            Nikolaos Goumagias et al, How to Overcome Route Dependence Through Resource Restructuring, <i>Journal of Business Research</i> (2022)  <a data-doi="1" href="" target="_blank" rel="noopener">DOI: 10.1016 / j.jbusres.2022.02.040</a>


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