المحاضرة رقم 189 المهندس / محمد العربي بعنوان "Digital Disruption Act- From Value Chains to Value Networks"

Act of Digital Disruption –
From Value Chains to Value Networks
Eng. Mohammed Al-Arabi
Mobile: +2010 2412 93 94, WhatsApp: +2011 533 60 404
Email: MohammedAlarabi@Gmail.com

Lecturer: Mohammed Al-Arabi
Management Consultant and Instructor
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 Education:
 Computer and Systems Engineer with 30+ years experience
 MSc Candidate in Organization Psychology during 2023
 Professional certifications in different management areas
 Professional Field:
 Co-founder at Strategy Gate (www.StrategyGate.org)
 Main Focus:
 Training and Consultation services in integrating these management areas:
• Strategic Management * Business Management
• Quality and Process Management * Project Management
• HR Management * IT Management
• General Management
 Good experience in how to integrate the different management areas
 Providing coaching, training and consulting services to entrepreneurs and startups
 Agile management of digital transformation projects
 Short Bio:
 Developed Methodologies and Frameworks in Business, Project, and
HR Management
 An author for two Arabic books; one in Marketing and one in Project
Management
 A speaker at conferences and forums in Africa, Asia, and Europe
during this period (2008 – 2022)
 Some of the consultation services that have been provided:
• assessment using OPM3® and P3M3®
• establishment of PMO, QMO, IMO and SMO
 Some courses that were delivered during 2016 – 2022:
• Strategic Planning, Balanced Scorecard, Portfolio Management,
Governance, Business Model, PMP®, PMI-ACP®, PRINCE2®, MoV®, Six
Sigma, Business Process Management (BPM), ITIL®, Writing reports

Agenda
 The Disruptive Innovation
 The Three Pillars of Disruptive Innovation
 Enabling Technology
 Innovation Business Model
 Coherent Value Network
 Question & Answer
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What is the Strategy Journey®?
 All enterprises are continuously navigating through the five stages of THE STRATEGY
JOURNEY ® as they tackle different challenges.
 These stages represent the business lifecycle, that is the journey from strategy to execution of
every enterprise as it transforms to survive, thrive, and grow.
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What is the Strategy Journey® Framework?
 The framework is comprised of 5 Models with the tools and techniques to help your business
navigate your strategy journeys, and overcome the transformation challenges that could
disrupt and cause failure.
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Corporate Activities
Mission Model Business Model Value Model Transformation Model
Operating Model
Strategy Development Strategy Execution

Change vs. Transformation
Change fixes the past
 CHANGE requires becoming familiar with the
current situation, and working to make things better,
faster, cheaper, or some other “er” word.
 The past is the fundamental reference point and
actions are intended to alter what already
happened.
 When you choose CHANGE, your future is really a
reconditioned or improved version of the past.
Transformation creates the future
 TRANSFORMATION doesn’t describe the future by
referencing the past (better, faster, or cheaper); it
births a future that is entirely new.
 When you choose the path of TRANSFORMATION,
it becomes easier to leave the past behind after
thoroughly considering the As Is.
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Digitization vs. Digitalization
“Digitization” is the move from analog to digital
 Most businesses started converting all of those ink-on-paper
records to digital computer files. This is called “digitization”:
the process of converting information from analog to digital.
“Digitalization” is using digital data to simplify
how you work
 “Digitalization” means the use of digital technologies and of
data (digitized and natively digital) in order to create
revenue, improve business, replace/transform business
processes (not simply digitizing them) and create an
environment for digital business, whereby digital information is
at the core.
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Digitization vs. Digitalization vs. Digital Transformation
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Digitalization vs. Innovation
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Sustaining Innovation vs. Disruptive Innovation /1
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Sustaining Innovation vs. Disruptive Innovation /2
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Disruptive Innovation History
Harvard Business School professor
Clayton M. Christensen
popularized the theory of disruptive innovation.
The Innovator's Dilemma,
published in 1997
The Innovator’s Solution,
published in 2003
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The Three Pillars of Disruptive Innovation
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Introduction to Life Cycle
 Life cycle models are not just a phenomenon of the life sciences.
 As a person is born, grows, matures, and eventually experiences decline and ultimately death.
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Product Life Cycle
 No one wants their product to become “obsolete”
and reach the end of its product life cycle.
 That’s why it’s important to understand what stage
your product is in so you can make better marketing
and business decisions and strategies
 The product life cycle refers to the four stages a
product goes through during its existence.
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Extending the Product Life Cycle
 Instead of simply accepting that the product
will decline in sales – think about whether
there is an opportunity to “breathe new life”
into the product.
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Emergent
Growth
Maturity
Decline
Sales
Product Extension

Beware of Businesses on the Cusp of Decline
 All mature brands need to be worried that they
might enter a phase of decline.
 The trick might well be in planning an innovation in
time to create a breakthrough and enter a new
phase of growth.
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Decline Stage and Discontinuity
 When the innovation in the product reaches its
maturity level, there might be a change in the
technology which disrupts the industry or the market
by its new technology.
 So thereby a new S-curve starts.
 When the new S-curve starts, there will be a
discontinuity in between the two S-curves.
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Innovations Disrupt the Product Life Cycle
 An upcoming wave of market entrants armed with innovative solutions which have emerged as the
dominant design in those markets and that have gotten some traction with a sizable fraction of the
potential user base.
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The Evolution of Sound|Audio Industry
 For example:
 Music was bought from record
stores in the form of vinyl, cassette
tapes, and CDs.
 File-sharing technology emerged
which gave internet users free
access to their favorite music.
 Over time, file-sharing was
replaced by online retailers who
revolutionized the way music is
consumed.
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Competitive Life Cycle
 The Competitive Life Cycle repeats itself over and over
again, typically within the different industry segments.
 The idea is simply to map out where your various
products are positioned on that life cycle.
 We represented it as a circle, recognizing the fact that,
often, we see renewal and the process begins again as
new technologies and disruptions.
How long do these various stages likely last within the
competitive life cycle?
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Example – High-end Technology
 The iPad had been offered In 2011. It was still in the
emerging stage.
 The iPhone had been offered a few years before.
That was more in the growth stage.
 Shakeout had occurred, we had the iPod which was
entering in a more mature stage.
 We had the Mac product, and it towards the end of
its life cycle.
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Operating Model

Disruptive Business Model
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 Disruptive business models are a type of disruptive innovation that brings a new idea or
technology to an existing market.
 Disruptive market entrants usually capture unmet-demands in the existing market.
 This can either be a Low-End or High-End repressed demands where either the more price
sensitive customers or the more premium customers gets addressed.

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Operating Model

The Business Architecture
 The business architecture is how players in an industry are
organized to deliver a certain value to the end users.
 This includes competitors, suppliers and players from
adjacent industries, how do they interact together and who
do they interact with.
 Industry architecture plays a huge role in determining a
given company structure, processes and ultimately its
business strategy.
 Historically, the architecture that we often use to describe
how business is organized in a given industry was a value
chain, a vertically integrated one.
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Operating Model Canvas
 The objective of the Operating Model Canvas is to capture thoughts about how to design
operations and organization that will deliver a value proposition to a target customer or
beneficiary.
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Value Chain - Primary activities
Inbound Operations Outbound Marketing
& Sales Service
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Vertical Integration
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Producer
Wholesaler
Retailer
Consumer

Ecosystem Like a Value Chain /1
 In its simplest form, an ecosystem can be composed
of a supplier, manufacturer and a customer. Like in
a value chain.
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Ecosystem Like a Value Chain /2
 Between those layers, you have an exchange of
goods and services, as well as an exchange of
information.
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Breaking up the Value Chain
 Links in the vertically integrated value chain
became looser and started to break up.
 This way, you end up with different layers fulfilling
the same functions as before in the industry.
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The Complexity of Ecosystem /1
 The manufacturer can have multiple suppliers.
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 The suppliers have their own suppliers as well.
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 The customers can be distributors who interface with
other retailers before reaching different
communities of end users.
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A Company with Competitors
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 A company would typically integrate multiple steps in the value chain to become a member
of an oligopoly with a couple of other vertically integrated competitors.

Independence and Inter-operability
 Each layer contains several independent players
interacting with each other independently and
interacting with the rest of the layers.
 This independence and inter-operability allowed
each layer to evolve with its own key success
factors.
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Key Success Factors - Scale Sensitive
 Some layers were scale sensitive so the players
naturally consolidated sometimes to the level of
building a monopoly.
 Fewer players but enough scale to optimize investment
and utilization of very expensive assets.
 No benefit in having five players duplicate in the fiber
wiring in a city when one was enough.
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Key Success Factors – Innovation Driven
 Other layers needed more innovation and agility so
players remained fragmented.
 The top layer however is about innovation.
 New services can emerge and try their luck with
customers.
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The Evolution of Telco Industry /1
 Phase #1
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 Phase #2
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 Phase #3
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 Phase #4
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Give an example of a new Service
OPEN
DISCUSSION
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Impact of Deconstruction
 This deconstruction of the value chain allowed
players in each layer to compete on what matters
for their specific functionality.
 The players of new services either prosper or die
without any impact on the lower stacks.
 This is the beauty of the stacked architecture.
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How Companies can Create more Values?
Change of Mindset
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Cooperation Competition Coopetition

Horizontal
Partnership
Vertical
Partnership
Cross-industry
Partnership
How Companies can Create more Values?
Partnerships
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Case Study – The Cooker®
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The Cooker®
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 The Cooker® is an imaginary company specialized in preparing healthy meals.
 In order to design the operating model, the value chain was deconstructed to a number of layers
horizontally and a number of fragments vertically. So that the company can see the parts it
works on and the cooperation with competitors and other businesses to increase the value
proposition and increase profitability, as well.

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H
D G
D
Coopetition
Vertical Partnership
Horizontal Partnership
Raw material
G
H
Interoperability
Legend
The Cooker®

Act of Digital Disruption –
From Value Chains to Value Networks
59
Eng. Mohammed Al-Arabi
BSP®, CSSBB®, MPM®, Prince2®, MSP®, MOP®, P3O®, PMOC®, PMP®, PMI-RMP®, PMI-SP®,
PMI-PBA®, PMD PRO, ISO 21500TM, ITIL® V3, DTC, MCP, MCTS, MS Project, IT project+, SFC™,
ICC, CQIA, Marketing Diplomas

المحاضرة رقم 189 المهندس / محمد العربي بعنوان "Digital Disruption Act- From Value Chains to Value Networks"

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المحاضرة رقم 189 المهندس / محمد العربي بعنوان "Digital Disruption Act- From Value Chains to Value Networks"