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Lecture Notes
Digital Transformation

Published Nov 28,
2020
(Publisher Packt)
Jan 21, 2021

Fall 2022
1. Digital Transformation explained (DT)
2. Digital Disruption and DT strategy
3. Theories for DT
4. DT techs – AI/ML
5. DT techs – IoT
6. DT techs – Blockchain
7. DT techs – cyber
8. Data playing a role in DT and Big Data
9. Database design
10. MySQL
11. Platforms
12. DT org and culture
13. Biz models
14. Business Model Canvas
15. Agile
16. ESG and DEI
17. Applications and Use Cases
Course Content

• Digital transformation is a journey that organizations
undertake, integrating business model change, process
improvement and cultural shift, often leveraging several
digital and emerging technologies, to create new
opportunities in the marketplace.
• Digital transformation is the process of using digital
technologies to create new — or modify existing —
business processes, culture, and customer experiences to
meet changing business and market requirements. This
reimagining of business in the digital age is digital
transformation.
• In this journey, organizations learn to navigate the
changes and adopt new way of solving old problems,
much more efficiently, in the industry.
Jan 21, 2021
Lecture 1:
Digital Transformation
explained (DT)
What is Digital
Transformation?

Getting Started
• The different drivers for the transformation
• Why the transformation matters to the organization?
• The evolution of industrial transformation
• How to quantify the benefits of transformation?
Exploring Digital
Transformation

Class Activity
• Either divide the class into groups and have them
discuss it in short group or have them answer
questions in the class around:
• “Is Digital transformation a pure technology
play?”
• The key takeaway from this exercise should be an
understanding that “Digital” or the Digital /
Emerging Technology is a key enabler, but the end
state is about [business] Transformation
• The success of Digital Transformation should not be
better state of Technology only rather improvements
to business outcomes
• E.g. Technology re-platforming by itself is NOT
Digital Transformation but may accelerate the
organizations journey towards Transformation
Understanding current
perceptions of the students,
about Digital
Transformation

Understanding the
History of Industrial
Transformation - large-
scale Transformations
observed by Human
Civilization
The Industrial Revolution
can be defined as the
process of change from the
current state of society and
economy, to the next
advanced state, powered
by Technology.

• The First Industrial Revolution - The first Industrial
Revolution originated in the 18th century in Britain and
then spread to the other parts of the world.
• The Second Industrial Revolution - Following the first
Industrial Revolution, almost a century later we see the
world go through the second. ...
• The Third Industrial Revolution - The Third Industrial
Revolution laid the foundation of the Internet and
many technologies that are mainstream today
• The Fourth Industrial Revolution or the Industry 4.0.
The Fourth Industrial evolution started in the early
2010’s and we are part of it as the book is being
written. The Industrial Digital Transformation is one of
the biggest opportunities for the decade of the
2020’s.
These Revolutions have created
monumental changes to the
humans in the last few hundred
years. That is why it is important
to understand these Revolutions,
before discussing any kind of
Transformation, going forward.
The World changed for better in
each of these Revolutions as we
will see in the following sections.
There were massive disruptions
in each phase.
Each phase also introduced
some challenges that can be
seen as opportunities to solve in
future such as high density of
population in the cities and
additional constraints on the
natural resources.

Models of Digital
Transformation
• According to the Customer Insights & Analysis
group of the International Data Corporation (IDC),
the worldwide investment in industrial digital
transformation related initiatives are expected to
exceed $6 trillion over the next four years (2020-
2024)
• Let us look at what are the expected outcomes for
the industry through such large-scale investments
towards Digital Transformation
Cause and Effect Model
developed by the Authors
of the Book

Cause and Effect of Digital Transformation

• In the commercial sector, often the need for industrial digital
transformation is driven by two kinds of strategy:
• Defensive Strategy
• Offensive Strategy
• The defensive strategy of transformation refers to protecting
the business from competitors and disrupters. E.g. current
automobile manufacturers, producing Electric Vehicles
(EV’s)
• Tesla adopted an offensive strategy by creating a new market
for EV’s and try to disrupt the market, trying to take the
market share from the incumbents, when it started. By
adding Driver Assist and autonomous-vehicle like features,
trying to maintain its differentiation
• Public Sector is often driven by better citizen experience and
not just profitability
Jan 21, 2021
Commercial / Private vs
Public Sector –
Motivations for Digital
Transformation

Technology View
Making products and operations
smarter
Adding sensors
Connected products
Applying analytics to the data
generated by connected products
and services
Delivering new and improved
outcomes
Product-as-a-service model,
subscription services

• Overall success of Digital Transformation requires fine
tuning the organization structure and culture
• For existing business, it often requires balancing its
current “traditional” revenues streams with newer
business models that may cannibalize the current revenue
streams. For e.g. selling EV’s may reduce the sales of
gas-engine cars. Or selling cloud software may reduce
the sales of licensed software
Jan 21, 2021
Thinking Beyond the
Technology

Culture and Change Management
Cultural Change to Support
Transformation
• Learning Organization
• Informed Risk Taking
• Customer Focus
• Partnering
Change Management
• Communication
• Skills Training
• Accountability
• Effective Feedback
• Coaching
• Inclusion

Risks associated with Digital Transformation
Peloton – the home-gym
company
What made Peloton successful
in 2020-21
Current State of Peloton

Home Gym – Servitization of Gym-equipment
https://www.fastcompany.com/90587575/gyms-arent-coming-back-heres-how-youll-work-out-in-the-future

Peloton
Lululemon
S&P
Book Started Here

Peloton – “Servitization” of Home Gym Equipment
Jan 21, 2021
 Peloton has 2.6 m members worldwide at the time of writing the book, (3.1
million now)
 In April 2020, a single class drew a live audience of 23,000 people. Class was
streamed from instructor’s home, not from NY or London studio
 Peloton uses the modern broadcasting technology in its built-in screens to
connect the “riders” globally – Community Feeling
 The connected sensors collect data to improve cycling experience for its bike
users. The two sensors in the bike collect revolutions per minute (RPM) and
resistance data when a user is cycling.
 The bike’s LED screens display the sensor data and additional derived
performance metrics, such as power, in real time. The riders can wear heart rate
monitors as well if they want to do so.
 Peloton bike tracks the progress over time for users - Leaderboard

• Use riders historical streamed data to build a personalized
recommendation engine for users that suggests rides &
instructors based on user preferences, such as the day and
time of the week.
• Use engagement and goals achievement information to
evaluate the performance of their instructors.
• Peloton could partner with other wearable companies and
leverage the user data to help promote the health and
wellness of its members.
• Peloton could work with doctors and other healthcare
providers to foster wellness for an entire family or
employee groups.
Peloton – Future Opportunities to “Transform” (New
Possible Digital Revenue Streams)

Lululemon Acquired
Mirror in end of June
2020 for $500m
From pricey yoga pants
to pricey “mirrors” –
business model change

Airbnb - $100b+ Market Cap! [$35B in 2019]
• By June, Airbnb had redesigned its website and
app so its AI algorithm would show prospective
travelers everything from cabins to lavish beach
houses near where they lived.
• Big cities visited by tourists had been Airbnb’s
strength, but it would now focus on local stays.
• By July, guests booked stays at pre-pandemic
levels - before travel and tourism came to a halt.
• In August, more than half of bookings made were
for stays within 300 miles of the guest’s location,
according to the company.
• CEO made more changes, including cutting
marketing, putting many noncore projects on hold
and reducing staff by 25% [shareholder value?]
• Airbnb suffered a big setback as the travel
industry crumbled in early 2020.
• Airbnb quickly started a new AI-led
Transformation to Experiences, which do not
require travel
• To make the Experiences feature relevant to
guests, Airbnb deployed search ranking
based on AI/ML to display the most relevant
experiences to their guests
• Later in summer, urban residents were searching
for vacation rentals in neighboring towns and
cities, so they didn’t have to fly. People wanted
to book entire homes.

Class Discussion
• Discussion in groups or together
• If group then assign companies like Peloton, Zoom,
Teladoc Health, Airbnb etc. to each group
• What did these companies do right in the last few
years?
• Are these companies struggling? Is share price the
correct indicator of the health of the company?
• What could they have done differently in the last
two years?
• What can do going forward to stay strong and
Transform themselves?

Check for
Understanding
• Why are the main drivers for industrial digital
transformation?
• Are there major differences in commercial sector as
compared to public sector for transformation
objectives?
• What is the role of the digital technology in driving
transformation?
• What are the benefits from industrial digital
transformation to the organization?
• Why is it important to understand the history of the
industrial revolutions to understand the industrial digital
transformation ?
• How will Digital Transformation help manage various
risks in an enterprise?

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