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DIGITAL INNOVATION STRATEGIES

Indian School of Business, Term8, 2019


OfficeHours: By Appointment.

Faculty

Nicholas Berente
Associate Professor, Mendoza College of Business, University of Notre Dame
email nberente@nd.edu
twitter @nberente

Youngjin Yoo
Professor, Design & Innovation, Elizabeth M. and William C. Treuhaft Professorship in
Entrepreneurship, Weatherhead School of Management, Case Western Reserve University
Email youngjin.yoo@case.edu
Twitter @youngjinyoo

Course Objectives

Everything in business is designed. The role of design has become even more important as digital
technology continues to disrupt traditional business models. In the digital economy, the ways by which
companies innovate and create value is fundamentally shifting from products to experiences. As
demonstrated by the phenomenal success of Apple, for example, rapid convergence to digital
technology opens up new opportunities to offer new products and services that did not exist before. At
the same time, emerging and ubiquitous technologies such as mobile computing, social networks, and
smart “things” make new forms of organizing possible. The convergence of computing,
communication, content, and entertainment are resulting in new business models (“digital business
models”). Industries such as banking and financial services, entertainment, and retailing have been
transformed through digital innovations. Today, we are witnessing dramatic transformations in media
industries because of the digital innovations. The health care industry increasingly looks to digital
capabilities for transformational models in the delivery and management of health care costs and
quality. At the same time, technological innovation has fueled a dramatic surge in entrepreneurial
activity around the world. The Internet and other information technologies have become a platform for
entrepreneurial activity and given rise to prominent success stories such as Google and Facebook, as
well as innovative internet- based platforms for social development such as e-choupal. In India, with the
availability of technical talent and the rapid proliferation of mobile computing, the opportunities for
digital innovation are on the rise.

The goal of this course is to provide students with concepts and frameworks for learning and thinking
about how innovators can produce radically new products and services in this increasingly digital world.
In doing so, the course takes a design approach to innovation. The course will be of particular interest to
students who are seeking to develop competencies and careers at the intersection of technology,
strategy, entrepreneurship, and marketing.
Digital innovation involves the following activities: (i) identifying innovation opportunities based on
keen understanding on human needs, (ii) scanning and recognizing the capabilities of current and
emerging technologies, (iii) designing solutions for the identified problems by creating new products,
services, business processes, and business models, and (iv) managing the competitive, financial, and
behavioral elements associated with the market launch of such innovations.

The course integrates concepts from digital and business strategy, marketing, and economics to
provide students with insights about the following ideas:

1. Why is innovation particularly important in the digital age? Students will learn about the idea of
creative destruction and how digital technologies are accelerating the pace of disruptive
innovation.

2. What is the process for generating digital business model innovation? Students will learn about the
concept of a digital business model and the process for blending analysis of markets, technologies,
and finances in designing business models. In particular we explore how digital business models can
be different than traditional business models, and highlight some of the key digital business
models. Case studies and analyses of emerging business models will be used to provide concrete
frameworks for digital business model innovation.

3. What is the process for creating digital product or services innovation? Students will learn how to
focus on customer experiences and the role of digitization in creating new and valuable experiences
for product or services innovation. To this end, students will be introduced to approaches for design
inquiry, involving tools to frame problems and explore possible solutions. This method builds on
emphatic and contextual observation, different approaches for ideation, visualization, scenario
planning, prototyping, and stake- holder analysis. This approach is a radical departure from the
traditional innovation strategies that is based on core competencies, strategic resources, and
industry analysis. This relentless focus on customer experience allows companies to adopt
an“outside-in” approach to exploring innovation opportunities.

4. How do firms successfully manage digital innovation? Students will learn about the importance of
managing digital innovation networks and collaboration ecosystems with other firms in developing.
In addition, discussions about open innovation will also be covered to help understand the
successful management of innovation.

The pedagogical approach for the course will include lectures, case discussions, hands-on activities and
workshops, and a group project. The lectures will integrate concepts from different literatures and will
provide students with the basic frameworks. Case discussions will include analysis of digital innovations
in industry-leading organizations. The centerpiece of the course will involve various design exercises
and a series of creative design workshops whereby groups will design a digital product or system
innovation following a design inquiry process.

The course will be valuable for students in the following ways:

• Students seeking consulting careers will gain knowledge about technological innovation,
transformation, and competitive advantage across firms and industries. This knowledge will
also help them develop expertise in assessing firms’ innovation port- folios and pinpoint new
opportunities.
• Students seeking positions in strategy will gain knowledge about how information
technologies, economics, and strategy intersect with each other in the development of new
business models
• Students seeking business development or strategy positions in the information technology
industries will gain knowledge about product and services innovation strategies in a
technology business
• Students interested in entrepreneurship will gain knowledge to discover technological
entrepreneurship ideas and develop them into potential ventures.

Learning Goals

Effective Oral Communication


Each student shall be able to communicate verbally in an organized, clear, and persuasive manner, and
be a responsive listener.
Assessment: Project Presentation

Critical and Integrative Thinking


Each student shall be able to identify key issues in a business setting, develop a perspective that is
supported with relevant information and integrative thinking, to draw and assess conclusions.
Assessment: Quizzes, Case Write-ups and Discussions, Design Workshop and Group Project

Awareness of Global Issues Affecting Business


Each student shall be able to identify key relevant global factors, and be able to analyze the impact of
the global environment on business issues, as compared with domestic factors.
Assessment: Project Presentation and Case Write-ups and Discussions

Required/Recommended Text Books: None

Software requirements for the course: None

Pre-requisite for your Course: None

Grading

The grade for the course will be based on the following:

•Individual case write-ups (choose 2): 10% (due: March 1, 5, and/or 7)


•Individual design research report 15% (due: March 12)
•Initial group problem statement 10% (due: March 14)
•Group project design brief 20% (due: March 28)
•Group project final solution and presentation: 20% (due: March 28)
• Individual Class participation 25%
Individual Case Write-ups: You need to submit written analyses for two out of three designated
cases by responding to the assigned questions for each case (maximum 2-page, double spaced).

Cases analyses will be graded for both form and content (5 points each writeup). The grading will be
based upon the quality of your analysis. Merely restating case facts will not help your grade and, in
fact, will use up valuable space in your brief. In writing your briefs, assume that you are a consultant
to the company who is being paid to analyze the company's situation and make a set of
recommendations. Students are expected to read and prepare all cases, but are only required to turn
in write-ups for two of their choosing.

Group Project: Exploring Digital Opportunities in Construction. Healthcare in India is an area of


great importance and opportunity. This term we will be exploring the particular issue of diabetes in
India along with our partner organization, Medtronic. The goal of this project is for each student
team to investigate opportunities and design a new digital business model having to do with
diabetes. Student team will use design inquiry to identify innovation opportunities to create
disruptive digital products or services in this market. Students should leverage the lessons and
frameworks learned from the class in creating a proposal for a digital product or business model
innovation. Students are expected to carry out field and desk research to deeply understand the
health care industry in India, and the problems associated with diabetes, broadly conceived. The
interim report should focus on the identification of the opportunities. The report should cover
fundamental shifts in industry structure, cost drivers, the value creation process, business models in
the industry, and products/services that can be offered as a result. You are expected to use
appropriate data from secondary sources to back up your analysis and projections. Implications of
the changes for new entrants and existing industry players must also be discussed in your report.
Teams will present out at the end of the term.

Team Composition: Students will be free to form their own teams. Each team will have a maximum
of 5-6 members and must primarily be formed with students from within the same section. Instructor’s
approval is needed in cases where teams wish to have members across sections by providing the
appropriate rationale.

Group Project Deliverables:


Due March 12 - Individual Design Research Report: In the first two weeks of the course, each student
will work in class and outside class to analyze key stakeholders, conduct an ethnography, interview
relevant stakeholders, and capture lessons with images, drawings of rich pictures, empathy maps, etc.
They will work with group members to perform either a market analysis or a competitive analysis. From
this research each student is expected to submit a report – Due March 12 before class – documenting
the activities and summarizing the notes and findings from these activities. Format: 4-6 pages double
spaced total: ~2-3 pages summary of industry/competitive analysis; ~2-3 pages summary of
ethnography and interviews. Should also include images, drawings, etc., as an appendix.

Due March 14 – Problem Statement Presentation: In the third week of the course, teams will have
collaborated to integrate the findings of their research and identified multiple interesting areas to
pursue further. These areas involve pain points and problems of stakeholder groups, challenges, or
opportunities posed by competitive actions. Presentations will be short (~5 min) and will summarize
the relevant findings from design research of individual group members, and conclude with 1-3 very
concise problem statement(s), stating:
 What is the problem/opportunity?
 With respect to which stakeholder?
 Why is this a problem?

Due March 28 – Design Brief and Design Presentation: Teams will deliver a client-ready design brief,
and develop a presentation. More details to follow on the requirements for these deliverables.

Class Participation: One of the primary highlights of this course is that it facilitates learning through
discussion, interaction, and feedback. Informed discussions are central to the success of this class.
Please be prepared to participate fully in the class discussion. Good class participation includes asking
interesting and relevant questions, sharing personal insights and experiences, offering constructive
alternative points of view, and providing courteous and professional feedback to other people’s
opinions. You can also contribute to the shared learning experience by offering pointers to additional
articles or resources that add to the collective knowledge and learning of the class.

You should evaluate and comment on readings and cases throughout the seven weeks of this course.
The quality and appropriateness of your participation as well as your attendance and contributions to
class discussion will determine your grade for this component. Class participation grades will reflect
the assessment of your total contribution to the learning environment. This reflects both the
frequency of your contributions in class and their quality (ability to draw on course materials and your
own experience productively, ability to advance or sharpen in-class discussion and debate, willingness
to take risky or unpopular points of view, use of logic, precision, and evidence in making arguments).
In addition, I will consider the professionalism of your conduct (attendance, punctuality, preparedness,
respecting all students and their class contributions, and refraining from conduct that is distracting).

Please note:

• Insights or value-added, divided by airtime, serves as a measure of contribution to


class discussions.
• Since class discussion forms such a central part of the learning process, attendance and
participation in class is required (part of the grading). If you know that you are going to
miss a specific class due to work related travel or a family emergency, please notify the
instructor in advance of the class via e-mail.
• While in class, you are expected to be considerate of others in the classroom.
• As a courtesy to the speakers, please refrain from using laptop during class for non- class
purposes (such as email, off-topic web surfing). The sound on your laptop and cell phone
should be turned off during class sessions.
• Ways of identifying your name are highly recommended in each class.

Attendance Policy

ISB students are admitted partly based on the experiences they bring to the learning community
and what they can add to class discussions. Therefore, attendance is an important aspect of the ISB
Post-Graduate Programme in Management. ISB insists on 100% class attendance for all its courses.
Absence is only appropriate in cases of extreme personal illness, injury, or close family
bereavement. Voluntary activities such as job interviews, business school competitions, travel plans,
joyous family occasions, etc. are never valid reasons for missing any class.

Please refer the below link for ISB - Attendance Policy


http://atrium/Programmes/PGP/ASA/StudentManual/Programme-Administration/Pages/Attendance-Seating.aspx

Coding scheme for ALL course work

What kinds of collaborative activities are allowed? What material can be referred to?1
References Can I discuss general Can I discuss specific Can I refer to Can I refer to the
/Coding concepts and ideas issues associated with external case-study solutions
Scheme relevant to the the assignment with material?2 or problem set
assignment with others? others? solutions?
4N N N N N
3N- a Y N N N
3N-b N N Y N
2N-a Y Y N N
2N-b Y N Y N
2N-c N N Y Y
1N Y Y Y N
0N Y Y Y Y
As a general rule:

 Students are responsible for submitting original work that reflects their own effort and interpretation.
Remember that any submission should be your own work and should not be copied in part or verbatim
from any other source whether external or internal.
 An honour code violation is an honour code violation. A violation under coding scheme 0N is not less
severe than others. A 0N coding scheme submission is judged against a 0N coding scheme, and a 4N
coding scheme submission is judged against a 4N coding scheme; therefore, any honour code violation is
equally severe irrespective of the coding scheme of the submission.
 Students can discuss cases and assignments with the course instructor and the Academic Associate for the
course.
 Required and recommended textbooks for the course and the course pack can be used to answer any
individual or group assignment.
 Although not all submissions may be subject to academic plagiarism checker (e.g. turn-it-in), in
retrospect, if the Honour Code committee feels the need, any of the previous submissions of an individual
or a group can be subjected to turn-it-in or any other academic plagiarism checker technology.
 When in doubt, the student should contact the instructor for clarifications.

1
Any referencing needs to be accompanied with appropriate citations
2
A non-exhaustive list includes journal articles, news items, databases, industry reports, open courseware
Week 1–Feb 26 & Mar 1

Session 1: Introduction – Innovation 101 (Tuesday Feb 26)


The goal of this session is to get an overview of the course and an introduction to the diabetes
situation.

Design Exercise:
Stakeholder analysis and empathy map of stakeholders.

Readings:
1. McKinsey (2012) “Capturing the upside of technology-driven threats” from Perspectives on
Digital Business, January 2012
2. Brown (2008) “Design Thinking” Harvard Business Review, June 2008
3. Blomberg et al “Ethnographic Field Methods and Their Relation to Design”

Session 2: Digital Disruption (Friday March 1)


This session will focus on digital business innovation –in particular, areas of an organization where
there are opportunities for digital innovation. We will discuss how industries are fundamentally
transformed by digital innovations. Students should think of additional examples as well as other
emerging patterns and come prepared to discuss the case as well as other examples of digital
transformations and disruptions. Topics covered include:
• Digital convergence & Digital disruptions
• Industries transformed by digital innovations

Design Exercise: Competitive assessment - disruptions

Readings:
1. Foster & Kaplan (2001) Creative Destruction; Chapter 1: “The Game of Creative
Destruction”p.1-24
2. May (2012) “Observe First, Design Second: Taming the Traps of Traditional Thinking,” Rotman
Magazine, Spring 2012.
3. Salvador et al “Design Ethnography,” Design Management Journal, Fall 1999.

Case:
Bonnier: Digitalizing the Media Business, HBS Case: 9-813-076, Date 11/30/2012
Discussion Questions:
1. Was the approach Bonnier chose to establish a centralized R&D department and to change its
innovation practices a sound business decision? Was it risky? Why or why not?
2. What is the nature of digital innovation, and how can fast-paced digital innovation processes
be handled in traditional and conservative business contexts and industries? How did Ohrvall
organize innovation differently from the traditional incremental innovators in the industry?

Week 2–March 5 & 7

Session 3: Digital Business Model Innovation (Tuesday March 5)


The goal of these sessions is to develop an understanding of business models and the ways in digital
technologies are providing opportunities for business model innovation. Students will learn about the
following:
• What are digital business models? What are the fundamental ways in which digital
technologies enable new business models?
• What are the frameworks for business model innovation?
• What factors are important for successful business model innovation through technology?

Design Exercise: Competitive assessment – digital business models

Readings:
1. Johnson et al (2008) “Reinventing your business model” Harvard Business Review, December
2008
2. Weill & Woerner (2015) “Thriving in an increasingly digital ecosystem” Sloan Management
Review, Summer 2015

Case:
Hindustan Unilever Mulls Over e-Grocery Market Option, Ivey Case: W15504, Date 11/9/2015
Discussion Questions:
1. Should HUL enter the e-grocery field? Why or why not? HUL had always been at the forefront
of using technology to reach consumers, but was e-commerce the best way forward? Can you
think of other digitally-enabled directions?
2. If HUL decided to enter the e-grocery field, where should it implement a viable online model
first? Should the company focus on metropolitan cities (Tier 1), which offer the benefit of
infrastructure, or Tier 2 and Tier 3 cities, which promised massive demand?
Session 4: Digital Platforms (Thursday March 7)
The goal of this session is to develop an understanding of how digital technologies are revolutionizing
products across industries. Students will learn about:
• Digital platforms and platform-based business models
• Creativity techniques

Design Workshop: Empathy Interview exercise

Readings:
1. Weill &Woerner (2013) “Optimizing your digital business model,” Sloan Management Review,
Spring 2013.
2. Edelman (2015) “How to Launch your digital platform,” Harvard Business review, April 2015

Case:
Philips Healthcare: Marketing the HealthSuite Digital Platform, HBS Case: 9-515-052, Date
9/8/2015
Discussion Questions:
1. Will the platform be attractive for app developers and providers? What could HSDP do to
improve this attractiveness?
2. What are some challenges to this platform strategy? Alternatives to this strategy? What are
the pros and cons of this strategy compared to alternatives?

Week 3 – March 12 & 14

Session 5: Design –March 12

Everything in business is designed. We will explore what is design and how it is different from
management and art. We will discuss design methods and design attitude. We will also discuss why
design-based approach is necessary for successful digital innovations. Design project will be
introduced in detail.

Design Workshop (1)


 Cognitive mapping exercise

Readings:
• W. Isaacson (2012), “The Design, ” from Steve Jobs, pp. 125-134.
• Boland, Collopy, Lyytinen and Yoo, Managing as Designing: Lessons for Organization Leaders
from the Design Practice of Frank O. Gehry*
• How Might We: http://www.designkit.org/methods/3

Sessions 6: Design Inquiry for Digital Innovations – Thursday March 14


In this class, students will learn the basic framework and methods of design inquiry. Students learn the
five key questions one needs to ask for a successful new experience design. Students will develop a basic
research plan for their design project.

Design Workshop (2):


 Presenting the results of design research & preliminary design hypotheses (How Might We?)
 Developing an initial solution and a plan to ask stakeholders to gather initial feedback

Readings:
• Yuhgo Yamaguchi (2015), “Better Healing from Better Hospital Design”, Harvard Business
Review (https://hbr.org/2015/10/better-healing-from-better-hospital-design)
• Tim Brown & Roger Martin (2015), “Design for Action”, Harvard Business Review
(https://www.ideo.com/images/uploads/news/pdfs/DesignForAction.pdf)
• Jon Kolko, (2015), “A Process for Empathetic Product Design”, Harvard Business Review
(https://hbr.org/2015/04/a-process-for-empathetic-product-design)

Week 4 – March 19 & 21

Session 7: Digitalization and Digital Innovations –Tuesday March 19


In this class, students will learn the basic framework and methods of design inquiry. Students learn the
five key questions one needs to ask for a successful new experience design. Students will develop a basic
research plan for their design project.

Design Workshop (3):


 Refining the solution based on the initial feedback and integrating digital components
 Thinking about the key stakeholder’s experience and strategic moment of impact

Readings:
• Yoo, Y. (2010). "Computing in everyday life: A call for research on experiential computing." MIS
Quarterly 34(2): 213-231.
• Yoo, Y., O. Henfridsson, et al. (2010). "The New Organizing Logic of Digital Innovation: An
Agenda for Information Systems Research." Information Systems Research 21(5): 724-735.
Session 8: Persona and Service Blue Print –Thursday March 21
In this session, students will identify the areas of opportunities for digital innovations based on their
design research. Further, they will identify key stakeholders and their unmet needs.

Design Workshop (4):


 Building a persona of key stakeholder and a “to-be” service blue print
 Making a plan to take the idea to the key stakeholders to test the idea

Readings:
 Service Blueprints: Laying the Foundation: http://www.cooper.com/journal/2014/08/service-
blueprints-laying-the-foundation
 Service Design Tools: Personas: http://www.servicedesigntools.org/tools/40
 Service Design Tools: Blueprint: http://www.servicedesigntools.org/tools/35

Week 5 – March 26 & 28

Session 9: Making it work –Tuesday March 26


In this session, students will build prototypes of their solutions and explore necessary resources and
organizational structure. We will discuss organizational challenges in managing digital innovations
following the design process

Design Workshop (5):


 Refine the idea based on the feedback
 Refine business model with service delivery model, pricing plan, and resource acquisition
requirements

Readings:
 Youngjin Yoo & Kyungmook Kim (2015), “How Samsung Became a Design Powerhouse”,
Harvard Business Review, https://hbr.org/2015/09/how-samsung-became-a-design-
powerhouse

Session 10: Design Project Presentations –Thursday March 28


Students will make the final presentations. They will prepare a formal business presentation and a
scenario prototyping to demonstrate how their solution might change the user experiences and create
new values. The formal presentation should include the business model, basic market research and
technology overview. The scenario prototyping (acting out) will include how the product or services
will be consumed in the real setting.