When I started in my position as a Professor of Information Systems at Frankfurt School about a year ago, I realized that an important topic was missing in the curriculum. While the Master in Management was already covering various important fields, it did not yet deal with digital transformation and electronic business models. Digitalization is one of the strongest forces we observe currently in most industries and many firms have just begun to understand the related fundamental challenges they are faced with.
Digitalization affects everything around us – we can see and feel it on a daily basis. Being online 24/7 has become standard and using our smartphone is the first and last thing most of us do every day. Businesses have to react to this trend but often do not know how to. What is the right strategy for today’s digital age? Which organizational and technological capabilities are needed? In order to qualify future managers to successfully handle these questions and challenges, we implemented the new Master in Management concentration in Digital Business.
Digital transformation refers to fundamentally rethinking a business by considering two dimensions: one is the Internet technologies that have become available everywhere (e.g., online social networks or the ubiquity of mobile devices like smart phones, smart watches, smart wristbands, smart tooth brushes etc.) while the other is the data that we can collect and utilize through these technologies. The online and mobile behavior of users creates so many data traces that allow – if smartly combined – analysis of their attitudes, behaviors, emotions, needs, and wants in a much better and deeper way than ever before. This in turn requires us to rethink the way how we “manage” customers – we have not only become better in understanding them but we can also influence demand in a more effective way if we make data and technology work together in real time. For example, a physical retail store can, when a potential customer passes by outside, send her a push notification about the availability of a pair of shoes on stock that she has looked at online a couple of hours ago.
However, digital transformation does not only change the way how we interact with customers – in a similar manner, it affects the way how we manage our internal operations, our partner value chains, and our employees. And more fundamentally, digitalization gives birth to new business models. A car manufacturer like Daimler can become a data provider for weather services if they collect the data from the rain sensors of their customers’ cars. Google has become a specialist in predicting influenza outbreaks, and mobile network carriers like T-Mobile will serve as data providers for earthquake detection and warning by using the sensors of their clients’ smartphones.
These and other examples, like Apple or Amazon, show that digitalization often leads to transforming product or service firms to becoming platform providers – which is a fundamental shift in the business model. If firms manage this transformation successfully (and stay ahead of the competition), they will outperform not only their competitors but even other industries – which in turn means that digitalization is a fundamental threat for every firm that does not get engaged in rethinking their business. As a prominent example, the Apple iPhone is, together with the surrounding ecosystem (iTunes/App store, additional hardware components etc.) not only a product but a platform since third parties can add on it to deliver their products and services. Since its advent, this platform has fundamentally harmed or even destructed 27 other industries by substituting their products (alarm clocks, flashlights, digital cameras, diaries/planners, compasses etc.) (Wang 2015). Probably, as a consumer compass producer you might not have expected that a mobile phone takes your customers away.
These examples show the idea of “rethinking” a business. Firm leaders or their “Chief Digital Officers” need to identify the opportunities and threats resulting from these trends. In our Digital Business concentration, we want to equip MiM students with the management tools and “rethinking competencies” that are needed to put companies straight on the course to success – digital management, which is covered by the first module of this concentration, is a high priority for any company in any industry.
Businesses have to use the power of information and data to create greater customer insight and superior services to better serve the customer. Accordingly, digital analytics, taught in the second module, will be an essential skill for future managers. In our digital world, customers play a completely new role. They have more insight, are consequently more powerful, and it has never been easier for them to compare services and products. This allows them to demand the best service at competitive prices. Digital marketing, being the focus of the concentration’s third module, plays a crucial role in placing the service in an increasingly connected and fast-moving world as well as by communicating this new service commitment towards the customer and deliver an around the world and around the clock service – everywhere and every time from every digital device.
In our courses, we collaborate with industry partners that are currently facing digital transformation challenges in their business. For example, the Digital Management module will be enriched by industry workshops organized by firms in which students together with representatives of those firms train their “rethinking” competencies by applying them to the visiting firm’s business problem. By inviting firms from various industries and addressing different business problems, we will create broad insights and learn how problems of very different fields are related and thus solution processes can inform each other.
If you want to focus on today’s indispensable digitalization and to get involved in rethinking and reshaping business activities by digital transformation, you should join the Digital Business concentration!