Nokia, once a leader in the mobile phone industry faced a sharp decline due to a series of strategic missteps:<ol><li class="ql-align-justify">Failure to Adapt: Nokia failed to recognize the shift in consumer interest.</li><li class="ql-align-justify">Ignoring Key Markets: Nokia ignored the U.S. market shifts.</li><li class="ql-align-justify"> Internal Issues: Dysfunctional organizational structures, growing bureaucracy, and deep internal rivalries.</li><li class="ql-align-justify">Lack of Innovation: Focusing on incremental improvements, they were unable to innovate at scale.</li><li class="ql-align-justify">Competition: The rise of new competitors.</li></ol>This serves as a cautionary tale about the importance of adapting to technological changes and market shifts.

The Death of a Giant: Nokia

<ol><li class="ql-align-justify">Find white space</li><li class="ql-align-justify">Define your customer value proposition</li><li class="ql-align-justify">Establish a dominant design</li><li class="ql-align-justify">Design for network externalities</li></ol>

Four steps to orienting a new business model

Defining your customer value proposition involves clearly articulating the unique value your product or service provides to customers.<ol><li class="ql-align-justify">Identify your customer’s main problem: Understand the challenges your customers face that your product or service can solve.</li><li class="ql-align-justify">Identify all the benefits your products offer: List out every product you sell and the benefits they provide.</li><li class="ql-align-justify">Describe what makes your offering unique: Explain what differentiates your product or service from others in the market.</li><li class="ql-align-justify">Articulate why you are the best choice: Make it clear why your offering is stronger than the competition.</li></ol>

How to define a Customer Value Proposition (CVP)

<ul><li class="ql-align-justify">Cloud migration: Partnering with Google Cloud to unify data sources and create a more scalable infrastructure.</li><li class="ql-align-justify">Data analytics capabilities: Enhancing data collection, analysis, and usage to understand customer behavior and improve decision-making.</li><li class="ql-align-justify">Automation and AI: Implementing solutions to streamline back-office operations, personalize marketing campaigns, and provide virtual customer assistance. </li></ul>

Best Buy - Technology Modernisation

Overall impact:<ul><li class="ql-align-justify">Increased online sales: E-commerce revenue has grown significantly.</li><li class="ql-align-justify">Improved customer satisfaction: Initiatives like Geek Squad and personalized recommendations have led to higher customer satisfaction scores.</li><li class="ql-align-justify">More efficient operations</li></ul>Challenges and ongoing efforts:<ul><li class="ql-align-justify">Competing with online giants like Amazon: Best Buy continues to adapt and innovate to maintain its competitive edge.</li><li class="ql-align-justify">Integrating physical and digital experiences: Seamlessly blending online and offline customer journeys key.</li><li class="ql-align-justify">Employee reskilling and upskilling.</li></ul>

Best Buy - Impact and Challenges

<ul><li class="ql-align-justify">In-store expertise: Expanding Geek Squad services and training sales associates to offer deeper product knowledge and personalized assistance.</li><li class="ql-align-justify">Community building: Creating in-store spaces for workshops, demonstrations, and events to foster customer engagement and brand loyalty.</li><li class="ql-align-justify">Focus on passions: Shifting from simply selling products to helping customers "pursue their passions" with technology, offering expert advice and solutions tailored to specific needs.</li></ul>

Best Buy - Customer experience focus

"I coined the term “white space” as a way to talk about how companies need to consider new value propositions that go beyond their core business, because sooner or later, as Peter Drucker once said, “the theory of the business can no longer work."

<ol><li class="ql-align-justify">A customer value proposition that fulfills an important job for the customer in a better way than competitors’ offerings do.</li><li class="ql-align-justify">A profit formula that lays out how the company makes money delivering the value proposition.</li><li class="ql-align-justify">Key resources needed to deliver that proposition.</li><li class="ql-align-justify">Key processes needed to deliver that proposition.</li></ol>

The four key elements of a successful business model

In the context of digital transformation, "white space" often refers to the unexplored or underutilized areas where new opportunities for growth or innovation can be found. It's like the blank canvas where new ideas can be painted, or the gaps in a market that a company can fill with a new product or service.

White Space

"There is no alternative to digital transformation. Visionary companies will carve out new strategic options for themselves — those that don’t adapt, will fail."

90% of CEOs believe the digital economy will impact their industry, but less than 15% are executing on a digital strategy (MIT Sloan & CapGemini).

The time is now

"It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change."

"The biggest part of our digital transformation is changing the way we think."

"Clearly, the thing that’s transforming is not the technology — it’s the technology that is transforming you."

"Less than 1% of data in businesses is analyzed and turned into benefits."

"At least 40% of all businesses will die in the next ten years… if they don’t figure out how to change their entire company to accommodate new technologies."

"Every industry has a unique digital transformation opportunity."

Apple is known for its ability to identify and create white space opportunities. They have consistently introduced innovative products that have created entirely new markets.

Apple Inc.

Airbnb disrupted the traditional hospitality industry by identifying white space in the accommodation sector. They offered a unique, community-driven approach to lodging that was different from conventional hotels

Air BnB

Netflix initially disrupted the DVD rental market by offering a subscription-based streaming service, eliminating the need for physical DVDs

To seize new growth opportunities, a company needs a strong foundation and resources like people, time, and money. Smaller companies, while resource-limited, should focus on scaling viable business models. Larger, plateauing companies need to explore new growth areas and business models. The company’s size can impact these efforts due to resource availability.Share:I work for a large organisation and to focus my work I use a mantra / saying that a previous Director shared with me "We are a large ship and we can only turn as fast as the whole ship can go."

White space vs company size

Establishing a dominant design in business involves creating a product or service that becomes the standard in the industry. <ol><li class="ql-align-justify">Complete Market Research: Identify existing products in the market, analyze their strengths, weaknesses, and gather user feedback.</li><li class="ql-align-justify">User-Centric Approach: Understand your target audience, their pain points, and preferences.</li><li class="ql-align-justify">Identify Patterns</li><li class="ql-align-justify">Create Dominance: Design one element to have more dominance than another by giving it more visual weight. </li><li class="ql-align-justify">Design Focal Points: Every design should have a primary area of interest or focal point that serves as a way into the design.</li></ol>

Establish a dominant design

Designing for network externalities involves creating a product or service that increases in value as more users adopt it.<ol><li class="ql-align-justify">Understand Your Users</li><li class="ql-align-justify">Create Value: Build a system that provides value to early users.</li><li class="ql-align-justify">Leverage Network Effects: As the number of users increases, the value of your product should also increase.</li><li class="ql-align-justify">Ensure Compatibility and Interoperability.</li><li class="ql-align-justify">Set Standards and Protocols</li><li class="ql-align-justify">Use Strategic Approaches: Implement strategies to enhance network effects, such as offering incentives for referrals.</li></ol>

Designing for network externalities

Best Buy's digital transformation journey has been ongoing for several years, driven by the need to adapt to changing consumer behaviors and compete in an increasingly online retail landscape. Here's a summary of their key initiatives:E-commerce focus:<ul><li class="ql-align-justify">Investing heavily in their online platform</li><li class="ql-align-justify">Omnichannel integration: Blending online and offline experiences by enabling in-store product pick-up, buy online, ship to store (BOPIS), and online order returns in stores.</li><li class="ql-align-justify">Personalized recommendations via data and analytics</li></ul>

Best Buy: Down $1.5B to being up $1.5B

Ever wondered what lies in the unexplored corners of your business landscape? Let’s dive into the ‘white space’, a realm of untapped potential that could revolutionize your business.

SIMEON PRESTON

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