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Gayé DELAHOUSSE Executive MBA EM LYON Strategic Initiative Project, November 2015

Table of Contents

Executive Summary .......................................................... 1

PART I, DIGITAL TRANSFORMATION, A MACRO OVERVIEW 3

1. Introduction ................................................ 3

2. Digital Transformation – « Qu’est!ce que c’est ? » 4

a) The fundamental changes in companies ....... 5

b) Performance of Leaders in Digital Transformation 10

3. Digital Transformation in France ................ 12

4. Digital Transformation and the Tourism Industry in France 13

5. Digital Transformation through the Lens of Strategic Frameworks 16

a) PESTEL ....................................................... 17

b) Porter’s Five Forces ...................................... 24

c) VRIO Competency Assessment .................... 30

6. The Customer Journey Map: a Mirror on Digital Transformation 32

PART II, VAL DIGITAL and COMPAGNIE DES ALPES .... 36

7. Digital Transformation of French Ski Stations of Compagnie des Alpes 36

8. Benchmark ................................................. 44

a) Compagnie des Alpes Ski Resorts ................. 44

b) Val Thorens, social networks’ leader in France 47

c) Whistler Blackcomb, a world leader for digital ski resorts 49

9. Val Digital Project ....................................... 53

a) Project Overview ......................................... 53

b) Sub!Projects ................................................ 61

10. KPIs for Val Digital ...................................... 75

11. Recommendations for Val Digital after 1 year of Existence 76

3


PART I

DIGITAL TRANSFORMATION

A MACRO OVERVIEW

1. Introduction

Digital transformation is one of the hottest topics of our times if it is not the topic, given its

widespread influence and impact. It is a global phenomenon, its scope and maturity level

not always in line with the development levels of different countries: It is possible to find a

country such as Korea ahead of its peers in terms of Wi!Fi quality, or the usage of social

networks more widespread in some developing countries than developed ones. The impact

on business is huge, as it disrupts many givens and barriers to entry that protected different

industries or vendors for decades. This has led to the writing of Chapter 5, the analysis of

change brought about by digital transformation in the context of strategic frameworks,

because it really changes the rules of the game. Digital transformation is a vast subject, of

which it will not be able to discuss all aspects in this paper; and moving extremely fast,

which means that some ideas or practices discussed in this paper may have become

obsolete by the time it is handed in.

Source reliability and change are the main complexities of the research for this paper, as

the traditional books as primary sources are replaced by white papers, presentations, web

sites and blogs. There is an extremely important number and variety of publications

available. However, the claims therein need to be checked carefully and compared against

other resources given the ease with which any idea or claim can find itself out there,

without pre!validation by “authorities”. The new ere has also its proper way of validation:

peer reviews and reader views become the next best thing to affirm or discredit new

information sources. Therefore, the resources that have been chosen are those which are

cross!referenced, appearing in reliable editors’ pages, or introducing new or interesting

concept and ideas although they may not have been proven so far.

The case example of this paper is the work that the author is doing at the moment, the

project management of Val Digital and its evangelisation. Val Digital is the code name for

the Compagnie des Alpes1 pilot digital transformation project, taking place at Val d’Isère.

Basically, it is the ambition of digital transformation of a whole ski resort.

1 world leader in management of ski resorts & amusement parks

4


In order to understand the facts and the stakes, the author will start by taking a look at the

digital transformation in general: What is it and what does it englobe? What does it impact?

Who does it impact? As the case is taking place in France, the digital transformation taking

place in France will be studied, with a special focus on the tourism sector.

To illustrate the “game changing impact”, strategic frameworks will be used in order to

identify what changes are/will be taking place at different strategic dimensions.

Before focusing in on the Val Digital project, the client journey as a structuring element of

the transformation will be studied. A brief analysis of the results of a survey among main ski

resorts in France to identify where they stand on the digital transformation, and an

outstanding example from France and the world will end this section.

The Val Digital project, its development and its different parts will be the object of thorough

description and analysis, before concluding with brief recommendations.

2. Digital Transformation – « Qu’est!ce que c’est ? »

The dictionary definition of « transformation” is “transmutation, shift”. Howard King

defines it in his The Guardian article in the business sense as “Transformation is a whole

scale change to the foundational components of a business: from its operating model to its

infrastructure. What it sells, to whom and how it goes to market.”i This definition is in line

with the comprehension of the essence of this paper, so will be used for the purpose of this

paper. As for “digital”, he defines it as “any technology that connects people and machines

with each other or with information”, which is again a workable definition as it is sufficiently

overarching the whole of the concepts that will be mentioned.

“Digital Transformation”, on the other hand, is a concept that is interpreted in many ways,

with different approaches discussing it in terms of its benefits, drivers, elements, attributes,

or the fields it impacts. In order to pave the route for the strategic approach that will be

discussed in Chapter 5; the broadest sense will be the most helpful. In light of all the

research and insight, the author has come to the following definition of digital

transformation for this paper:

“The totality of the fundamental changes in companies by way of digital elements,

including and affected by the change in consumers’ attitudes and way of life brought

about by the same elements.”

Concretely, what does it mean? Let’s start by looking at “the fundamental changes in

companies”.

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The emergence of the World Wide Web, reputation websites, social media and the mobile

technology which gave access to all of these everywhere and all the time, the consumer

became active instead of passive. Before the digital era, an advertising claim was put

forward by a brand and the consumer had no way of knowing its truthfulness or

effectiveness unless he used the product or was exposed to word!of!mouth from his

entourage. With the arrival of social media and evaluation websites, consumers could give

their opinions and read that of others; and more importantly, in large numbers.

Web 2.0 was the revolution of interactivity and “word!of mouth marketing” gained

importance more than ever, though virtually. Thus, the consumer became active and the

monologue from a brand to its consumers quickly became a dialogue or an exchange “one!

to!many” as it is called today, with exchange creating the foundation for the new world.

With the introduction of identifiable masses of individuals giving their opinions, consumers

have the chance to make choices based not only on the official claims of a brand, but also

on the views and critiques of others who are similar to them. The digital opinions are given

via a screen (computer, telephone, …) but the consumer can know more about the persons

giving the opinion than the person standing next to him (same age group, with or without

children, similar tastes,… ). Thus, peer influence contributes to consumer decisions,

replacing part of brands’ persuasion power, and becoming a subject that they need to

address and services they need to pay more attention to than before (brand reputation,

after sales problem solving, consumer complaints…).

The easy access to information also brought about the possibility to choose between many

offers, with a lot of information on the content and quality of the offer and the possibility of

delivery to and from places impossible before: country barriers are evicted as more and

more international easy delivery options are available, and even the small honey producer

in the country can send off his goods easily to four corners of the world.

Intermediation has also undergone tremendous changes: on the one hand, huge platforms

like booking.com integrate an enormous variety of different hotel and lodging offers; on the

other hand, each individual with an offer can meet its clientele directly; or, as in the case of

Airbnb, single offers are united to create a big and more active market.

And finally, the most important notion that rises with the digital era is the consumer!

centrism: the real period of consumer as king has begun. The customer journey is a concept

that the brands are paying extreme attention to as well as the touch points because the

marketers have become aware that the decision making of the purchase is no longer made

solely during the act of purchase. As such, all the different contact points with the customer

gain importance as each gives a possibility to influence him/her to take that vital decision:

“buy”. Since marketers now know that a loyal consumer costs much less than a new one,

the question becomes how can repeat!purchase behaviour be “programmed”? Better, how

8


can he become the brand’s “ambassador”, to persuade others in behalf of the brand? Then

there’s the issue of creating new or incremental business: if I know what my customer is

doing, how can I induce cross!selling or upselling behaviour to increase my business, his

likelihood of buying and his total spending?

ii. The Operational Processes

Looking back at the definition retained in the introduction, digital is “any technology that

connects people and machines with each other or with information”. As such, it is only

natural that it also improves the operational processes or the way of doing things.

One of the first and foremost advantages of digitization is the elimination of double entries:

by enabling communication between different machines, people and data; it helps

eliminate the errors stemming from manual entry or multiple entries, saves time and

energy on the simple processes. On top of that, the complex surveillance capabilities

brought forward by these intelligent systems help reduce waste and increase automation.

The increasing number of direct relations between producers and buyers, the evolution of

delivery systems and the birth of rating systems bring about changes in the cost and

profitability models: increasing transparency calls for lower margins; thus new processes

aiming higher productivity and lower costs. On the other hand, as a result of the same

changes, the existing processes or production methods become obsolete and put

enterprises in danger (Kodak), or completely change the environment and question the

legal frameworks (taxis vs Uber). A new model of competition is born.

On a more general level, performance management is simplified: more data is available and

easily interpretable to define key performance indicators and install automatic monitoring

processes. As such, even small details can be detected and improved, broadening the

horizons for innovation and higher efficiency.

iii. The Business Models

The digital era is questioning the existing business models and their sustainability, too. This

is happening in a variety of ways:

! “GAFA” (Google, Amazon, Facebook, Apple) are becoming active in many sectors

previously considered outside of their activity and the lines of core business are

blurring.

9


! New actors, called “pure players” are born, active only on the web and focused on

one idea. In the midst of this ever changing landscape, existing businesses are

questioning their viability, their profitability and their future business models: will

they still be making money with their products or is “services” their future? How will

the production, delivery and maintenance costs change? Most importantly, what is

the shape and form of tomorrow’s market in which they’ll be required to compete?

! Societal phenomena are changing the rules of the game: new concepts like

crowdsourcing or crowdfunding provide access to rare resources in yesterday’s

world. Key competences can be assembled by the way of crowdsourcing. Otherwise

hidden ideas come to light thanks to crowdfunding: micro participations enabling

the creation of business from individual ideas. Consumers become developers

through co!creation platforms, and everybody can sell much less anything via social

commerce or e!commerce sites.

In short, new usages and new habits are questioning the business models as we know them.

In Chapter 5, the impact of the digital will be unveiled further using basic strategic

frameworks.

iv. The Empowerment of Employees

The digital era is also changing the employee power, employee!employer relationships, and

the management schemes. As Karel Dörner and David Edelman of McKinsey say:

” Being digital is about using data to make better and faster decisions, devolving decision

making to smaller teams, and developing much more iterative and rapid ways of doing

things. Thinking in this way shouldn’t be limited to just a handful of functions. It should

incorporate a broad swath of how companies operate, including creatively partnering with

external companies to extend necessary capabilities. A digital mind!set institutionalizes

cross!functional collaboration, flattens hierarchies, and builds environments to encourage

the generation of new ideas. Incentives and metrics are developed to support such decision!

making agility.”iv

Given the flattening of hierarchies, and the importance of the client!employee interaction

at all levels, employee empowerment becomes a must: no brand manager will be able to

handle all contacts for a brand on all of its social platforms, in all its stores and after sales

points. The consumer, however, expects the same level and mentality of service at all of

these touch!points. On top of all this, major innovations come from the field and from

knowing the consumers. Therefore, it is essential that employees integrate brand values,

display them and take part voluntarily in processes surpassing what their job calls for.

10


The digital age has additional challenges, from an employee and employer perspective. As

the management guru Gary Hamel puts it:

“…I’ll outline three of the most formidable challenges that confront companies in this new

century.

1. Dramatically accelerating the pace of strategic renewal in organizations large and

small

2. Making innovation everyone’s job, everyday

3. Creating a highly engaging work environment that inspires employees to give the

very best of themselves.”v

Roland Berger, in a study in France, found that employee satisfaction is higher in highly

digitized companies: “the companies the most matures in terms of digitization increase their

turnover 6 times faster than their less mature counter!parts, and as importantly, employees

in the mature companies have employee well!being ratings 50% superior. Companies with

digital cultures give a large place to the human factor: they have understood that

employees may be the source of continuous improvement and even innovation. Once

trained, employees become a real force of digital transformationvi.”

b) Performance of Leaders in Digital Transformation

Cap Gemini Consulting has realised a study with MIT to measure the link between the

digital maturity of companies and their financial performance among 391 companies in 30

countries, interviewing 469 directorsvii. They have measured the maturity along two axes:

! The Digital Intensity

Technology enabled initiatives in customer experience and internal operations

! Transformation Management Intensity

Leadership capabilities including vision, governance, engagement and IT!Business

Relationships

11


This work has led them to classify companies on 4 digital groups:

FASHIONISTAS

! Several separate digital projects

! Not guided by a vision that would

introduce synergies between different

departments and in different functions

! Even though some departments may be

mature, it needs a central governance

DIGIRATI

! A good global vision of the potential of

a digital transformation

! Solid governance with sufficient

investments to capture value adding

opportunities

! Strong digital culture

BEGINNERS

! Even though some may be mature in

ERP or online sales, no profound

thinking on digital

! Beginners by choice but mostly because

they ignore the real potential of digital

CONSERVATIVES

! Under exploited global digital vision

! Structured governance to ensure good

digital project management

! Dubitative on the added value of digital

! Prudent investments, sometimes to the

point of missing on opportunities to

competition

!

According to their findings, the Digirati outperform their competition on average by 26%.

Fashionistas will perform !11% less than their competition, beginners !24% versus their

competition and conservatives 9% better.

In terms of revenue generation, Digirati will be 9% better than their counterparts whereas

this figure will only be 6% for the fashionistas, !4% for beginners and !10% for conservatives.

Digirati’s market evaluation will be 12% better than their competitors whereas the

fashionistas will be !12%, and conservatives will be at 7% vs beginners at !7%.

It suggests that there is a real relation between digital maturity and overall performance, an

important message to heed by all companies asking themselves if they should take the path

to digital transformation or not.

1.

Digital Intensity

2. Transformation Management Intensity

12


3. Digital Transformation in France

According to the September 2014 study by McKinsey, the value added of the digital is

equivalent to 5.5% of the GDP (110 billion €), and it generates 3.1% of all jobs (1.5Million) in

France. On line sales have tripled since 2007, and 80% of the French population use internet.

As such, the penetration of digital in France is in the average of comparable countries.

However, there is an important difference between the private consumption and

investments. Whereas France is 4th

in terms of private consumption, its private investment

in digital is only 9th

among 13 countries. This phenomenon is further demonstrated by

online sales: Only 14% of French companies have received online orders in 2013 (compared

to 26% in Germany) and only 65% have websites (compared to 89% in Sweden). viii

The Roland Berger study of the same period shows that France occupies only the 25th

place

in the world, according to the NRI indicator (Network Readiness Indicator) and adds some

more figures about the digital progress in France:

! Less than 30% of companies use online data,

! Only 15% of companies have developed a mobile application,

! Only 13% of companies have developed APIs (Application Programming Interface).

! 1 French person out of 6 has made purchases online but only 1 French company out

of 10 sells online.

French companies seem to understand that digital transformation is an important element

of the future: 57% of French companies identify digital as a major strategic axis, but only 1

out of 3 has a formalised digital strategy (36%)ix.

The majority of the businesses in France claim that the digital has already led to or is

leading to an evolution of their business model (86%). Surprisingly, they see it more as a

threat than an opportunity as 84% estimate that there is a risk, of which 71% think that it’s

important or very important. For majority of the respondents, digital will require

reinventing the consumer experience (94%), create an evolution of the existing

management models (82%) and transform operational processes (81%)x.

Those who lead the change have a head start: enterprises mature in their digital

transformation have a growth rate 6 times superior to others, and their employees are 50%

more satisfied with their professional environments than those in companies less maturexi.

What’s keeping the French companies from performing better? McKinsey has studied 500

companies and has identified 4 principal reasonsxii:

13


! Organisational difficulties

45% of the companies mentioned structural rigidities, especially the well separated

identities of different functions in the company.

! Lack of digital competencies

31% of the companies have a real difficulty hiring digitally talented people.

!

! Insufficient profitability

French companies lag behind their European counterparts in profitability (average

gross profit margin for French companies at 28% vs 38% for UE28), making it

impossible to invest in digital for 30% of them

! Management involvement

28% of them mentioned the need for more and visible implication from their

managers and leaders to be able to bring about the digital transformation and the

cultural change that comes with it.

These results show that some of the French companies have become their digital

transformation and profit from it, although the majority haven’t taken the necessary steps

yet and a cautious approach is hindering faster development.

4. Digital Transformation and the Tourism Industry in France

France is the first touristic destination worldwide, and the tourism industry in France makes

up 7.4% of the GDP and 156.9billion € of the revenues of the country in 2013, according to

the BPI studyxiii

(Accommodation providers, travel agencies, transports, catering and

restaurants are included in this total). Even though it is not stated clearly, it seems that side

industries such as ski lift companies, locations of equipment, sales of equipment and

apparel related to touristic activities are not included in these figures, and as such the

figures are understated in terms of their potential impact on the country’s economic

welfare.

In 2013, 1 reservation out of 2 was made online and 62% of voyagers used internet to

prepare their trips in France, a performance not far from other mature European

countriesxiv. In this perspective, tourism seems to be one of the most mature sectors in

terms of digital transformation, recalling that only 1 company out of 10 proposes online

sales in France. Unfortunately, mostly front office elements have benefited from this

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15


The traditional actors change as well, putting more resources on online activities

whereas small agencies and tour!operators who have not taken the digital turn lose

market share. The emergence of the final client as an independent holiday creator

online, who can buy individually all the elements of a package, is an important

danger facing the travel intermediaries, both in terms of the offer and the prices.

It is becoming increasingly important to know the consumer and assure good client

relations, pushing traditional companies to improve direct sales platforms.

The emergence of peer!to!peer economies such as Airbnb, Uber,… also have an

important impact on the competition in the tourism industry, as illustrated by the

following article from Le Figaro (editor’s note). http://bit.ly/1N3XfVh

2. A multichannel client experience

Internet sales represented 33% of sales in 2013 vs. 23% in 2012; mobile reservations

are expected to increase threefold between 2012 and 2015. Given the increasing

usage of tablets, it is essential to provide high!performing applications to users and

profit from the advantages of such usages like geo!localisation, and to account for

the social aspect of travelling.

Clients also expect to be able to continue their reservations or have replies to their

questions in a continuum between different interaction points. The seamless

continuity of the experience is also a determining factor for customer satisfaction.

For a well highlighted illustration, watch David Edelman, McKinsey partner leading

Digital Marketing Strategy Practice: http://bit.ly/1R2l2ql

3. Innovative products and services

As in other sectors, digital technologies make it possible to offer products with

higher added value for clients.

Perhaps the most interesting is a selfie!tour of the city by Mandarin Oriental Paris, as

it shows not only the impact of social networks on the tourism but also illustrates

that they are for all ages and all levels of income (editor’s note).

http://bit.ly/1LsREFo

4. Better informed decision making

The massive amount of data available on clients and the interpretation of such data

thanks to digital technologies give birth to new practices. The first and best known is

the “yield management”, making it possible to adjust prices and optimise revenues

according to demand and supply. The increase in available data on clients also leads

the way to make suggestions to clients based on their preferences, and even adjust

the proposed options to their consumption methods, enabling “personalisation” of

products, offers and reductions.

16


5. A digital transformation of processes from end to end

Three distinct processes are concerned by this phenomenon:

o Transferring some acts to clients

Novelties such as direct bag drop!offs, self!check!in and dematerialised

boarding tickets and e!vouchers have transformed the acts and

organisational needs in the tourism industry.

o Automation of processes

One of the major outcomes of automation of processes is moving from

“static”, meaning preconceived and fixed offers in terms of contents and

price to “dynamic” packages where the package is created during the

reservation, and its contents defined according to the demands of the client.

Another implication of this change is the evolution of laws and regulations,

as some of the existing texts were based on the concept of packages (editor’s

note).

o Diffusion of digital equipment to staff

Some companies have equipped their staff with mobile tablets or other

digital equipment that contribute to service quality, efficiency and

economies.

5. Digital Transformation through the Lens of Strategic Frameworks

Given the importance of digital in the new world and the changes it brings about, a final

proof of its importance would reside in its capacity to change strategy, or rather a study of

impact of digital in strategic analysis. The inspiration for this analysis has come from the

teachings of Mr. Thomas Lawton at EM LYONxvii.

There exist many strategic frameworks that can be used for analysis. In this paper, the

changes brought about by the digital transformation will be studied in the light of 3

frameworks:

! PESTELxviii

! Porter’s Five Forcesxix

! VRIO Competency Assessment

These three have been chosen for their complementarity: PESTEL helps understand the

environment and the forces of change in which an industry operates. Porter’s Five Forces is

a tool that is very easy to use in order to analyse the different competitive forces within an

industry. Finally, the VRIO competency assessment is helpful to identify the core

competencies within a company and look at the changes going on with them to assess

competitiveness. A change sufficiently important to be called a revolution would have

impacts at these three levels, from the most general to the most specific.

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18


dangerous way, people on the streets may be pro!Uberpop, seeing it as liberation of choice

and prices. What is, and what could be the position of politicians? How do such

confrontations change politics and expectations? In a similar fashion, should politicians be

striving to integrate possible new economic models (Uber, Airbnb …) or insist that they

abide by the old rules? The attitudes of many users are in these cases in contradiction with

existing laws and structures, introducing new political questions: Both taxi drivers (and their

families etc.) and Uberpop users are voters, whom will the politician try to please? What is

the place of this subject within his agenda? What are the forces of the “Uberists” and “Taxi

drivers” and what is their nuisance capacity? This is of course just an example, as similar

cases can and will arise on the subject of Airbnb & hotels, Amazon & libraries and others

that we do not know yet. In this context, thanks to the communication power of the new

digital world, people will have more access to information to hear, question and judge

politicians, necessitating taking a stance.

The second question stems from a competitive issue: digital transformation being an

important element of economic welfare of countries, what should be the politics in terms

of digital transformation and development of countries, and what is the role of politicians

and government agencies? Mc Kinsey, in their paper dealing with accelerating the digital

mutation of companies, estimates that the contribution of digital to the French economy

will continue to grow regularly to potentially reach 280 billion € in 2020 if France could

attain the digitization level of the UKxxi. In this context, how should economic and

educational policies be created to favour the creation of digital innovation and

transformation? What infrastructural investments should find themselves on top of political

agendas? The choices and actions of politicians will play a major role in the development of

any industry related even remotely to the digital economy.

The observation of politicians, political and related institutions shows the increasing impact

of the digital transformation and the new questions it introduces in the political arena.

ii. Economic

The changes brought about by the digital in economic terms may be grouped under three

types:

those impacting the relationship between business and the final consumer (B2C),

those impacting businesses selling to other businesses (B2B), and

those impacting the transactional economic relations between consumers (C2C).

At the consumer level, the digital revolution is certainly one of information. He/she has

easy access to much more information and choice and this modifies his relationship with

19


any provider of products or services. Because of this greater knowledge, he has the

possibility to compare prices between different offers, distributors and steps in the

production cycle. This knowledge increases his force, and, via the lower prices, his

purchasing power. According to the Mc Kinsey study, an internet user in France brings

about 20€ of economies by month to its householdxxii.

Among the digitally induced B2C changes is the creation of giant distributors, with a very

wide offer. Amazon is a global vendor selling everything from clothes to books to gym

equipment, and has even started distributing fresh fruits and vegetables. With its fast

delivery, competitive prices and performant customer service, it has brought an end to

many local stores. Marketplaces replace separate vendors. The dematerialization of offers

has also led the markets to evolve towards big aggregators selling differently, as the music

sector witnessed with the arrival of iTunes, Deezer or Spotify; or the travel agencies with

online sales and booking.com.

On the B2B scheme of things, greater integration of processes has been possible thanks to

digital improvements, leading to way to less stocks and better delivery times, by integrating

the systems of different contributors to production. The improvement of costs, thanks to

the management of great amounts of data and their interpretations to reduce waste has

also been an outcome of digitization.

The digital transformation has created a whole new jargon in economy and perhaps the

most important result of the digital transformation on economy has been the creation of a

whole “new” economy, the sharing economy, without intermediation (C2C). The impact is

so vast and so all!encompassing that it brings about a revolution:

o The sharing of consumption and direct offers (Airbnb, Uber, blablacar, homeaway,

couchsurfing, lessons via internet...),

Thanks to internet and the possibility to “connect” with potential consumers, each and

every person who has a potential sellable or rentable service or object can do so, freely and

easily. It goes from renting out one’s flat to one’s couch, renting out lessons, the car or the

possibility to use a service with other people that one does not know to have access to an

offer that wouldn’t be possible otherwise. This new possibility creates a big disruption for

industries concerned: hotels have suddenly new competitors that they did not see coming,

it may become easier to travel renting only a couch instead of a room increasing the

number of travellers, taxi prices may be questioned… Many new elements are to take into

account making a business plan.

20


o The sharing of creation (crowdsourcing,…)

Let’s start with the definition of crowdsourcing from Wikipediaxxiii

: Jeff Howe and Mark

Robinson, editors at Wired Magazine, coined the term "crowdsourcing" in 2005 after

conversations about how businesses were using the Internet to outsource work to

individuals. Howe and Robinson came to the conclusion that what was happening was

like "outsourcing to the crowd," which quickly led to the portmanteau "crowdsourcing."

Howe first published a definition for the term "crowdsourcing" in a companion blog post

to his June 2006 Wired magazine article, "The Rise of Crowdsourcing," which came out

in print just days later:

"Simply defined, crowdsourcing represents the act of a company or institution taking a

function once performed by employees and outsourcing it to an undefined (and

generally large) network of people in the form of an open call. This can take the form of

peer!production (when the job is performed collaboratively), but is also often

undertaken by sole individuals. The crucial prerequisite is the use of the open call format

and the large network of potential labourers."

The impact is enormous: no longer bound by geographical boundaries or dependant on

in!house teams, companies no longer have the same resource constraints. The

crowdsourcing as it is seen today (writing code, creating publicity,…) is evolving at a

great pace, as new forms of delivery are being mentioned; for instance, people going

home from work can deliver packages on their route if they want to. The developments

on a large scale of these evolutions will have major impacts on costs and reach,

changing forever the economical equations.

o The sharing of financing (crowdfunding).

First things first, another definition from Wikipediaxxiv

: Crowdfunding is the practice of

funding a project or venture by raising monetary contributions from a large number of

people, typically via the internet. Crowdfunding is a form of alternative finance, which

has emerged outside of the traditional financial system.

The crowdfunding model is fuelled by three types of actors: the project initiator who

proposes the idea and/or project to be funded; individuals or groups who support the

idea; and a moderating organization (the "platform") that brings the parties together to

launch the idea. In 2013, the crowdfunding industry grew to be over $5.1 billion

worldwide.

Once again, a new model is born which permits people with a new idea or business model

to bypass the hard and long roads of classic financing and get what they need from a large

number of people, to realise their projects. Many start!ups form in this manner and

21


threaten existing companies in many industries with their agility and novelty among other

advantages.

As can be seen with the above descriptions and illustrations, digitization has a huge impact

on the economic scales of any strategy and calls for a new way of thinking.

iii. Social

The societal changes that accompany the digital transformation are so many that it would

be necessary to write another paper to explain in detail all of them. For the purpose of this

paper, please find below the major effects that have been observed by the writer, knowing

that the list is certainly not complete.

• The “connected age”: All the social networks that are a major part of the digital era

create a connection between people who previously didn’t know each other and would

never cross paths, while it leaves less time for less human interaction with family and

friends. A new type of “friendship” is born, bringing with it new rules of conduct and trust.

• Andy Warhol was right when he said “In the future, everybody will be world!famous for

15 minutes.” Thanks to the social networks; anybody can become famous and very fast.

• People are more informed, and informing. Anybody can find information about the

product/service he wanted to buy or give his opinion on it, and opinions of “strangers like

me” shape the buying decisions. As consumers they have new power and they will use it.

• Consumer needs are evolving as well: reactivity, individual attention, quality of service

fluidity in interactions with the vendor/brand and integrating consumers into the creative

processes are among the newly emerging norms.

• Citizens are also becoming more active in their demands and how they voice them

thanks to the power of social networks which help amplify simple messages.

• Thanks to the sharing economy, it is much easier to become a creator or make

commerce without needing a heavy structure.

• The digital era is also a better “equal rights employer” as it creates the possibility to be

educated online or to work from home.

• The work/private life borders are shifting, with the rise of smart phones and tablets

which make it possible to join anyone anytime; and thus ask something of them.

• The expectations of workers are shifting as well; they want more participative

management, being included in innovation projects, responsibility and autonomy.

22


iv. Technological

The digital era is about technology. Whereas information systems were just one of the

support systems of a company not so long ago, now they are in all the departments of the

company. Starting from the top, the management uses key indicators and performance

reports supplied by its information systems. HR needs IS to calculate the hours worked, the

pay, the personal development follow!up,... Production needs IS to follow production

numbers, efficiency, breakdown rates, raw material needs, production

schedules,…Commercials need IS to take orders, to propose repeat orders, to keep track of

client information and propose new products or deliveries,…Logistics needs IS to calculate

costs, prepare deliveries, to handle delivery schedules, to define the routes,…Marketing

needs IS to see which products sell, to define new products, to calculate prices, to learn

about consumers’ opinions, to communicate on the product, to exchange with consumers.

All these departments which were once autonomous now depend on and are tied together

with information systems as data is at the heart of all digital systems and information

systems provide this. New job titles such as Chief Technology Officer or Chief Digital Officer

are created, including responsibilities of the old IS guys and marketing, and maybe more

and more of everything in the future with the further usage of Big data. At a strategic level,

this shows the importance of digital to attain success and the importance that should be

attributed to it.

v. Environmental

Even though the digital revolution will not have the same environmental impact as the

industrial revolution, it will be important in the sense that the communication capacity that

it gives to everyone may help act on environmental destruction. People may connect and

fight against damage to the environment, and companies who invest on green practices

may receive the applause that they merit thanks to the fast spread of information thanks to

social networks and internet. The possibility to publish photos and videos is especially

helpful, as it reinforces the claims or truth, and may stir a stronger emotional involvement

than words alone.

vi. Legal

Amongst the trademarks of the digital transformation, we can count the disappearance of

borders, the creation of new forms of transactions and the availability of personal

information at a larger and easier level. These elements have very important legal

implications.

23


One of the first legal issues to come to light with the increase in e!commerce was that of

jurisdiction: If one buys in France a product from an American e!commerce website

produced in China and shipped from Turkey, the legal framework to be respected is that of

which country? In which country does the client take his complaint to court? The rules of

which country apply? For instance, in the case of the “Anti!Amazon” law in France which

forbid adding the 5% price decrease and free delivery, Amazon responded just the day after

by proposing delivery at 1 centimes of € and thus sidestepping the intention of the lawxxv.

Also related to this subject are the questions about tax, legal and economic issues. The

transactions between companies and companies (B2B) or between companies and

individuals (B2C) are well defined. However, which are the rules that apply between two

individuals (C2C)? When an individual rents a house for 25 persons, does the house comply

with the rules and regulations of a hotel (as is the law in France), or can he compete with a

hotel of the same size having no constraints whatsoever because it is technically not a hotel.

And would this be considered unjust competition (competition déloyale) or not, or at which

point it becomes so?

There is also the question of privacy: which rules and regulations about personal

information apply? The most recent case of Google against CNILxxvi

illustrates brilliantly this

subject: End of July, Google informed CNIL, guardian of private life in France, that it

wouldn’t be following CNIL’s recommendations concerning the “right to forget” (droit à

l’oubli). What this means is that if an individual in France asks that an offensive content be

removed from search engines because it is offensive, it will be removed from only French

search engines and not of other countries. This may seem shocking because anybody can

access other countries’ search engines. According to Bertrand de le Chapelle, who shared

his thoughts in the same article, there is a certain balance to be found between the

protection of private life and the right to information, and take into account the territorial

rights: how is it possible or acceptable to impose French laws in US or vice versa? He gives

the example of Thailand, where it is a crime to criticize the king. If the logic of no territorial

law is pursued, this would mean erasing all negative comments about the Thailand king all

around the world, which would be another extreme.

These insights show the complexity of the new legal landscape facing the digital era, and

this will certainly have an impact on strategy making.

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ctional barri

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asked “Did

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mportant m

e informati

ance’s Gene

n interview

rd store bef

of Ford is to

mous chang

go, now th

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nfluence of

ndors’ repu

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sing blood t

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access to a

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tion coming

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on, but als

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fore making

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recommen

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th

g their decis

brick and m

n, whereas

ores are be

of this new v

s is the new

ends much

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n of big gro

bnb apartm

may be made

lace is easi

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CSC study is

way your clie

ndations…).

making proc

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at their clie

sion compar

mortar store

it was ques

ecoming ext

vision, like B

w force tha

on what th

n brands. Th

Initiative Pro

ups are gon

ent in Mar

e more on b

ier. The rul

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s about con

ents have a

96% replie

cess has cha

and from di

s, Bertrand

ents now sto

red to 4 to 5

es an extens

stioned to h

tensions of

Burberry for

t has risen

heir clients s

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oject, Novem

ne as well: T

rais and the

booking.com

les of the g

d.

tact points

access to yo

ed that they

anged for th

fferent sou

Lessard, re

op by on av

5 timesxxviii

.T

sion of their

have websit

websites. T

r luxury goo

with the d

say about t

padvisor.co

ber 2015

The 5 star

e taxis to

m than his

game are

and sales

our offers

y did, and

he clients:

rces than

evealed to

verage 1.5

Therefore,

r website.

tes or not

There are

odsxxix

.

igital era:

hem, and

om and all

27

the

of p

figu

find

buyi

i

The

the

In r

trad

disru

a t

com

sear

Build

com

Sou

Gayé

similar web

eer influenc

res on the s

them usef

ingxxx

.

iii. Thre

digital age

ease of inte

return, all

ditional chan

uption. Indi

hreat to t

mpetitors wi

rch for disru

ding a strat

me, as no on

rce: http://w

DELAHOUSS

bsites on dif

ce as a new

subject are

ful for thei

eat of Subs

makes it po

eraction tha

products th

nnels or ven

viduals’ flat

taxis. How

th the digita

uption in on

tegy for tom

e is safe fro

wetpaint!m

E Executive M

fferent subj

w element to

imposing: 9

ir purchase

titutes

ossible to de

anks to digit

hat can be

ndors. Uber

ts did not se

wever, prev

al age. Ther

e’s own ind

morrow nee

om an outsid

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jects that fo

o be taken i

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es, and 68%

evelop prod

al tools, eve

e bought d

r and Airbnb

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re is an imp

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eds to take

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ON Strategic I

ollow is a cle

nto conside

French peo

% consult o

ducts adapt

en a co!crea

differently a

b are once

at to hotels,

thought!of

ortant lesso

re a new en

e into accou

e. As Tom G

Initiative Pro

ean indicato

eration in br

ple read on

on line opin

ted to client

ation with t

are no long

again good

, as private

options m

on for brand

trant comes

unt the pot

Goodwin pu

oject, Novem

or of the im

randing stra

nline comme

nion websit

ts’ needs. B

he clients is

ger bought

examples t

cars had no

may becom

ds: there is

s and takes

tential disru

ts itxxxi

:

ber 2015

mportance

ategy. The

ents, 86%

te before

ecause of

s possible.

t through

to market

ot seemed

me viable

a need to

the place.

uptions to

28

29


iv. Bargaining Power of Suppliers

The effects of the digital transformation are more visible downstream than upstream.

However, the changes downstream may influence the businesses upstream in different

ways. One of these is the distribution of profits. There are three possible ways in which this

can happen:

1. With the need for more personalisation, the product specifications at production

level may become more different, thus increasing production posts, without the

possibility to increase final product price.

2. As new intermediaries are being created downstream ! meaning the big vendors

such as booking.com which force new and higher commission rates on

accommodation owners – the producers and historical direct sellers lower their

marginxxxii

.

3. The access to further and cheaper producing countries may put local producers in

peril.

The digital transformation is an ever changing process and its exact evolution is not yet

known. For the time being, it seems to decrease the power of suppliers rather than increase

them.

One final question remains to be clarified: “Who is a supplier?” Before the digital age, it was

clear to see who played in which industry. Today, with google entering new segments such

as tourism, health or automobile, it is difficult to evaluate their role in relation to an

industry. Yesterday, for tourism, google was a supplier of visibility in search engines. Today,

they are an intermediary selling accommodation. What will their role be tomorrow and

how will it change the power structures within industries? This is the unknown with the

future of the digital age.

v. Competitive Rivalry within an Industry

BPI underlines an important potential outcome of the digital transformation in its February

2015 report: « By allowing, through its immaterial character, competition on a multiplied

geographical zone, the digital can weaken local historical actors and induce a brutal and

massive movement of profits. Only the services carried out by nature in proximity with the

client are an exception, but all the upstream segments may share this fatexxxiii

. The change

in profit distribution is one outcome of the digital age, but it is not the only one.

Among the current rivalry within any industry, new dynamics are at play because of the

digital transformation. The transformation capability of different actors determines their

future, as all industries are open to attack by inside or outside players. Let’s take a look at

the music industry: Justine Bieber, Taylor Swift, Madonna… and countless other artists are

com

mus

lives

anot

very

as b

subj

or p

all n

Spot

thei

c

Sou

Onc

adva

usin

of a

Gayé

mpeting for t

sic, the num

s were the

ther eleme

y important

before, and t

ject for them

ulling all he

new emerg

tify, vine…

r presence.

c) VRIO Co

rce: http://b

e the comp

antage at co

ng strategic

company. L

DELAHOUSS

the attentio

mber of albu

elements w

nt, combine

element to

the returns

m, as seen b

er work out

ing artists w

; making it

ompetency

bit.ly/1P3cK

petitive anal

ompany lev

framework

Let us recall

E Executive M

on of the glo

ums, the to

with which t

ed with pro

o their prom

on Spotify

by Taylor Sw

of Spotifyxxx

who can co

even more

y Assessme

KB5

ysis of an in

vel. At this l

ks, we will lo

l the 4 comp

MBA EM LYO

obal music a

ours and the

they played

oximity and

motion. But t

or Deezer o

wift’s refusaxiv

. Artists co

ome out m

e important

ent

ndustry is m

last part stu

ook at the i

ponents of c

ON Strategic I

audience. U

e interest t

d. Today, th

d interactio

that’s not a

or Apple mu

al of putting

ompete am

much more

t for existin

made, the ne

udying the i

impact of d

core compe

Initiative Pro

ntil recently

hey provide

eir social m

n with fans

ll: music is n

usic is a new

g her new a

ong themse

easily now

ng ones to

ext level is a

impact of d

igitization o

etenciesxxxv

:

oject, Novem

y; the qualit

ed with the

media prese

s, adding a

no longer d

w and very i

lbum on ap

elves but als

thanks to

continue a

assessing co

igital transf

on the com

ber 2015

ty of their

eir private

nce is yet

new and

istributed

mportant

pple music

so against

YouTube,

nd renew

mpetitive

formation

petencies

30

31


Valuable: Does it clearly contribute to your value proposition?

Rare: Is it scarce within the sector?

Inimitable, immobile, non!substitutable: Can it be easily copied or obtained by rivals? Can

a different capability or competency deliver the same effect?

Organization: Is the firm organized, ready and able to exploit the resource/capability?

At the company level, the effect of digitization is the changes on the competencies that can

be considered valuable, rare and hard to imitate.

Coming back to the tourism sector, let’s imagine a hotel chain renowned for its service

quality: they take pride and advertise on responding to all requests of clients in a fast,

relevant and impeccable manner throughout. It clearly is valuable and contributes to its

value proposition. It can be assumed that it is rare as they are using it as an advertising

claim. It is not easily imitable or substitutable because it requires a certain mind!set and a

certain organization, the last element of the VRIO framework. Now let’s look at the

adaptation of this hotel chain to the digital age:

! The new demands will require instant and high!debit Wi!Fi. Not hard to do, but

necessitating a new mind!set and investment.

! Other material needs may follow : chargers, headphones, cables,…As above,

possible

! The guests will be leaving their comments on online evaluation websites such as

tripadvisor.com, or through mentions on Twitter, Facebook, etc. It gets more

complicated at this level because :

o First of all, the chain has to have thought of this evolution and hired at least

one community manager.

o Which would not suffice because clients now everything NOW so there may

be a need for a community manager around the clock.

o Then again, the community manger must be able to figure out who the

person behind the comments is (not everybody use their real names).

o One more step: the hotel chain organization must have evolved in such a

way that employees from all levels can accept demands coming from the

community manager, technically at the same level or at a lower hierarchical

level than themselves.

o And further: the guests, who have already stayed with the hotel, reckon that

the hotel knows all about them and should have everything as they want for

their next stay, requiring a CRM system.

! The hotel chain must also realize that comments offline are less visible today, and

find a way to transfer negative comments to positive online.

This

clien

reth

new

com

nam

and

The

impe

the

stan

6

“Dig

evol

“Soc

fund

Bria

In th

pape

into

Cust

succ

the

map

the

influ

may

Sou

T

Bus

Inc

C

Cha

Gayé

s example ca

nts pass 1.5

hink its sales

w element t

mpetency in

mes, tastes a

have more

digital tran

erative that

game and it

nd the test o

6. The Cus

gital Darwin

lve faster th

cial, mobile

damentally

an Solisxxxvi

he light of

er, the nee

the functio

tomer!centr

ceed to be

customer j

pping to des

interactio

uences a c

y have with

urce: Altimete

ransformation

sinesses Are B

creasingly Digit

Companies Are

anging How Bu

Done, April 2

DELAHOUSS

an be exten

5 times in

s strategy a

to boost its

itself. Can

and proxim

comments

nsformation

t each bran

ts reply to t

of digitizatio

stomer Jou

nism is the

han your abi

e and rea

altering the

all the info

d has arise

oning and s

ric is a new

customer!c

journey ma

scribe all

ns and

ustomer

a brand.

r, Digital

n: How

ecoming

tal; Elite

e Also

usiness Is

2014

E Executive M

nded to othe

the stores

nd its place

s sales, the

n the neigh

ity, knowing

to refine th

n is putting

d rethink it

these chang

on.

urney Map:

evolution o

ility to adap

al!time rem

e ways peop

ormation th

n to illustra

strategy of

w ideology,

centric, it is

ap enters t

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er types of

compared

e within its

seamless d

hbourhood

g that they

heir tastes?

g the core

s core com

ges, in order

a Mirror on

of consume

pt.”

main our

ple connect,

at has bee

ate concrete

companies.

fruit of dig

essential t

he game. W

ON Strategic I

industries o

to 4!5 tim

VRIO frame

digital expe

bookstore

will get a m

competenc

petencies in

r to redefine

n Digital Tra

er behaviou

catalysts.

communic

n presented

ely how to

. Customer

gital transfo

to understa

What is a c

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or services:

es before,

ework. Burb

erience onli

survive on

missing title

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e its core co

ansformati

ur when soc

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ate and disc

d in the firs

integrate d

is the new

ormation. H

nd the cust

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When Ford

the brand

berry has id

ne & offlin

knowing it

e faster with

nds at test,

the changin

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ciety and te

intersect,

cover inform

st 5 chapte

igital transf

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tomer. This

ourney ma

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says that

needs to

entified a

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ts clients’

h amazon

and it is

ng rules of

s that can

echnology

they are

mation.”

ers of this

formation

attention.

order to

s is where

p? It is a

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sical and d

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ionary defin

t the heart

otions gene

placement

osity, other

pose of eac

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n looking fo

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e different

o engage or

digital touc

a screen an

ered. In this

ns in a stor

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e duration o

nition, depe

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in the cus

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contact or

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touch point

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rney, some

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ts, online a

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physical. T

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35

79


i What is digital transformation, Howard King, The Guardian, November 21st, 2013

ii P. 9, Roland Berger en collaboration avec cap!digital, du rattrapage à la transformation, l’aventure

numérique, une chance pour la France, Septembre 2014

iii George Westerman, Didier Bonnet and Andrew McAfee, MIT Sloane Review, The Nine Elements

of Digital Transformation, January 7th, 2014

iv Mc Kinsey & Company, What “digital” really means, Karel Dörner and David Edelman, McKinsey

Digital, July 2015

v P. 40, Gary Hamel with Bill Bree, The Future of Management, Harvard Business School Press, 2007.

vi P. 3, Roland Berger en collaboration avec cap!digital, du rattrapage à la transformation,

l’aventure numérique, une chance pour la France, September 2014

vii Cap Gemini Consulting, Digital Transformation : Définition, Enjeux, Illustrations, November 2014

viii McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance

et de compétitivité pour la France, September 2014

ix Roland Berger en collaboration avec cap!digital, du rattrapage à la transformation, l’aventure

numérique, une chance pour la France, September 2014

x CSC, Barometre de la Transformation Digitale, Les Secrets des Super Héros du Digital, 2015

xi Roland Berger en collaboration avec cap!digital, du rattrapage à la transformation, l’aventure


xii McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance et

de compétitivité pour la France, September 2014

xiii Key Facts on Tourism, Direction Générale des Entreprises, Ministère de l’Economie, de l’Industrie

et du Numérique, Edition 2014.

xiv McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance


xv Roland Berger en collaboration avec cap!digital, du rattrapage à la transformation, l’aventure


xvi McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance


xvii Thomas Lawton, Foundations of Strategic Thinking Course (XESST), EM Lyon Executive MBA

Module, November 13th!15th, 2014.

80


xviii Gerry Johnson, Richard Whittington, Kevan Scholes, Duncan Angwin, Patrick Regnér et

Frédéric Fréry, Stratégique (10e édition), Pearson, 2014, pp. 37!43.

xix M.E. Porter, The Five Competitive Forces that Shape Strategy, Harvard Business Review 57

(January 2008), p57!71

xx http://www.lemonde.fr/economie/live/2015/06/25/la!greve!des!taxis!contre!uberpop!provoque!

des!incidents!a!paris_4661266_3234.html

xxi McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance

et de compétitivité pour la France, September 2014, p 5

xxii McKinsey France, Accélérer la mutation numérique des entreprises : un gisement de croissance

et de compétitivité pour la France, September 2014, p 2

xxiii https://en.wikipedia.org/wiki/Crowdsourcing

xxiv https://en.wikipedia.org/wiki/Crowdfunding (mention on the page as article being outdated

already in April 2014, but the definition is valid for the purpose of this paper)

xxv Banque Populaire d’Investissement, le Lab, Le Numérique Déroutant, February 2015, p 39

xxvi http://rue89.nouvelobs.com/2015/08/17/faut!cour!internationale!linternet!260768

xxvii CSC, Barometre de la Transformation Digitale, Les Secrets des Super Héros du Digital, 2015

xxviii http://www.actionco.fr/Thematique/business!1018/Breves/Ford!Store!comment!poursuivre!

parcours!digital!client!concession!258843.htm

xxix http://www.forbes.com/sites/scottdavis/2014/03/27/burberrys!blurred!lines!the!integrated!

customer!experience/

xxx E!transformation du Parcours Client, Présentation du 25 juin 2015, Travail de groupe MBA

Marketing et Commerce sur Internet, Institut Leonard de Vinci (#MBAMCI), La Défense, Promo

Part Time 2014/2015

xxxi The Battle is for the Customer Interface, Tom Goodwin, TechCrunch, 3 March 2015

http://techcrunch.com/2015/03/03/in!the!age!of!disintermediation!the!battle!is!all!for!the!

customer!interface/#.ntdj8f:0sCd

xxxii Banque Populaire d’Investissement, le Lab, Le Numérique Déroutant, February 2015

xxxiii Banque Populaire d’Investissement, le Lab, Le Numérique Déroutant, February 2015

xxxiv http://www.billboard.com/articles/news/6605541/taylor!swift!pens!open!letter!explaining!

why!1989!wont!be!on!apple!music

81


xxxv Thomas Lawton, Foundations of Strategic Thinking Course (XESST), EM Lyon Executive MBA

Module, November 13th!15th, 2014, the VRIO criteria derive from the work of Barney (1991 and

2005).

xxxvi Digital Transformation and the Customer Experience, Overcoming Barriers & a Framework for

Success, May 23rd, 2014, http://fr.slideshare.net/MFiddy/digital!transformation!and!the!customer!

experience!35052981?qid=d3ac9fcc!033a!4466!ac70!e4caf0561369&v=default&b=&from_search=1

xxxvii Roland Berger Strategy Consultants, Impacts et mise en œuvre de la transition numérique à la

Compagnie des Alpes, Document de synthèse, Avril 2015.

xxxviii Office de Tourisme de Val Thorens, Val Thorens United – Un Plan pour Une Action Globale,

April 2012

xxxix Cap’com, Val Thorens Invente un nouveau modèle de marketing intégré, 2 juin 2014.

http://www.cap!com.org/content/val!thorens!invente!un!nouveau!mod%C3%A8le!de!marketing!

int%C3%A9gr%C3%A9

xl Roland Berger Strategy Consultants, Impacts et mise en œuvre de la transition numérique à la

Compagnie des Alpes, Document de synthèse, Avril 2015.

xli http://www.origindesign.ca/whistler!blackcomb!2014!15!winter!campaign

xlii http://twentytengroup.com/case!studies/whistler!blackcomb/

xliii Val d’Isère Téléphériques Sales Statistiques, obtained by asking all clients buying a ski pass of 2

days or more: « Where do you come from ».

xliv GfK Baromètre de Satisfaction 2014!2015.

xlv GfK Baromètre de Satisfaction 2014!2015.