Digital Transformation is the Self-overturn of the Business Model of Enterprise

By Xuewu Wang, Founder & Head of Data Labs at China Eastern Airlines

Xuewu Wang, Founder & Head of Data Labs at China Eastern Airlines

In mid-March, The Virginia Tech University's Executive MBA senior cohort, 12 students and 2 professors in total, visited China Eastern Airlines. They wanted to learn about China Eastern Airlines' big data and digital transformation experience, the Data Labs operating model, and how it can help companies revolutionize business processes and strategies through data-driven approaches.

As the company’s market and business areas continue to deepen, there are more and more customer contact points in the customer journey. Newly built enterprise applications, data platforms and the resulting data have also grown significantly. Companies have more and more data, and while doing data governance, they need a way to transform the value of data asset. To maximize the core competitiveness of enterprises and improve operational efficiency, it is necessary to build an innovative collaboration model across different business fields and departments.

Digital transformation is a fundamental change for enterprises to optimize their core competitiveness by customer-centric. Implementations include improve productivity, enhance customer experience, customer growth and increase enterprise brand value. The successful digital transformation is not only the successful application of innovative digital technology but also the successful implementation of innovative business models.

Professor Parviz Famouri and Dana Hansson, who are responsible for the Virginia Tech University’s Executive MBA Program are very much agreed with this point of view. Therefore, they chose the business case of data-driven innovation in Data Labs as a part of the Virginia Tech Executive MBA International Business Course. The VTEMBA Program is to learn about how a company can respond to a changing technology or policy environment and succeed in the global marketplace. This senior cohort is a dynamic and creative group. The students have very successful professional resumes and they are destined to take a leadership role in the business or government.

Digital-transformation represents a fundamental change in the business model of how companies can use innovative collaboration models, innovative technologies, and data-driven approaches. Digital-transformation combines a customer-centric philosophy with a fast data product and service product iteration model. Through digital tools to increase productivity, promote the company to generate more value, increase brand influence, and provide customers with a better service and create more values for them.

To maximize the core competitiveness of enterprises and improve operational efficiency, it is necessary to build an innovative collaboration model across different business fields and departments

There are many sources of driving force for companies to implement digital transformation, including reducing costs, improving operational efficiency, customer growth, achieving growth, improving revenue, optimizing supply chain, optimizing business processes, and acquiring new market opportunities. These drivers will enable companies to acquire new business processes, new products, new services, and create new business models.

Gartner released the "2018 CIO Agenda" research report by surveying 3,000 CIOs around the world. The report found that the IT management of companies in the digital age is changing from four aspects: business model change, customer-centric, project management to product management, and technology investment direction adjustment. And the role of CIO has shifted from “delivery” to the combination of IT and business.

In the process of implementing digital transformation, cross-departmental and cross-disciplinary collaboration is closer and more important than ever. Because there are many new challenges and new tasks in the process of trial, it is difficult for the business department to put forward clear requirements, which requires the business department to work with the IT department and even other departments to implement the digital task. For example, to provide products that better meet your needs more quickly, you can use a product management model. Product management will revolve around the entire lifecycle of digital solutions. The current digital products are iteratively very fast. The advantage of the product type is that the product development team (business or IT) can work more closely with customers, making the product iteratively faster through agile work methods. Reduce the market risk of products.

In the digital age, companies are beginning to focus on the changes in business models and explore new business opportunities. A new business model needs to be known after it’s has been tried, and its business model emphasizes the methodology of quick exploration and agile delivery.

At present, most companies are still in the initial stage of digital-transformation, and only a few companies have begun to scale the entire digital business and have gained a lot from it. The most important factor hindering “digital scale” is not IT, but the company’s culture, because the digitalization is an innovative work that requires changes in management mindset and management mode, while innovative work requires companies to have innovative genes. Many companies have strong execution, cost control or other aspects, but lack sufficient "innovation" genes, which has become a major obstacle to the progress of digital transformation. Other resistances include resources, personnel quality, and company high-level concerns.

The China Eastern Airlines’ Data Labs is an accelerator for the digital transformation and innovation of the aviation business. Data Labs has an open and flexible big data experiment platform. Analysts in various business fields will get the most flexibility and freedom to use the data and the digital tools provided by the platform for quick verification, Verify their opinions and ideas. The data sandbox platform connects and integrates different resources, including but not limited to data resources, talents resources, and technical resources. The greatest value of Data Labs is the realization of data assets in a scenario-driven model. And it also is an innovative incubator that can incubate innovative ideas, new projects, new products, and data science talents.

In the digital age, traditional companies face the challenges and pressures of transformation. but the new era has also given us a great opportunity to let the global companies stand on the same starting line in digital transformation. To become more competitive and gain more growth and brand influence, the digital transformation will be a very effective business model for each company.