III. Leveraging digital technologies to thrive in the digital era: roles of hospitality and leisure managers

Role of hospitality and leisure managers in digital business transformation strategy, digital business strategy, digital innovation, digital learning, adaptability, and agility

Introduction

In the previous chapter, we identified critical organization capabilities necessary to effectively participate in digital business transformation and to compete as a digital business. We also pointed out that for hospitality and leisure organizations to effect these organization capabilities, hospitality and leisure managers have to play particular roles, and they require particular competencies to play those roles. In this chapter, we unpack a subset of the previously identified capabilities (i.e. digital business transformation strategy, digital business strategy, digital innovation, digital learning, and adaptability/agility/ ambidexterity capabilities). Specifically, we discuss what the capabilities mean, how they differ from their traditional or nondigital counterparts, and what their value is to organization performance and longevity. We then identify the key roles hospitality and leisure managers can play in building and maintaining each of these organization capabilities and what competencies they require to perform those key roles. Each of the capabilities identified be a complex area with lots of depth, interdisciplinary knowledge, slippery terms and concepts, and practice challenges. Our aim is to provide a meaningful introduction to the digital capability, required roles, and required competencies so managers can have a starting point and a contextual framework to support further and lifelong learning/competency development in these important capability areas. Figure 7.1 shows how traditional business capabilities and digital business capabilities have similar aims (e.g. improved business performance and longevity). However, they differ in their ability to deliver on those common aims. Digital transformation is required to effect digital business capabilities. And effecting digital transformation also requires particular capabilities (e.g. digital business transformation strategy, digital leadership).

Required managerial roles and competencies for digital business strategy and digital transformation strategy

Unpacking digital business strategy

Digital business strategy' is strategy formed and realized by leveraging digital resources to achieve breakthroughs in efficiency, differentiation, adaptability, and agility.1 It fuses together the domains of information systems and business strategy so that, rather than being positioned below business strategy or being a component of business strategy' (like traditional IT strategy'), digital business strategy' becomes business strategy itself.2 This is because digital technology advancements continue to rapidly fuse together people,

/ Digital business requires new organization capabilities or enhancements of traditional capabilities

Figure 7. / Digital business requires new organization capabilities or enhancements of traditional capabilities

Note: These new or enhanced capabilities are effected through digital transformation, which in turn requires new capabilities like digital transformation strategy. The aims of traditional and digital business are similar, although some aims become much more important to digital business.

processes, technologies, networks, and things within and outside organizations (or blur the boundaries between them) to such a degree that conceiving strategy separately is increasingly becoming counterproductive. When digital business strategy becomes the business strategy itself, it is able to be a strategic dynamic capability that enables organizations to dynamically configure and orchestrate diverse digital assets to respond to and shape changes in marketplaces.3

Jeanne Ross and Ina Sebastian, researchers at the MIT Center for Information Systems Research, and Cynthia Beath, emerita professor of information systems at the University of Texas, propose that a great digital business strategy sets a clear direction.4 In doing so, it enables managers to form and lead digital initiatives, assess their progress against the set direction, and adapt their efforts as required? Sunil Gupta, professor of business administration at Harvard Business School, and chair of the executive program on driving digital strategy, warns that digital business strategy shouldn’t just be thought of as having an independent digital unit, or running digital experiments. That thinking of it as having an independent digital unit is like launching a speedboat to turn around a large ship (there will be lots of activity and speed but it won’t turn around the ship); and just running digital experiments, without a clear roadmap, may result in proliferation of disjointed ideas that don’t address fundamental strategic issues.1' He also cautions that, while organizations should always pursue cost reduction and operational efficiency, viewing digital business strategy

Digital strategy, innovation, learning, agility 69 solely as a leveraging technology to reduce costs and improve operational efficiency ignores the potential (and high) likelihood of technology fundamentally disrupting the business and its industry.7 This is consistent with the thinking of Ross, Sebastian, and Beath, who clarify that operational excellence (efficiency and effectiveness) is a digital business commodity, not a basis for competitive advantage. These three researchers also argue that organizations should choose between a customer engagement strategy (one that “targets superior, personalized experiences that engender customer loyalty”) or a digitized solutions strategy (one that “targets information-enriched products and services that deliver new value for customers"), but should not attempt both, as they risk doing both badly.8

Digital business strategy is about managers determining what combination of digital assets to leverage, and how to leverage them to effectively compete as a digital business. Effectively competing as a digital business requires competing on new and evolving bases of competition: being able to rapidly flex operations up or down in response to disruptions or changes in demand (e.g. elastic cloud infrastructure);9 benefiting from network effects and multi-sided business models;1" being able to scale rapidly (e.g. between 1996 and 1999 Amazon grew from 151 employees, generating $5.1 million revenue to 7,600 employees generating SI.64 billion revenue);1112 using shared digital asset alliances and partnerships (e.g. hospitality and leisure organizations that share reservation systems, loyalty programs, and online cross-selling networks/alliances, such as Star Alliance and One World); taking advantage of speed (e.g. speed to market of new products, match speed of complementary product partners and of competitors, speed of decision making, real-time customer sensing and responsiveness, speed of supply chain orchestration, speed of network formation and adaptation);13 and expanded value creation/capture opportunities (e.g. leveraging growing data availability for product innovation, creating and capturing value from coordinating different business models in networks, building and controlling industry platforms and ecosystems).14

Role of digital transformation strategy in digital business strategy

Whereas digital business strategy focuses on “future states” and how to realize them, digital business transformation strategy focuses on having and effecting the blueprint for navigating the structural and cultural changes required to effectively integrate and be able to leverage digital technologies.13 Thus digital business strategy and digital business transformation strategy differ but go hand in hand. Doing digital business strategy and digital transformation strategy right offers breakthroughs in efficiency, product/service differentiation, adaptability, and agility that just aren't possible without bringing together and orchestrating contemporary digital assets. In turn, it can shift organizations into the category of disruptors that are rewarded with a lion’s share of value capture across markets, industries, and geographies. Turning a blind eye to digital business strategy and digital transformation strategy, or doing them in a token way or by half measures, is the path to loss of competitiveness, disruption, and potentially irreversible survival risks (e.g. at a certain point, Blockbuster and Kodak could not turn back time and reorient themselves).

New or enhanced managerial roles and competencies required for digital business strategy and digital transformation strategy

Given their intimate understanding of customers, markets, products/services, and operational processes, hospitality and leisure managers need to play critical roles in digitalbusiness strategy and digital transformation strategy. These roles include leading the formation and realization of a digital business strategy (e.g. establishing a clear mission, vision, and direction for digital business; identifying and leading digital business initiatives; motivating people at different levels and in different parts of the organization to participate in the building and leveraging of digital business capabilities; aligning digital business efforts). They include participating in digital business strategy formation (e.g. contributing ideas for business model innovations; digital assets to implement and leverage; networks/ecosystems/communities to participate in; product/service innovations; customer experience innovations). And they include championing and supporting digital business strategy initiatives and cultural changes (e.g. leveraging managers’ formal and informal networks to encourage employees to understand and embrace digital business strategy initiatives, ensuring managers’ direct reports have relevant knowledge and skills, and modeling appropriate attitudes and behaviors).

To effectively lead, participate in. and champion digital business strategy and digital transformation strategy efforts, hospitality and leisure managers need corresponding digital competencies. The lack of such competencies may be a key reason why managerial unwillingness to experiment with new business models is a major barrier to incumbent organizations’ digital business transformation efforts. Based on our research, we propose that the required digital competencies include having an understanding of different digital technology advancements and their strategic implications (e.g. what digital asset opportunities do advancements in loT, Al, blockchain, robotics, and drones present?); having working knowledge of the technical aspects of these digital technologies (e.g. how do they work, what are the limitations and issues, what is really involved in implementing and using them, what is hype and what is reality?); having a working understanding of different digital business strategy approaches and benefits (e.g. different business models, approaches to digital infrastructure configuration, approaches to alliances and partnership, approaches to network and ecosystem participation, approaches to product innovation and enhancement, approaches to adaptability and agility); having a working understanding of digital business bases of competition and the value of key platforms and ecosystems; and having a working understanding of digital transformation strategies and accelerated change/transformation approaches (speed is critical to digital business strategy, so managers leading digital strategy initiatives need to understand effective approaches for rapidly implementing an instituting digital business strategy initiatives so they aren’t undermined, rejected, or killed off by the wider organization. Examples of these approaches include agile methodologies16-17 lean thinking principles/practices18-19-2" lean startup practices,21 design thinking approaches,22 startup accelerator practices,23 and strategy making processes such as the change acceleration process24).

 
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