A Strategy for the Management of Digital Information Products

Information companies are sociotechnological, targeted and open systems with at least one strategic business unit (SBU) that sells or rents (digital) information products. Operational activities are carried out in business units. Strategies define the broad directions for the system and for its subsystems. Visions are the targets of strategies, and specific, measurable, achievable, result-oriented and time-based (SMART) objectives need to be defined to give systems that possess a degree of inertia a concrete, measurable direction.

In this thesis, both a bottom-up and a top-down approach to strategy will be taken. As an example for a bottom-up approach, a sequential, parallel, customer-oriented business strategy for the management of digital information products, a strategy that can be implemented through customer involvement in the product lifecycle, and through customer integration in the supply chain, will be elaborated. This strategy is best induced by a preceding timely shift towards (radical) product and process innovation, a limited punctuation of a long-term equilibrium of customer orientation and incremental innovation.

Hybrid strategies like the one presented in this thesis are built on modular, independent and homogenous subsystems that communicate, collaborate, compete and finally agree on joint activities, manifested in plans that then are implemented by the actors involved in order to achieve the various primary and secondary objectives on the way towards a greater, common vision.

Simultaneous hybrid strategies are a top-down or abstract view on this whole system. As simultaneous hybrid strategies possess a degree of ambiguity or even impossibility because they hide implementation details of the system, the ambiguity needs to be handled on the operational level when a hybrid strategy is implemented. Ambiguity can be resolved by introducing priorities for strategic objectives, by parallelizing strategy execution in regard to system structure, or by sequentializing strategy execution in regard to time. A top-level strategy first of all is responsibility, responsibility for the lower levels of organizational hierarchy.

After the introduction, chapter 2 starts with the definition of central strategic terms. Then, the options for business strategies and hybrid strategies in the context of information companies are sketched.

Chapter 3 essentially describes the theory of the product lifecycle, which can be compressed to the three main stages new product development (NPD), product management (PM) and revitalization/retirement of products. Retirement and revitalization stages respectively play an exceptional role at the end of a product lifecycle. The chapter ends with a critical observation of the concept and managerial application of the lifecycle view in combination with the supply chain concept.

In chapter 4, first the general characteristics of information products are illustrated. For example, production of information goods is usually closely connected with high fixed costs, which contrasts with rather low variable cost for reproduction and possible marginal costs near zero for digital distribution. Information products are also experience goods. Their value can only be determined after consumption.

Different actions can be undertaken to increase customers’ trust in a new product’s quality prior to purchase. The degree of digitalization and modularization are further, but not necessary properties of information products, even if these properties can increase utility for both customers and producers.

Chapters 5 till 7 cover the subject of customer orientation from a supply chain management (SCM) perspective. Chapter 5 paves the way towards a customeroriented strategy. Based on the preceding chapters and against the background of hybrid strategies, Porter’s corporate strategy types of cost leadership and differentiation are reviewed. Business strategy between innovation and customer orientation is the next topic of this central chapter that provides a generic framework for business strategy in the end. Applying Berthon, Hulbert and Pitt’s strategy matrix approach, four basic strategic orientation modes of a business unit are elaborated and discussed. The customer orientation mode is further analyzed in the following chapters.

Chapter 6 leads over to customer integration as a possible implementation method of strategic customer orientation, and chapter 7 introduces the basic ideas of mass customization, a method to integrate the customer or rather his/her preferences in the production process along the supply chain. A model for customers’ information needs and implications for the competitiveness of a business unit offering customized products closes this part.

Chapter 8, 9 and 10 deal with customer orientation from the perspective of product lifecycle management (PLM). Customer involvement is a method to implement strategic customer orientation in the product lifecycle. Chapter 8 introduces customer involvement as a possible but debatable success factor of new product development (NPD). The broader idea of open innovation is introduced next.

Finally, the differing effectiveness of customer involvement in different phases of the new product development process is discussed.

In chapter 9, the management of information products and the evolution of information products from market introduction to mature products are discussed. Here, the question is answered why product management in practice predominantly deals with incremental product innovation. In chapter 9.3, a new and generic framework for the development of tactical plans is proposed and demonstrated in the light of a sequential hybrid business strategy.

Chapter 10 finally deals with the revitalization and retirement decision for mature products at the end of their lifecycle. The revitalization or retirement of mature products is as important for a company as the development of new products. The special role of mass customization and customer-oriented strategies is discussed in this context.

The thesis ends with the conclusion in chapter 11. Based on the strategy developed in this thesis, the relationship of sequential and simultaneous strategies is discussed. The question and the hypotheses from the first chapter then are in the center of attention at the close of the thesis.

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