The module „Digital Business Models“ has taught us new skills concerning our activities online and theoretical knowledge about emerging technologies such as AI and big data within the business world. I will use Gibbs’ theory to reflect on my learning experience in this course as well as evaluate the course itself. In the end, I am going to draw implications for my future career.
My peers and I were tasked to create our own blog and write
blog entries on businesses we were familiar with who have incorporated a
digital business model. To deepen our understanding of the topics we commented
on our fellow peers’ work and reflected on our own work.
Feelings: Nervosity
As a very traditional accounting and taxation student, this new
way of learning made me very nervous but I was very determined to take on this
challenge since I am aware of the overwhelming demand of digital skills in the
consultancy sector.
Evaluation: Connectivism
Online interaction was paramount for effective learning in
this module. Unlike traditional methods of learning in University, we learned
by interacting in the MOOC community and gathering opinions and hence
information from every peer. The good thing about social interaction between
peers is that you develop your own voice and become more confident over time. On
the other hand, my peers are students just like me. Also, timing was vital since
I often had the feeling to be ‘too late’ and many things I wanted to say had
already been said.
Analysis: The Infinite Ocean
My work was based on online research, gathering relevant
information, blogging and content creation using multiple media materials. I
was completely new to blogging and as not so creative person, I did struggle with
the design and creative writing – how to make the article as appealing as
possible. Our work was mostly self-motivated, and we were given an abundance of
flexibility since we could decide for ourselves when and where to work.
Getting to know current and emerging trends in the digital world, it was like being thrown into an abyss of information at first. There were endless sources of information on the internet, videos, blogs, articles etc. It was like exploring the depths of the oceans that, which we know, are finite. However, when it comes to the digital world, its possibilities are indeed infinite.
How Burberry became the Most Successful Digital Luxury Brand
Authentic Branding for a Global Audience: Angela Ahrendts
When we think of British luxury brand Burberry, the first product that comes to mind is their iconic beige trenchcoat with its signature cheque lining.
Not long ago, this was not so obvious. Before one of the most capable managers in the world, Angela Ahrendts DBE, left Burberry as CEO in 2014, she revamped the British fashion house, made it find its way back to its roots and tripled sales in only five years (Davis, 2014). Apart from centralising design and focussing on innovating core heritage products, Ahrendts (2013) crystallised a highly potential customer base that was being ignored by their competitors, namely millenials.
In order to address this new customer base and to understand the needs of contemporary stakeholders, Burberry has used emotive brand content (using music, movies and live-videos), invited young British influencers as brand ambassadors (e.g. Emma Watson and Cara Delevigne) and made its marketing digital.
The secret to success of digital business models is the identification of opportunities, the optimum alignment of skills and right timing. Burberry has understood that the key feature of contemporary business models is transformation. While developing a sustainable business model, Ahrendts and her executive team have incorporated internet trends and new technologies to their strategy. By doing so, they transformed their “traditional (and historic) brand into a shareable, digital experience” (Centric Digital, 2015). Ahrendts optimised HR by appointing central heads for all operative departments, such as design and supply chain management, and seized the right time to digitalise Burberry’s marketing which resulted in Burberry’s digital leadership.
It all started in 2006, when the digital approach of communicating the brand and its values embodied two methods: engaging in social media and the creation of the “ultimate in-store digital experience” (Petey S, 2016).
In 2009, Burberry stepped into the world of social media, notably Facebook (live streaming and exhibiting products), Instagram (visuals) and Snapchat (leaking exclusive content through Snapcode), and did so as one of the first luxury fashion houses (Shannon, 2017). Not only did Burberry use many different social media channels, it distributed content as well and made sure that it would only and always meet high-quality standards and a high degree of sophistication (Na, 2016). By embracing social media, the company had seen its fastest growth in online sales (Butler, 2013).
Furthermore, two key features on addressing brands in the contemporary digital world are immediacy and velocity (Shannon, 2017). Having become a pioneer by introducing the “See-now, buy-now” strategy brought the hearts of fashion enthusiasts and Haute Couture customers to melt. Burberry’s exclusive fashion pieces did not leave potential buyers to wait for another six months but instead could be purchased right after the fashion show – on the beloved mobile phone.
The interaction between the company and its customers has never been so close, intense and immediate, causing both brand and clientele to co-evolve through information exchange (Peroco, 2014, pp.83). As a result, customisation campaign Burberry Bespoke brings exclusiveness to the next level.
By 2018, Burberry’s social media reach peaked at 51 million followers worldwide, across 13 platforms, 24 accounts and 11 languages underlining the maison’s digital prowess (Burberry, 2018, p.38).
The second approach required the digitalisation of the real shopping experience when entering a flagship store. Since 2012, Burberry has blurred the line between online and in-store shopping.
By gathering information about their customer’s shopping behaviour (e.g. through loyalty and reward programs), Burberry has been using big data to optimise marketing and boost sales (Marr, 2017).
In the Regent Street flagship store, customers experience the connection between their online purchase activities and the real shopping sensation through immersive multimedia content, the usage of social media and the Burberry app (Danao, 2017). Embedded chips in products enable customers to immediately find out more about it on their mobile devices and mirrors magically turn into interactive infoscreens excelling customer expectations (Alexander, 2017).
Apple and Burberry drew closer when Ahrendts left to join the Californian technology giant in 2014 and rightfully so, Apple should be the one taking care of Burberry’s augmented-reality fashion app that was eventually launched in 2017 (Williams, 2017). “The campaign’s shareability and social-friendliness organically turned users into brand advocates” because, simlply said, the app is fun and for free (Aitken, 2018). It won the award for best app in the Drapers Digital Awards 2018 (Burberry, 2018).
Incorporating social media, AI, augmented reality and big data has led Burberry to shift from the focus on “which markets drive growth to which channels drive growth” (Gartner, 2015). Burberry states in its 2017/18 financial report that “about 70% of retail sales are estimated to be influenced by digital somewhere along the customer journey”. That means around 1,5bn out of 2,7bn GBP total revenue was somehow generated or influenced through digital investment – and this number only includes retail.
As a German citizen who has come to England to study, I am required to undertake money transfers from my German to my British bank account.
British universities charge relatively high tuition fees, so we are talking about considerate amounts of money. I am not reluctant to pay a high price for excellent education, but I do get annoyed by only looking at the info booklet sent to me by my home bank in order to get a notion of the respective transfer and exchange fees. Of course, it was easier for me to just google information and exchange rates but the whole process was such a time-consuming nuisance and the outcome wasn’t pleasant at all either. To be honest, I still do not understand the difference between OUR and SHARE.
Searching for alternatives, I stumbled upon London-based money transfer service “Transferwise” – a so-called Fintech.
Fintechs vs. Banking
The financial sector has been experiencing a severe wave of disruptions mostly due to digitalisation, the increased importance of smartphones and mobile convenience, and (as in my case) increased consumer discontent and expectations. Traditional banks have notoriously failed in offering innovative digital solutions concerning internet finance, online banking etc., and Fintechs however have succeeded in identifying those gaps in the marketplace and seized the opportunity to make money from those.
Fintechs are normally start-ups with few employees and therefore have flatter hierarchies. This allows them to change, innovate and rebuild at a higher pace and with less organisational barriers. Legacy banks are controlled by an inflexible regulatory framework and focus more on trust and security, risk management and strong capitalisation inhibiting themselves from quicker innovation and application of new technologies (Martin, 2018).
By providing common and simple interfaces on all mobile devices, especially smartphones, as well as computers, Fintechs have automatically accessed an uncanny wider audience as opposed to the physical distribution of banks.
Every year KPMG and H2 Ventures release the Fintech100 report that showcases statistics and the most successful Fintechs of the year. In 2017, 26 companies from the UK and EMEA were dominating in the “Emerging 50” who have raised over US$1B in 2018 altogether (KPMG, 2017 and 2018). Fintechs are especially fast growing in the UK although not restricted to it.
Coming back to the fintech of my choice, Transferwise has made use of the inefficiency that arised from the bothersome transactions between EU and UK bank accounts. Globalisation is not a new trend hence young, adult and old people alike travel for leisure or business reasons especially in the European Economic Area. Two Estonians, Kristo Käärmann and Taavet Hinrikus, faced my current problem in 2010 and decided to do something about it. This short video explains how Transferwise was born:
Over the past decades a growing tech-savvy customer base is growing nearly everywhere in the world (see fig. 1) and as such, expectations and consumer behaviour are changing at a fast pace as well. Being born a so-called “Millennial”, I grew up with ever-changing technology, the internet and mobile devices. Fintechs seize the opportunity of profiting from the people’s increased perception of their financial rights and their capability of searching the internet for better alternatives (Gibbs, 2017).
Eventually, it all comes down to the money you could save while undertaking transactions. Transferwise does not only manage to keep the exchange fees at a minimum, they also charge a VERY low price for their service. Being praised by users on the internet during the past 8 years and since the website seemed professional and trustworthy as well, I gave it a try. The company is now valued at more than US$1B underlining their incredible success story. As Taavet Hinrikus explains himself in the below video: “I don’t think consumers think about Fintech [as such], consumers care about a better experience. Cheaper, faster, more convenient.”
And he was right.
Fintechs do not primarily aim at disrupting existing businesses but have seized the opportunities from technology shifts to provide services in a more efficient way (Stanford-Clark, 2017). Although Fintechs sound all great, they are still facing a handful of challenges.
When I started using Transferwise I was taking a risk, as opposed to buying services from big banks who have built on their customers’ trust over generations. Banks have one main advantage over Fintechs which is their in-person services, i.e. “real staff” (Gibbs, 2017). The fear of defraud is therefore as good as non-existent. Collaborations with banks might be necessary to elevate an even stronger, better performing entity (Marous, 2018). Transferwise cannot establish an own bank in every country they operate in, hence collaborating with local banks is inevitable. Gaining trust without having a physical location of business or “real staff” might have been and still is the biggest challenge of Transferwise.
Big companies and banks, such as Barclays, Apple and Google, have decided to assist the UK government on establishing a Partnership to teach digital skills to citizens (UK, 2017). Fintechs grow and so do their staffs. As Jones calls it “the war for talent”, it is also one of their challenges to find right-minded, skilful people when facing giant Techfins (such as Amazon, Google and Facebook) and banks who are now starting to modernise (Jones, 2018).
In summary, Transferwise has achieved in eating away one of the banking value chain, i.e. transactions across borders with two different currencies, and disrupting the banking industry. However, Fintechs have disrupted but not yet replaced banks as such.
When we think of doing our taxes, we feel a quite unpleasant sensation in our body. We will think of invoices, deadlines and hours of paper work in general. Preparing the tax return used to be a very troublesome procedure of collecting, sorting and filing paper invoices as well as submitting the whole folder, the tax return, to HMRC on time.
Since the advent of the internet tax compliance has changed. Individuals and companies have the possibility and sometimes the obligation to submit their returns electronically. Online submissions do not only reduce compliance and administration costs, it also works in real-time and a lot faster than before. But with the increasing understanding of self-explanatory tax return mechanisms, are tax professionals still necessary then? And what are the new implications for the tax profession?
The digital economy and globalisation have changed business models and transfer across borders. Tax professionals are challenged to understand and adapt their tax practice to the new economy. How are internet services to be taxed? Where is a website considered tax-resident? What kind of tax risk do internet start-ups face? There are many questions arising only from connecting taxation and firms active in the digital field and they have to be answered now since the economy has been changing at an incredible pace.
Even though computers have substituted common tasks formerly performed by accountants and tax professionals, there are fields that technology cannot do just yet. EY (formerly Ernst&Young) has stated key capabilities that are necessary for future tax professionals. Many leading companies will invest in robotics, AI and process automation. Having a thorough understanding of those technologies are of paramount importance to crystallise relevant information for tax matters and to advise effectively on high-tech businesses. Highly professional consultants, mostly directors, are required to be able to influence across the C-Suite and present a highly effective tax strategy in real-time. International business has assumed unprecedented dimensions and so has the companies’ data collection. Understanding Big Data and being able to analyse overwhelming amounts of data for tax purposes have become key abilities for the future tax profession.
There is no denying that the future tax professional does not resemble the traditional profession at all. Digitalisation has changed the tax profession and requires tax professionals to be creative, tech-savvy and communicative. It is very likely that the profession will always be subject to change as long as the economy is still evolving.
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