Question

How Does Digital Transformation Happen?

The Mastercard Case

Taking on Cash

“One of the biggest things we did was to redefine our competition. Once we got [that] right, then the vision of the company became very clear.”

Ajay Banga, CEO, Mastercard1

Although news headlines warn established companies that they must “disrupt or be disrupted”, the meaning of digital transformation continues to elude most business leaders. Does it mean becoming a social network like Facebook, an information platform like Google, a booking exchange like Uber, or a messaging service like WeChat? What examples exist of successful digital transformations, and what do firms do to make it happen?......................................

• Why did the share price of MC rise faster than that of Visa between 2010 and 2017 even though Visa reported $6.3 billion more in revenues in 2017?
• Is it possible to compete with cash?
• What in MC’s approach to innovation works well? What does not work well?
• Should the Smart Stickers concept go ahead or be stopped?
• What is an ‘adaptive ecosystem’ and why did MC adopt such a strategy?
• What role did adaptive ecosystems play in MC’s transformation?

Answer 1

*****Please please please LIKE THIS ANSWER, so that I can get a small benefit, Please*****

Although news headlines warn established companies that they must “disrupt or be disrupted”, the meaning of digital transformation continues to elude most business leaders. Does it mean becoming a social network like Facebook, an information platform like Google, a booking exchange like Uber, or a messaging service like WeChat? What examples exist of successful digital transformations, and what do firms do to make it happen?

Ironically, when Ajay Banga became CEO of Mastercard in 2010, his aim was not to lead it through a digital transformation but to redefine its strategy. Mastercard had spentdecades battling Visa, but despite its best efforts remained in second place among global payment processors. Banga started out from the observation that 85% of payments world wide were made in cash, not cards.So while the payment itans were spending millions to get a bigger share of the remaining 15% of the market, the real blue ocean opportunity was competing with cash. It was this strategic insight that would transform Mastercard and, unexpectedly, contained the seeds of its digital transformation.

Why did the share price of MC rise faster than that of Visa between 2010 and 2017 even though Visa reported $6.3 billion more in revenues in 2017?

The shares of the company was high as compared to Visa, this is because of the ideas and strategic plan that has been thought by the CEO of the company. His views were very fine and long term oriented. This made the company grow and capture the large shares of the market as the focus was to introduce the digital transformation thought into existence when the demand for cashless processes increases. This is how company got the opportunity to get develop and tap the market at the time when the demand for the digital functioning was very high

Is it possible to compete with cash?

Competing with cash based market was one of the biggest challenges that company faced. It is not easy for the company to change the thought process of the people that cashless cards instead of using cash is also an alternative is the best option. People feel more secure in using cash and cheque and understood in the case study. This is the major reason which made the company to take the initiative of digital transformation late. Henceforth, it can be understood that competing with cash is not an easy task where people still are relying on cash based transactions. The people of society are very rational and they think and favor what suits them best. This is the major challenges and issue.

What is MC’s approach to innovation works well? What does not work well?

The innovative approach of the company in relating with the smart stickers was the success factor. It has been seen in the case study that company’s team was awarded with the orange box tag, which means that the firm is having opportunity to reach one step ahead to red box within coming 60 days. This is one of the favorable things that had happened with MasterCard. This part of innovative approach has worked well. But at the same time the commercial lens of smart sticker idea was not as effective as it was planned. Seeing through commercial lens was not clear also the value for it was not clear which went wrong for the company.

Should the smart sticker’s concept go ahead or be stopped?

The overall, quality of the smart sticker was found good but the commercial lenses were not supporting the innovative idea in the market. This did not worked well, therefore as per the feedback of the innovative approach, it has been understood that the concept must not be preceded further and has to be stopped. Company should come up with more and new innovative approach that could be used effectively by the customers. Continuing the approach as per the scenario did not feel to be done, instead it has to be stopped and worked on some new and innovative approaches.

What is an adaptive ecosystem and why did MC adopt such a strategy?

The adaptive ecosystem is one of the innovative approaches that have been introduced by the company which helps in collaborating with different companies and making them get involved in such an ecosystem suitable for their working culture. With this the companies can come up with different solutions for the problems that they are facing or may face in the coming time. This is strategy was basically introduced by the company so that the uncommon partners can be able to adapt the ecosystem and be able to create solutions for different adverse and crucial situations. This strategy has really proven to be supportive and very effective for the business to sustain and survive in the competitive market.

What role did adaptive ecosystems play in MC’s transformation?

The adaptive ecosystem has played an essential role in the growth and stability of the MasterCard Company. This has provided pathway for it to get into digital transformation world which is the current trend of the market. The company got success and was get adapted by the market people for their cashless transactions. This is one of the prime and most important changes that took place in the company that has helped it to meet the market trend and build trust among the customers as well.

*****Please please please LIKE THIS ANSWER, so that I can get a small benefit, Please*****