Empire Strikes Back by Youngjin Yoo | Weatherhead School at Case Western Reserve University

Empire Strikes Back by Youngjin Yoo

Posted 2.17.2021

Written by Youngjin Yoo

On November 12, 2019, over 10 million families signed up for Disney's new digital streaming service on the first day of service. Given that 60 million families in the US (165 million worldwide) subscribed to Netflix after 12 years of operation, this was a remarkable accomplishment by a legacy company. Smelling blood, investors on Wall Street dumped almost $8 billion worth of Netflix's stock on the day of Disney’s announcement. Today, Disney has over 73 million paying customers for its streaming service. Though still reeling from operational losses from its theme parks due to pandemic, Disney is poised to create new kinds of entertainment experiences by combining its digital streaming service and traditional physical theme park business—something its digital disruptors, like Netflix, cannot easily imitate. Watch out, Silicon Valley disruptors, the empire is striking back!

It is not just Disney flexing their digital muscle. At this year's CES, one of the main stories was how legacy companies like Walmart, Best Buy, and GM came out swinging their digital strategies.

As the economy recovers from the pandemic, 2021 will likely be marked as the year legacy companies got serious about their digital strategy and moved beyond small scale pilot projects. As most legacy firms were forced to accelerate the digitalization of their operations during the pandemic, they will come out with better digital muscle memory. Once the economy is fully open, legacy firms will be able to make deliberate decisions on how they choose to mix physical and digital modes of operations, giving them a new layer of options that they did not have before.

As the digital strategies at legacy firms mature, we also see the locus of digital activities begin to change. More firms are moving the digital responsibility into business units, indicating that "the digital" is no longer an option, but an essential way of doing business. CIOs who were shunned away from digital innovations are now increasingly taking important roles in designing and implementing enterprise-wide digital strategies.

As your digital journey continues to mature, what has worked for you when you started with digital transformation over two or three years ago may not be enough. In fact, the very formula that jump-started your digital journey can be the very reason why you cannot scale with your digital strategy.

This is precisely why xLab seeks to build a strategic partnership with your firmto learn and share our learning with you. Together with our members and partners, xLab continues to research how legacy companies thrive in this digital economy, amplifying their unique assets through the use of digital technologies.

Youngjin Yoo

Faculty Director, xLab

Elizabeth M. and William C. Treuhaft Professor in Entrepreneurship

Professor of Information Systems

Case Western Reserve University


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