The role of digitalization in the tutoring educational sector

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The role of digitalization in the tutoring educational sector

Master Thesis

MSc. Business Administration – Digital track

University of Amsterdam

By

Adrien Bouscasse (11410469)

Under supervision of Maarten de Haas

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Statement of Originality

This document is written by Student Adrien Bouscasse who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

This research aims to identify underlying factors for digital business innovations. A framework developed by Nylen has been applied to the Dutch tutoring industry. A qualitative study through semi-structured interviews has been conducted with key industry players. Research findings illustrate that the framework is a suitable starting point to identify digital business innovations in the tutoring industry. Certain elements are however less relevant and applicable than others, while new variables have been identified. Furthermore it is concluded that the maturity of the market and firms play a significant role in identifying factors determinant to digital business innovations. Keywords: Digital business innovations, Nylen’s framework, tutoring industry, semi-structured interviews, exploratory study

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Acknowledgments

I would like to start off by thanking my supervisor Maarten de Haas for his patience, understanding and critical thinking throughout this whole process. His guidance throughout this thesis has permitted me to successfully finishing my thesis. Secondly, I would like to thank all the participants who took the time to give me the necessary insights and opinions. While not all insights have been mentioned or utilized

throughout this thesis I would like to add that it has only increased my interest in this field of study.

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As Ernst & Young (2016) states in their report titled “The Digitization of Everything”, “the proliferation of digital channels, platforms and devices has produced a generation who are born plugged in”. The phenomenon of this new generation Y being constantly plugged in has brought tremendous challenges and opportunities for commercial purposes. As Beffa (2017) highlights in his book “To transform or to die” “the next big challenge and priority for all types of companies and their leaders is how to create value from the numeric transformation”. Touching all sectors, this digital transformation is significantly lacking in the educational sector, as Buckley states: “education processes and structures have barely changed”

(Buckley, 2015: Gandhi et al, 2016). This due to the apparent gap caused by the lack of standard educational systems in meeting the needs and expectations of students (Crotty, 2016).

Ample research has been devoted to defining the relationship between technology and in-class education. Conclusions being consistent in terms of technology having a positive influence on students’ performance (Higgins, 2012; Lei & Zhao 2008). As Oliver & Trigwell (2005) state the confusing debate lacks accepted correct definitions of e-learning, blended learning, digital education etc. This thesis will not be

concentrating on the validity of certain terminologies, but for consistency reasons will be mentioned.

This thesis will focus on the role of digitalization in the tutoring industry, rather than in-class learning. As highlighted by The Global Industry Analysts, the global tutoring industry will surpass the $100billion turnover by 2018 (Crotty, 2016). In the

Netherlands private tutoring spending by households has increased from 26€ million to 189€ million in 20 years time (CBS, 2016).

The role of digitalization of educational serviced companies in The Netherlands has not yet been analyzed. My research will investigate and discuss the factors that play a role in the decision-making process of digital business innovations in the tutoring industry. My goal is to expand and criticize a founded framework and propose a more practical approach to business strategy.

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This exploratory study will build upon the framework proposed by Nylen &

Holmstrom regarding digital strategy innovation in the context of the tutoring sector. This shall shed light on what factors enhance and constitute the digitalization

processes companies undertake. I will then test this model through questioning key industry players.

The factors that constitute the framework proposed by Nylen & Holmstrom are grouped within three main dimensions: product, organization and environment. Each dimension is split into secondary factors. These secondary factors are then defined by ways they can be measured. I hope to produce insights about the applicability of the framework to the tutoring industry. Besides analyzing the presence of the factors, their measurability and applicability for businesses will be discussed.

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2. Literature review

This study aims to analyze factors determinant for commercial firm’s digital strategy in the Dutch educational sector. The literature review consists of two parts: relevant definitions and the factors that constitute the framework proposed by Nylen &

Holmstrom (2015). I have chosen the framework proposed by Nylen & Holmstrom as the backbone of my thesis in analyzing the digitalization of the tutoring industry. For consticency reasons, and as Nylen was the main author of the article I shall refer to it as Nylen’s framework throughout the thesis.

2.1 Definitions relevant to digital education

I first set the stage by referring to the definitions that form the building blocks of this thesis.

Throughout the paper I shall refer to commercial companies, as companies organized and structured to make a profit (Cambridge, 2018). This limits the scope of the study to companies providing a service and product with a profitable objective. I therefore exclude NGO’s (non-governmental organizations) and NPO’s (non-profit

organizations) and state-owned companies and their initiations in education.

Secondly, scholars have interchangeably used digitization and digitalization in an attempt to define the transformation of industries with regards to digital technologies. To clarify this, as the world’s leading research company Gartner defines it

“digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities: it is the process of moving to a digital business” (Prause, 2016). On the other hand, digitization is the “process of changing from analog to digital form” (Prause, 2016). Digitalization encompasses a larger aspect of the company, it is therefore used throughout this thesis rather than digitization.

Digitalization rather than digitization leads to digital innovation. Digital innovation defined as the new combinations of digital and physical components into novel

products (Yoo et al, 2012). This definition focuses on the product innovation aspect of digitalizing, while the process and organizational innovation are also important. With regards to the scope of this thesis I choose to broaden the definition to incorporate

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aspects of process and organizational innovation. Digitalization, rather than

digitization, is relevant for this thesis as it encompasses the whole value chain of the company. I refer to process and organizational innovations only in the digital context.

The role digitalization takes in the context of education has offered quite the academic confusion on what terms to use. Oliver and Trigwell (2005) debate the usage of

blended learning throughout academic research as “blended learning… like so many terms within this field it remains ill-defined”.

Utilizing Whitlock and Jelfs (2003) definitions, blended learning takes on three forms: integrated combination of traditional learning with web-based online

approaches, creating an e-learning platform whereby various mediums and tools are used, and different pedagogic approaches irrespective of the technological medium used. The second definition has been further developed to modes of delivery end-users instead of only the e-learning environment (Singh, 2003). The definitions originate from four concepts: combining or mixing web-based technology to accomplish an educational goal, combining pedagogic approaches, combining any form of instructional technology with face-to-face instructor led-training and combining with actual practical tasks (Driscoll, 2002).

Another approach is developed by Valiathan (2002), regarding blended learning as a learning type being skill-driven, attitude-driven or competency-driven. Skill-driven learning focuses on the self-capacity to learn and further develop skills with external support. Attitude-driven learning focuses on the various forms of delivering

information to develop behavior and competency-driven learning focuses on performance enhancement through support tools in the context of workplace

capacities. As Oliver & Trigwell (2005) argue, these learning methods differ in terms of end-consumer rather than the choice of method of transferring information. The authors strongly criticize the scope in which blended learning is utilized, stating it is only from the perspective of teachers and used to “redeem the millions of pounds invested unwisely in purely online training”.

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I choose to disregard this critique as it highlights the problems of higher education (in-class) rather than the digitalizing products and services of the tutoring industry. Moving on, I focus on the four concepts developed by Driscoll (2002), giving insights on the various forms a blended learning approach can take.

Besides blended learning, another form education can take is purely online, known as e-learning. The Department for Education and Skills (2003) broadly defines (e-learning) it: “someone is learning in a way that uses information and communication technologies.” These ranges from pre-school children playing an interactive game to group work being done over the Internet.

The European Commission refer to e-learning as the “use of new multimedia

technologies and the Internet to improve the quality of learning by facilitating access to resources and services as well as remote exchanges and collaboration” (Debande & Friebel, G, 2004). In order to make e-learning possible the following four were distinguished: infrastructure and equipment, high-quality educational multimedia services and content, training services and dialogue and cooperation. This clearly shows that e-learning goes beyond the usage of technology to learn, but that it needs effective management in order to be implemented correctly. The definition by the European Commission is further developed and gives more insights on how

e-learning is broken up in different usage forms. Being interested to find out the whole spectrum of methods of e-learning and for what reasons companies opt for a certain type of e-learning, I choose to utilize the latter definition.

This thesis focuses on commercial companies and their decision-making about digital strategy, defining the playing field they operate in revealed to be difficult. Multiple terms have been used to define this field ranging from the tutoring industry, shadow industry to extra-curricular education. For consistency purposes I shall refer to it as the tutoring industry, defined as an industry where “more able students or

professionals helping less able students to learn in in cooperative working pairs or small groups” (Goodlad, 1998). In the context of this thesis the tutoring industry encompasses all companies providing services in exam training, homework

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“mass-market consumer software for education that takes inspiration from video games” (Deterding et al, 2011). Bluntly said, the tutoring industry is any form of educational support a commercial company may offer to schools or directly to students and parents.

2.2 Digital strategy innovation and factors of the Nylen Framework

I now review the academic reasoning behind the underlying framework utilized in this research paper proposed by Nylen & Holmstrom (2015). Nylen & Holmstrom

developed the framework as a reflection of managers’ increasing interest in being able to handle and manage digital products and services. All industries are undergoing a radical change due to the influence of digitalization, and so new methods of

management in dealing with processes and innovations are changing. These new types of innovations are considerably different from the analogous innovations that were present during the Industrial Era. Academics are therefore forced to revise the underlying components of innovation in this new context (Henfridson et al., 2014; Yoo et al, 2012). These new digital products are creating new methods of innovation that are more dynamic and harder to control (Lee & Berente; 2012, Yoo et al., 2012) .

Exploiting digital business innovations have been key in gaining strategic competitive advantage in homogenous markets, making it highly relevant to understand how they are best managed (Nylen & Holmstrom, 2015). The framework aims to establish a clear method for firms and managers to keep track of the innovations and how to measure its progress and process. The framework has been developed through

assessing prior academic research on digitalization and business innovation. From this research Nylen & Holmstrom have created a set of factors that can be seen as a

checklist to keep in mind and constantly evaluate over time.

The framework infers the crucial importance of three dimensions regarding digital strategy innovation, namely product, environment and organization.

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Figure 1: Digital strategy innovation framework (Nylen & Holmstrom, 2015)

The framework consists of dimensions that are further developed and segmented in dimensions, which in turn are made measurable in elements (see Figure 1 – horizontal axis). The three dimensions are split up into different areas. The first, product is divided into two aspects: user experience and value proposition. Secondly, the environment is analyzed through digital evolution scanning and lastly, the

organization is split up into skills and improvisation (as can be seen in Figure 1).

The performance of a company can be measured through a grading system. This system proposed by Nylen, a Likert scale, mean firms are to grade each element from a scale 1 to 5. Thereafter Nylen advises that firms should devote more attention to low-scoring elements. The following Section shall review each dimension and area that forms the framework.

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2.2.1 Product

2.2.1.1 User-experience

As stated in the framework, user-experience is “offering high levels of usability, possess carefully designed aesthetic properties, and evoke engagement.” (Nylen, 2015)

Agreeing on a common definition when referring to user-experience has not been easy. It ranges from broad definitions as a “persons’ experience at the moment experienced” (Whiteside & Wixon, 1987) to traditional usability, hedonic and affective aspects of using technology or simply the beauty of it. Besides the origin of user-experience, there is much confusion about how user-experience should be managed (Forzilli & Battarbee, 2004; Tractinsky et al 2006).

Nylen & Holmstrom break down user-experience in three elements: usability, aesthetics and engagement. This is derived from the three facets proposed by Hassenzahl & Tractinsky (2006): beyond the instrumental, emotion/affect and the experiential. Hassenzahl and Tractinsky stresses the importance that user-experience is optimized by a synergy of all three facets.

Its usability gives insights in how users go about physically using the website: is it smooth? Can you easily find what you are looking for? Are you able to get where you are in minimal amount of clicks? This is defined by Hassenzahl & Tractinsky (2006) as the ‘instrumental’. Aesthetics refer to the beauty and emotional state a product evokes when used, referred to by Hassenzahl as ‘beyond the instrumental’ and

‘emotion and affect’. Finally the interaction (the experiential) that it produces with its user enables firms to “tap into values that can make the experience of their digital products and services meaningful to users”. Nylen defines this as the engagement element. (Diller et al., 2005; Nylen & Holmstrom, 2015).

Research (Forrester – research and advisory firm) investigated the effective use of digital user-experience, its conclusion was that 97% of websites fail to have a strong user-experience. Reasons range from text legibility and use of space to task flow, being more usability and aesthetics reasons (Brokaw, 2012). On the other hand, it was

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concluded that the failures could easily be reversed by simple changes (font size, foreground-background contrast). Measuring and quantifying user-experience enables firms to understand how to improve it (Albert & Tullis, 2013). This illustrates the urgency and relevancy on how user-experience innovations needs to be better managed, making it the key dimension in Nylen’s framework.

This thesis focuses on how companies perceive and manage user-experience. I shall also analyze the decision-making process in improving and adapting user-experience. It will be an added bonus to gain insights on what specific metrics are used in

measuring user-experience, and what tools are used to improve it. 2.2.1.2 Value proposition

The framework refers to a company’s value proposition by the “customer

segmentation including strategic pricing and positioning of the product portfolio, dynamic bundling of product units, and carefully negotiated commissions to channel owners” (Nylen & Holmstrom, 2015). Digitalization has become a tool for firms to better segment markets and offer differentiated pricing, this serving as a catalyst for digital innovations (Chesbrough & Rosenbloom, 2002).

The first measurable factor proposed by Nylen is customer segmentation. In order to exploit different customers, it must be able to distinguish the different markets and customers it can serve. As put by Guray et al (2003) the more customer-oriented strategy known as Customer Relationship Management is central to corporate strategy as “new technologies now enable companies to target chosen market segments, micro-segments or individuals more precisely”.

However marketeers fail by misidentifying what products are to be bundled and which can’t be (Yang & Lai, 2006). Online marketing tools allow marketeers to not only analyze the final shopping behavior of customers but also their journey and decision-making process of selecting products. Getting insights on the shopping journey of consumers can translate to firms in possible pricing opportunities (Yang & Lai, 2006).

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Besides capturing value from consumers is the ability to negotiating and

communicating with suppliers. The digital era has brought a completely different approach to dealing with suppliers and partners. As Nylen & Holmstrom (2015) put it “the Apple store and Google Play both take a 30% commission on sales, while e-commerce storefront services vary in their commissions”. The more intermediaries there are between products and consumers, the more a company will fail in exploiting the maximum of its value. A trade-off is to be made by calculating the value gained from utilizing an intermediary. This should be weighed against the costs commissions incur. In the hospitality sector for example “hotels will depend less on third parties to sell their rooms…commissions and other fees charged by intermediaries will

decrease, thus increasing their profits” (Gazzoli et al., 2007).

Capturing the value proposition is therefore dependent on two interactions, consumers and suppliers. On the consumer side, a firm needs to identify who their market and consumers are in order to properly align it to its pricing strategy. On the supplier side, the more the intermediaries the more commissions are lost out. Companies need to identify what inputs are really needed in order to provide its digital products.

2.2.2 Environment

2.2.2.1 Digital evolution scanning

The digital environment is constantly changing and evolving, whereby “hardware circuits and lines of code are configured to act continuously in new ways” (Nylen & Holmstrom, 2015). The framework separates the type of digital evolution scanning in three aspects: devices, channels and behavior.

Devices encompass the hardware that is utilized by consumers or the firm, ranging from memory, processors to PC’s laptops and mobile. Channels are the software that allows the activity to take place known as platforms (apps, websites,

logistic/administrative programs). Nylen & Holmstrom stress the importance of companies to continuously scan the digital environment in order to create new combinations of existing components. This is done through scanning competitors in the firms own sector as well as other sectors. A comprehensive scan of the users behavior can give insights to future shifts in digital technology usage.

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The ability to manage this as a firm is dependent on, the firm’s own size as well as the technological complexity and environmental uncertainty (Tidd., et al, 2006). The larger the environmental uncertainty the larger the priority for a firm as the market is more disruptive and likely to change. Firms have the challenge to understand what technology innovations are relevant for their own usage, using for example s-curves to identify at which innovative technologies take over the usage of existing ones. It does not only have to be about creating an implementing new technologies, as Tidd et al (2006) and Nylen & Holmstrom (2015) state, it can be the implementing of an existing technology in a new market that can drive innovation. Scanning other

industries that utilize platforms can give considerate insights in developments in their own industry.

The framework proposed by Nylen explains and highlights where digital innovations are to take place, but does not refer to how these innovations can best be identified and implemented. Tidd et al (2006) creates parameters in how firms should manage and deal with this external type of change that affects firms. However structuring uncertainty and innovations is difficult, resulting in a sparse amount of literature.

2.2.3 Organization

2.2.3.1 Skills

Becoming and remaining active in a digital environment, means as an organization has to be able to adapt and embrace new challenges and opportunities. A company may well be structured to operate in the current situation, however how will it react when it needs to evolve, change and adapt to new technologies (be it hardware or software). As Christensen (1997) states “core competencies of incumbent firms can actually stand in the way of innovating when entering new markets”. Nylen & Holmstrom (2015) distinguish this relationship with organizational change through three elements: learning, roles and teams. Learning is crucial in determining how and why new technologies can be adopted to result in innovations (Nylen & Holmstrom, 2015). The organization should support and stimulate learning, both on-the-job and off-the-job. Organizing trainings to new employees of established digital skills can be

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the catalyst to new skills being developed. A firm should assess what skills can internally be learnt or acquired externally (Tidd., et al 2006).

Besides the individuals or firms ability to learn new skills and acquire them, is how they are controlled: what roles do individuals undertake to stimulate digital innovation in the best of ways? Purely having and gaining knowledge is not enough to sustain digital innovation, roles must be set out and constantly reviewed in order to maintain the correct innovative direction (Nylen & Holmstrom, 2015). Once the role of employee’s established they are directed in “dynamic and innovative” teams in order to crystallize potential innovations.

Nylen & Holmstrom acknowledges that large firms have more capacity to share in-house knowledge than smaller firms. Innovation knowledge can be shared and learnt by others, however it is dependent on how the firm provides the right channels and setting for this knowledge to be transferred. As Tidd en al (2006) the “existing channels and flows [of knowledge] may not be appropriate to support innovations”, and firms need to manage this learning process in order to have sustainable digital innovations (Nylen & Holmstrom, 2015). Tidd en al (2006) further distinguish that the ability to learn is dependent on the firm’s competencies as “where these are weak, a firm normally has little choice but to acquire from the outside, at least in the short-run”. This meaning that besides establishing the learning environment, creating teams and assigning roles the company must first analyze its own competencies and

probabilities of developing digital innovations. 2.2.3.2 Improvisation

Regarding improvisation within the organization Nylen & Holmstrom (2015) state that “managers need to ensure that they provide organizational members with an improvisational space where structure and flexibility is balanced… dedicated time is given.. and efforts are coordinated to deal with overlaps and waste”. Moorman and Miner (1998) define organizational improvisation as an action, deduced from a meta-analysis of previous research, “that whether or not occurs depends not only on what happens but also on the temporal order in which things happen”. It is said to of a semi-ordered activity, as if it were to be defined in a formal setting it would no longer qualify as improvisation (Weick, 1993). What started to be a key aspect for start-ups,

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due to the increasing role of technology, has become central to all types of companies (Moorman & Miner, 1998). Technology has served as a real catalyst for altering their organization’s memory and access.

Nylen & Holmstrom (2015) further dissect improvisation in three elements: space, time and coordination. Dougherty & Dunne’s (2012) have developed a three-fold strategy in for improvisation to be fruitful. The first is that a firm must create the environment of an open space. Secondly, it must be partially structured in order to be productive and thirdly it must keep in mind objectives and potential outcomes in order to be effective (Weick, 1993). It is apparent that this coincides with the space, time and coordination elements proposed by Nylen & Holmstrom. Constructing partially structured open spaces refers to the importance of some type of coordination in order to direct innovations to added value. Besides creating the right space is assigning the right time. The notion of time has been argued in terms of its effectiveness in leading to innovations; as digital technologies accelerate the rate at which innovations prevail. On the other hand time is a restrictive factor as it is coupled with financial spending as innovations must be well designed, built and deployed to be successfully

implemented (Yoo et al., 2012).

Avital & Te’eni (2008), do however stress that improvisation by itself can’t be the source of productivity and efficiency to innovations. They stress that effective improvisation lies first in the capacity and skills of employee’s to do so. There is therefore a distinctive relationship between skills and improvisation, it being complementary and not mutually exclusive.

Effective improvisation has been clearly adopted; Google being the front-runner herein with their “20% time policy” advocating that employees are encouraged to spend 20% of their time working on new projects1

. A former employee however says that it is hardly applicable in reality due to priorities (Mims, 2013). This illustrates that attempts in quantifying and measuring improvisation efforts in the practical setting are delicate.

1_{This is where they have so-called been able to develop Google News, Gmail and AdSense (D’onfro,}

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Improvisation is a clear catalyst to innovations, but how it can be best managed and implemented by companies remains unclear. Academic research has been aimed to define what drives improvisation, while measuring it has not been explicitly addressed.

Sub questions

Concluding the literature review, the proposed framework of Nylen and the

underlying relationships between technology and education, my research question and sub question can be formulated as followed:

Main Research Question: What factors underline digital strategy innovation in the tutoring industry?

Sub questions:

-‐ How are the dimensions and areas of the Nylen framework present in the tutoring industry?

-‐ How does the size or phase of a firm affect its digital business strategy? -‐ How are these factors prioritized and measured?

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3. Methodology

In this Chapter the data collection and the analysis thereof is discussed. Firstly, I describe the research design, giving insights on what and why the data was collected. The following Section will cover how the data is analyzed. Analyzing qualitative research can take on various forms, therefore explaining my choice of using the Gioai methodology of coding.

3.1 Research Design

In order to analyze the factors that play a role in the decision-making process with regards to the digital business innovations in the tutoring industry, qualitative research design is used. The research is conducted by the method applied in multiple case studies in order to gain significant insights on the tutoring industry. A multiple case-like study has been chosen as I am able to then draw comparisons and similarities against the factors proposed in the Nylen framework (Nylen & Holmstrom, 2015). In this form the research is both exploratory as explanatory in order to deduce the relationship between digital innovation and the tutoring industry.

The field of digital business innovations being relatively new, it has not been considerable tested in a practical setting. Conducting a multiple case study will give exploratory findings that can add to the digitalization and innovation debate. It shall further strengthen or critique the applicability of the framework. All firms being active in the tutoring industry and operating in a digital manner makes the stage specific (Yin, 2003).

3.2 Data collection method

A qualitative research can be conducted in various ways, I decide to utilize the proposed methodology by Gioai (2013) as this inductive research will convert data into useful, coherent and relevant findings.

As Gioai explains: “stating and presenting a theoretical framework in the face of respondents can be quite confronting” (Cloutier, 2013). I will therefore not explicitly name them, but rather use them as a guidance.

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Figure 1: Gioai coding methodology

The qualitative data was collected between June 2017 and December 2017 in the form of 10 open-ended interviews with Dutch commercial companies operating in the tutoring industry. In the Appendix 1 and 2 an overview can be found of the

respondents and the companies they work for. The duration of each interview ranging from 40 to 75 minutes. It must be noted that all interviews were conducted in the interviewees’ native language (Dutch) in order to retain as much information. All references made throughout the Results Section have been translated. The interviews were held face-to-face using qualitative interviewing methods in order to provide the right structure to the interviews.

The interviews were conducted in a semi-structured manner regarding the factors proposed by the Nylen framework. Being semi-structured interviews it enabled the interviewee to go in-depth in matters he/she felt relevant, in order to “obtain both retrospective and real-time accounts by those people experiencing the phenomenon of theoretical interest “ (Gioia, D., et al, 2012). The interviews were prepared by

utilizing interview guidelines, where questions were not mandatory but present to remind myself what topics to cover. This structure allowed the focus to be maintained

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on the established variables in the literature review, while giving room for the interviewee to mention and go in-depth in potential new variables.

3.3 Data analysis method

As mentioned the Gioia coding methodology was used for this thesis. After the first three interviews the first-order concepts were attributed through open coding (Strauss & Corbin, 1998). Open coding meaning the interview transcripts were conducted without a structured coding scheme, yielding 143 codes (being the first-order concepts). It was only thereafter that the factors proposed by the Nylen framework were put against these codes in order to form the second-order themes. The first-order concepts that were coded were then grouped within the pre-defined factors by Nylen to form the 15 second-order themes that constitute the Nylen framework. Within these 15 second-order themes the first-order concepts were grouped to similarities.

Two additional second-order themes were created as they didn’t fall into the pre-defined categories while multiple interviewees mentioned them. Another ten additional second-order themes were formed but judged irrelevant to the research question at hand. This methodology was utilized for the remaining interviews making the coding scheme clearer and easier throughout the process. The last seven

interviews gave rise to two additional second-order themes, the process of going back to the first interviews was executed to incorporate these new themes (using Nvivo software permitting for changes in coding to continuously be made to fortify). Going back to the first interviews to re-scan for new themes is what gave additional

qualitative rigor, which is further discussed in the following Section.

3.4 Qualitative rigor

Qualitative rigor is established, according to Gioia et al (2013) through the phases of the coding methodology. The enhancement of qualitative rigor comes from this process of establishing 1st

order concepts through open coding, then relating them to 2nd

order themes. Rigor is further strengthened when continuously going back to prior coded interviews to update them regarding new codes and insights, known as

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Qualitative rigor is determined by the number of interviews conducted and the homogeneity of the group (Gioia et al, 2012). The number of interviews is said to be twelve or higher to obtain saturation of information, I feel that the 10 interviews conducted are specific and targeted enough to reach that threshold of saturation (Marshall, B., et al, 2013). The importance lies in defining specific themes to be questioned and have a thorough methodology. Research conducted by Guest et al (2006) illustrated that thorough pre-defined themes, 6 interviews yield 75% of the codes (based on Cronbach’s alpha) were present and 92% within 12 interviews. This relatively low number of observations is only possible within a homogenous group, being the case in this thesis (Guest et al, 2006).

All research is subject to some form of bias, qualitative research having its own approach to it (Morrow, 2005). Throughout this thesis I have kept in mind the personal bias I may bring and the bias of respondents. To minimize this, I have conducted an audit of every respondent prior to conducting the interview. This included checking the websites and other online materials regarding the firm, and personal information if active on professional networks. I acknowledge that biasness is inevitable in qualitative research (Morrow, 2005), but aim to minimize that through asking objective questions during the interviews. By objective questions I mean to limit persuasive language hitting on a certain direction, in order to increase

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4. Results

The previous Chapters were dedicated to setting the stage for conducting research. In this Section I present the results from the interviews after the coding methodology was applied. This Section objectively present’s the results based on the variables established in the literature together with additional variables that have come out of the coding process. The Chapter is structured by the three main areas of the Nylen framework, whereby the elements of the framework were mentioned often enough to present them individually.

4.1 Product

The first area of focus is the product, and how its user-experience and value proposition are viewed by firms in terms of business innovations.

4.1.1 User-experience

User-experience is split up by the three elements of measurability: its usability, aesthetics and engagement.

Usability

Whether it is a platform, website, or videos shown through an outsourced channel all respondents stress the importance of usability as a driver to innovations. All firms providing their products and services through a platform, being eight out of ten respondents, stress usability as their number 1 objective “The word dashboard and platform means everything and nothing.. it can be anything ranging from what your mobile phone shows.. the importance lies in how it can be used and what you can do with it” (Respondent 3).

Besides the core importance of usability in terms of selling the product, it is also a way to distinguish itself from competitors. This has been highlighted by Respondent 9 by stating: “The look and feel is one of our Unique Selling Points. We focus and are known for our look and feel” (Respondent 9). Respondent 3 acknowledges this gap in the market by saying: “I have seen first-hand how hard to it is to provide a technical sound product that is easily usable – especially for companies going from analog to digital” (respondent 3).

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Constraints arise when firms outsource their platform and become dependent on external parties. “We use YouTube to provide our video’s, it was the cheapest and best way to share our content. You are however restricted to their usability and look and feel. At first it does save you a lot of time” (Respondent 10). It is clear that a trade-off was made between the freedom of choosing functionalities and the financial investment against it. The financial aspect of creating an own platform and having the freedom in its usability was mentioned, but more in terms of efficiency “We invest a lot in our dashboard.. other companies invest a ton of money for endless training to show how it works and make it understandable… we aim to make it as

self-explanatory as possible, a company shouldn’t depend on trainings to explain their products” (Respondent 3). Respondent 1 also comments on the financial return of having a well functioning platform, “We believe that a good product will sell itself.. hence going back and deciding to invest more in the product itself”.

The respondents that do not utilize a platform, Respondents 5 and 6, do however acknowledge that if it were the case that usability still is a crucial factor. It is one of the reasons why they have chosen not to use a platform to selling digital products. “The product needs to work well; being digital you will always be dependent on the technical side: is the network working? Are the devices fully charged? Can the users use it without thinking? There are a lot of hurdles to overcome” (Respondent 5).

Getting to a well functioning product and service clearly takes time and the ability to change. Most companies mention the importance of feedback loops, however all of them observe more effort should be put in. “At the end of the day we are still under-testing the usability of the platform.. need to use ‘screen-casts’ to get more data about how our platform is used.. and translate that to A-B testing”

Respondent 8, still in the process of creating its platform, has its strategy already laid out: “We first want to test the platform internally on users we already have, then bring it to the public to become market leader” (Respondent 8). This illustrating the advance analog companies has over firm’s starting digitally, as they have a sample size they can test on without considerably affecting their reputation. Sample size has a direct link to innovating in usability states Respondent 3: “you can not really test and

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analyze based on 5 children, you need a significant pool of observations to make changes”.

Usability is the core of the product in a digital world, all respondents acknowledge this importance. It not only enables consumers to use it but also has been highlighted as a differentiating factor. The trade-off between financially investing in usability innovations and its return has been mentioned by some respondents. Besides the trade-off, most companies do observe they could and should be investing more in it. Aesthetics

Companies mention usability and aesthetics in a complementary and synergetic manner: one goes hand in hand with the other and is often referred to as the “look and feel” (Respondents 1,2 5, 7, 8, 9 and 10).

In a digital age, where the tutoring industry is selling its digital products to the younger generation, aesthetics naturally takes a central role. How they go about the aesthetics differs per respondent. Respondent 2 has a rather direct and simple view on aesthetics in the sense that “information has to be centralized and have a clear layout”.

More than half of the respondents however use it as a differentiating factor: “We see ourselves as the Netflix of the educational and training market, the look and feel has to be easy and approachable” (Respondent 4) “We have a fulltime UX designer who focuses on our look and feel and tests different layouts” Even though they have outsourced their platform respondent 7 saw that both they and their provider laid importance in its look “Our provider wanted constant feedback on how the platform looked and felt to users”, however this feedback “had to do less with the design of the platform – the design already looked pretty slick” (Respondent 7).

Some respondents depended on their internal skills for aesthetics testing and development, while others took on another approach. Respondent 1 mentioned the role other firm’s play: “we have looked a lot at other providers. We look to see what type of design they use”.

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Aesthetics, together with usability, is of importance as it is the first contact moment users have with the product. Respondents confirm the importance of aesthetics, but were less convinced of the need to put time in it compared to its usability. As has been mentioned for usability it can also serve as a differentiating factor, especially in the comparison between analog companies and digital companies.

Engagement

There is a difference in opinion whether digital interaction is beneficial or detrimental to the engagement of users. Respondent 8 states that: “we have found out that in most cases students have more concentration when digitally learning – in a class with other students you become distracted easily” (Respondent 8). Other respondents rather claim that “the problem is that they quickly turn to using social media.. their concentration span these days when using digital tools lasts 3 seconds.. especially when intrinsically not motivated… this is the greatest enemy to e-learning by far” (Respondent 6). The interaction being beneficial or not is dependent on the ability of a student to concentrate and to be motivated.

While the effectiveness is questioned, all respondents aim to increase engagement in the future. They see it done by innovating the digital products themselves. “You can use online interaction in the sense of gamification. You would get more insights on someone’s profile and users would use your product longer” (Respondent 6).

Besides gamification and adaptive platforms, respondents see opportunities in terms of customizing the product. This is referred to by Respondents 4 and 7 as individual pathways: “We create learning-pathways for certain pre-defined skills. If you want to become a marketing expert, we have an already set pathway for you to get there” (Respondent 7).

More than half of the respondents see additional value in the interaction between users. “We find it important to create an environment where students can interact to share their thoughts on certain topics – QA Section for each other” (Respondent 2). Feedback, as respondents explain, allows firms to understand where and how engagement can be increased.

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Respondents see engagement as a reason for increasing innovations. Various forms have been mentioned: adaptive learning, customized learning, gamification and adding more content. It is not only seen as an interaction between the firm and the user but added value is seen in the interaction between users as well. This leading to keeping users longer on their platform.

4.1.2 Value proposition

The value proposition Section is split up by the three elements: segmentation of the market, bundling of products and pricing, and commissions.

Segmentation

Respondents identify two ways to segment the tutoring industry. One is based on segmenting by content and the other based on consumers.

All respondents have stated that aligning their product to a specific user group is crucial. Digital products are specific, and can not be identical throughout user groups (Respondent 3). In the education sector different ages demand different approaches, according to Respondent 2. User groups are split up by the level of education, whether middle and high school or college/university. More than half of the respondents have started in middle-school, to then expand to high school students. They opt for this strategy as the content for middle-school students is easier to tutor at first (Respondent 5).

Seven out of the ten respondents mentioned the importance in truly understanding and classifying end-users before engaging in any activity. “That every company is active in a form of digitalization is clear. However, firms tend to forget to formulate who their end-users are and what digital tools best fit them” (Respondent 6). Besides the ability to segment the market before creating the products, is the ability to segment current users. As Respondent 2 explains: “We noticed that people were using our content and not adding on to it… we introduced a system where people could access more content if they participated by adding own content or inviting friends”

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Splitting content is not the issue for the tutoring industry, but rather how to crystallize it into value and ultimately revenue. “We have noticed that segmenting based on content works psychologically against buyers. You do not want give the impression that they are missing content” (Respondent 6).

Firms properly segment the market when creating their digital products. Respondents have defined a clear and niche market when entering the market. Segmentation is distinguished by the level and age of students. Segmentation in terms of content is not applicable for the tutoring industry as users want access to the complete platform. Bundling

It does not surprise me that the difficulty to segment markets has an effect on the bundling of products, being limited for the tutoring industry. Aligning the right pricing structure with the digital products is quite a challenge, resulting in a trial-and-error process as Respondent 2 explains. “We started off with one-time payments, per individual document, but soon saw that consumers aren’t always willing to take out their wallets”.

Firms ultimately step away from bundling and all opt for the same, offering the platform as a whole. “The true value lies in offering your whole platform at once… bundling is not possible, offering everything is what works” (Respondent 2). The only real form of differentiation is done through customized pricing. “The only real

pricing model we had was in customized offers to schools, dependent on how many products and services they want to use” (Respondent 6).

As a consequence to how the market is formed and segmented a bundling pricing strategy appears not to fit the tutoring market. Respondents have attempted to adopt different pricing structures but all fall back on the quite simplistic subscription model. Commissions

Respondents had a rather limited perception on commissions, most of them not even dealing with commissions as no intermediaries were present or needed. Most

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dealings with commissions. For the respondents that deal with commissions they take on two forms: as a revenue or as a cost.

Commissions can be a source of income when imposed on others making usage of the platform. This was the case for Respondent 8 stating that when the platform was going to launched a pricing model including commissions was a possibility. “We are not fully sure on our revenue structure. At the moment we want to charge a fix commission when a teacher wants to use our platform (around 6-12%)”. Another form of generating revenue through commissions is through advertisements.

Until he launches his own platform Respondent 10 is subject to commissions, or at least the loss of potential revenue. “I would like to create my own platform as I wouldn't have to deal with the restrictions imposed by YouTube. You can only earn so much as they retain a high amount from adverts”. The benefit of using a public platform as YouTube is that it does not impose a cost on using its platform.

Advertisements is however not a prevalent source of income in the tutoring industry, more than half of the respondents claiming it should not be a source of income: “we have tried putting adverts on our platform, however the revenue generated from advertisement is minimal.. and we do not see the link between education and external adverts…we find it ‘not done’” (Respondent 1)

Only two respondents (Respondents 3 and 7) were subject to costs, not because of intermediaries but rather marketing costs. Marketing costs come from advertising through social media channels “its worth the investment as you can specifically target your consumers using ‘look-a-like’ profiles, being profiles targeted based on your current consumer base” (Respondent 3).

Commissions can be a real cost for companies when dealing with intermediaries. For the tutoring industry in The Netherlands it is however not applicable in the sense that none of the respondents experienced a cost through commissions by intermediaries. The only form of commissions experienced as a cost was through social media channels to target a specific audience. It is rather a form of revenue, however revenue

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through advertisement commissions is not extensive in the sector. Education wants to stay “clean” and users don’t want to be bothered with external content.

4.2 Environment

The second area of focus is the environment, and how scanning the digital field is done by firms in terms of business innovations.

4.2.1 Digital evolution scanning

The digital evolution scanning Section is split up by the three elements: devices, channels and user behavior.

Devices

Almost all respondents have mentioned not having problems with the utility of devices but rather stress the importance of how they can be used. All respondents that work with platforms provide them on laptops and tablets. Half of them claim that the platform should be accessible on all types of devices. Only some have made the step to being active on mobile but results are mixed. “We have developed the app to be used on mobile, we do however see that students rather use laptops or tablets” (Respondent 2). Other respondents explain that mobile is simply used for other purposes: in checking results and progress, or for very specific tools such as word-learners.

Innovations in the market with regards to devices are rather specific: “We look at what is going on in the market, screens are getting bigger so we need the resolution to go accordingly” (Respondent 2).

The usage of devices has been mentioned by all respondents, however in terms of innovations respondents have been careful. The importance lies in making the product available, whereby tablets and laptops have a distinct preference by users. The usage of mobile phones has been assessed by most respondents, stating that its function lies in more complementary functions (progress and specific tools).

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Channels

From the interviews I identified two types of channels: usage of social media and the usage of search engines.

Online channels are a novel way to target and attract potential consumers, mainly through social media platforms and search engines. The strategy that firms undertake in using social media is explained by Respondent 7 as “a real trial and error method, you have to test different ways of targeting consumers. It really is learning by doing” (Respondent 7). Respondent 8 has acknowledged that using these channels efficiently requires the correct know-how and has therefore decided to “contact an external party to help us with our marketing. They will help us to profile ourselves better in the market”. This is due to the fact that a vast array of channels can be used, ranging from professional networks to social platforms.

Respondents 1 and 7 stress using search engines as another channel: “We have linked our websites to certain keywords so that if specific words are typed in to Google that we come up as one of the first results.” (Respondent 1). Respondent 1 and 7 do however state that the return on investment is key in this strategy. Besides the usage of online channels to target potential consumers, respondent 7 reminded that offline channels are still very efficient. The respondent stated that: as impressive innovations are in terms of targeting individuals, it must still offset the classical method in terms of return on investment (naming LinkedIn to be too expensive for start-ups).

Channels strike a great deal of interest as our respondents have proclaimed. Digital channels allow for more specific targeting of potential consumers. A strategy in using digital channels has not been defined, rather a trial-and-error to find out what yields the highest conversion rate is put forward. One crucial component respondents have mentioned is having the knowledge to exploit channels and keeping in mind the return on investment.

Behavior

Scanning user behavior in order to gain insights on potential digital innovations takes on two forms according to respondents: analyzing potential/external users and

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Respondent 7 says a global approach should first be undertaken, by analyzing general trends in digital behavior of potential users. “In order to reach your consumers you have to understand what they use. Before everyone used Facebook, now you see how the younger generations are more active on Snapchat and Instagram”. Not adapting to changes in user behavior in terms of channel usage can result in wasted

advertisements. Analyzing potential users may be difficult, one way is analyzing what works with competitors and why users may be attracted to that. “We saw from a competitor that they showed the progress of students, and so we decided to use that as well” (Respondent 1).

Besides reaching potential users, some respondents state it is important to focus on providing the right service to current users: “Online education is not only about the content but more the personal approach” (Respondent 5). In order to gain insights on understanding the needs of consumers more than half of the respondents refer to having functioning feedback loops. “We actively ask for feedback. One of our Unique Selling Points is ‘we do it together’. This allows us to update our platform and be direct in link with what users prefer or would rather experience” (Respondent 10).

Greater factors are also playing a role in why users are not transitioning to the online learning environment. Respondent 10 questions the role large corporates play in this shift “The market is having a hard time to grow as the analog publishers still have a lot of power. There is some lobbying taking place to slow down this digitalization process”.

User behavior with regards to potential innovations takes on two approaches, analyzing the current and potential users. Respondents identified this and all have created an environment current users to give feedback. The feedback that is given is then the driver for digital innovations (functionality changes for example). Potential users are harder to analyze, following general trends and competitors has been mentioned as a useful strategy.

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4.3 Organization

The third area of focus is the organization, and how managing its skills and improvisation creates opportunities for innovations.

4.3.1 Skills

The skills Section is split up by the three elements of measurability: learning, roles and teams.

Learning

The framework proposed by Nylen & Holmstrom refers to learning as an activity firms should promote continuously so that digital innovation can be stimulated. The interviews have given insights on how this process is undertaken. Most respondents state that learning is a crucial element to digital innovation, yet it takes on a rather sporadic process. “We expect that they are active in this industry out of interest, and invest free-time in developing like I do” (Respondent 9). Besides spending free time in learning, it is also the result of the nature of the firm. Eight of the ten start-ups state that the learning process is dictated by the phase in which the firm is in. “In the start-up environment you do not have access to seniors like corporates. You need intrinsic motivation to learn, while it is definitely expected you do. Start-ups simply do not have the budget to pay for learning workshops” (Respondent 9).

Respondents mention that there are two ways to learn: internally and externally. Internal learning comes from gaining knowledge from fellow employees to then implement them in novel ways. “While I was observing a colleague working on design, I realized I was capable of learning such skills” (Respondent 1). The external way of learning, by attending specialized trainings, is not a predominant occurrence in the tutoring industry. “Start-ups simply do not have the budget to pay for training sessions and skills” (Respondent 9) . According to respondent 10 the overall approach to learning is by doing, as it is when you encounter problems that creative and

innovative solutions arise.

Learning takes on two distinct forms: internal or external. Learning in start-ups is advised but strongly left to the motivation of individuals. Most respondents claim that learning is the result of encountering problems and solving them.

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Roles

Assigning digital roles in the tutoring industry is rather challenging. A third of respondents state that roles are impossible to assign when in the start-up phase. “As the company grows you start assigning roles that natural fit employees. At first we all work on the same things.” (Respondent 1). Roles are conjoint to the growth of the company, once scalability has been achieved firms are able and are obliged to

dedicate clearer roles. “We first were doing similar activities, my partner was a extra arms-length for me. Now that we have grown we have assigned clearer roles”

(Respondent 10).

Only one firm states having established roles from the beginning, coming from a well-thought strategic approach to how innovations and performance can best be stimulated. “We define roles and people are then assigned a specific role.” (Respondent 9). Respondent 4 mentions that the specific assignment of roles for digital innovations is tough due to communication and management issues: “Managing the technical guys can be harder as they tend to be less good in communication”.

Defining and establishing roles for digital innovation purposes in the tutoring industry is not a straightforward action. The size of the company appears to be a constraining factor in establishing them. As the company grows, firms are pushed and obliged to formulate clearer roles (Respondents 1, 2, 8, 9 and 10).

Teams

Establishing dynamic innovation teams apply to firm size. As respondent 1 states: “Specific teams within a start-up is difficult to have, this takes place when companies start to grow. We hired a development team as we were told it would help, but soon found out they were not as good as expected” (Respondent 1). Besides being dependent on the firm’s size they address the point that establishing teams does not imply good results.

Respondent 4, being in a larger company (60+ employees) does mention the

importance and influence making teams have: “we collect user information, then in teams of 5 IT specialists in quick sprints, we create functionalities based on that”

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(Respondent 4). The respondent makes a direct link between teams and innovations, whereby the process of quick sprints seem to be a catalyzer and determinant to potential innovations.

Forming a dynamic team is not an extensive topic in the tutoring industry, due to the phase companies find themselves in at the moment. Start-ups, composing of a

majority of the industry, do not have the capacity to form specific teams to undertake innovative actions.

4.3.2 Improvisation

The improvisation Section is split up by the three elements of measurability: space, time and coordination.

Space

Space is defined as a possibility and a constraint for firms operating in the tutoring industry. As is the case for forming roles and teams, allowing space for improvisation to employees is something all firms’ want but cannot always give. Space can have direct effects on generating innovations: “We give employees a lot of space to come up with ideas, we even have an online board to share them”.. “it must however be linked to a certain KPI and well thought out – we do have the last say in the matter” (Respondent 2).

Financial easiness is also stimulator for a high degree of improvisation: “As we did not have a formal investor, we had quite a lot of space to test ideas. Looking back we might have spend way too much money” (Respondent 1). On the other hand space can also be a constraint, in another context Respondent 10 states: “it’s annoying

sometimes when we are brainstorming and editors are in the same space… we can’t speak out freely.. we just have to accept that for now”.

Space is regarded by the respondents as an underlying factor for stimulating

innovations, but is not always experienced or apparent in the prevalent start-up firms in the tutoring industry.

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Time

Space and time are closely linked, as giving space to employees automatically means allowing time for improvisations to be thought of. Respondent 6 agrees with

Respondent 2 concerning allowing space for technical employees to brainstorm but goes on to state: “however we do not have the time to let them brainstorm, daily activities always come in the way” (Respondent 6). As many respondents comment, time is the asset that plays the biggest role against them. “We would like analyze a lot more [data], in order to tests things but we simply do not have the time for it”

(Respondent 10).

The nature of the industry and size of the firm once again catches up with possibilities in terms of improvisation. Time is a real constraining factor in generating

improvisations. The growth of the company does however yield opportunities for assigning specific teams that can devote more time to digital innovations.

Coordination

Coordination in the tutoring industry is highly dependent on the type of firm and the type of managers. Respondents differentiate between formal and informal

coordination types. Respondent 2 says coordination is possible when the right tools are put in place. “We have an online board, the management board consisting of 4 people then assess the idea and decide whether to engage with one”. Establishing the right environment for improvisations to be thought of can facilitate the coordination of them.

Other respondents refer to coordination as a result of conversations taking place, and stating that: “like most start-ups our brainstorm sessions are not really coordinated, they come from spontaneous conversations regarding a certain topic” (Respondent 10). Respondent 7 mentions that when brainstorm sessions happen they also do not take a lot of time as decisions need to be made quickly. He makes the comparison that corporates undertake a whole different approach to these sessions, coordination is rather informal and dedicated to making quick decisions.

Respondent 3 says that coordination is the result of how a manager decides to relate with his employees “As a leader you need to trust in the capabilities of the people you

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hired, with some you learn to be stricter and some you easily give them more space – you become a manager”. Coordination is, in his opinion, is a form of trust that comes from experience.

Similar to the previous elements in the organizational Section, coordination is subject to the size and phase of the company. Respondents make a distinction between corporates and start-ups, whereby start-ups are less formal in their approach to coordination improvisation. A form of coordination is however preferred, especially for making quick decisions.

Additional Variables

This Section is devoted to additional insights respondents have given with regards to digital innovation and the process thereof. Four additional variables have been defined as relevant factors to digital innovation: setting priorities, scrum & iterative approach, collection of data, and reputation & brand image. While some of these may overlap with already defined variables I shall explain why they deserve separate attention. Variables were chosen if they were at least mentioned by half of the respondents.

4.4 Priorities

Setting priorities is crucial for any company, its necessary for maintaining an overview and gives direction to actions that need to be taken. More than half of the respondents comment on the phase in which they are in as a firm having an effect on what they are able to do. As Respondent 1 states: “there are so many things on our to-do list, it's a constant challenge to assess which ones have priority”. Respondents mention how they would desire to have more time to spend more time on all different types of aspects, leading to potentially greater innovations. Time and daily routines are however a constraining factor.

Respondents mention a rather detailed relationship between the size of the firm and the priority that accompanies it. At first companies “at first you focus on creating a product that users are willing to use and that works…. Then you focus on gaining a larger user base… then the product can be further improved as knowledge of user demand increases” (Respondent 1). This trade-off between gaining users and improving the product is something key for start-ups. As the company grows,

The role of digitalization in the tutoring educational sector