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By integrating its previously separate insurance, banking and investment products around customer life events (e.g., buying a car, getting married or buying a house), USAA is able to deliver a superior customer experience. To achieve the integration, USAA had to re-architect its business by redesigning structures, roles, incentives, processes and IT systems. The USAA case provides four principles for architecting a business to provide superior customer experience, which will become increasingly important in the digital economy.
The digital economy has created intense demands for innovations. Companies are responding in part by creating new digital products and services to meet increasing customer expectations.
MIT CISR findings indicate that product variety is NOT directly related to firm performance, and IS related to increased difficulties for costumers and employees.
The MIT Center for Information Systems Research surveyed 255 executives in 2015 to investigate how companies are managing business complexity. This report details the findings from our analysis of the survey data:
1. Some product complexity adds value, some does not. Specifically, companies with more links (aka integration) in their product and service portfolio are higher performing. - 2. Product variety makes it more difficult for costumers and employees to get things done. These customers and employee difficulties impair a company's performance. - 3. Companies that excel at making it easy for employees and customers to get things done differentiate themselves by applying a set of complexity management practices around enterprise architecture, role reconfiguration, and the use of metrics and incentive systems.
Based on these findings, we recommend that companies make product complexity a strategic chois, invest in the abovementioned complexity management practices, and use costumer and employee dfficulties as key metrics for product innovation.
The proliferation of convergence of digital technologies SMACIT (social, mobile, analytics, cloud, and Internet of Things) has created significant threats and opportunities to established companies. Business leaders must rethink their business strategies and develop what we refer to as a digital strategy. Our research shows four keys to successfully defining and executing a digital strategy:
1. zeroing in on a customer engagement or digitized solutions strategy to guide the transformation, 2. building operational excellence, 3. creating a powerful digital services backbone to facilitate rapid innovation and responsiveness, and 4. ensuring ongoing organizational redesign. A list of publications from the research is provided at the end of this document.
In its 100+ years of company history, IBM reinvented itself multiple times. In the last 20 years, IBM had shifted from individual products to integrated solutions and moved to become a globally integrated enterprise with standardized processes. In 2014, the expanding adoption of social, mobile, analytics, and cloud (SMAC) technologies generated excitement in the industry. IBM believed these technologies presented a huge growth opportunity. Simultaneously, management viewed SMAC technologies as disruptive forces demanding transformative changes to how IBM worked. And introducing new ways of working to 400,000 employees in 175 countries was a daunting task.
Based on personal interviews with 17 IBM business and IT executives, the case illustrates organizational challenges of introducing current technologies that even providers of these technologies face – in other words, when they “eat their own cooking.” It demonstrates the difficulties large companies face when implementing technologies that students use daily and take for granted.
The digital economy poses existential threats to — and game-changing opportunities for — companies that were successful in the pre-digital economy. What will distinguish those companies that successfully transform from those that become historical footnotes? This is the question a group of six researchers and consultants from Boston Consulting Group set out to examine. The team conducted in-depth interviews with senior executives at twenty-seven companies in different industries to explore the strategies and organizational initiatives they relied on to seize the opportunities associated with new, readily accessible digital technologies. This paper summarizes findings from this research and offers recommendations to business leaders responsible for digital business success.
Started as a mono-line focused purely on savings, in late 2012 ING Direct Spain was becoming a full-service bank. To this end, the bank had substantially increased its product- and channel-portfolio. ING Direct Spain originally provided "simple", "good value for money" products in an "easy to deal with" way at low cost supported by a direct model. But with the growth in its product portfolio during the previous decade and the ambitious goal of becoming a full-service bank, an increase in complexity seemed inevitable. Like many businesses in the global, digital economy, ING Direct Spain found it needed to decide which complexity created value for its customers and which one not. It also learned that IT can contribute to complexity and/or help manage complexity.
This case offers a close look at challenges of growing a company by increasing product complexity to provide comprehensive yet simple services.
As "the most international company on earth", DHL Express promised to deliver packages between almost any pair of countries within a defined time-frame. To fulfill this promise, the company had introduced a set of global business and technology standards. While standardization had many advantages (improving service for multinational customers, faster response to changes in import/export regulations, sharing of best practices etc.), it created impediments to local innovation and responsiveness in DHL Express' network of 220 countries/territories. Reconciling standardization-innovation tradeoffs is a critical management issue for global companies in the digital economy.
This case describes one large, successful company's approach to the tradeoff of standardization versus innovation.
THE PROBLEM: Companies create problems for customers and employees when product innovation goes unmanaged. Eventually, excessive operational complexity hurts the bottom line.
THREE SOLUTIONS: Focus on product integration, not product proliferation. Make sure your product developers work closely with customerfacing and operational employees. And settle on a high-level purpose that can guide decision making.
New digital technologies present both game-changing opportunities for—and existential threats to—companies whose success was built in the pre-digital economy. This article describes our findings from a study of 25 companies that were embarking on digital transformation journeys. We identified two digital strategies—customer engagement and digitized solutions—that provide direction for a digital transformation. Two technology-enabled assets are essential for executing those strategies: an operational backbone and a digital services platform. We describe how a big old company can combine these elements to navigate its digital transformation.
Royal Philip's goal was to use innovation to improve the lives of three billion people a year by 2025. To reach that goal, the company was shifting from selling medical products in a transactional manner to providing integrated healthcare solutions based on digital health technology ("HealthTech").
This shift required a dual transformation. On one hand, the company needed to transform how healthcare was conducted. Healthcare professionals would have to change the way they worked and reimbursement schemes needed to change to incentivize payers, providers, and patients in vastly different ways. On the other hand, Philips needed to redesign how it worked internally. The company componentized its business, introduced digital platforms, and co-created solutions with the various stakeholders of the healthcare industry.
In other words: Royal Philips was transforming itself in order to reinvent healthcare in the digital age.
To deliver on a digital value proposition, companies must fundamentally re-architect. In other words, they must redesign their processes, systems, roles, data, and habits to allow them to iteratively create, enhance, an replace digital offerings. This briefing examines how Royal Philips is transforming its value proposition - and its entire company - to seize the opportunities presented by digital technologies.
Successful digital business strategies rely less on strategic analysis and big bets than on experiments and learning. Consider, for example, that Airbnb grew out of the belief that people would pay to sleep on air mattress on a stranger's floor. Similarly, Instagram started as an app for checking in and hanging out with friends (and sharing pictures) that proved complicated to use. Twitter's founders had first tried a podcasting platform, Odeo, which Apple made obsolete with iTunes. AUDI AG had to kill of its "share a car with five friends" app before rolling out more successful mobility services in a number of countries. The digital successes did not grow out of a comprehensive upfront analysis. Digital strategy emerges from an idea - often, not a particularly good idea.
"Designed for digital" offers practical advice on digital transformation, with examples that include Amazon, BNY Mellon, DBS Bank, LEGO, Philips, Schneider Electric, USAA, and many other global organizations. Drawing on five years of research and in-depth case studies, the book is an essential guide for companies that want to disrupt rather than be disrupted in the new digital landscape.
Successful digital offerings are created at the intersection of what technologies can deliver and what customers want and will pay for. That point of intersection, however, has proved to be elusive. To find it, companies must experiment repeatedly, cocreate with customers, and assemble cross-functional development teams - and the insights gleaned along the way must be shared internally.
In this article, we discuss how several of the nearly 200 companies we've studied have built and exercised these capabilities. We also take a close look at how one company, Schneider Electric, is using them to acquire and share customer insights.
Established companies are facing two transformations involving digital technologies: becoming digitized and becoming digital. The platforms enabling these transformations are fundamentally different in their purpose, target state, success metrics — and especially, in the key responsibilities of senior leaders. Because of these differences, companies will need to apply new rules new roles, processes, metrics, and norms — to the new digital platform. To develop new rules leaders should (1) separate the teams working on the digital platform, (2) allow digital platform leaders to experiment with new rules, and (3) identify new leaders and coach them to succeed with new rules. Given the time it takes to establish new rules, companies need to start breaking old rules now.
How companies use digital technologies to enhance customer offerings - summary of survey findings
(2019)
Digital technologies are transforming how companies do business. Social, mobile, analytics, cloud, and the Internet of Things - which together we refer to as SMACIT - along with artificial intelligence, blockchain, and an ongoing procession of new technologies create new capabilities : specifically, ubiquitous data, unlimited connectivity, and massive, affordable processing power.
In 2017, Philips' goal was to use innovation to improve the lives of three billion people a year by 2025. To achieve that, the company was shifting from selling medical products in a transactional manner to providing integrated healthcare solutions based on digital health technology. Based on our interviews with 23 executives at Philips, the case examines the two directions of the transformation required by this shift: externally, Philips worked on transforming how healthcare was conducted. Healthcare professionals would have to change the way they worked and reimbursement schemes needed to change to incentivize payers, providers, and patients in vastly different ways. Internally, Philips needed to redesign how its employees worked. The company componentized its business, introduced digital platforms, and co-created integrated solutions with the various stakeholders of the healthcare industry. In other words: Philips was transforming itself in order the reinvent healthcare in the digital age.