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Most digital innovations fail when they transition from the exploring to the scaling stage. We describe how freeyou, the digital innovation spinoff of a major German insurer, successfully scaled online-only car insurance, focusing particularly on how it managed the IT-related challenges. The stark differences between the stages required very different approaches to application development, IT organization and data analytics. Based on freeyou’s experience, we provide recommendations for successful transitioning from exploring to scaling.
By 2019, Germany-based Kärcher, “the world’s leading provider of cleaning technology,” had turned its professional cleaning devices into IoT products. The data generated by these IoT-connected cleaning devices formed a key ingredient in the company’s ongoing strategic shift in its B2B business: Kärcher was transforming from a seller of cleaning devices to a provider of consulting services in order to help professional cleaning companies improve their cleaning processes. Based on interviews with seven IT- and non-IT executives, the case illustrates how the company learned to generate value from IoT products. And it demonstrates how a family-owned company transformed its organization in order to be able to more effectively develop and provide IoT products, while adding roles, developing technology platforms, and changing organizational structures and ways of working.
AUDI AG has historically focused on producing and selling premium vehicles but has begun to experiment with providing mobility services, built around car sharing. Its response to the so-called sharing economy addressed strategic and transformational challenges. Strategically, the company pursued additional sources of revenue from targeted, premium mobility services, rather than the less segmented services provided by competitors such as BMW and Zipcar. AUDI AG also transformed its organizational structure, processes and architecture to balance autonomy for innovation and integration for competitiveness.
IT platforms as the foundation of digitized processes and products are vital in a digital economy. However, many companies’ platforms are liabilities, not strategic assets because of their complexity. Consequently, companies initiate IT complexity reduction programs. But these technology-centric programs at best provide temporary relief. Soon after, companies’ platforms become just as complex as before. Based on four case studies, we identify three non-technical drivers of platform complexity: (1) Lacking awareness of consequences business decisions have on platform complexity, (2) Lacking motivation to avoid platform complexity, (3) Lacking authority to protect platforms from complexity. We propose measures to address these drivers that can help achieve more sustainable impact on platform complexity: (1) Removing information asymmetries between those creating complexity and those dealing with complexity, (2) Redefining incentives to include long-term effects on platform complexity, (3) Redressing power imbalances between those who create complexity and those who have to manage it.
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.
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.
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 use of digital, IT-based components in physical products is becoming increasingly relevant in practice. Surprisingly, the strategic impact of these "digitized products" has not received a lot of attention in IS research so far. Extant papers on the topic rely on ambiguous terminology (e.g., "smart products", "cyber-physical systems", "digital product-service systems") and underlying concepts differ widely. Based on an extensive literature review, this article provides an overview of the different terms and identifies five conceptual elements that form the building blocks of digitized products in research: "hybridity" (i.e., the combination of digital and physical components), connectivity, smartness, digitized product-service bundles (servitization of digitized products), and digitized product ecosystems. The implication for practitioners is that each element comes with different managerial challenges that companies need to address when incorporating the respective element in their products. The research implication is that each conceptual element is supported by different theoretical streams.
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.