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By 2019, German-based Kärcher, "the world's leading provider of cleaning technology", hat turned its professional cleaning devices into digital offerings. The data generated by these 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.
The case illustrates how the company learned to generate value from digital offerings. And it demonstrates how a family-owned company transformed its organization in order to be able to more effectively develop and provide digital offerings, while adding roles and developing technology platforms, as well as changing structures and ways of working.
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.
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.
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.
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.
PI Chile, a subsidiary of the Principal Financial Group, adopted a new digital vision in 2017 and initiated a transformation of the company with the goal of using digital offerings to help many more customers reach their financial goals. To do this, PI Chile had to wrap its legacy applications in APIs, build a reusable digital platform for the new offerings, and learn what kinds of tools and information customers would and could use. In addition, PI Chile was experimenting with entirely new ways of working for those staff who were developing the new offerings. The company's new accountability framework sought to empower teams to make key decisions quickly. In a short time, PI Chile was well on its way to becoming designed for digital.
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.
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.
Recent MIT CISR research found that an obsessive focus on innovation is a characteristic of CIOs of top-performing firms. There are now more ways than ever that a firm can be disrupted by and disruptive with digital innovations. Indeed, a growing number of firms and individuals are using increasingly powerful digital technologies and figuring out ways to develop better products and services, better customer and employee experiences, and new business models. The new digital imperative is to compete with more types of digital innovations - and IT units must refine approaches to producing them. Based on an in-depth caste study, this briefing takes a look at how German car manufacturer AUDI AG has expanded its portfolio of digital innovations.