Digital Economy Success Factor #2: Product Enhancements
(Part 2 of 4, originally published on HBR.org)
For several years now digital has been an appendage to “business as usual.” But recently, digital transformations have reached the tipping point where digital has become “business as usual”; the tail has become the dog. Digital is not just part of the economy — it is the economy.
It’s an economy of limitless opportunities for some and disruption and displacement for others. Many firms — such has Kodak, Blockbuster, Sears, and Blackberry — were unable to adapt, while others are thriving. According to MIT Sloan research, the companies that are adapting to a digital world are 26% more profitable than their industry peers.
How are these thriving firms reinventing themselves, their supply chains, and their marketplaces? For an upcoming MIT symposium on the topic, we’re focusing on four main themes: customer expectations, product enhancements, collaborative innovations, and organizational forms.
Thriving companies are also integrating related products and services into sophisticated industry solutions, while extending and restructuring industry boundaries, essentially creating whole new industries. Michael Nilles, recently promoted to Schindler’s chief digital officer, offers a great example. Schindler has expanded its business beyond its elevator and escalator products to become a mobility solutions company, offering its technology in a variety of industries including health care, hotels, offices, malls and retail outlets, and sports arenas and expos. A major enabler in this evolution was the development of smart elevators and escalators that constantly collect sensor data and transmit it over the internet to Schindler’s back-end systems, where the data is analyzed, generating maintenance notifications long before an actual breakdown. These notifications, enriched with expert repair advice, are then dispatched in real time to Schindler’s service applications, where technicians are scheduled as appropriate.
Beyond individual products, companies have been harnessing the power of platforms to connect buyers and sellers (e.g., Etsy, Priceline, and Apple’s App Store), hosts and visitors (e.g., Airbnb and HomeAway) and drivers with riders (e.g., Uber, Lynx, and RideScout). Some platforms, such as Uber, are giving rise to a new on-demand economy that’s redefining the nature of work.