Today’s business leaders would love to find themselves ahead of “the next big thing.” While it may appear that luck and the fickle winds of customer preference rule the day, there is a proven path to market leader status. The catch: effectively managing and analyzing the ever-expanding volumes of data from within the organization and its ecosystem of business partners.
Too often, the potential of that data to drive innovation goes untapped because organizations lack the capabilities to generate meaningful insights from their data. And, they are not preparing themselves to take advantage of the flood of data still to come from the more than 27 billion Internet of Things (IoT) devices expected to be in use by 2020 based on the latest research from IoT Analytics.
This impedes their ability to know what customers want, why and when they buy (or don’t) and what they like (or dislike) about their company’s offerings. When companies are data-rich and insight-poor, innovation is starved. Ideas for new products, services and processes are episodic and often miss the target.
And there is another often overlooked element – imagination. When companies are confined by the traditional boundaries of their industry or business models, innovation takes a further backseat.
Four Key Steps to Drive Innovation
The good news is there are clear ways organizations can reshape their businesses to harness data effectively and generate insights – amplified by human ingenuity – to foster innovation. In fact, there are four strategies businesses must employ to achieve successful digital transformations that deliver new levels of business value in today’s Business 4.0 world.
1. Adopt a “Machine First” Approach
Merely digitizing existing businesses processes and products is not enough. Digital transformation is about shaping your business around data and digital technologies, as well as aligning human resources to best leverage those insights. Often, the way organizations need to operate involves a cultural shift that evolves business processes and teams to drive better outcomes.
This means creating a “Machine First” culture where mundane and monotonous tasks are automated to free up human capital to focus on the new creative work—including translating data-derived insights into innovative ideas for new products and services, and better managing constant change. And, by building on a foundation that combines technologies that deliver connectivity, speed and scale – cloud, artificial intelligence (AI), IoT – transformation initiatives can deliver unprecedented outcomes.
For example, a large American biotechnology and agrochemical company launched a cloud analytics platform called “science@scale” to facilitate collaboration between the company’s scientists and data experts. Work that was previously completed in months is now done in hours, saving the company an estimated $15 million in operating costs and boosting revenue by $17 million.
2. Reimagine Business Models
Building on a Machine First foundation, the next step is exploring new business models to compete in a digital ecosystem.
At the heart of this process is a data-centric mindset and a clear recognition that analytics and data form the wellspring of insights that lead to new ways of delivering customer value. Companies that are leading the charge are forming unconventional partnerships to reimagine products and services, expand to new markets and customer segments and generate new revenue streams.
The opportunities to evolve business models are near-unlimited. For example, insurers are partnering with car manufacturers to use telematics data to innovate auto insurance and encourage safer driving behaviors. In another real-world example, a global engine manufacturer now digitally tracks the post-sale performance of its more than 120,000 engines in service. It has been able to take a machine first approach and proactively alert trucking customers about preventive maintenance, significantly increasing the revenue from after-sales services.
3. Deliver Products and Services That Bring the Model to Life
Capitalizing on a new, data-driven business model requires innovating products and services to take advantage of emerging digital technologies and trends to drive unparalleled customer experiences.
Take the example of stationary bike maker Peloton, which offers a paid subscription service offering live-streamed exercise classes to users of its bikes. The product has quickly evolved beyond just the $2,000 bike (analog), to include the streaming service (digital). The combination creates an enhanced customer experience that has delivered more than 100% annual revenue growth for Peloton since launch.
The bottom line is product or service development and delivery should be viewed as a continuous process, driven by an agile approach that aims to improve and expand existing products and services, while innovating new ones.
4. Build Intelligent Business Processes to Support It All
Creating a machine first enterprise includes embedding business processes with intelligence, driven by data and analytics, to support continuous improvement. The focus always should be on delivering superior customer experience and measurable business outcomes.
For example, multiple Business 4.0 technologies are converging to reshape the supply chain—synchronizing manufacturing, distribution and order fulfillment in ways that make it possible to produce customized products for individual consumers. AI is helping call center staff and field technicians predict equipment maintenance needs, improving the run-time of equipment and customer satisfaction. Data-driven chatbots are handling routine customer inquiries, enabling skilled customer experience staff to work on higher priority issues. These smart, connected processes reduce the need for human intervention in areas where there is low value and customer return. The opportunities to reimagine business processes can be found across the enterprise, from R&D and talent management to finance and accounting.
Digital Transformation Starts At the Top
The organizations today generating game-changing insights from data operate quite differently from their industry peers. That difference begins at the top, with a Board that understands the art of the possible with data and with a leadership team who is hungry for the right type of data and understands that these insights are the driving force behind successful business transformation.
The good news is you don’t have to be a “digital native” like Google, Netflix, or Uber to systemize innovation through digital insights. All it takes is a Machine First foundation and a willingness to reimagine your business model, products and services, and support structures. Start small and build on early successes. But don’t wait too long or the opportunities missed will be tremendous.
About the author: Dinanath Kholkar is the vice president and global head of analytics and insights in business and technology services at Tata Consultancy Services. In this role, Dina is responsible for formulating the units strategy across TCS’ global footprint. In a global career spanning 27 years of IT/ITES experience, he has held leadership roles across multiple services, technologies and industry verticals. He has been responsible for managing the relationships and delivering services to many TCS customers. Dina is actively involved in promoting diversity at the workspace through DAWN, iExcel and other D&I initiatives at TCS including the units participation in the UNs HeforShe campaign. Under his leadership and in partnership with GE and Aramco, TCS BPS runs an All Womens Centre for BPS at Riyadh, KSA.
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