Turbocharge your company’s digital strategy with these two experiments
From Facebook to 3D printing to self-driving cars, products powered by digital technology are transforming the world. Companies that keep pace in their own fields must be constantly experimenting.
The right digital tests can help companies see early trends, reassess current assumptions, and drive future business models. But with limitless options about what experiments to run and what variables to tweak, how should companies determine their best next steps to drive digital transformation?
Focus on two, says Venkat Venkatraman, author of The Digital Matrix and David J. McGrath Professor of Management at Boston University Questrom School of Business. His research shows that companies should concentrate on a balanced pair of digital experiments: those that complement their current business models and those that challenge them. “The former gives you early indications of how you might positively embrace those ideas,” he says. “The latter points to warning signs to consider.”
Experiment 1: Complement your business model
Top companies have long found ways to embrace digital experiments that could complement their existing business models — even if their core business seemed outside of the digital world.
For example, Nike was exploring the digital realm as far back as 1987, when it first introduced a device called Monitor — a paperback-sized technology that runners strapped around their waist to calculate their speed. Later, it tested branded sports watches and heart rate monitors. Eventually, the company found a hit with Nike+, a partnership with Apple’s iPod that allowed runners to stream music and collect data about their runs on Apple devices.
Under Armour, meanwhile, started out as a clothing company known for its sweat-wicking fabrics. It added heart-monitoring straps that users could attach to its shirts. But CEO Kevin Plank studied the digital horizon and saw the value of online communities including LinkedIn and Facebook. Could his company take cues from them? He hired engineers and app developers, and ultimately developed a connected fitness community with more than 150 million active members.
These examples showcase the way that these companies were able to test ideas to refine their own product offerings.
Your company can use these examples as templates in its own digital experiments, says Venkatraman. “Scan your own industry and others to understand how incumbent companies in different industries have been working through ways of accepting and absorbing digital functionality,” he says. “Such assessments can help you develop deeper, more focused insights about how experiments at the edge of traditional business models are being pursued.”
Experiment 2: Challenge your business model
Today’s business playbooks were written with an eye for what has worked well in the past. But good leaders also know that what worked yesterday might be out of date in the digital age. They know that if they’re not willing to develop a digital strategy that tests the status quo, they may ultimately be put out of business by startups or digital behemoths.
Ford, for example, has developed more than two dozen strategic experiments to understand how digital technology might disrupt the transportation industry. This includes everything from remote control cars to smartphone apps designed to find open parking spots. The company is open to the idea that it may ultimately be an organization less focused on physical vehicles than on software and services.
Similarly, GE is focused on the way that it can integrate technology into its products as part of the “Internet of Things” movement. Its leaders are looking at ways to create smart machines that collect data and use software to analyze and customize products for individual customers.
The larger lesson? Leaders who understand where the world is headed can prepare for it, says Venkatraman. “The future is not an extrapolation of the past,” he says. “Past success does not guarantee future success and growth, and reinvention is necessary, now.”
Want to learn even more about how your company can take advantage of digital shifts? Enroll in BU Questrom’s digital strategy certificate program, “Digital Strategy: Designing Your Winning Playbook.”
In 2 days, learn the fundamentals of digital transformation from noted expert Venkat Venkatraman. Guest speakers include Georges-Edouard Dias, Co-founder and Chief Strategy Officer at Quantstreams and former Chief Digital Officer at L’Oreal, Rick Chavez, Partner and Americas Head of Digital Strategy Acceleration at Oliver Wyman, and Martin Nisenholtz, founding CEO of New York Times Digital.
Venkat Venkatraman is one of the most cited researchers in strategy and management. His recent book, The Digital Matrix: New Rules for Business Transformation Through Technology, was described by Ginni Rometty, Chairman, President, and CEO of IBM as “invaluable for all leaders, whether of established institutions or born-on-the-cloud startups. It is nothing less than a roadmap for the next era of business transformation.”
Related Stories
Five Big Ideas for Reimagining Healthcare Post-Coronavirus
Questrom Magazine Extra: In this Q&A, Questrom Magazine talks with Jonathan Woodson and Anita Tucker about improving healthcare coverage, fixing supply issues, and tracking future outbreaks.
Professor Jay Kim Receives the 2022 DSI Best Teaching Case Studies Award
Last month at the 2022 Decision Sciences Institute (DSI) annual conference, Dr. Jay Kim, Associate Professor of Operations & Technology Management, received the Best Teaching Case Studies Award for his paper, "The Global Rush to Produce Covid-19 Vaccine."
Tips for winning VC funding
Greg Stoller shares takeaways from a student VC (venture capitalist) competition.