Category: Digital Business

What can enterprise architecture do for your organization?

Posted by MIT Sloan Executive Education - 17 days ago

As the business world continues to digitize and grow in complexity, many businesses will need to avail themselves of “enterprise architecture”—the process of defining every aspect of an organization’s structure for the successful development and execution of strategy. Enterprise architecture may not be synonymous with enterprise transformation, but it is a means to that end.

There are some significant challenges to leveraging enterprise architecture for success. By definition, architecting a business is a vast undertaking; designing every aspect of an organization’s structure including people, processes, strategies, and accountabilities requires time, resources, and education. The biggest challenge blocking most businesses from prioritizing enterprise architecture is its emergence as a new discipline. Because it is new, most organizations don’t know what enterprise architecture is and/or how to utilize it. 

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The ups and downs of dynamic pricing

Posted by MIT Sloan Executive Education - 1 month and 17 days ago

In 2013, fourteen of the top 30 global brands by market capitalization were platform-oriented companies—companies that created and now dominate arenas in which buyers, seller, and a variety of third parties are connected in real time. These leaders include companies such as Akamai, LinkedIn, Airbnb and Uber. (See our earlier blog posts on Airbnb and Uber). 

Of those brands, Uber in particular is known for its use of dynamic pricing—price fluctuations driven by supply and demand. For example, on a rainy Saturday night, Uber may raise its fares because its drivers are in high demand and more consumers opt for car services over public transportation or a walk in the rain. Why is this not considered price gouging, you ask? Because Uber is transparent about their dynamic model—the app alerts users that the current rate is higher than usual, and by how much, giving the consumer the option to decline and find alternate means of transportation.

As Uber investor and board member Bill Gurley points out in his blog post on Uber’s dynamic pricing model, this strategy is not new. Hotels, airlines, and rental car companies have long relied on dynamic pricing. This is why your flight during the Thanksgiving holiday will cost more than a plane ticket purchased almost any other time of year.

Of course, dynamic pricing can also benefit the consumer. Hotels loathe empty rooms. The same pricing model that raises the rates on some days also allows hotels to offer last-minute deals to fill inventory. And in those cases, the consumer wins.

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Redefining the digital divide

Posted by MIT Sloan Executive Education - 2 months and 20 days ago

For most people, the “digital divide” represents the gap between those who have access to information and communications technologies and those who don’t. It deals with socioeconomics, infrastructure, fairness, and opportunity. Although that digital divide is certainly not to be taken lightly, another one is emerging in the world of business. This new digital divide is the widening gap between businesses that understand how to drive true value from new digital technologies, and those that don’t. 

While companies in the technology and software industries certainly understand how to “be digital,” the story is different for the other 90%+ of businesses in the economy. For them, only a relative minority “get” digital.  “Digital mastery matters,” said George Westerman, Research Scientist at the MIT Sloan Initiative on the Digital Economy (IDE).  “It matters in every industry. And any company can build the DNA of digital masters if its leaders have the will to do so.”

Westerman, along with Didier Bonnet, Senior Vice President at Capgemini Consulting, and MIT IDE Principal Research Scientist Andrew McAfee, studied more than four hundred global firms to understand how they transformed their organizations through digital technology. These businesses include some surprising—and some less surprising—names, including Asian Paints, Burberry, Caesars Entertainment, Codelco, Lloyds Banking Group, Nike and Pernod Ricard. Westerman, Bonnet, and McAfee call these companies “digital masters.” They present these visionary organizations, along with an extensive step-by-step transformation playbook, in their forthcoming book, Leading Digital: Turning Technology into Business Transformation.

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Will online reviews require proof of purchase?

Posted by MIT Sloan Executive Education - 3 months and 17 days ago

The success of recommendation and review websites and applications such as Yelp and TripAdvisor are undeniable. As of the end of July 2014, Yelp had a cumulative 61 million reviews. These reviews are quite powerful: studies have found that 88% of consumers trust them. Surprisingly, the vast majority of reviews on Yelp receive four or five stars (out of five).

But mention Yelp to a chef or restaurateur, and their reaction is likely to be much less positive. One of the issues is that of “cyber-shilling,” where consumers are paid to write reviews—positive or negative. And there have long been rumors and anecdotes of Yelp forcing businesses to pay to suppress negative reviews; this accusation has come up again in a recent shareholder lawsuit against Yelp. The outrage amongst the hospitality community in particular is so strong that a group of French restaurateurs and hoteliers is petitioning France’s Minister of Commerce to effectively ban all defamatory reviews.

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The digital business transformation imperative

Posted by MIT Sloan Executive Education - 6 months and 5 days ago

“What exactly does a digital business transformation mean?” asked Michael Krigsman, CEO of Asuret, Inc., and moderator of the "CIO, CMO, CDO Perspectives on Digital Transformation" panel at The 2014 MIT Sloan CIO Symposium.

Each of the panelists—F. Thaddeus Arroyo, CIO of AT&T Services, Inc.; Robert Tas, CMO & SVP of Pegasystems; Tanya Cordrey, Chief Digital Officer (CDO) of Guardian News and Media; and George Westerman, Research Scientist at the MIT Center for Digital Business—had his or her own take on the digital transformation facing most businesses today. 

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No substitutions allowed

Posted by MIT Sloan Executive Education - 8 months and 20 days ago

One famous scene from the movie Five Easy Pieces shows Jack Nicholson ordering a side of whole-wheat toast with his omelet at a diner. He’s then informed that the system doesn’t allow sides of toast. So he orders a chicken salad sandwich on whole-wheat toast—without butter, lettuce, mayonnaise, and chicken.

Nearly everyone recognizes what’s wrong with the “system” in this scenario—the customer doesn’t easily get what he wants. But the traditional approach to “fixing” this might be to simply add more options for what the customer might want. That change would impact the diner’s ordering system, the inventory needed in the kitchen, and even how the kitchen staff cooks. So sometimes it’s easier to simply say, “the system doesn’t work that way,” or, in other words, “no substitutions allowed.”

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What we’re learning from the Target data breach

Posted by MIT Sloan Executive Education - 9 months and 9 days ago

Data breaches in the news over the past two months have affected millions of people; 110 million Target shoppers and 1.1 million Neiman Marcus customers. Retailer Michaels Stores is investigating a possible data breach. In addition, some Marriott Hotels, Holiday Inns, Sheratons, and other sites managed by White Lodging Hotels were also the target of cybercriminals. As these retailers, businesses, and industry experts brief Congress on the situation, consumers are learning more about the implications of cybercrime. The overall takeaway is that data breaches are common and will continue. In fact, as The Washington Post reported in Experts warn of coming wave of serious cybercrime,” “Only 11% of businesses have adopted industry-standard security measures … and that even these ‘best practices’ fall short of what’s needed to defeat aggressive hackers.”

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Is there a hole in JetBlue’s digital strategy?

Posted by MIT Sloan Executive Education - 11 months and 4 days ago

Winter weather—and its associated travel woes—are nothing new to the Northeast or the Midwest. But the early storm (Hercules) of 2014 saw a nearly unprecedented level of cancellations and chaos days after the actual storm. Those most impacted were passengers of JetBlue. The airline blamed both the weather and new FAA rules that extended the hours of rest crews needed between flights. Not only has this incident exposed some core airline operations issues—not planning for the extension in required rest hours and not having the flexibility to move aircraft—but it has also exposed some holes in JetBlue’s digital customer service.

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