Category: Digital Business

Bringing spice to platforms--literally

Posted by MIT Sloan Executive Education - 14 days ago

spices square

As a panel discussed during the MIT Sloan CIO Symposium this year, platform strategies are beginning to displace product strategies. Two of the three panelists came from newer businesses--Paddy Srinivasan, Vice President of Products for Xively, and Bryan Kirschner, Director of the Apigee Institute. Xively works with companies to build applications for the Internet of Things (IoT) and the Apigee Institute is a research and strategy organization that helps businesses succeed in the new digital world. The panel was moderated by Professor Marshall Van Alstyne, Research Associate with the MIT Initiative on the Digital Economy.

The third panelist, Jerry Wolfe, founder and CEO of Vivanda, has come to the platform business from a most unusual route; he was previously the first CIO at McCormick & Company. Yes, that McCormick--the spice company founded in 1889. After significant analysis of the current grocery store product ecosystem, Wolfe led an initiative at McCormick to develop FlavorPrint, an API-enabled, predictive food personalization platform.

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Why platforms beat products every time

Posted by MIT Sloan Executive Education - 28 days ago

MIT CIO

Is the product business model broken? According to Professor Marshall Van Alstyne, Research Associate with the MIT Initiative on the Digital Economy, and moderator of the MIT Sloan CIO Symposium panel, "Platform Shift: How New Business Models are Changing the Shape of Industry and the Role of CIOs," the answer is definitely yes

Case in point: BlackBerry. While there remain some holdouts relying on their BlackBerrys, the numbers don't lie: in 2009, BlackBerry had nearly 50% market share in U.S. operating systems, and now the company has 2.1% market share.

On the other hand, in 2013, 14 of the top 30 global brands by market capitalization were platform-oriented companies. These are companies that have created and now dominate areas in which buyers, sellers, and third parties are connected. In addition to the platform-oriented brands listed in the chart below, standout platform companies include Uber and Airbnb. They've each created innovative and disruptive business models that have drastically changed how consumers (and now businesses) secure transportation and lodging. (Read our previous posts related to Uber and Airbnb.)

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Is reuse part of your digital strategy?

Posted by MIT Sloan Executive Education - 1 month and 19 days ago

When most think of digital strategy, assets, and IT work, they think of efforts to develop new and innovative technology, systems, and processes. The focus is on how to build something completely new, or how to get rid of what already exists for something better. As a result, a new project can be compared to cooking from scratch. The end dish is includes a variety of ingredients, none of which were pre-made. It's an entirely new effort.

With that concept in mind, why do technologists and IT departments approach everything from scratch? Why has the idea of digital reuse not bubbled to the surface more? After all, as the illustration above shows, sometimes building on the work of others is a much more efficient approach to a project.

Peter Weill, Senior Research Scientist at MIT Sloan, and his partners, fellow MIT Sloan Research Scientist Dr. Stephanie L. Warner and Dr. Mark McDonald, Group Vice President at Gartner Executive Programs, designed a study to measure the effect of digital reuse strategies across 1551 firms in over 77 countries. The respondents were enterprise CIOs, business unit CIOs, and senior-most IT executives. In a research article published in the European Business Review, Weill, Warner, and McDonald revealed their findings. 

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Authors of Leading Digital share how leadership and vision drive digital transformation

Posted by MIT Sloan Executive Education - 5 months and 17 days ago

While young and eager employees are often credited with moving innovation at their companies, research shows that true technological transformation—such as those achieved by "Digital Masters"—must come from the top down.

For their new book Leading Digital: Turning Technology into Business Transformation, authors Andrew McAfeeGeorge Westerman, and Didier Bonnet, spent years researching companies they call “digital masters:” organizations that were not born digital, but have leveraged digital technologies to drive new levels of productivity, profit and efficiency.

In this video, posted to MIT Sloan Reviews, the authors explain that Digital Masters "excel in two critical dimensions: the what of technology and the how of leading change."

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What can enterprise architecture do for your organization?

Posted by MIT Sloan Executive Education - 7 months and 6 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 - 8 months and 5 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 - 9 months and 9 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 - 10 months and 6 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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