Recently we shared some insight presented by Principal Research Scientist at MIT Sloan, Jeanne Ross. In her webinar, Digital Disruption: Transforming your Company for the Digital Economy, Ross stated that there are two paths for a digital strategy: customer engagement or digitized solutions. In our earlier blog post, Responding to disruption with digital strategy, we covered how the U.S. retailer Nordstrom took the customer engagement approach to developing a digital strategy.
Ross' webinar included a second example of a company that opted for developing digitized solutions to create disruption in the marketplace. Schindler Group, based in Lucerne, Switzerland, is one of the world's leading providers of elevators, escalators, and moving walks. The company believed a digitized solution was the best approach to disrupt a permanent business annoyance--small service companies receiving maintenance contracts for their elevators and escalators, or being called for emergency repairs. Schindler wanted to capture that maintenance and repair revenue. Instead of just selling elevators and escalators, Schindler wanted to be the service provider of choice for ongoing maintenance contracts, emergency calls, and preventative and predictive maintenance.
As Ross points out in her webinar, a proper digital strategy requires a strong operational backbone. Schindler’s first step was to create SHAPE--Schindler's Harmonized Applications for Process Excellence. This business process leveraged the company’s enterprise resource planning (ERP) system and provided the foundation for its overall digital solution.
The company's next step was to better understand the repair process. The findings were intriguing: overall, repairing elevators and escalators is a tough job. There are many generations and versions of the equipment, therefore technicians need to find the needed parts in a massive catalogue. Schindler solved this issue by creating a simplified, digital catalog that technicians could access using an iPad, iPhone, or other mobile technology. Subsequently, Schindler analyzed trends in this data so that the company could have partners deliver the right parts to the technicians, reducing the amount of down time for the elevator or escalator.
Next, the company realized it could be truly disruptive by leveraging the Internet of Things (IoT). IoT sensor data can now alert Schindler to operational issues before the actual elevator or escalator breaks down. Schindler's technicians can then perform preventive maintenance, enabling the customer to experience minimal inconvenience.
Schindler's digitized solution strategy is to be an urban mobility solutions provider that offers sustainable and technologically advanced elevators, escalators, moving walks and related services. This includes solutions specifically for healthcare (utmost reliability), hotels (high levels of comfort and quiet), and other tailored services. In a mission to help move people to their destinations quickly, Schindler's products and services allow office buildings to have tenants and visitors check in with security through mobile phones; those phones then interact with the elevators to ensure people are only able to access specific floors.
While digital business models may seem counterintuitive to legacy businesses, Schindler is a great example of how a solid backbone, combined with a deep understanding of the company's core expertise, can help turn nearly any company into a digital business.
Jeanne Ross is Research Director and Principal Research Scientist at MIT Sloan's Center for Information Systems Research. She teaches in the MIT Sloan Executive Education programs Essential IT for Non-IT Executives and Revitalizing Your Digital Business Models.