It’s time for a new Apple CEO

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Over the last couple of years, Apple was so fortunate to set one record after another in terms of revenue, profit, profit margins etc. Just this year for the first time in 15 years, Apple reported an annual decline in sales, revenue, and profit compared to last year. And to be honest, the signs were pretty clear that this had to come.

Under the leadership of Tim Cook, Apple lost its place as a Digital Master and innovator and is now slowly transforming to a Fashionista according to the framework of Westermann (2014). Let me explain why this is happening.

In the recent years, Apple completely shifted its focus from a variety of products to the cash cows of the company, namely the iPhone. While the iPhone receives updates every year to be equipped with state of the art chips, camera, and display, Apple decided to leave other products behind that were not contributing so much to the company’s revenues and profits. There are dozens of example: The iPad Air 2 hasn’t been updated since 2014, neither has been the iPad mini. The MacBook Air hasn’t received a major update since 2010, and the Mac Mini and the Mac Pro didn’t even get a new chipset since more than two years.
Just last week, Apple introduced new MacBook Pros (finally, after keeping the older models for more than one year on the shelf), where they got rid of all ports but the headphone port, replacing them with four identical USB C ports. They also included a smaller battery than in previous models and not the latest Intel chipset. The only innovation is the Touch Bar, a contextual toolbar at the top of the keyboard that automatically changes to surface app-specific commands.

With the development of Apple in the recent years, one might also get the feeling that products get developed more and more in silos with little communication and coordination between departments. Let’s look at some examples here:

  • If you buy a brand new flagship iPhone 7 and a brand new MacBook Pro, there is no way you can connect them without an adapter. You can also not use the headphones that ship with your iPhone 7 on your new MacBook without an adapter.
  • Let’s have a look at software. Siri was introduced in 2011 for iOS and it took more than 5 years for it to arrive on MacOS. Two years ago, MacOS received a major update for its search function Spotlight, that in a way tries to behave like Siri, just with text input. These two parallel developments raise the question why they didn’t coordinate the work on both of these frameworks and instead developed two different features that have the same functionality just with different inputs.

The results are pretty clear:

  • In terms of software, Apple has fallen behind its competitors. For example, Google Docs and Microsoft Office support collaboration since a couple of years and Apple took until this year to finally launch a collaboration feature for their Office suite. This list is almost infinite. Apple’s iCloud is not as good as Dropbox or Google Drive, Siri doesn’t have the capabilities of a Google Assistant, Google Photos is superior to iCloud photos and so on…
  • In terms of hardware, the competition gets better and better, raising the bar for Apple to be the leader in innovation. The new Surface Studio by Microsoft is way more innovative than everything that Apple has introduced for desktop computers in the last couple of years. Okay, desktop computers and innovation don’t really sound like a natural fit anymore, but let’s look at cell phones. The Samsung Galaxy Note 7 had a superior camera than the iPhone 7 does (I wrote this in past tense and not present tense for obvious reasons), almost all Android phones have a fast-charging capability and when we look at the quality of a Google Pixel it’s on par with the quality of an iPhone.

So, with all these negative developments happening, Tim Cook was fortunately foreseen enough to already have chosen his potential successor. Be aware that this is just my personal hypothesis here, but I will lay out some reasoning why I believe that way. When Tim Cook personally convinced Angela Ahrendts to step down from her CEO position at Burberry to join Apple as a VP, I am pretty sure that not only the $80 million paycheck in her first year convinced her to move jobs but also the prospect to eventually to move up on the career ladder at Apple. I am pretty sure that Tim chose her to be his successor and he really wanted her to join Apple, why else would he as a CEO pay her more in her first year than he pays himself?

Apple right now is just at the start of facing a crisis. There is no sign that a new iPhone could catch up with the success of the iPhone 6 and 6S and new products like the Apple Watch do not live up to the expectations. Most of the new ventures that Cook tried so far, failed before they even saw the light of day. Examples here are the rumored Apple TV (an actual television) or the Apple Car, where rumor has it that no clear leadership and internal conflicts led Apple to shelve the project.

For Ahrendts, this would be the perfect time to step up to provide Apple with a better digital leadership and bring the company back on track. Her excellent track record at Burberry’s of providing excellent leadership and a clear vision, thereby transforming the company is the perfect requisite for Apple in its current situation. It’s easy, Ahrendts once said, to run a company while the economy is expanding, and easy to get lazy. A sharp downturn tends to focus the mind. Ahrendts would also help Apple to correct its focus and to see new chances of growth in products that are already forgotten by Apple’s leadership. “The idea is balance,” she once said in an interview, “knowing the market, the customer, and perfectly anticipating demand.” She seems like a natural fit for the position of the CEO of Apple, even if she doesn’t have a background in the tech industry.

Don’t get me wrong here, I am not an Apple hater, I like Apple products and I am writing this on a MacBook but with the recent update of the MacBook, I become truly worried about the direction Tim Cook is leading this company. I think Tim has contributed his fair share to the development of the company but should now have the courage to step down and leave place for improvement.

Please feel free to share your own opinion on this topic. I am really interested to see what you think about the recent developments of Apple and the consequences in the future.

 

Sources:
George Westerman, 2014. Leading Digital: Turning Technology into Business Transformation. Edition. Harvard Business Review Press.

https://www.theguardian.com/technology/2016/oct/25/apple-profits-sales-decline-2016-iphone-7

http://www.dailytech.com/Meet+Apples+New+CEO+Tim+Cook/article22538.htm

https://web.archive.org/web/20100914002455/http://magazine.wsj.com/features/the-big-interview/earning-her-strips/5/

http://www.macrumors.com/2016/10/31/ipad-sales-3q16-idc/

http://www.macrumors.com/roundup/apple-car/

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Here is why I do not believe in the Hype cycle and you should not either

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hype-cycle

 

 

When one talks about technology progress and which technologies are more promising and will be popular, there will be somebody mentioning the Garnter hype cycle and how tech #x will be the future. Let me tell you: I do not believe any of that. I do not even get why anybody created that framework or cycle at all. On the Gartner website (1), they say that this hype cycle should be used for businesses looking to launch a new product, so that they can balance risks with commercial success.  Is it really so? Does the framework work? Let’s take a closer look at it:

  1. Technology and commercial success have little in common. Technologies can be available yet there is a high chance nobody is willing to pay for it. Maybe the technology is not useful, maybe it is not integrated in the right product, or maybe just the product is not marketed well. In any case, the consumers might not buy the technology. But wait. In the Gartner hype cycle, there is nothing said about consumers, market potential or any whatsoever commercial metric. An example that came to mind is videocalling. I remember when I was 12 years old and this Italian provider started producing phones with this camera with the main assumption that people would enjoy videocalling each other. The company invested much effort and money in developing a product that could do support that (Apple and Smartphones were not there yet), creating a network and promoting 24/7 the new technology. It never took off. Now, 11 years later people do not videocall that much either. Or let’s take a more practical example. Recommendation systems or predictive analytics are based on alrgorithms that were mostly developed before the 80’s. It is true that computers back then were bigger and slower, yet consumers data were already there. Supermarkets have had fidelity programs for decades. So why is the technology booming now? The technology is not, its applications are.
  2. There are many inconsistencies, also in the jargon. If you look at the hype cycle in 2010, predictive analytics almost reached plateau of productivity. In 2016, Machine Learning is just over the peak. I wonder how is this possible ? Predictive analytics is based on machine learning, so either Gartner had a really different definitions of those two concepts or they made a mistake in calculating the cycle. To hide that, they just use some different buzz word and voila, everything looks right again. Further more artificial intelligence is much behind machine learning, although machine learning represents pretty much 90% of what artificial intelligence is (2). Does that make sense? Not to me. Moreover, many of terms they use mean are really cryptic. I guess that those can be really handy for business executives giving speeches or for some new young startup founds trying to get investors on this new technology that nobody really knows.
  3. Progress is more like a tree than a cycle. Well, if you think of a cycle you would not come up with anything looking like the Garnter cycle but most likely with a circular form. Apart from that, the only circular element in it is this flow of expectations increasing and decreasing. Yet comparing the Hype cycle from year to year I see that many technologies appear and disappear. There is not really a story or a continuity to check how they develop over 3 or 4 years. This aspect defies the concept of the cycle and lets us wander where all these technologies ended up in? They did not go through the cycle stages or they just died? We will never know.

To me it seems like the Gartner’s analysts are a bit confused. As in they do not have standard metrics to base their hype cycle on (3). I could imagine that some companies finance them to put some buzz words on exactly that point of the curve, to launch new startups or this amazing service which will boost their revenue streams. I do not see any added value in this Gartner’s cycle or any measurable basis to even call it a model. Do you?

 

References

1 – http://www.gartner.com/technology/research/methodologies/hype-cycle.jsp

2- https://www.quora.com/What-are-the-main-differences-between-artificial-intelligence-and-machine-learning

3- https://www.researchgate.net/publication/224182916_Scrutinizing_Gartner’s_hype_cycle_approach

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Are leadership capabilities needed in hospitals to govern digital processes?

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In this blog, I would like to take the opportunity to share the news on data leaks in the Dutch healthcare sector. Data breaches are an interesting topic as it appears closely to us like the data breach at the Erasmus University. Moreover, I have written an earlier blog on the Yahoo data breaches.

As of this year Dutch hospitals and other organizations have to register leaks by the Autoriteit Persoonsgegevens (the Dutch Authorities of Personal Data) resulting in better insights in the phenomenon. The authorities indicate that the causes of the leaks are mostly due to unsecured connections as well as human mistakes. I would like to discuss the latter one, as I believe that on the one hand these are inevitable, however, on the other hand the news article stated that some employees in the hospital ignored the regulations with the result of a data leak of 800 patients’ documents…

I believe that leadership capabilities could be missing in hospitals to correctly govern the new digital processes that employees have been confronted with over the years. Further in the blog, the impact of leaks is mentioned which indicate the large need of properly governing the digital transformation happening in hospitals. In my opinion, the discussed digital governance mechanisms should be evaluated and implemented in healthcare organizations just as we have been discussing corporations in class.

Lastly, I would like to inform you on the consequences of a data leak of patient information based on a research by Intel Security. Because what can criminals do with your health record? In comparison with credit card information, the health dossiers are less valuable (the price per medical dossier is 0.03 to 2.42 US dollar compared to a price of 4.00 to 500 US dollar for a credit card number). Nevertheless, the usability of the data is valuable for a longer time span, as the data could be used for multiple crimes and are more difficult ‘to block’ than credit cards.

This article is based on http://nos.nl/artikel/2144780-ziekenhuizen-lekken-dagelijks-privacygevoelige-informatie.html and the Intel Security report ( http://www.mcafee.com/us/resources/reports/rp-health-warning.pdf)

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How Starbucks turned the tide

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Starbucks has grown into one of the largest coffee retailers and worldwide recognized brands, ever since they started in 1971. Starbucks did not grow solely on just coffee; it managed to create a unique Starbucks experience, both online and offline. With over 36 million likes on Facebook, more than 10 million active users of its mobile payment system, resulting in 21% of Starbucks transactions in the US being made using mobile devices, Starbucks is seen as leading the way in digitally enhancing the customer experience. However, Starbucks has not always been a Digital Master. It faced declining same-store sales in 2008, and its share price dropped by nearly 50% within two years. Stores ran on legacy technology systems and store managers could not access their emails within the store. Senior leaders within Starbucks noticed something needed to be done, and they decided using digital technologies to reenvision the customer experience was the way go.

Starbucks did this by focusing on mobile payments, engaging customers through social media, bridging the online and offline experience, and creating a digital advantage.

Mobile Payments
Starbucks made its loyalty program digital by introducing the Starbucks Mobile Card app. This app allowed customers to pay for purchases with their mobile phone. Today the company boasts over 10 million users in the US alone, and more than 20% of sales are done through mobile. This is not only improved the customer experience, but actually lowered transaction costs as well.

Social Media
Starbucks has built a leading presence in social media, with 36 million Facebook likes, 12 million Twitter, and Instagram followers, making Starbucks one of the most socially engaged companies.
Apart from the enormous reach, Starbucks uses social media for customer-driven innovation through the launch of their My Starbucks Idea website, where customers can submit ideas to improve the products and services.

Bridging the Offline / Online Experience
Starbucks launched the Starbucks Digital Network, which offers in-store customers digital content to appreciate alongside their coffee. Users that are connected to the free Starbucks Wi-Fi connection have access to content such as The Economist, The New York Times and the Wall Street Journal.

Digital Advantage
Through their successful digital transformation, Starbucks managed to create a digital advantage over its competitors. The company is able to reduce transaction costs through the use of mobile payments, managed to use customers’ idea generation through the My Starbucks Idea website, and improved the customer experience by bridging the offline /online experience. As a result, Starbucks managed to increase its stock price by over 1300% from $4 in 2008, to $55 in 2016.

 

Sources:

 

Consulting, C. (2013). Starbucks: taking the. Retrieved from Capgemini Consulting: http://ebooks.capgemini-consulting.com/dm/Starbucks.pdf

Khraif, O., & Patton, L. (2016, March 30). Starbucks Takes Its Pioneering Mobile-Phone App to Grande Level. Retrieved from Bloomberg Technology: https://www.bloomberg.com/news/articles/2016-03-30/starbucks-takes-its-pioneering-mobile-phone-app-to-grande-level

Meola, A. (2016, June 13). Starbucks’ loyalty program now holds more money than some banks. Retrieved from Business Insider: http://www.businessinsider.com/starbucks-loyalty-program-now-holds-more-money-than-some-banks-2016-6?international=true&r=US&IR=T

Taylor, K. (2015, November 19). Starbucks is conquering a huge challenge in retail — and even Apple and Chipotle should be jealous. Retrieved from Business Insider: http://www.businessinsider.com/starbucks-mobile-payment-numbers-2015-11?international=true&r=US&IR=T

 

 

 

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Hype cycle in commercial aerospace

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Emerging technologies and markets are exiting and can result in contribution for society. Business can prosper with new technologies. It is crucial to know where and how to invest in opportunities and show committed leadership which embrace renewal. A top-down approach with a transformative vision of the future. Initiatives are needed to empower the transformation (Westerman et al., 2014). In order to apprehend the implication for an industry it is interesting to look at Gartner’s hype cycle.

Due to the Commercial Space Launch Competitiveness Act, space is not a governmental program anymore (H.R.2262, 2015). Private businesses are playing a major factor and thriving innovation. The industry is growing and worth $ 314 billion in 2013. The business is powered by dominant actors such as billionaires and venture capitalists. They commit themselves to explore and exploit this largely unknown domain (Martin, 2014). Most of these actors are experienced in commercializing their initial businesses. They gained skills and a network which fuels hyping the industry and surrounding technologies. Such as SpaceX and the online announcement of their Mars endeavor for making humans multiplanetary (Musk, 2016). The hype cycle innovation trigger is already a decade behind us. The innovation is initiated by governments and got more and more commercial. The peak of inflated expectation is not on its height. Privatization more or less focused at less riskier and technological feasible projects between low earth orbit (LEO) and geostationary orbit (GEO). This new phase is riskier and has more technological challenges (Riebeek, 2009). Besides some minor failures, like exploding unmanned rockets, a lot of progress is made these days. The negative hype and trough of disillusionment in the hype cycle is often caused by failure. Mostly failure which does not match with the exaggerated expectations.

Most of the dominant actors behind the private space business made their wealth in leading companies within their industry. These business concede somewhat to Westerman et al. (2014) quote: “Digital masters see technologies as a way to rethink the way they do business, breaking free of outdated assumptions that arose from the limits of older technologies”. They know what it takes and how to achieve objectives. Is it possible to diminish the negative slope of the hype cycle with a strong transformative vision, leadership and a strong technological backbone? Can these billionaires and venture capitalists ‘beat’ the hype cycle and accelerate the commercial space technology?

 

References:

H.R.2262 – U.S. Commercial Space Launch Competitiveness … (2015, November 25). Retrieved October 25, 2016, from https://www.congress.gov/bill/114th-congress/house-bill/2262/text

Martin, K. (2014, December 2). The business of space: Exploring the new commercial space economy. Retrieved October 25, 2016, from http://america.aljazeera.com/watch/shows/real-money-with-alivelshi/articles/2014/12/2/the-business-of-spaceexploringthenewcommercialspaceeconomy.html

Musk, E. (2016, September 27). Mars. Retrieved October 25, 2016, from http://www.spacex.com/mars

Riebeek, H. (2009, September 4). Catalog of Earth Satellite Orbits. Retrieved October 25, 2016, from http://earthobservatory.nasa.gov/Features/OrbitsCatalog/

Westerman, G., Bonnet, D., & McAffee, A. 2014. Leading Digital: Turning Technology into Business Transformation, Harvard Business Review Press, 2014.

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When the CIO reports to the CEO – What does it mean for the organization?

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As we have recently learn it (at the third session), the Chief Information Officer (CIO) can be placed differently within the organizationasl structure depending on the digital purpose of the organization. If Information Technology drives significant value within the enterprise, it means that IT is a strategic function, therefore the CIO should report directly to the CEO. On the other hand, if the company is focused on maintaining cost efficient operation, the CIO is most likely to report to the CFO.

There has been an ongoing debate in literature about the position and the reporting structure of the CIO. But it seems that in true digital companies, CIO reporting to the CEO is the way to go.

In today’s digital world, IT has become more important than ever and most companies realized that already. Therefore, IT is now an essential part of their business and holds a strategic role with a CIO on the executive board. In this case, when IT is of strategic importance in the company, it is evident that the CIO reports directly to the CEO. This implies that the CIO has more freedom in managing the whole organization’s IT activities and able to take more risks which can eventually lead to greater success.

In ideal digital companies, the CIO should be treated as an equal partner to the CEO. This way the IT strategy presented by the CIO can be aligned better with the company’s overall strategy, therefore, as a result, IT would support business activities more efficiently.

A CIO reporting to the CEO has other implications within an organization. This direct relation to the Chief Executive Officer can deliver a clear message to all the functional areas in the company, that IT is of strategic importance.  This can help the IT department and the CIO itself build a stronger and more respected image throughout the organization.

It is worth mentioning that a CIO who reports to the CEO and is part of the top management, has to have certain capabilities apart from sole technical knowledge. A competent CIO is ambitious and has strong leadership capabilities with a good sense of business when it comes to strategic decisions. Besides, a true IT leader has to be experienced and visionary in order to steer the company in the right digital direction.

As we can see, the CIO’s place in the organization hierarchy highly represents the status and importance of IT in the whole organization. In the age of digital transformation, the importance of IT is increasing in many industries across many companies. Therefore, in my opinion, the discussion on the reporting structure is leaning towards the CIO’s direct reporting to CEO as it represents the high importance of IT within the organization.

Sources:

Session 3

http://www.cio.com/article/3074899/cio-role/more-cios-report-to-the-ceo-underscoring-it-s-rising-importance.html

http://www.theceomagazine.com/business/why-cios-should-report-to-the-ceo/

 

 

 

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The difference between a CIO, a CTO and a CDO

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In light of the importance of leadership capabilities for the digital transformation of an organization, chances are high that you stumble upon abbreviations like CTO, CIO or CDO. I didn’t really know what the exact difference is, so I started to do conduct a little research and I would like to share the results with you.

The term CIO, Chief Information Officer, was first defined by Synnott and Gruber in 1981 as a senior executive of the organization responsible for information policy, management, control, and standards. They further added that the five primary functions of a CIO include participation in corporate strategic planning, responsibility for information systems planning, leading the development of corporate or institutional information policy, management of the organization’s information resources, and development of new information systems capabilities. I believe this definition is still quite accurate to describe the role of a CIO today. Just today the focus of a CIO is much more on actually increasing profits with the use of IT. From the definition, you can also tell that a CIO is rather internally faced and is mostly responsible for processes that happen within the organization.

The role of a CTO, a Chief Technology Officer, shares some common attributes with the role of a CIO. Both positions need to have a strong business understanding in order to bring added value to the organization and to align their respective responsibilities with organizational goals. They also need to have a technical background, so that they can understand and evaluate the underlying technologies in a business. In comparison to a CIO however, the CTO has a more customer facing role and is mostly responsible for enhancing the company’s product offerings. Connected to that, another difference of both roles is that the CTO is usually responsible for the development of new technologies in a company, whereas the CIO has its focus more on organizational problems and tries to solve these with existing IT solution.

Next to both roles, which have been around for a while now, the role of a CDO, a chief digital officer, has emerged recently. His major responsibility lies in digitally transforming traditional businesses to digital ones. In order to do so, the CDO needs to determine the parts of the business where influencers are able to support the change and to empower these influencers. That’s why, it is especially important that the person that fills in this role is not only a digital expert but also familiar with all parts of the organization.

I hope this short summary helped you to get a better understanding of these particular roles in an organization. Please keep in mind that these are not fixed roles and every company can interpret a role differently and the roles have been changing throughout the past. If you want to read further on this topic, I recommend you to check out my sources. Also, if you are curious how people actually became CTOs, CIOs or CDOs and what jobs they did prior to that, I recommend you to just use the LinkedIn advanced search and search for these positions in the country of your choice. This works fine even if you are not a Premium user.

I wonder what your opinion is on these roles. Does every company need to have all three roles on their board? Or do you think the CDO is just an evolution from the CIO and will make this role redundant?

 

Sources:

Penrod, James I. “The Chief Information Officer in Higher Education. Professional Paper Series,# 4.” (1990).

Synnott, William R., and William H. Gruber. Information resource management: opportunities and strategies for the 1980s. John Wiley & Sons, Inc., 1981.

http://www.computerwoche.de/a/der-cio-totgesagt-und-alle-haende-voll-zu-tun,2528153

http://www.forbes.com/sites/peterhigh/2014/03/03/why-your-company-should-consider-adding-a-cio-to-the-board/#4791a363e2f6

http://www.uniforum.org/publications/ufm/nov96/cio.html

http://www.huffingtonpost.com/don-tapscott/do-companies-still-need-a-cio_b_6214482.html

https://en.wikipedia.org/wiki/Chief_digital_officer#cite_note-8

https://en.wikipedia.org/wiki/Chief_technology_officer

https://en.wikipedia.org/wiki/Chief_information_officer

http://www.techrepublic.com/blog/tech-sanity-check/sanity-check-whats-the-difference-between-cio-and-cto/

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Healthcare: from dispending to patient care model

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An example of reconfiguring value delivery models. The definition of Westerman et al. (2014) is: “Using technology to connect all your products, services and information in a different way can build stickiness with customers and competitive advantage. When done well, it creates switching costs and incentives for customers to favor transacting with you.”

Large healthcare organizations are business to business companies. Healthcare companies produce and sell drugs to apothecaries, but are transforming to get a connecting with the end user. A reason to transform is that the pharmaceutical industry is struggling with a turbulent market due to generics which are identical and cheaper.

Big pharma is trying to transform by using digital technological opportunities. They are shifting from product oriented to a combination of product and service. An advantage of this combination is that it is more specifiable, measurable and predictable (Brief, 2015). For instance, a therapy management service via mobile technology or internet of things. Other examples are telehealth services, wellness programs, and improved chronic disease management over patients’ lifetimes (Bloomberg, 2014). Large healthcare companies are combining products, services and data to change the role in the value chain (Westerman et al., 2014). They are doubling their investments in digital transformation initiatives (Bloomberg, 2014).

Johnson & Johnsons is one of the largest companies in healthcare (Fosty et al., 2015). They are aiming on more patient interaction and more information. Wearables, social tools, sensors and other patient-centric technologies to improve the knowledges about conditions, movements and loyalty of patients (Bloomberg, 2014). In 2015 Johnson & Johnson announced a partnership with IBM (Johnson & Johnson, 2015): “The planned collaboration is intended to provide healthcare systems with holistic virtual coaching and rehabilitation solutions striving to transform the patient experience and healthcare delivery model by creating an integrated view of patient care.” Actual innovations are an app for allergies, a wearable tracker to manage rheumatoid arthritis, an app for managing glucose levels and a digital ecosystem to identify if you are candidate for a particular surgery (Bianchi, 2016). These innovations give Johnson & Johnson a more direct relation with the customer without disrupting its relation with apothecaries and other vendors (Westerman et al., 2014). Healthcare companies are aiming on more engagement with the customer (Bloomberg, 2014). The technology is important, but to get engaging customers, experience is equally essential. Customers still have to buy their medicines. Apothecaries will keep the vendor role. They can enrich their services and the customer experience with information of large healthcare organizations like Johnson & Johnson. Automatic triggers from sensors can alert the patient about their condition or medicine intake. They can be signalled to contact or visit an apothecary for assistance. These kind of services give healthcare companies more control over the costumers to ‘lock them in’.

Important issues are the sensitivity of patient data and privacy. Are the benefits greater than the disadvantages? Are large healthcare businesses willing to improve the situation of the patient or trying to market their business?

 

References:

Bianchi, J. (2016, November 01). The Power of Human-Centered Technology: 4 Johnson & Johnson Innovations That Could Help Revolutionize Your Health. Retrieved November 03, 2016, from https://www.jnj.com/innovation/4-johnson-and-johnson-digital-healthcare-innovations

Bloomberg, J. (2014, August 15). Digital Transformation Moves Pharma ‘Beyond the Pill’ Retrieved November 03, 2016, from http://www.forbes.com/sites/jasonbloomberg/2014/08/15/digital-transformation-moves-pharma-beyond-the-pill/#77267f5d19ae

Brief, B. (2015, December 16). Getting the Dose Right: A Digital Prescription for the Pharma Industry. Retrieved November 03, 2016, from http://bain.com/publications/articles/a-digital-prescription-for-the-pharma-industry.aspx

Fosty, V., Durme, Y. van, & Vezbergiené, A. (2015, June). Building your Digital DNA – Deloitte United States. Retrieved November 3, 2016, from https://www2.deloitte.com/content/dam/Deloitte/be/Documents/technology/deloittedigital/Deloitte-Digital-BE_Building-your-digital-DNA_download_HR.pdf

Johnson & Johnson and IBM Announce Plans to Collaborate on Advanced Solutions Designed to Transform Healthcare Delivery. (2015, April 13). Retrieved November 03, 2016, from https://www.jnj.com/media-center/press-releases/johnson-johnson-and-ibm-announce-plans-to-collaborate-on-advanced-solutions-designed-to-transform-healthcare-delivery

Westerman, G., Bonnet, D., & McAffee, A. 2014. Leading Digital: Turning Technology into Business Transformation, Harvard Business Review Press, 2014.

 

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IKEA eat your heart out, Lowe’s is transforming the way we redesign our homes

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Have you ever remodeled a room, or even only tried to imagine how a new colour on your wall would look like? Those of you who did know that this is not an easy process and that it mostly is accompanied with a lot of arguing, deliberation and high costs when it turned out not to be as you imagined. Lowe’s, a fortune 500 home store chain has the answer to all your remodel problems and will transform the whole way we will remodel our houses in the future. IKEA eat your heart out.

Lowe’s teamed up with Pinterest and Microsoft to improve the process of remodelling and here is how they did. The process of remodeling does not start in a home store but way up front on your pinterest walls. By giving Lowe’s access to your pinterest wall in the in store app, the cortana intelligence system of Microsoft can identify for example which kitchen of Lowe’s inventory matches best your pinned pictures on pinterest. The system provides you recommendations based on this match. If you would like to know how this kitchen look like in real life size, you can go to a Lowe’s store where the hololens of Microsoft provides you this experience. Moreover, you can change almost all features of the kitchen and see how they look like combined. When you are satisfied you can order all elements of your own designed perfect kitchen. The Hololens enables Lowe’s to capture the opinion on specific features of their customers by combining the eye-tracker with the Cortana voice recognition. This technology enables Lowe’s to continuously improving their services and products.

It is clear that Lowe’s has some strong new digital capabilities. First, the new technology improves the customer experience by helping tacit ideas in customers minds make explicit and by recommending products based on their true preferences. Second, the new technology shifts the core operations of Lowe’s from inventory management to recommendation and designing services. Less inventory and show models are needed since the products now can be visualized through the Hololens and the products can be made to order. The focus of employees now lies on recommending matching products and designing new features that best matches customer preferences. Third, the new technology changes the whole business model in a way that it becomes a pull rather than a push market. The Hololens and the partnership with Pinterest help customers determine what they want and give Lowe’s insight in what the customers want rather than they push a specific kitchen into the market.

Lowe’s has the potential to become a Digital Master but only time can teach us how Lowe’s will combine these strong digital capabilities with their leadership capabilities to make it an industry changing success. The pilot version was a hit and by the end of 2016 they plan to launch the experience in three more stores in America. When they can successfully roll out the concept in al their stores globally, Lowe’s will be a true Digital Master. IKEA eat your heart out.

What is your opinion on the way Lowe’s remodels the remodeling business? Do you see any complications in this approach? Do you think other firms can learn from Lowe’s or do you think Lowe’s needs to learn from other firms?

Sources:
http://www.lowesinnovationlabs.com/hololens

Westerman, G., Bonnet, D., & McAffee, A. 2014. Leading Digital: Turning Technology into Business Transformation, Harvard Business Review Press, 2014.

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