Why Technology Is Changing Business: The Three Digital Capabilities

These days, businesses need more than just a Facebook page or an app if they want to stay ahead of competitors. According to Jeanne Ross, Faculty Director in the Organizational Design for Digital Transformation online short course from the MIT Sloan School of Management (MIT Sloan), innovation is key — and that means embracing digital technologies, and their resulting capabilities, to improve your value proposition.

Transcript

If it feels like the pace of change in business is accelerating, it’s because it is. Let me tell you why.

We are being bombarded by new digital technologies. It started with social, mobile, analytics, cloud, Internet of Things. I call these “SMACIT,” because that’s the way it feels. We’re being smacked around by these new technologies. And, of course, it doesn’t stop there. Now we have artificial intelligence, blockchain, biometrics, robotics. They just keep coming, and they are changing the competitive landscape.

What’s interesting to us as we study these technologies, is that if we only look at one of them, it’s no big deal. You can do a little social media or add an app to your customer interface, and it doesn’t fundamentally change your business. It perhaps makes things a little bit more interesting. It enhances the customer experience.

What’s amazing about these technologies is how they change the value proposition. These digital technologies are introducing three rather remarkable business capabilities.

The first is ubiquitous data. Basically, we can know anything that we want to know. It’s changed our personal lives in so many ways to have ubiquitous data. It’s only starting to change our business lives, but that impact is going to become greater and greater.

And teamed with that is the second capability: unlimited connectivity. So, once we know something, we can share it. We can do something about it. We can respond to a new customer need.

And then add to that massive processing power. What that means is we can know anything, we can share that information, and there’s no limit, really, to how much we can process. So, what it does is it changes the way we think about what we can do for our customer.

Think about Uber. That company emerged because it recognized that taxis did a fine job of getting people from A to B, but it didn’t tell people when they’d be picked up, how much it would cost, when they’d get delivered, what the name of their driver is. So, it turns out that because they could, customers went: “Wow. That is so much better than just a ride in a taxi.” It is a transportation solution.

The problem is if we are established businesses, we can’t always imagine these. I mean, the taxi companies could have added these very same capabilities, but they didn’t. They didn’t know how. They didn’t know it was important. They just couldn’t imagine it. Basically, they waited until their customers had been seized by other companies, and then they started saying, “We better do something about this.” And they actually weren’t positioned to do it.

This could happen to any company, in any industry. It is a matter of somebody else, a start-up, a competitor, a digital technology company saying, “There’s so much more you could be doing for your customers than you are.” There are brand-new value propositions.