Which route do you take to create value from data?
Four speakers from four very different industries shared their experience how they had evolved in creating Digital Innovations.
The Ambassadors of Innovation is a regular event for leaders who are responsible for innovation in large Dutch industrial companies and is organized by Philips Engineering Solutions – Industry Consulting. The recent event had a strong line-up of speakers that have gone successfully through a Digital Transformation or are making large strides in that space currently. These companies are creating new values in alternative ways. See more on that topic in the accompanying article.
Three types of Digital Innovation – three sources of data
All companies moved through different forms of Digital Innovation. Already for a long time organizations use data for improving decisions, products and processes. As a next step traditional product companies wrapped data with products in order to improve customer value. Some are now also going into providing services based on data, no longer linked to the product itself 1.
At the same time data sources are also changing. This evolves from existing company owned data, via customers’ data toward using data from ecosystems. The speakers from Vanderlande, TomTom, Port of Rotterdam and Philips showed how they are managing to provide data-based value.
Improving decisions, products and processes with data
Solutions installed by Vanderlande create continuous data on luggage handling. Whilst this is used for service and on-line dashboards of system performance, Vanderlande now successfully uses the data to help airports improve their own baggage handling operations and increase their overall performance.
All companies are improving their own processes and products with data usage. For making internal processes more efficient toward improving products or services using field data.
As an example Vanderlande is using data from their conveyor belts and service engineers to improve their on site solutions and make their products better.
TomTom allows customers to report where their maps are incorrect or may be improved and uses anonymous user data to automatically verify such reports. At Philips Healthcare the service organization knows when and in what way imaging products are being used and for how long. This allows them to monitor performance ensuring always in prime working condition.
Wrapping data with products to improve customer value
Next companies are improving customer value and customer experience by wrapping data with products to create new solutions and value. TomTom, Vanderlande and Philips are doing this, thereby increasing their value and differentiation to customers. For instance, Philips helps hospitals improve efficiency and planning of radiology departments by jointly reviewing how to improve using imaging equipment data as a source. Philips uGrow Baby Monitor is connecting parents and their baby as well as linking them to a parent community.
TomTom was primarily known as a consumer electronics company, producing PNDs third-party maps. By allowing customers to improve their maps and share the improvements with other users, it differentiated itself from its many competitors. Once it started collaborating with telecom operators, user data not only allowed more map improvement but also provided better insight in road usage to produce better routes. They now combine historic data of typical road usage at any time of any weekday with actual real-time traffic conditions. It also allows up to date maps knowing where roads are closed and where routes are altered. Especially being able to give real time route advice increases TomTom’s customer value further. Knowing how people are moving now opens many opportunities. That data can help local and regional authorities on planning emission improvement or e.g. a new hospital location, safeguarding easy access.
Providing services based on data
The Port of Rotterdam aims to stay the smartest port of the world. Whilst optimizing its own processes it needs involvement of multiple stakeholders to create more value whereas it is just one part of the total intermodal transportation chain. It has introduced successful services like InlandLinks.eu which optimizes inland waterway transport. In June it started the development of Nextlogic and is working towards a more efficient handling of inland container shipping, with benefits for the entire logistic chain.
Finally, data can be used stand alone or applied for providing solutions or services. Here as well, all four companies showed their experiences. Port of Rotterdam does exactly this by establishing an ecosystem of parties that are all involved and depend on each other to improve the total logistics efficiency. The other companies showed impressive examples as well. Once companies have entered into this stage there are many ways to create value and monetize it. These comprise applications, consulting as well as providing platforms, etc.
These examples are following certain routes as projected on the Digital Innovation map (Figure 1). It provides a fascinating view of how these companies navigate in the Digital Domain, and how they have repositioned themselves. TomTom started from bottom left with its own data and 3rd party charts and used customer feedback to improve its products. Next Telco’s entered the ecosystem which allows wrapping value propositions like real time traffic advice to the product. Now TomTom has moved all the way to the right providing governments and companies advice. The other three companies made a similar journey. It is important to note that the more you move to the top and the right of the chart, the more difficult it becomes to develop these value propositions. Going to the right means that completely new business models will enter the game. Going up will have as a consequence that more parties will get involved, all having their specific needs and barriers.
Figure 1 – Digital Innovation systems and sources of data
How can you benefit from these experiences in your Digital Innovation journey?
- Depart from the vision where you want to go in Digital Innovation
- Understand where you currently are on the path and what you want to accomplish (see also: Data driven business innovation)
- Have the next step already in mind, i.e. what comes after this type of innovation?
- When moving up the Digital Innovation map ensure profound understanding of the ecosystem, its drivers and barriers (see also: Value Modeling tool: mapping uncharted ecosystems)
- When moving to the right in the diagram pay attention to changing business models and allow for the appropriate organization: Should it be inside or outside?)
In Digital Innovation there will be a challenging road ahead. Learn from others, like the companies mentioned above, and use the Digital Innovation map (Figure 1) to find your way to success.
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*1: This categorization is based on Generating Business Value from Data, Dr. Barbara Wixom, Center for Information Systems Research, MIT Sloan School of Management