CIO Straight Talk - Issue 11 - 61

corporate leadership may be unaware of them
or not fully appreciate their ROI. Others seem to
mistakenly see such technological investments
as nothing more than an additional cost burden
needed to keep up with the competition. Or
I'll often hear industry executives say that the
creation of disruptive technologies is primarily
the domain of startups and that they can buy
these technologies-or buy the startup itself-if
the need arises.
Whatever the reason, companies with large
market shares, who are often best equipped to
take the lead in technological innovation, often
wait and react to changing industry standards
rather than strive to set them. And the late
adopters risk not only paying more for the
technology as time passes but losing market
share, temporarily or permanently, to firms that
have successfully implemented value-creating
technologies.
There are lessons to be learned from companies
like tennis racket producer Babolat, which
developed digitally connected tennis racquets
that provide real-time analytics in order to help
players improve their strokes. The innovation
won awards and helped propel Babolat's brand
recognition among professional players, whose
endorsements are key to sales.
This kind of innovation-the adoption of
new technology combined with the requisite
realignment of business models and processes-
not only creates value for customers but can
create entirely new markets.

OPPORTUNITIES FOR
DIGITAL INNOVATION
So how do manufacturing companies identify
value-creating opportunities for digital
transformation in their own organizations? It
may be helpful to group such opportunities
into several categories, based on the business
problem to be solved:
CONSUMER INTELLIGENCE
Complex distribution channels often leave major
gaps in a company's customer intelligence. Most

manufacturers, and especially those that rely
heavily on distributors, have little knowledge of
where their products go and how they are used
after leaving their inventory. These companies
usually hear from their end customers only when
there are product quality issues.
Cost-effective technologies such as IoT now
enable companies to stay connected with their
customers and collect a vast amount of data in
real time. For example, a chemical manufacturing
company could reduce quality correction
costs and improve customer satisfaction by
tracking its products right up until the point
they are incorporated into the final products of
its customers. They can use the insights from
analyzing this data to predict product quality,
take proactive steps to correct quality issues,
and accelerate product development. And
the view into the customer ecosystem enabled
by this connectivity opens up new business
opportunities.

MY SON'S OUTBURST STILL RINGS
IN MY EARS AS A METAPHOR FOR A
MANUAL SYSTEM LONG OVERDUE
FOR AUTOMATION.

ENHANCED SERVICE OFFERINGS
I once proposed to the head of a large life-safety
organization that she build proactive service
capabilities into company products, such as
building sprinkler systems. The proactive service
model is familiar to everyone who receives
requests from smart phone apps to allow them
to collect your usage data, which in turn allows
app developers to both learn more about the user
experience and troubleshoot issues quickly. It is
increasingly being incorporated into manufactured
goods, from personal computers to cars.
This executive wasn't convinced. She replied
that, because competitors were a long way
from producing digitally connected products,
she didn't consider this to be a pressing action
item. Hers is a common point of view: Given our
market power, why fix what isn't broken?
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CIO Straight Talk - Issue 11

Table of Contents for the Digital Edition of CIO Straight Talk - Issue 11
