Dr. Peter Weill

Chairman & Senior Research Scientist

MIT Sloan Center for Information

Systems Research (CISR)

Leading the Next Generation Business: Increased Customer Intimacy & Digital Ecosystems

PRESENTER

Dr. Peter WeillChairman and Senior Research Scientist

Center for Information Systems Research (CISR)MIT Sloan School of Management

Phone: (617) 253-2348, Fax: (617) 253-4424pweill@mit.edu; http://cisr.mit.edu

This research was made possible by the support

of MIT CISR sponsors and patrons.

RESEARCH TEAM

Dr. Peter WeillDr. Stephanie L. Woerner

© 2015 MIT Sloan CISR

Leading the Next Generation Business: Increased Customer Intimacy & Digital Ecosystems

October 6 & 7, 2015

Microsoft LATAM CXO & Government Forum

The Next-Generation Enterprise

Digital disruption—impact of increasing digitization on your

company’s future success

What is the next generation enterprise in 5 to 7 years?

Studied 120 enterprises’ most “important IT-enabled transformation

initiatives to achieve breakthrough performance.”

Will describe insights, case studies, and a framework

– What it takes to become an Ecosystem Driver: Aetna, NYC

– How to transform in highly volatile markets - Softscaling

P. Weill & S.. Woerner, “The Next Generation Enterprise: Thriving in an Increasingly Digital

Ecosystem,” MIT Sloan CISR Research Briefing, Vol. XIII, No. 4, April 2013.

For more information see “Thriving in an Increasingly Digital

Ecosystem,” by Peter Weill and Stephanie L. Woerner, Sloan

Management Review, Summer 2015, Vol. 56, No. 4, pp 26-34.

Digital disruption in financial services

https://medium.com/@waynewz90/making-sense-of-the-fintech-startup-ecosystem-9213670cd34c

Revenues under threat

What percentage of your company's revenues are under threat from

digital disruption over the next 5 years?

Source: MIT CISR 2015 CIO Digital Disruption Survey, N=350

• Average revenues under threat of large

firms (> $7B in annual revenues) = 53%

• Average revenues under threat of all

firms = 33%

Percentage of revenues under threat

Options for the next generation enterprise

P. Weill & S. Woerner, “Thriving in an Increasingly Digital Ecosystem,” MIT Sloan Management Review, Summer 2015, Vol. 56, No. 4, pp. 27-

34, June 16, 2015.

P. Weill & S. Woerner, “The Next Generation Enterprise: Thriving in an Increasingly Digital Ecosystem,” MIT Sloan CISR Research Briefing, Vol.

XIII, No. 4, April 2013

Know

ledge o

f Y

our

End C

onsum

er

Co

mp

lete

OMNI-CHANNEL

‘Own’ customer relationship

Multi product customer experience to meet life events

Integrated value chain

Banks, Retail, Energy Companies

ECOSYSTEM DRIVER

Provide a branded open platform

Ensure great customer experience

Plug and play third party products

Customer knowledge from all data

Match customer needs with providers

Extract ‘rents’

Amazon, Fidelity

Pa

rtia

l

SUPPLIER

Sell through other companies

Potential for loss of power

Core skills: low cost producer, incremental innovation

Insurance via agent, Electronic producer via retailer,

Mutual fund via broker

MODULAR PRODUCER

Plug and play product/service

Able to adapt to any ecosystem

Constant innovation of product/service

PayPal, Kabbage

Value Chain Ecosystem

Business Design

Kn

ow

: n

am

e o

r IP

ad

dre

ss, p

urc

ha

se

his

tory

wit

h y

ou

& o

the

r fi

rms &

g

oa

ls

Who controls key decisions: brand, contracts, price, quality,

participants, IP & data ownership, regulation

Exemplars

Know

ledge o

f Y

our

End C

onsum

er

Co

mp

lete

OMNI-CHANNEL ECOSYSTEM DRIVER

Pa

rtia

l

SUPPLIER MODULAR PRODUCER

Value Chain Ecosystem

Business Design

Kn

ow

: n

am

e o

r IP

ad

dre

ss, p

urc

ha

se

his

tory

wit

h y

ou

& o

the

r fi

rms, &

g

oa

ls

Who controls key decisions: brand, contracts, price, quality,

participants, IP & data ownership, regulation

#1 in customer experience 10.8% vs 2.6% Growth

83% decide before 50% sales non US

iTriage clip

% Companies by Dominant Model: Larger Firms

Source: MIT CISR 2013 Ecosystem Survey, N= 101 and MIT CISR-Gartner 2013 Ecosystem Survey, N=93Large firms >1B in revenues, Complete Customer knowledge=4 or 5 on at least 6 of the 7 Customer Knowledge questions and revenues is 50% or greater from Ecosystems. Small firms <$1B revenues.

Know

ledge o

f Y

our

End C

onsum

er

Co

mp

lete

OMNI-CHANNEL ECOSYSTEM DRIVER

Pa

rtia

l

SUPPLIER MODULAR PRODUCER

Value Chain Ecosystem

Business Design

Kn

ow

: n

am

e o

r IP

ad

dre

ss, p

urc

ha

se

his

tory

wit

h y

ou

& o

the

r fi

rms, &

g

oa

ls

Who controls key decisions: brand, contracts, price, quality,

participants, IP & data ownership, regulation

18%

31%36%

15%

24% 12%

46% 18%

Smaller Firms

Ecosystems drivers dominate but …

Source: MIT CISR 2013 Ecosystem Survey, N= 101 and MIT CISR-Gartner 2013 Ecosystem Survey, N=93

Sample: Companies >1B in revenues. Self-reported Net Margin/Growth correlates at the .05/.09 level with

actual Net Margin/growth. Financial measures are relative to industry. Customer Experience and Time to

Market were assessed relative to competitors. All measures were transformed to a 0-100% scale. All

differences are significant at the 0.05 level or greater.

0 10 20 30 40 50 60 70 80 90 100

Net Margin

Revenue Growth

Time to Market

Customer Experience

Ecosystem Driver

Modular Producer

Omnichannel

Supplier

New York City: Five priorities as a city ecosystem driver

Source: Road Map for the Digital City, 2012. (http://www.nyc.gov/html/media/media/PDF/90dayreport.pdf)

• Fiber optic internet service to 100% of

homes

• Unlimited public Wi-Fi in parks

• Cell service in subways

• Free Community Technology Centers

• Engineering school initiative

• Innovation Zone (iZone)

• Mouse - innovative youth

development

• 900 data sets available

• 15 Hackathons (200 participants)

• 311 APIs published (1759 services)

• NYC BigApps Ideas Challenge (600

ideas)

• 280 Social media channels

• 2750 updates monthly

• 19 Smartphone apps

• nyc.gov web site

• 2,000 photos submitted to the City's

first Facebook photo contest

• Technology-Fueled Economic Growth (32%

increase in VC deals)

• NYC tech talent draft for start-ups

• NYC next idea - Global business plan

competition

• NYC venture fellows – selects 20-30 ‘rising

stars’

• NYCEDC incubator network

Know

ledge o

f Y

our

End C

onsum

er

Co

mp

lete

OMNI-CHANNEL BUSINESS

(2006-2009)

OPEN ECOSYSTEM DRIVER

(2010 – 2014)P

art

ial

SUPPLIER Great Modular Product/Service

Producer

Value Chain Ecosystem

Business Design

New York City’s Digital Journey

P. Weill & S. Woerner, “Thriving in an Increasingly Digital Ecosystem,” MIT Sloan Management Review, Summer 2015, Vol. 56, No. 4, pp. 27-34,

June 16, 2015.

P. Weill & S. Woerner, “The Next Generation Enterprise: Thriving in an Increasingly Digital Ecosystem,” MIT Sloan CISR Research Briefing, Vol.

XIII, No. 4, April 2013

• Unlock and maintain public

records

• Connect and engage through

digital channels

• Support technology infrastructure

• Recruit and develop talent

• A vibrant digital sector

• Know addresses, incomes of

residents and companies

• Provide services, typically

undifferentiated

• Rely on taxes for funding and for

bargaining

• Integration of 40 agencies to a

single call center for non-

emergencies (311)

• Use of IVR, web and mobile

• Development of knowledge base

(information on over 3600

services)

Kn

ow

: n

am

e o

r IP

ad

dre

ss, p

urc

ha

se

his

tory

wit

h y

ou

& o

the

r fi

rms, &

g

oa

ls

Who controls key decisions: brand, contracts, price, quality,

participants, IP & data ownership, regulation

What it takes to buy options

Source: MIT CISR-Gartner 2013 Ecosystem Survey, N=93

Great information about

customers’ goals and

“life events”

Amplify the customer

voice inside the company

Evidence based decision

making

Integrated multi-product

channel customer

experience

Be the first choice in your space

Great at partnerships and acquisitions

Service enabled core business transactions (with exposed APIs)

Compliance as a competence

Know

ledge o

f end c

onsum

er

Co

mp

lete

OMNI-CHANNEL ECOSYSTEM

DRIVER

Pa

rtia

l

SUPPLIER MODULAR

PRODUCER

Value Chain Ecosystem

Business Design

• ‘Naka’ visits

• 4 M text messages

with customers per

month

• “Skip-level” meetings

and open debate

culture

• “Succeeding as a

family”

• Product designers at the

plant in Pune combine

‘Naka’ & warranty claims

data to design a better

truck

• “We have an information

democracy”

• CEO is one of the top use

of analytics

• “Deploy world class

processes” with strong

reuse of ERP

templates

• “We are 70%

digitized”

• Spend less on IT

(1.2%) and get more

Optimizing

Business

Processes

Nurturing the

Emotional

Connection

Informed

Empathy

Softscaling: A growth strategy for volatile environments- Tata Motors: helped Jaguar Landover to profitably in 1 year

Agarwal, Ritu and Peter Weill. "Softscaling: A New Growth Strategy for Volatile Environments," European Business Review. November 20, 2012. Available at: http://www.europeanbusinessreview.com/?p=2342

Homework!!

What is your percentage of revenues under threat from digital disruption?

How can you move up and to the right?

– Role of IT?

How good are you at (1 poor to 10 really good):

– Optimizing business process

– Nurturing the emotional connection

– Informed empathy based on data

#latamcxoforumjoin the conversation