"Make sure your technology can keep up"
Professor Stijn Viaene on the digital economy
Source: Business Bytes 14 (Digital newsletter for Telenet, aimed at businesses and governments)
A modern company that wants to focus on digital innovation needs to put the customer experience first, experiment with value propositions, act co-economically and think in terms of ecosystems, according to Vlerick Professor Stijn Viaene. He calls these the “four realities of the digital economy,” and the last two in particular depend on the quality of the IT infrastructure.
The digital economy is an “exconomy”
Stijn Viaene summarises the four realities of the digital economy in the term “exconomy”. The term refers to customer EXperience, EXperimenting with value propositions, COllaboration and eCOsystems.
Reality 1. The customers are in charge, because...
nowadays they can switch easily from company x to company y. You can research and compare on the internet like never before. It just takes a few clicks. So, according to Professor Viaene, companies need to conquer customers' heads and hearts and use all their resources to deliver the customer experience, including their IT infrastructure and network. "Focusing on the customer experience will blur the boundaries between industries," he believes. "A company like Google is venturing into the online-payments market, for example. They are not a bank, but from their customer-focused perspective it's a logical step."
Reality 2. Experimentation is necessary, because...
simply hypothesising about how a product or service will be received by customers will get you nowhere. Today, value propositions have to be tested. Stijn Viaene: "Carrying out A/B tests (testing the effect of various design options) is already common practice for websites, but companies can also test digital value propositions in a similar way, though on a much larger, industrial scale. We now have the technology and networks that we need to conduct huge experiments and accurately determine what does and does not work.”
Reality 3. Companies are making stronger connections with each other, because...
they can then focus on what they're really good at, in a cost-effective manner. "The digital economy is a co-economy. It's all about collaboration and co-creation,” says Viaene. "We are now seeing real alliances developing. This is something completely different from outsourcing in order to save costs or forming a partnership with a supplier. In an alliance, value is created together and shared between the parties. Such alliances are not possible without strong digital infrastructure. The cooperation between companies and customers is growing too, resulting in new value propositions."
Reality 4. The future is on digital platforms because...
these architectures of reusable and integratable digital services form the basis for flourishing digital business ecosystems. Stijn Viaene gives eBay as an example. "The eBay platform offers customers the opportunity to simply and quickly set up an online shop with access to a large online market. They don't have to invest in their own digital infrastructure and they still get access to a whole e-commerce environment and market in no time. eBay earns in proportion to the success of the shop. This encourages eBay to continuously improve and extend its digital services. The shop only stands to benefit from this and consequently so does eBay. And the customers? They also benefit. A rich and appealing range of offerings attracts customers. More customers then draw in more sellers. And so on. These are the positive network effects of a successful ecosystem.”
Stijn Viaene believes that we have "only seen the tip of the iceberg when it comes to the digital economy". "With the Internet of Everything, everything becomes a sensor and producer of data. We will be able to respond to the customer experience even more successfully, gain additional opportunities to test value propositions and use even more data in cooperations. The sensor data needs to be unlocked correctly, however. This is a key task for ecosystem platforms. They will invest in reuse, transparent connectivity between parties, and they will enable markets.” But according to Viaene, it will take a while for the Internet of Everything to become mainstream. He believes all companies can capitalise on the four realities today, however. "Lots of companies have data they are currently not using optimally. Build a platform around this data or provide it for use by a larger ecosystem. The London underground has done this with its data on underground lines and travel times. A brilliant open-data initiative. But this was so popular that the system soon crashed. If you take these kinds of initiatives, you need to be able to rely on your infrastructure. Always make sure your technology can keep up.”