Welcome and Introduction
LTI@MIT CISR : Effectively Delivering on Digital Transformation
© 2017 MIT Sloan CISR
Dr. Peter WeillChairman & MIT Senior Research [email protected]
Friday, November 3, 2017 | MIT, Cambridge, MA
© 2017 MIT Sloan CISR
245 First StreetE94–15th FloorCambridge, MA 02142
Ph. 617-253-2348Fax [email protected] | http://cisr.mit.edu
MIT CISR’s Mission
Founded in 1974 and grounded in the MIT tradition of rigorous field-based research, MIT CISR helps executives meet the challenge of leading dynamic, global, and information-intensive organizations. Through research, teaching, and events, the center stimulates interaction among scholars, students, and practitioners.
2017 MIT CISR Research Projects
• What Types of Digital Business Transformations Require Organizational Surgery?
• AutoData 2.0: Answering Hard Questions About Your Customers Using Your Own Data and Comparables
• What Are the Different Types of Digital Ecosystem Drivers… and How to Get There
• Cognitive Computing: Developing the Human/Machine Partnership
• Designing Digital Organizations for Integration, Innovation, and Agility
• Exploring Blockchain• Data Wrapping: How Companies Effectively
Use Data to Create Competitive Products and Services
• Re-thinking Talent Management for Digital• Orchestrating the Digital Workplace
for Business Value • Getting Digital Innovation Right
Aetna, Inc.Akamai TechnologiesAllstate Insurance Co. ANZ Banking Group Ltd.
(Australia)APM Terminals (Denmark)Australia PostAustralian Securities &
Investments Commission (ASIC)
Australian Taxation OfficeAustralianSuperB2W Companhia Digital
(Brazil)Banco do Brasil S.A.Bank of Queensland
(Australia)Barclays (UK)BBVA (Spain)Bemis Company, Inc.BiogenBMW GroupBNP Paribas (France)BNY MellonThe Boston Consulting
Group, Inc.BT Group plc (UK)Canadian Imperial Bank
of CommerceCardinal Health, Inc.Caterpillar, Inc.
CEMEX (Mexico)Charles Schwab & Co., Inc.Chevron CorporationCHRISTUS Health Chubb & SonCochlear Limited
(Australia)Commonwealth Bank
of AustraliaCPPIB (Canada)CSBSDBS Bank Ltd. (Singapore)DentaQuestEl Corte Inglés (Spain)EquifaxExxonMobil Global
Services CompanyFairfax Media (Australia)Ferrovial Corporacion,
S.A. (Spain)Fidelity InvestmentsFrieslandCampina
(The Netherlands)General ElectricGenworth FinancialGlaxoSmithKline (UK)Hitachi, Ltd. (Japan)Howden Joinery Group plc
(UK)Insurance Australia GroupIron Mountain
Johnson & JohnsonLKK Health Products
Group Ltd. (HK, China)LPL FinancialMcGraw-Hill EducationNational Australia Bank
Ltd.National Disability
Insurance Scheme (Australia)
New Zealand Govt.—GCIO Office
NielsenNomura Holdings, Inc.
(Japan)Nomura Research Inst.,
Ltd. (Japan)Nordea BankNorthwestern MutualOCP S.A.Orange S.A. (France)Organisation for
Economic Co-operation and Development (OECD)
Origin Energy (Australia)Owens CorningPepsiCo Inc.Pioneer Natural
Resources USA Inc.Principal Financial Group
Procter & GambleQBERaytheon CompanyReserve Bank of AustraliaRoyal Bank of CanadaSabadell BankScentre Group (Australia)Schindler Digital Business
AG (Switzerland)Schneider Electric
Industries SAS (France)Standard Bank Group
(South Africa)State Street Corp.Suncorp Group (Australia)Swinburne University of
Technology (Australia)Sydney Water (Australia)TD Bank N.A.Teck Resources Ltd.
(Canada)Tenet HealthTetra Pak (Sweden)Trinity HealthUSAAWestpac Banking Corp.
(Australia)WestRockWorld Bank
MIT CISR gratefully acknowledges the support and contributions of its Research Patrons and Sponsors.
AlixPartners LLPAvanadeHuawei Technologies Co.,
Ltd. (China)ISACALTIMicrosoft CorporationPricewaterhouseCoopers Advisory Services LLC
CISR Research Patrons CISR Research Sponsors
15 October 2017
MIT HACKS
Agenda
Time Session Title Presenter
8:30 am – 9:00 am Breakfast (Conference Room E62-350)
9:00 am – 9:15 am Welcome address Sujay Sen, LTIDr. Peter Weill, MIT CISR
9:15 am – 10:00 am Future Ready: Four Pathways to Digital Transformation
Dr. Peter Weill, MIT CISR
10:00 am – 10:45 am Employee Experience: Making it Easier to do Complex Work
Dr. Kristine Dery, MIT CISR
10:45 am – 11:15 am Coffee break
11:15 am – 11:45 am Fireside chat with LTI Leadership Rohit Kedia, CBO, LTIDr. Peter Weill, MIT CISR
11:45 am – 12:30 pm Designing a Competitive Innovation Portfolio Dr. Nils Fonstad, MIT CISR
12:30 pm – 12:45 pm Working lunch – break to collect lunch
12:45 pm – 1:30 pm How Companies Leveraging IoT Are Growing Faster
Dr. Stephanie Woerner, MIT CISR
1:30 pm Closing Remarks by LTI Peeyush Dubey, CMO, LTI
2:00 pm – 3:30 pm MIT Campus Walking Tour Dr. Nils Fonstad, MIT CISR
Future Ready: Four Pathways to Digital Transformation
LTI @ MIT CISR: Effectively Delivering on Digital Transformation
Dr. Peter WeillChairman & MIT Senior Research [email protected]
Research TeamDr. Stephanie L. WoernerDr. Ina M. SebastianDr. Nick van der Meulen
This research was made possible by the support of MIT CISR sponsors and patrons.
© 2017 MIT Sloan CISR
Friday, November 3, 2017 | MIT, Cambridge, MA
245 First StreetE94–15th FloorCambridge, MA 02142
Ph. 617-253-2348Fax [email protected] | http://cisr.mit.edu
MIT CISR’s Mission
Founded in 1974 and grounded in the MIT tradition of rigorous field-based research, MIT CISR helps executives meet the challenge of leading dynamic, global, and information-intensive organizations. Through research, teaching, and events, the center stimulates interaction among scholars, students, and practitioners.
2017 MIT CISR Research Projects
• What Types of Digital Business Transformations Require Organizational Surgery?
• AutoData 2.0: Answering Hard Questions About Your Customers Using Your Own Data and Comparables
• What Are the Different Types of Digital Ecosystem Drivers… and How to Get There
• Cognitive Computing: Developing the Human/Machine Partnership
• Designing Digital Organizations for Integration, Innovation, and Agility
• Exploring Blockchain• Data Wrapping: How Companies Effectively
Use Data to Create Competitive Products and Services
• Re-thinking Talent Management for Digital• Orchestrating the Digital Workplace
for Business Value • Getting Digital Innovation Right
Aetna, Inc.Akamai TechnologiesAllstate Insurance Co. ANZ Banking Group Ltd.
(Australia)APM Terminals (Denmark)Australia PostAustralian Securities &
Investments Commission (ASIC)
Australian Taxation OfficeAustralianSuperB2W Companhia Digital
(Brazil)Banco do Brasil S.A.Bank of Queensland
(Australia)Barclays (UK)BBVA (Spain)Bemis Company, Inc.BiogenBMW GroupBNP Paribas (France)BNY MellonThe Boston Consulting
Group, Inc.BT Group plc (UK)Canadian Imperial Bank
of CommerceCardinal Health, Inc.Caterpillar, Inc.
CEMEX (Mexico)Charles Schwab & Co., Inc.Chevron CorporationCHRISTUS Health Chubb & SonCochlear Limited
(Australia)Commonwealth Bank
of AustraliaCPPIB (Canada)CSBSDBS Bank Ltd. (Singapore)DentaQuestEl Corte Inglés (Spain)EquifaxExxonMobil Global
Services CompanyFairfax Media (Australia)Ferrovial Corporacion,
S.A. (Spain)Fidelity InvestmentsFrieslandCampina
(The Netherlands)General ElectricGenworth FinancialGlaxoSmithKline (UK)Hitachi, Ltd. (Japan)Howden Joinery Group plc
(UK)Insurance Australia GroupIron Mountain
Johnson & JohnsonLKK Health Products
Group Ltd. (HK, China)LPL FinancialMcGraw-Hill EducationNational Australia Bank
Ltd.National Disability
Insurance Scheme (Australia)
New Zealand Govt.—GCIO Office
NielsenNomura Holdings, Inc.
(Japan)Nomura Research Inst.,
Ltd. (Japan)Nordea BankNorthwestern MutualOCP S.A.Orange S.A. (France)Organisation for
Economic Co-operation and Development (OECD)
Origin Energy (Australia)Owens CorningPepsiCo Inc.Pioneer Natural
Resources USA Inc.Principal Financial Group
Procter & GambleQBERaytheon CompanyReserve Bank of AustraliaRoyal Bank of CanadaSabadell BankScentre Group (Australia)Schindler Digital Business
AG (Switzerland)Schneider Electric
Industries SAS (France)Standard Bank Group
(South Africa)State Street Corp.Suncorp Group (Australia)Swinburne University of
Technology (Australia)Sydney Water (Australia)TD Bank N.A.Teck Resources Ltd.
(Canada)Tenet HealthTetra Pak (Sweden)Trinity HealthUSAAWestpac Banking Corp.
(Australia)WestRockWorld Bank
MIT CISR gratefully acknowledges the support and contributions of its Research Patrons and Sponsors.
AlixPartners LLPAvanadeHuawei Technologies Co.,
Ltd. (China)ISACALTIMicrosoft CorporationPricewaterhouseCoopers Advisory Services LLC
CISR Research Patrons CISR Research Sponsors
15 October 2017
TransformedTraditional
What is digital business transformation?
Operational EfficiencyImproving operating margin
Cust
omer
Exp
erie
nce
Incr
easin
g N
PS Tran
sfor
med
Trad
ition
al
Source: MIT CISR 2015 CIO Digital Disruption Survey (N=413 and 2016 interviews) and 2016 company interviews. Customer Experience=effectiveness on customer knowledge+omnichannel capability+customer experience projects+customer experience performance. Operational Efficiency=effectiveness on automation and employee productivity projects+% of core capabilities with APIs+cost of operations performance. Quadrants are splits at 2/3 along each axis.
Future Ready• Both innovative and low cost• Great customer experience• Modular and agile• Data is a strategic asset• Ecosystems ready
Integrated Experience• Customer gets an (simulated)
integrated experience despite complex operations
• Strong design and UX• Rich mobile experience including
purchasing products
Industrialized• Plug and play products/services • Service enabled ‘crown jewels’ • One best way to do each key task• Single source of truth
Silos and Spaghetti• Product driven • Complex landscape of processes,
systems and data• Perform via heroics
TransformedTraditional
The four pathways to Future Ready
Operational EfficiencyImproving operating margin
Cust
omer
Exp
erie
nce
Incr
easin
g N
PS Tran
sfor
med
Trad
ition
al
The lines are the transformation pathways. Explosions are major changes in decision rights and organizational surgery. Quadrants are splits at 2/3 along each axis.Customer Experience= effectiveness on customer knowledge+ omnichannel capability+customer experience projects+customer experience performance.Operational Efficiency =effectiveness on automation and employee productivity projects+% of core capabilities with APIs+cost of operations performance. Sources: Quadrants are derived from data from MIT CISR 2015 CIO Digital Disruption Survey (N=413) and 2016 company interviews.
Future ReadyIntegrated Experience
IndustrializedSilos and Spaghetti
• Customer gets an (simulated) integrated experience despite complex operations
• Strong design and UX• Rich mobile experience including purchasing
products
• Both innovative and low cost• Great customer experience• Modular and agile• Data is a strategic asset• Ecosystems ready
• Product driven • Complex landscape of processes, systems
and data• Perform via heroics
• Plug and play products/services • Service enabled ‘crown jewels’ • One best way to do each key task• Single source of truth
2 4
3
1
TransformedTraditional
Future-ready firms have the best margins compared to competitors
Operational EfficiencyImproving operating margin
Cust
omer
Exp
erie
nce
Incr
easin
g N
PS
Tran
sfor
med
Trad
ition
al
Source: MIT CISR 2015 CIO Digital Disruption Survey (N=413) and 2016 company interviews. Customer Experience=effectiveness on customer knowledge+ omnichannelcapability+customer experience projects+customer experience performance. Operational Efficiency=effectiveness on automation and employee productivity projects+% of core capabilities with APIs+cost of operations performance. Quadrants are splits at 2/3 along each axis. Net Margin is relative to industry average.
Future ReadyIntegrated Experience
IndustrializedSilos and Spaghetti
15%% firms
Percentage points above or below industry average net margin
| -3.6 23% | 16.0
51% | -5.1 11% | 4.6
Discussion questions
Which pathway(s) are you on and what percent of your transformation is complete?
Please prepare a one-sentence summary
to share.
What is the key lesson you have learnt?
TransformedTraditional
The four pathways to Future Ready
Operational EfficiencyImproving operating margin
Cust
omer
Exp
erie
nce
Incr
easin
g N
PS
Trad
ition
al
The lines are the transformation pathways. Companies are MIT CISR researcher estimates. Source: MIT CISR 2015 & 2017 CIO Digital Disruption Survey (N=800) and 2016/7 company interviews. Customer Experience= effectiveness on customer knowledge+ omnichannel capability+customer experience projects+customer experience performance. Operational Efficiency =effectiveness on automation and employee productivity projects+% of core capabilities with APIs+cost of operations performance. Quadrants are splits at splits at 2/3 along each axis.
Future ReadyIntegrated Experience
IndustrializedSilos and Spaghetti
Tran
sfor
med
All pathways pay off
Source: Source: MIT CISR 2017 Pathways to Digital Business Transformation survey (n=400). Circles represent average performance change relative to competitors above and below 50% complete. Full circle = margin (growth) = 12.7 (15.9) percentage points improvement.
Average margin 66% higher and growth 84% higher comparing firms above and below 50% complete on transformation
Pathway Margin Growth
Employee Experience: Making it Easier to do Complex Work.
Friday, 3 November 2017
LTI@MIT CISR: Effectively Delivering on Digital Transformation
Dr. Kristine DeryResearch Scientist [email protected]
Research TeamDr. Ina SebastianDr. Nick van der Meulen
This research was made possible by the support of MIT CISR sponsors and patrons.
©2017 MIT Sloan CISR
MIT CISR gratefully acknowledges the support and contributions of its Research Patrons & Sponsors
PatronsAlixPartners LLPAvanadeHuawei Technologies Co., Ltd.ISACALTIMicrosoft CorporationPricewaterhouseCoopers
Advisory Services LLC
SponsorsAetna, Inc.Akamai TechnologiesAllstate Insurance CompanyANZ Banking Group Ltd.APM TerminalsAustralia PostAustralian Securities & Investments
Commission (ASIC)Australian Taxation OfficeAustralianSuperB2W Companhia DigitalBanco do Brasil S.A.Bank of QueenslandBarclaysBBVA Bemis Company, Inc.
Biogen, Inc.BMW GroupBNP ParibasBNY MellonThe Boston Consulting Group, Inc.BT Group plcCanadian Imperial Bank of CommerceCardinal Health, Inc.Caterpillar, Inc.CEMEX Charles Schwab & Co., Inc.Chevron CorporationCHRISTUS HealthCochlear LimitedCommonwealth Bank of AustraliaCPPIBCSBSDBS Bank Ltd.DentaQuestEl Corte InglésEquifaxExxonMobil Global Services CompanyFairfax MediaFerrovial Corporacion, S.A.Fidelity InvestmentsFrieslandCampinaGeneral Electric
Genworth FinancialGlaxoSmithKlineHitachi, Ltd.Howden Joinery Group plcInsurance Australia GroupIron MountainJohnson & Johnson (J&J)LKK Health Products Group Ltd.LPL FinancialMcGraw-Hill EducationNational Australia Bank Ltd.National Disability Insurance SchemeNew Zealand Government—
GCIO OfficeNielsenNomura Holdings, Inc.Nomura Research Institute, Ltd.Nordea BankNorthwestern MutualOCP S.A.Orange S.A.Org. for Economic Co-operation
and Development (OECD)Origin EnergyOwens CorningPepsiCo Inc.Pioneer Natural Resources USA Inc.
Principal Financial GroupProcter & GambleQBE Raytheon CompanyReserve Bank of AustraliaRoyal Bank of CanadaRoyal PhilipsSabadell BankScentre GroupSchindler Digital Business AGSchneider Electric Industries SASStandard Bank GroupState Street Corp.Suncorp GroupSwinburne University of TechnologySydney WaterTD Bank, N.A.Teck Resources LimitedTenet HealthTetra PakTrinity HealthUSAAWestpac Banking CorporationWestRockWorld Bank
Great new CX … but how is the EX?
WORKPLACE SPEED BUMPS…
…destroy value
Employee Experience: The capabilities and behaviors that enable and constrain our people to do their jobs today, and to reimagine their jobs of tomorrow
Employee Experience adds value
Dery, K. , and Sebastian, I. (2017) Building Value with Employee Experience” MIT CISR Research Briefing , Volume XVII, Number 6, June. Based on data from 2016 MIT CISR Survey (N=281)
EMPLOYEE EXPERIENCE
Top Performers
CUSTOMERSATISFACTION
NPS industry average
INNOVATION
New products/ services to market
in 2 years
PROFITABILITY
Increased revenue, lower
costs
Employee Experience: two key factors
ADAPTIVEWORK
ENVIRONMENT
COLLECTIVE WORKHABITS
Its not about Brownies in the Break Room
Image by Tastemade.co.uk
DESIGNING NEW SPACES IS
NOT THEANSWER
DIGITALCAPABILITIES
Priorities to build great Employee Experience
RESPONSIVELEADERSHIP
ADAPTIVEWORK
ENVIRONMENT
COLLECTIVE WORKHABITS
Cutting Edge Technology
StartupCulture
Great Placeto Work
DBS’ Digital Future
Assessing your employee experience
≥46: Your employee experience is on par with companies scoring in the top quartile on EX
≤ 34: Your employee experience exhibitscharacteristics of companies scoring in the bottom quartile on EX
Vote Now
0 1 2 3 4 5 6 7 8 9
<15 16–20 21–25 26–30 31–35 36–40 41–45 46–50 51–55 >56
Fireside Chat with LTI Leadership
LTI@MIT CISR : Effectively Delivering on Digital Transformation
Friday, November 3, 2017 | MIT, Cambridge, MA
© 2017 MIT Sloan CISR
Rohit Kedia, LTIDr. Peter Weill, MIT CISR
Designing a Competitive Innovation Portfolio
Friday, 3 November 2017
Dr. Nils Olaya FonstadResearch [email protected]
Research TeamDr. Martin MockerDr. Jeanne RossDr. Peter WeillDr. Stephanie Woerner
Dr. Alejandro Neut (BBVA)
This research was made possible by the support of MIT CISR sponsors and patrons.
©2017 MIT Sloan CISR
LTI@MIT CISR: Effectively Delivering on Digital Transformation
MIT CISR gratefully acknowledges the support and contributions of its Research Patrons & Sponsors
PatronsAlixPartners LLPAvanadeHuawei Technologies Co., Ltd.ISACALTIMicrosoft CorporationPricewaterhouseCoopers
Advisory Services LLC
SponsorsAetna, Inc.Akamai TechnologiesAllstate Insurance CompanyANZ Banking Group Ltd.APM TerminalsAustralia PostAustralian Securities & Investments
Commission (ASIC)Australian Taxation OfficeAustralianSuperB2W Companhia DigitalBanco do Brasil S.A.Bank of QueenslandBarclaysBBVA
Bemis Company, Inc.Biogen, Inc.BMW GroupBNP ParibasBNY MellonThe Boston Consulting Group, Inc.BT Group plcCanadian Imperial Bank of CommerceCardinal Health, Inc.Caterpillar, Inc.CEMEX Charles Schwab & Co., Inc.Chevron CorporationCHRISTUS HealthCochlear LimitedCommonwealth Bank of AustraliaCPPIBCSBSDBS Bank Ltd.DentaQuestEl Corte InglésEquifaxExxonMobil Global Services CompanyFairfax MediaFerrovial Corporacion, S.A.Fidelity InvestmentsFrieslandCampina
General ElectricGenworth FinancialGlaxoSmithKlineHitachi, Ltd.Howden Joinery Group plcInsurance Australia GroupIron MountainJohnson & Johnson (J&J)LKK Health Products Group Ltd.LPL FinancialMcGraw-Hill EducationNational Australia Bank Ltd.National Disability Insurance SchemeNew Zealand Government—
GCIO OfficeNielsenNomura Holdings, Inc.Nomura Research Institute, Ltd.Nordea BankNorthwestern MutualOCP S.A.Orange S.A.Org. for Economic Co-operation
and Development (OECD)Origin EnergyOwens CorningPepsiCo Inc.
Pioneer Natural Resources USA Inc.Principal Financial GroupProcter & GambleQBE Raytheon CompanyReserve Bank of AustraliaRoyal Bank of CanadaRoyal PhilipsSabadell BankScentre GroupSchindler Digital Business AGSchneider Electric Industries SASStandard Bank GroupState Street Corp.Suncorp GroupSwinburne University of TechnologySydney WaterTD Bank, N.A.Teck Resources LimitedTenet HealthTetra PakTrinity HealthUSAAWestpac Banking CorporationWestRockWorld Bank
Key findings: • Portfolio allocation (not total spend)
differentiates the most competitive firms• Competitive portfolios consist of four types
of digital innovation
In 5 years, Audi significantly expanded its portfolio of digital innovation1
1. A digital innovation is a new (from the point-of-view of your company) or significantly improved product, service, or process that relies in large parts on digital technologies such as social, mobile and cloud computing, analytics or internet of things technology.Source: MIT CISR Survey on Digital Innovation; data collected from Sept.-Nov. 2016 (N=201)
Business OperationsSmart FactoryKey objectives
- Operational efficiency- Flexibility
Customer-facing- Customer experience (Touch Points –
e.g., Smart City)- New products/services (Audi Connect)Key objectives- Revenue per product/service- Revenue per customerEmployee Experience
Enterprise 2.0Key objective
Employee productivityNew Business ModelsMobility services (ABI)Key objective: New revenue from new customers
Customer-facing- Customer experience (Touch Points –
e.g., Smart City)
Key objectives- Revenue per product/service
Digital innovation consists of four types;not all firms are in investing in all four types
Business Operations
Employee Experience
New Business Models
25%30%
25%
10%
10%
(45% do NOT invest in this type)
(25% do NOT invest in this type)
(6% do NOT invest in this type) Customer-facing- New products/services- Customer experience
(13% do NOT invest in this type)
50%
Source: MIT CISR Survey on Digital Innovation; data collected from Sept.-Nov. 2016 (N=201)
Digital innovation is inherently risky
Average Yield Rate: 42%
Average Yield Rate: 29%
Customer-facing
Business Operations
Employee Experience
New Business Models
Average Yield Rate: 49%
Average Yield Rate: 26%
Overall Yield Rate: 45%45% of total spend on digital innovation
leads to measurable positive business value
Source: MIT CISR Survey on Digital Innovation; data collected from Sept.-Nov. 2016 (N=201)
Average portfolios of top performing firms on four business outcomes… are different
NewBusiness
ModelEmployee Experience
BusinessProcess
10 20 2545
Customer Facing
10 30 2535
20 50 1020
25 25 1040
AVERAGE PORTFOLIO
Competitive Portfolio: For several performance outcomes, performance can be predicted by a distinct portfolio strategy (e.g., high performers invest a greater percentage in Type A and a smaller percentage in Type B; low performers do the inverse). For each business outcome, the competitive portfolio is the average of the top 25% of firms on the most competitive end of the portfolio strategy.Source: 2016 MIT CISR Survey on Digital Innovation (N=201)
Customer Satisfaction
Efficient Business Process
Revenue Growth
Innovativeness
TOP QUARTILE PERFORMERS ON:
Top performers in customer satisfaction balancecustomer facing with employee experience
Customer FacingNew web experience
Home delivery
Business ProcessPricing engine
Upgraded platform
Employee ExperienceEmpowering product
teams to innovate smarter
New Business ModelsOnline finance
Results (2017): Sales increased 5% to $15.9BNPS of 81; 13 consecutive years on FORTUNE
magazine’s 100 Best Companies to Work For® list
Use your portfolio as a compass;Use the average portfolio of top performers as your due north
NewBusiness
ModelEmployee Experience
BusinessProcess
10 20 2545
Customer Facing
10 30 2535
20 50 1020
25 25 1040
AVERAGE PORTFOLIO
Competitive Portfolio: For several performance outcomes, performance can be predicted by a distinct portfolio strategy (e.g., high performers invest a greater percentage in Type A and a smaller percentage in Type B; low performers do the inverse). For each business outcome, the competitive portfolio is the average of the top 25% of firms on the most competitive end of the portfolio strategy.Source: 2016 MIT CISR Survey on Digital Innovation (N=201)
Customer Satisfaction
Efficient Business Process
Revenue Growth
Innovativeness
TOP QUARTILE PERFORMERS ON:
? ? ??Your organization’s portfolio
DISCUSSIONWhat is the single most important change that you would advocate for in your organization’s digital innovation portfolio?
Why?
Key findings (second pair): • For both high and low performers, 45% of
investments result in positive business impact• High performers actively manage synergies across
all four types of digital innovations
Top performers do two things differently with digital innovation
2.Allocationof Spend
3. Key Practices
PERFORMANCE OUTCOMES 1. Innovativeness2. Efficiency3. Customer Satisfaction (e.g., NPS)4. Revenue Growth
1.Total Amount Spent
INPUTS
Source: MIT CISR Survey on Digital Innovation; data collected from Sept.-Nov. 2016 (N=201)
Next steps to innovating competitively
1. Use your portfolio as a compass• The portfolio, rather than total spend, is what
matters• Invest in all four types• Decide on your goal for innovation; weigh
investments accordingly
2. Actively manage your portfolio• Enhance the impact of individual innovations • Realize complementarities across innovations
• Provide a common focus• Include flexible, VC-inspired funding• Ensure engagement throughout
• Foster a start-up culture
3. Reward learning from successes and failures
Leveraging the Internet of Things for Growth
Friday, 3 November 2017
LTI@MIT CISR: Effectively Delivering on Digital Transformation
Dr. Stephanie L. WoernerResearch ScientistCenter for Information Systems Research (CISR)MIT Sloan School of Management [email protected], @SL_Woerner
Research TeamDr. Peter WeillDr. Stephanie L. Woerner
This research was made possible by the support of MIT CISR sponsors and patrons.
© 2017 MIT Sloan CISR
MIT CISR gratefully acknowledges the support and contributions of its Research Patrons & Sponsors
PatronsAlixPartners LLPAvanadeHuawei Technologies Co., Ltd.ISACALTIMicrosoft CorporationPricewaterhouseCoopers
Advisory Services LLC
SponsorsAetna, Inc.Akamai TechnologiesAllstate Insurance CompanyANZ Banking Group Ltd.APM TerminalsAustralia PostAustralian Securities & Investments
Commission (ASIC)Australian Taxation OfficeAustralianSuperB2W Companhia DigitalBanco do Brasil S.A.Bank of QueenslandBarclaysBBVA Bemis Company, Inc.
Biogen, Inc.BMW GroupBNP ParibasBNY MellonThe Boston Consulting Group, Inc.BT Group plcCanadian Imperial Bank of CommerceCardinal Health, Inc.Caterpillar, Inc.CEMEX Charles Schwab & Co., Inc.Chevron CorporationCHRISTUS HealthCochlear LimitedCommonwealth Bank of AustraliaCPPIBCSBSDBS Bank Ltd.DentaQuestEl Corte InglésEquifaxExxonMobil Global Services CompanyFairfax MediaFerrovial Corporacion, S.A.Fidelity InvestmentsFrieslandCampinaGeneral Electric
Genworth FinancialGlaxoSmithKlineHitachi, Ltd.Howden Joinery Group plcInsurance Australia GroupIron MountainJohnson & Johnson (J&J)LKK Health Products Group Ltd.LPL FinancialMcGraw-Hill EducationNational Australia Bank Ltd.National Disability Insurance SchemeNew Zealand Government—
GCIO OfficeNielsenNomura Holdings, Inc.Nomura Research Institute, Ltd.Nordea BankNorthwestern MutualOCP S.A.Orange S.A.Org. for Economic Co-operation
and Development (OECD)Origin EnergyOwens CorningPepsiCo Inc.Pioneer Natural Resources USA Inc.
Principal Financial GroupProcter & GambleQBE Raytheon CompanyReserve Bank of AustraliaRoyal Bank of CanadaSabadell BankScentre GroupSchindler Digital Business AGSchneider Electric Industries SASStandard Bank GroupState Street Corp.Suncorp GroupSwinburne University of TechnologySydney WaterTD Bank, N.A.Teck Resources LimitedTenet HealthTetra PakTrinity HealthUSAAWestpac Banking CorporationWestRockWorld Bank
IoT commitment and new business model change varies within industries
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Financial Services
Manufacturing
Retail
Percent of revenues from products and services introduced in the last 3 years
Perc
ent I
oTCo
mm
itmen
t
Source: MIT CISR 2015 CIO Digital Disruption Survey, N=352
Business Model Change (% of
revenues from new products and
services)
DriversMore threat than
opportunity
Organizational Readiness
More ability to change
VisionMore ExCo time on disruptionand CIO time on
innovation
New IoTCapabilitiesMore connectivity (open APIs)More infrastructureMore IP-enabled assets
IoT commitment has four factors
Source: MIT CISR 2015 CIO Digital Disruption Survey, N=413. Variables are significant in a regression at the p<0.05 level.
Business Model Change
IoT commitment correlates with business model change
Source: MIT CISR 2015 CIO Digital Disruption Survey, N=413..
Drivers
Vision
New IoT Capabilities
Organizational Readiness
Companies in the
Top Quartile of IoTCommitment Generate
50% of their revenues from new products and services introduced in the last three years
Bottom Quartile = 16%
Schindler Holding AG
Founded in 1874 in Switzerland
Manufactures, installs, and maintains escalators, elevators and moving walks
Active in 100 countries with over 58,270 employees
Forbes Magazine lists Schindler as one of the world’s most innovative companies
2016 revenues of $9.5B USD
2016 Schindler Industry
5-year revenue growth 4.7% (0.4%)
Net profit margin 7.9% 9.1%
ROA 9.2% 4.8%
Sources: onesource.com, factiva.com, schindler.com
IoT Commitment at Schindler
DRIVERSIncreasingly price sensitive marketConstant innovation needed for growth markets in Asia (60% of new installations)Highly competitive industry with huge market opportunityMaintenance accounts for 50% of industry revenues and about 75% of operating profits
VISIONLeadership through customer service
Outperform competitors in an increasingly price-sensitive market through cost leadership
Digital systems to ensure smooth experience
ORGANIZATIONAL READINESSNew structure with two global businesses: New Installations and Supply Chain and Service Business Incubation as a separate unitIT redesigned with streamlined processesClosed loop service platform with elevators and escalators integrated using the IoT
NEW IoT CAPABILITIES
Sensors on elevators send 200 million messages a day on elevator performance
Business rules engine analyzes sensor data for insightsCustomer web portal and mySchindler app for real-time information
Predictive analytics
Sources: http://www.schindler.com/com/internet/en/about-schindler/vision-and-values/vision.html,; http://www.schindler.com/com/internet/en/media/press-releases-english/press-releases-2015/schindler-wins-mit-sloan-cio-leadership-award-2015.html; http://www.schindler.com/com/internet/en/mobility-solutions/success-stories/technology-in-schindler/collaboration-with-apple.html; Schindler 2104 Annual Report; http://www.cio.com/article/2993292/big-data/cio-is-pushing-the-right-buttons.html
What’s your IoT strategy?
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Closing Remarks
LTI@MIT CISR : Effectively Delivering on Digital Transformation
Friday, November 3, 2017 | MIT, Cambridge, MA
© 2017 MIT Sloan CISR
Peeyush Dubey, LTI
