deconstruction
business application of, 225–228
dimensions of, 198–201, 202t–203t
worksheet for, 226w
deep learning, 84–85
delivery model, 3–4, 3f
See also connection architecture; revenue models; technology infrastructure
diagnostic questions, 50–51
Didi, 29
digital twins, 212
Disney MagicBand
competitive advantage of, 2, 235
connection architecture, 6–7, 100–101, 152–153, 170
as innovation of existing technology, 208, 215
revenue model, 14
rewards of, 34
Dollar Shave Club, 174
DonorsChoose.org, 164
Dragon Dictate, 210
drone delivery, 213
Dropbox, 186
dynamic pricing, 35–41, 178
Earnest, 149–150
EasyTaxi app, 33
eBay, 164
economies of scale, 114–115
ecosystem, 184–185
education, efficiency frontier in, 94–98, 95f
efficiency frontier
competitive advantage and, 5, 42–43
concept of, 22–24, 23f
disruptive potential of, 47
in education, 94–98, 95f
in grocery retailing, 24–29
Pareto dominance and, 30, 241
in ride-hailing industry, 29, 31
sketching, 55–59
worksheet for, 56w
See also willingness-to-pay
eHarmony, 41
episodic interactions
See repeated interactions
e-scooter industry, 156
European Union General Data Protection Regulation, 117, 193
Expedia, 158–159, 171
external search, 248
Facebook, 13, 46, 159, 161, 190, 192
fees-at-risk revenue model, 184
financial services
connected producers, 149–150
crowd orchestrators, 161–162
customer needs in, 147–148
peer-to-peer network creators, 165–168
fit attributes, 52–53
Fitbit, 83, 176–177
Ford, Henry, 91
freemium revenue models, 186–187
friction, 53
See also cost reduction
fulfillment cost
definition of, 23
in education, 95, 95f
in meal-kit delivery services, 25–26
reduction of, 136–141
See also efficiency frontier
gaming industry, 80, 187
General Data Protection Regulation, 117, 193
General Motors, 151
GetTaxi app, 33
Gillette, 174
Gobble, 154
Gogoro, 156
Goodr, 39
Google
AdWords, 190
connection architecture, 152, 159, 161
Nest thermostat, 196
revenue models, 186, 188, 190
voice recognition technology, 210–211
Grab, 29
Green Chef, 154
grocery retailing
efficiency frontier in, 22–24, 23f
willingness-to-pay, 27–29
See also meal-kit delivery services
haggling, 178
health care space, revenue models for
See revenue models
Heller, 212
HelloFresh, 24, 43, 154
Hema app (Alibaba), 28, 29f
hidden Markov chains, 210
hierarchy of needs, 108, 112–114, 142, 144, 152, 189, 232
HomeAway, 38
Homeplus app (Tesco), 28, 29f
hovering, automatic, 11, 83, 87, 109
HP Instant Ink program, 77, 79
IBM, 152, 186, 210
in-app purchases, 187
Indian grocery market, 27
information, limitations in, 178, 180
information flow
dimensions of, 79–83, 81t
identifying and documenting, 131–133
worksheet for, 132w
infrastructure-as-a-service revenue model, 186
innovation, 209–213, 236–237, 249
Instacart, 26–27, 171
Instagram, 192
Instant Ink program (HP), 77, 79
Internet of Things, xi, 10, 77, 212
iRobot Roomba, 196
IronPlanet, 159, 160
JD, 29
Jobs, Steve, 205, 208
Kayak, 38–39
Khan, Salman, 92, 95–96
Khan Academy, 92
Kickstarter, 161–162, 171
learning analytics
customer-level learning, 101–103, 103f, 134–136
population-level learning, 103–107, 107f
repeat dimension and, 110–115, 112f
LendingTree, 157
LinkedIn, 167, 186–187, 190
loan providers
See financial services
L’Oréal, 76
Love, Jack, 215
Lyft, 5, 10, 31, 70, 115
Lynda.com, 93, 102, 107
Mack Institute for Innovation Management, 10, 262–263
MagicBand
See Disney MagicBand
market makers, connected, 157–161, 158f, 171
Markowitz, Harry, 241
Match.com, 41, 167
McAfee, Andrew, 11
McGrath, Rita Gunther, 11
McGraw-Hill, 2, 7–9, 102
McMillan, Ian C., 11
meal-kit delivery services
curated offering, 71
efficiency frontier in, 24–29, 27f, 29f
membership revenues, 166–167
micropayment revenue models, 187–188
Microsoft, 186, 210
Mint, 191
MyTaxi app, 33
Nadi X pants, 76
Nalebuff, Barry J., 11
needs, recognition of
See recognition of needs
Nest thermostat, 196
Netflix, 71, 82, 113, 155, 171
Netsuite, 186
network effects, 115
neural networks, 85
New York City cab operations, 32–35, 37
Niantic, 14
Nike, 7, 167, 170, 186
Nintendo, 14
not-for-profit crowd orchestrators, 164–165
Ola, 29
OnDeck, 149–150
OpenTable, 38, 159
Organisation for Economic Co-operation and Development, 117
ownership, cost of, 52–55
P2P
See peer-to-peer (P2P) network creators
pain points
identification of, 126–130, 136–141
in ride-hailing industry, 31–35
worksheets for, 130w, 139w
Pareto dominance, 30, 241
PatientsLikeMe, 41
pay-as-you-go revenue model, 185–188
pay-for-data revenue model, 192–193
pay-for-performance revenue model, 183–184
pay-with-data revenue model, 190–193
PeachDish, 154
peer-to-peer (P2P) network creators, 165–168, 168f, 172
performance, pricing contingent on, 183–184
performance attributes, 52
personalization
See customization
PillsyCap, 176
platform-as-a-service revenue model, 186
platform strategies, 12–13
population-level learning, 103–107, 107f
Porter, Michael E., 11, 57
posted prices, 178
power purchase agreements (PPAs), 184
Priceline, 158–159, 171
pricing
dynamic, 178
posted prices, 178
surge, 35–41
See also revenue models
privacy
concerns, 44–46, 116–118, 144
producers, connected, 148–153, 149f, 170–171
product handoff function, 208
Progressive Insurance, 151–152
Prosper, 161
Purple Carrot, 154
QQ Show, 187
reacting technologies, 228
recognition of needs
in repeated interactions, 98–101
role of, 3, 64–67, 66t, 199
STAR approach to, 200–201, 203t–204t
why-how ladder, 107–110, 109f, 133–134
referral fees, 191
reinvestment into relationships, 189–190
Rent the Runway, 155
repeated interactions
competitive advantage and, 110–115, 112f
customer-level learning in, 101–103, 103f, 134–136
data-protection policies, 116–118
examples of, 91–94
improving customer experiences with, 141–144
population-level learning in, 103–107, 107f
recognition of needs in, 107–110
role in connected strategy framework, 3–4, 199
STAR approach to, 200–201, 202t–203t
summary of, 118–119
unified customer experiences across, 98–101
worksheet for, 143w
See also trust
requests
role in connected strategy framework, 3, 64–67, 66f, 199
STAR approach to, 200–201, 202t–203t
strengthening through repeated interactions, 101–103
respond-to-desire customer experience
characteristics of, 6–7, 67–70, 69f
information flow in, 81t, 82
use cases for, 86–87, 88t
response
role in connected strategy framework, 3, 64–67, 66f, 199
STAR approach to, 200–201, 202t–203t
strengthening through repeated interactions, 103–107, 107f
See also respond-to-desire customer experience
retailers, connected, 153–157, 153f, 171
retinal photographs, insurance reimbursement of, 181–182
revenue models
complementary products, 167
creation of, 222, 224
definition of, 174
ecosystem for, 184–185
examples of, 173–177
fees for information, 167
limitations of, 179–181
pay-as-you-go, 185–188
pay-for-data, 192–193
pay-for-performance, 183–184
pay-with-data, 190–193
reinvestment into relationship, 189–190
role in connected strategy framework, 4, 14
summary of, 193–194
traditional, 178–179
transaction or membership revenues, 166–167
value creation, 181–183
See also cost reduction
ride-hailing industry
competitive advantage in, 42–43
cost reduction in, 35–41
customer experience in, 5
disruptive potential of, 47
efficiency frontier in, 29, 31
network effect, 115
pain points in, 31–35, 34t
surge pricing in, 35–41
Robert Bosch, 156
Rolls-Royce, 16, 183–184
Roomba, 196
Salesforce, 152, 186
search, external, 248
selection tables, 198, 248
sensing technologies, 225, 227
Sensoria, 76
sensors, wearable, 76
Shiseido, 73
Siri, 210
SmartInhaler, 106
software-as-a-service revenue model, 186
South Korean grocery market, 27–28
Square, 104–105
stack framework, 201, 205–206
STAR (sense-transmit-analyze-react) approach, 200–201, 202t–203t
Stuart, Harborne W., Jr., 11
Sun Basket, 154
supply chain, 184
surge pricing, 35–41
Sweeten, 159
Target, 45–46
technology infrastructure
classification trees for, 206–208, 207f
deconstruction of, 198–201, 202t–203t, 225–228
design alternatives for, 206–208, 209t
identification of, 228–231
importance of, 14–15
innovation in, 209–213, 236–237
role in connected strategy framework, 4
sample scenarios for, 195–198
stack framework, 201, 205–206
visionary thinking for, 213–215
worksheet for, 229w–230w
Tencent, 187–188
Tesco, 27–28, 29f
textbooks, smart, 2, 7–9, 34, 92–93, 102
three-dimensional printing technology, 73, 228
tipping, virtual, 187–188
traditional revenue models, 178–179
training neural networks, 85
transactional friction, 179, 180
transaction costs, 53
See also cost reduction
transaction revenues, 166–167
TransferWise, 166
transmitting technologies, 227
TripAdvisor, 190
true personalization, 73
trust
data-protection policies, 116–118, 144
importance of, 44–46, 236
revenue models and, 178–180
why-how ladder, 107–110, 109f, 133–134
Uber
competitive advantage, 5, 32, 43
connection architecture, 10, 12, 170–171
efficiency frontier, 29
respond-to-desire customer experience, 70
See also ride-hailing industry
Uberization, 170
Vacation Rental by Owners (VRBO), 38
value creation, 181–183
Venmo, 165–166
voice recognition, 209–211
Volkswagen, 151
Volocopter, 213
Volpp, Kevin, 11
Wallaby Financial, 157–158
Wawa, 208
Wealthfront, 153–154
wearable sensors, 76
Wearable X, 76
WeChat, 188
Weinman, Lynda, 93
why-how ladder, 107–110, 109f, 133–134
willingness-to-pay
definition of, 22
drivers of, 52–55
in education, 95, 95f
identifying drivers of, 126–130
in meal-kit delivery services, 25
in ride-hailing industry, 31–35
worksheets for, 54w, 130w
See also efficiency frontier
worksheets
connected strategy matrix, 219w, 223w
customer journey, 125w
deconstruction, 226w
efficiency frontier, 56w
information flow, 132w
pain points, 130w, 139w
repeated customer experiences, 143w
technological solutions, 229w–230w
why-how ladder, 134w
willingness-to-pay drivers, 54w, 130w
World of Warcraft, 80
Wozniak, Steve, 205, 208
Xerox PARC, 208
Yandex, 29
YouTube, 167
Zalando, 105, 155
Zipcar, 11, 155–156
Zipline, 213
ZocDoc, 38
ABOUT THE AUTHORS AND ACKNOWLEDGMENTS
Both of us grew up in Germany but pursued (for Germans) uncommon education paths. After receiving a diplom in business information technology at the University of Mannheim, Christian studied at INSEAD in France to receive his PhD in management. Similarly, after completing German high school, Nicolaj went to Stanford University as an undergraduate, receiving a BA in economics, and then on to Harvard, studying under Michael Porter, to receive a Ph
D in business economics. We both joined the Wharton School of the University of Pennsylvania in 1998 as faculty members, Christian in the Operations, Information and Decisions Department and Nicolaj in the Management Department. Over time, we worked ourselves up the ranks and both now hold endowed chairs. Christian is the Andrew M. Heller Professor and also holds a faculty appointment in Penn’s Perelman School of Medicine. Nicolaj is the David M. Knott Professor and a former department chair of Wharton’s Management Department.
Our research has appeared in many of the leading academic journals in our fields—Christian focusing on operations management and innovation management, and Nicolaj on strategy and organizational design—including Management Science, the Strategic Management Journal, Administrative Science Quarterly, and the New England Journal of Medicine. We are also members of the editorial boards of key academic journals. Christian is the coauthor of Matching Supply with Demand, a widely used textbook in operations management, and of Innovation Tournaments, a guide for creating and selecting exceptional opportunities within organizations.
Both of us very much enjoy teaching in our MBA and executive MBA programs. Together, we have won more than fifty teaching awards in the Wharton classroom. One key perk of working at a top business school is the opportunity to present our work in front of many executive audiences. Nicolaj serves as academic director at Wharton Executive Education for two open-enrollment courses on strategy (Creating and Implementing Strategy for Competitive Advantage and Effective Execution of Organizational Strategy), while Christian is academic director for a program on innovation management (Mastering Innovation: From Idea to Value Creation). We have researched with and consulted for more than one hundred different organizations, from small startups to Fortune 500 companies.
To achieve broader reach in our teaching efforts, both of us have created online courses as well. Christian was the first to launch a massive open online course (MOOC) in business on Coursera. By now, close to one million students have enrolled in his Introduction to Operations Management course, making this one of the largest online courses. Nicolaj is offering an online course titled Business Strategy from Wharton: Competitive Advantage and the course Strategic Management: Competitive and Corporate Strategy, which is part of Wharton’s online certificate on leadership and management.
Another way in which we have attempted to broaden our reach and have the opportunity to learn is by hosting radio shows on Wharton’s Sirius XM channel. Christian hosts the show Work of Tomorrow, highlighting how technological advances affect the daily operations of many firms, while Nicolaj cohosts Mastering Innovation, which addresses how organizations foster innovation that keeps them going strong year after year.
Lastly, both of us are codirectors of the Mack Institute for Innovation Management at Wharton. The Mack Institute’s role is to bridge academic research and the world of practice by sponsoring research, conducting conferences, and connecting scholars, business leaders, and students. It was through our work with executive audiences in the classroom and through the Mack Institute that we became inspired to write this book. We observed that firms were connecting to customers in very different ways and were creating new connections between previously unconnected parties in the marketplace. It has been an amazing journey to write this book, allowing us to clarify our thinking and helping others to make more sense of the business world they live in. However, to borrow a phrase from Winston Churchill, we see this book certainly not as the end but only as the end of the beginning of our research into connected strategies. It is an exciting phenomenon that only has just started. Please stay in touch via our website, connected-strategy.com, as our thinking evolves on this subject.
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