In industries such as retail, insurance and travel, which have long been disrupted by digital and often dominated by the media, many manufacturers continue to operate in a “business as usual” mindset. This lack of proactivity and investment is, at best, providing your competitors with space for differentiation and, at worst, putting your brand on a path toward irrelevancy and massive missed opportunities for business impact.
A case in point — the business case for a leading global industrial equipment manufacturer to reinvent part of its customer-facing digital presence, resulted, conservatively, in low-to-mid nine (yes nine!) figure profit gains. The opportunity had been right in front of them for several years, but until the effort was made to create a differentiated digital strategy and methodically project the economic impact, the executive team had deprioritized digital. However, it turned out to be one of the most lucrative investments they could possibly make.
How can you best leverage digital technology?
Just like other industries, such as retail and insurance, manufacturers who are proactive with digital innovation have much to gain. Consider how your customer’s needs and habits have changed. Are you getting more direct business from new customers? Are you seeing more of your customer’s decision journey occurring online? Or are your customers demanding more robust online services? The case for change is not just attractive, but astounding.
Once you’ve made the case for change, what comes next? That question can seem daunting, especially as digital technology continues to evolve from the latest social network, to the Internet of Things, to the Maker Movement. With hype comes a tendency to focus on the technology itself and get distracted from essential questions that need to be regularly addressed — namely, how can you best leverage emerging digital technologies to distinguish yourself, to add customer value, and to provide economic gain? There are two fundamental considerations when figuring out your best path forward.
The first involves your brand DNA and narrative. What is your special sauce and value proposition as a brand? Is it exceptional customer service? If so, exploring technologies like NFC tags and collaboration communities that enhance transparency and customer intimacy may provide the best opportunities. What if your special sauce is product innovation? How can digital technology reinforce and strengthen your differentiation? Perhaps leveraging big data analytics to create a benchmarking service, making your products ‘smarter’ with sensors, or exploring on-demand 3D printing integration could activate your brand.
Second, and intertwined with your brand DNA, is your customer’s journey. How and when can digital improve your customer’s journey and the value you provide to them? Amazon CEO Jeff Bezos, one of the most impactful and persistent business disruptors of any era (let alone the digital era), has some timeless advice that many companies would do well to consider when devising their digital strategy and innovation agenda:
“I very frequently get the question: 'What's going to change in the next 10 years?' And that is a very interesting question; it's a very common one. I almost never get the question: 'What's not going to change in the next 10 years?' And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time. ... [I]n our retail business, we know that customers want low prices, and I know that's going to be true 10 years from now. They want fast delivery; they want vast selection. It's impossible to imagine a future 10 years from now where a customer comes up and says, 'Jeff I love Amazon; I just wish the prices were a little higher,' [or] 'I love Amazon; I just wish you'd deliver a little more slowly.' Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.”
The Digital Innovation Wheel for manufacturers (Figure 1) provides a canvas of digital technology opportunities that can set apart and enhance your customer, employee and partner journey. But as Mr. Bezos reminds us, don’t get swept away by the technology. Instead, stay focused on your brand DNA, your customer’s journey and, of course, your business goals. If you stay true to these principles, who knows what is possible? You may even find your own nine figure opportunity!
Mike Stutman is SVP of strategy and the manufacturing practice lead at Primacy.