Design a Digital Strategy That Works - krm.vo.llnwd.netkrm.vo.llnwd.net/o43/u/hbs0011408/22344/223442.pdf · Design a Digital Strategy That Works ... Canada Pension Plan ... Chief

Design a Digital Strategy That Works

Featuring Jeanne Ross, Director and Principal Research Scientist at MIT Sloan School of Management’s Center for Information Systems Research—an expert on how companies develop competitive advantage through digitized platforms

FEBRUARY 2, 2015

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Today’s Speaker

Jeanne RossDirector and Principal Research Scientist at MIT Sloan School of Management’s Center for Information Systems Research

Design a Digital Strategy That Works

FEBRUARY 2, 2015

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Center for Information Systems Research (CISR) Center for Information Systems Research (CISR)

PRESENTER

Dr. Jeanne W. RossDirector & Principal Research Scientist

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

[email protected]; http://cisr.mit.edu/

Design a Digital Strategy That WorksDesign a Digital Strategy That Works

This research was made possible by the support of MIT CISR sponsors and patrons.

RESEARCH TEAM

Dr. Jeanne W. RossDr. Ina Sebastian

Dr. Nils FonstadDr. Cynthia Beath

Aetna, Inc.AGL Energy Limited (Australia)Akamai TechnologiesAllianz Global Corporate & SpecialtyAllstate Insurance Co. AMP Services Ltd. (Australia)APM Terminals (Denmark)ANZ Banking Group (Australia)Australia PostAustralian Taxation OfficeBanco Bradesco S.A. (Brazil) Banco do Brasil S.A.Banco Santander (Spain)BB&TBBVA (Spain)Bemis Company, Inc.Biogen IdecBNP Paribas (France)BNY MellonBP (U.K.)BT Group (U.K.)Canada Pension Plan Investment Board

Canadian Imperial Bank of Commerce

Caterpillar, Inc.CEMEX (Mexico)Charles Schwab & Co.Chevron Corp.CHRISTUS Health Chubb & SonCielo (Brazil)Coles (Australia)Commonwealth Bank of AustraliaDBS Bank Ltd. (Singapore)Dunkin’ BrandsDWS (Australia)Eaton Vance ManagementEMC Corp.Equinox Ltd. (New Zealand)ExxonMobil Global Services Co.Ferrovial (Spain)Fidelity InvestmentsFOXTEL (Australia)Genworth FinancialHitachi, Ltd. (Japan)

Holcim Brasil S.A.HSBC Bank plc (U.K.)IBM CorporationInformaticaING Direct SpainInsurance Australia GroupItaú – Unibanco S.A. (Brazil)Johnson & JohnsonLevel 3 CommunicationsLKK Health Products Group Ltd. (HK, China)

MAPFRE (Spain)McGraw‐Hill EducationNational Australia BankNew Zealand Govt.—GCIO OfficeNomura Research Institute, Ltd. (Japan)Northwestern MutualOrange S.A.Origin Energy (Australia)PepsiCo Inc.Principal Financial Group, Inc.Raytheon CompanyReserve Bank of Australia

Royal Bank of CanadaRoyal Philips (Netherlands)Sabadell BankSchneider Electric Industries SASStandard & Poor’sStandard Bank Group (South Africa)State Street Corp.Teck Resources Ltd. (Canada)Telstra Corp. (Australia)Tenet HealthTetra Pak (Sweden)TransUnion LLCTrinity HealthU.S. Dept. of Health & Human Services

Unum GroupUSAAVF CorporationWestpac Banking Corp. (Australia)World Bank

MIT CISR gratefully acknowledges the support and contributions of its Research Patrons and Sponsors.

MIT CISR Research PatronsAlixPartners, LLPThe Boston Consulting Group, Inc.Gartner, Inc.Microsoft Corporation

Oliver Wyman, Inc.SAS Institute Inc.Tata Consultancy Services

355 Main Street, NE25–7th Floor Cambridge, MA 02142Ph. 617‐253‐2348 Fax 617‐253‐4424 [email protected] http://cisr.mit.edu

© 2015 MIT Sloan CISR 1 January 2015© 2015 MIT Sloan CISR 1 January 2015

MIT CISR Research Sponsors

Who owns digital strategy at your company?Who owns digital strategy at your company?1. Chief Digital Officer

2. CEO

3. CIO

4. Chief Marketing Officer

5. R&D/Product Development

6. Senior management team

7. Different people own different parts

8. Other

To respond to a poll, click on the “show polls” button in the lower-right corner of your screen, then click “take poll.”


SMACIT:Disrupting

your business

SMACIT:Disrupting

your business


What impact are you expecting from your SMACIT-inspired strategies?What impact are you expecting from your SMACIT-inspired strategies?

No impact2%

We will learn a great deal

7% Keep up with competition

11%

Get into or create a new market space

16%

Strengthen our competitive lead

22%

Create competitive advantage

42%


Digital StrategyDigital Strategy Definition: Business strategy informed by the capabilities of

readily accessible technologies (e.g. SMACIT) What’s the big deal?

– SMACIT impact is greater when multiple technologies are applied to same strategic objective

– As SMACIT capabilities are introduced, customer (and employee) expectations expose functional interdependencies

– No playbook for how to be digital!


SMACIT drives multiple, interacting strategiesSMACIT drives multiple, interacting strategies

SecurityCSO-CIO

Digital Product and Service StrategyHead of Product Development-CIO

Digital Marketing Strategy

Digital Marketing Strategy

CMO-CIO

Digital Operations

Strategy

Digital Operations

Strategy

COO-CIO

Digital Workplace Strategy

Digital Workplace Strategy

CIO-HR Head


Nordstrom Inc.Nordstrom Inc. Fashion specialty retailer offering clothing, shoes and accessories

for men, women and children Known for outstanding customer service and empowered employees Founded in 1901 in Seattle as a shoe store; now has 117

Nordstrom stores; 151 Nordstrom Rack stores; growing online presence

Source: Nordstrom Investor presentation 2014


Nordstrom is redefining customer service as speed, convenience, and personalizationNordstrom is redefining customer service as speed, convenience, and personalization

Source: Nordstrom Investor presentation, October 2014

1.3M Wanelofollowers

4.4M Pinterest followers


Nordstrom’s Purpose: Empower customers and employees to provide a fabulous customer experience

Nordstrom’s Purpose: Empower customers and employees to provide a fabulous customer experience

Source: Nordstrom Investor presentation 2014


Implementing digital strategy requires enterprise capabilitiesImplementing digital strategy requires enterprise capabilities

Source: Nordstrom Investor Presentation, October 2014


… as well as innovation capabilities… as well as innovation capabilities

Source: Nordstrom Investor Presentation October 2014


Moving from plan sponsor centric to B2B2C and B2C Focusing on multi-product and multi-service customer

experience Learning about their customers life style needs Emphasizing mobile so Aetna is always with you Partnering with companies that do health management,

coaching and other services.

Aetna’s Purpose:The place to go for [more and more] of your health and lifestyle needs

Aetna’s Purpose:The place to go for [more and more] of your health and lifestyle needs

Source: Company interviews and Aetna 2013 annual report© 2014 MIT Sloan CISR


USAA's Purpose:Facilitate the financial security of members and former members of the U.S. military and their families

USAA's Purpose:Facilitate the financial security of members and former members of the U.S. military and their families

Source: 2013 USAA Report to Members; J. Ross and C. Beath, “USAA: Organizing for Innovation and Superior Customer Service,” MIT CISR Working Paper No. 382, December 2010.

2013 Revenue $21B

2013 profit margin/industry median 13%/5.8%

Members and customers 10M

Employees 25,800

Diversified financial services company

# 139 in Fortune 500

Goal: Deliver integrated services to address member life events

Technology innovations include Deposit@MobileR and Auto CircleTM


USAA targets member satisfaction—and achieves itUSAA targets member satisfaction—and achieves it

Industry Average NPS Score Top Performer Top Performer NPS

ScoreAirlines 28 Southwest 56

Auto Insurance 44 USAA 81

Banking 34 USAA 81

Brokerage/Investments 47 Vanguard 65

Cable/Satellite TV 14 DIRECTV 34

Credit Cards 31 Discover 52

Department/Specialty Stores 62 Costco 82

Health Insurance 17 Kaiser 40

Home Insurance 40 USAA 84

Internet Service 5 Brighthouse 20

Laptop Computers 37 Apple 72

Life Insurance 29 State Farm 45

Online Entertainment 35 Pandora Radio 56

Online Shopping 44 Amazon 64

Smartphones 40 Apple iPhone 67

Source: Stametrix 2014 U.S. Consumer Study, www.satmetrix.com/benchmarking


1. Financial Advice & Solutions Group 2. Includes IT, Transformation & Integration and others 3. USAA Real Estate Company, External Affairs, General Counsel & Corporate SecretarySource: M. Mocker and J. Ross, “USAA: Capturing Value from Complexity,” MIT CISR W ki P N 389 M h 2013


President & CEO

3 more units3

ChiefAdmin.Officer2

CFOMember Experience

Federal Savings

BankFASG1

Investment Mgmt Co.

Life Company

P&CInsurance

USAA is organized for integrated solutionsUSAA is organized for integrated solutions


Propositions regarding digital strategyPropositions regarding digital strategy1. SMACIT is disruptive and will fundamentally change

businesses and industries because of what it makes possible.

2. Digital strategy starts with clear statement of purpose.3. Competitive advantage will only accrue to firms that have

strong underlying operational capabilities supporting their strategy.

4. Companies will quickly implement business components leveraging those operating capabilities.

5. The essence of the digital playbook will be a set of processes and guidelines facilitating coordination across functions, geographies, lines of business, and with customers and partners.

Questions?

OCTOBER 17, 2012

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Thank you for joining us!

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Design a Digital Strategy That Works - krm.vo.llnwd.netkrm.vo.llnwd.net/o43/u/hbs0011408/22344/223442.pdf · Design a Digital Strategy That Works ... Canada Pension Plan ... Chief