Digital Ubiquity

How Connections, Sensors and Data Are Revolutionizing Business

Marco Iansiti Karim R. Lakhani

(David Sarnoff Professor of (Associate Professor of business
Business Administration at HBS) administration at HBS)
The General Electric Way......
Problem and Risk
• Risk of losing top customers to non-traditional customers like IBM, SAP and big data start-ups.
• The competitors shifted the value proposition towards driving new efficiencies driven by advanced data analytics
and algorithms unlike GE.

Solution
• GE initiated a multi-billion project called ‘Industrial Internet’.
The company added digital sensors to its machines, connecting
them to a common, cloud based software platform.
• GE creates value by extracting useful data from the sensors on
its machines and use this information to optimize equipment
performance, utilization and maintenance.
• Charges a % of the customer’s incremental revenue from
improved performance.

Benefits
• Advanced analytics capability
• Generated more than $1.5 billion in incremental revenue in
2013 and expects to double it in 2014
Examples from Other Industries and
Businesses....
Pacific Gas and Electric will benefit a lot by Microsoft is shifting to cloud-enabled productivity
connecting with Nest, the digital thermostat that services that operate from any device and are
Google recently acquired. It van help in gradually moving from the past sales of traditional
aggregating real time consumption data and packaged software.
hence, forecast energy consumption accurately.

Ford is partnering with ZipCar and other start-ups to develop E.ON has been able to reduce its buying capacity for wind
their own car-sharing model and provide services such as turbines by installing GE machines and connecting them through
reserving parking spaces and enforcing residential parking rules. dynamic control and real time analytics.

Uber is using real-time data (location) of their users and car Bank of America is using Wealthfront’s (investment platform)
drivers to bring them together and make money from it. They services to manage more than $1 billion in investments. BOA
are not replacing the drivers but are giving them better leverage’s Wealthfront’s analytics and automation tools in
opportunity. consumer investing.
Approaching Digital Ubiquity....
1. Apply the digital lens to existing products
and service
• Identify cumbersome processes in the
business and narrow down the ones which
are amenable to connectivity.
2. Connect your existing assets across
companies
• Lookout for synergies among start-ups and
established companies.
• Connect with them, enhance their value and
extract some of it for yourself
3.
Examine new modes of value creation
• Check how new data can be attained from
various components of your business model
• Use the data to create opportunity and
value for your customers
4. Consider new value-capture modes
• Digitalization can deflate some old models
but we have to find the actual value the
business creates
• Better monetize this value through either
value-based pricing or outcome-based
models
5. Use software to extend the boundaries
of what you do
• Digital transformation doesn’t mean
giving up on foundational skills
• Instead compliment those skills with
technology to create new opportunities
and value.
Thank You