Understanding how to unlock value from your data

Digital transformation is most effective when organizations leverage the full potential of their data. What many companies fail to realize, however, is that the type of data they use is critical. While you don’t need to be a digital or data expert, as a leader you should take the time to understand the difference.

Two types of data

The digital transformation requires an increased use of interactive in contrast to episodic Data in existing business models. Episodic dates come from discrete events, such as the sale of a product or the shipment of a component. Interactive data comes from continuous interactions, e.g. B. by browsing the Amazon website, performing searches on Google or socializing on Facebook.

Today, with the help of sensors and the Internet of Things (IoT), all types of businesses can collect and use interactive data to generate new revenue streams and expand the scope of their businesses.

However, to take advantage of these new opportunities, businesses must convert their existing customers to Digital customers. These are customers who have transitioned from buying and using traditional products to sensor-equipped products. This has made them valuable sources of interactive data. Building a strong digital customer base is challenging, but can go a long way in expanding the scope of a company’s digital transformation and improving its return on digital investments. My research shows how to achieve such results.

The exercise

Think about the following questions:

• Do you use sensors/IoT in your company?
• Where do you use them? – in the assets of your value chain (e.g. machines or operations) or in your (customer-facing) products?
• What percentage of your customers use products equipped with sensors?
• What difficulties do you encounter (or expect) when developing sensor-equipped products?
• What difficulties do you encounter (or anticipate) in getting your customers to adopt sensor-equipped products?
• What is your strategy for using such data?

If you haven’t thought about using your data before, these questions can provide a roadmap of what you should do to get started: the sooner the better. Your data is often the key to revitalizing an outdated business and transforming traditional products into digital platforms.

For an in-depth look at how some big companies have used their data to provide richer customer experiences and what you can do to expand into digital ecosystems, take a look at The Future of Competitive Strategy: Unleashing the Power of Data and Digital Ecosystems by Mohan Subramaniam. This book will also be featured in IMD’s November Book Club.