Connected Business Models: A Technology Perspective

Connected Business Models

The integration of technology and connectivity is crucial for the success of modern businesses. Organizations that can leverage these components to develop innovative business models have a higher chance of succeeding in a highly competitive environment. By prioritizing customer needs, improving delivery, exploring new revenue models, and implementing connected pricing and technology solutions, companies can increase willingness to pay while reducing fulfilment costs. The main focus should be on creating personalized and seamless experiences that cater to the unique preferences of customers.

In this article, we will explore the various aspects of connected strategy and the role of technology in its execution. This article respects and takes inspiration from the book “Connected Strategy Toolkit” by by Nicolaj Siggelkow and Christian Terwiesch.

Technology to build “Connected Customer” Models

In the days gone by, companies used to interact with their customers in an episodic and disjoint manner. Customers today expect more than just a transactional relationship with companies. They want personalized, seamless experiences that cater to their needs and preferences. Connected strategy seeks to deliver just that by leveraging technology and connectivity.

1.?????Respond-to-Desire - Connected technology has enabled companies to quickly respond to customer demands and desires. For example, ride-hailing service Uber uses real-time data to match passengers with nearby drivers, providing a convenient and efficient transportation option. By leveraging connected technology, Uber can offer a highly personalized experience that meets the immediate needs of its customers.

2.?????Curated Offering - Technology has also enabled companies to offer highly curated products and services to their customers. Food delivery service Blue Apron uses data analytics to create customized meal plans based on individual dietary preferences and cooking skill levels. By leveraging connected technology, Blue Apron can offer a highly tailored experience that meets the unique needs of its customers.

3.?????Coach Behavior - Connected technology has also enabled companies to coach and monitor customer behavior in real-time. Wearable sensors from companies like L'Oreal can track skin health and provide personalized product recommendations based on individual needs. Online learning platform Lynda.com uses data analytics to track user progress and offer personalized course recommendations. By leveraging connected technology, companies can offer highly targeted coaching and monitoring services that help customers achieve their goals.

4.?????Automatic Execution - Finally, connected technology has enabled companies to automate many routine tasks and processes, improving efficiency and reducing costs. For example, HP printers can automatically order replacement toner when levels run low, reducing the need for manual ordering and ensuring uninterrupted printing. By leveraging connected technology, companies can streamline their operations and improve overall customer satisfaction.

Technology to support “Connected Delivery”

Connected delivery is another key aspect of connected strategy. Connected delivery involves leveraging technology and connectivity to improve the delivery of products and services.

1.?????Connected Producer: Technology has enabled producers to become connected with their customers in ways that were not possible before. For instance, Daimler's Car2go allows customers to rent and use a car through a mobile app, providing a new level of convenience and flexibility. Similarly, Progressive Insurance offers customers a device that plugs into their car, providing real-time data on driving behavior and enabling personalized insurance plans. These innovations demonstrate how technology is being used to create new ways of connecting with customers.

2.?????Connected Retailer: Amazon is a prime example of a connected retailer that has leveraged technology to create a seamless and personalized shopping experience for customers. By using data analytics and machine learning, Amazon is able to recommend products that are tailored to each customer's preferences and buying history. Additionally, the company's one-click ordering and same-day delivery options have redefined customer expectations for speed and convenience in online shopping.

3.?????Connected Market Maker: Companies like Expedia, Priceline, and Artsy act as intermediaries, connecting buyers and sellers in various markets. Through the use of technology, these market makers are able to facilitate transactions and provide added value to customers. For example, Expedia uses machine learning algorithms to recommend personalized travel itineraries based on customer preferences, while Artsy provides an online marketplace for buying and selling art, offering a level of accessibility that was previously unavailable to many.

4.?????Crowd Orchestrator: Technology has enabled the creation of platforms like Kickstarter and Airbnb, which allow individuals to create and join crowdsourced initiatives. These platforms help to break down traditional barriers to entry and democratize the market by giving individuals the tools to create and offer their own products or services. For example, Kickstarter allows creators to raise funds for their projects by connecting with potential supporters, while Airbnb enables individuals to rent out their homes to travelers, creating a new supply of accommodations that was previously untapped.

5.?????Peer-to-Peer Network Creator: Venmo is an example of a technology-enabled peer-to-peer network that facilitates transactions between individuals. By creating a platform for users to exchange money with friends and family, Venmo has redefined the concept of money transfer, making it a social activity. The platform's integration with social media also allows users to publicly display their transactions, creating a sense of community and encouraging social interactions around money. These peer-to-peer networks are transforming the way we think about transactions, providing new opportunities for connection and collaboration

Technology to evolve “Connected Revenue” models

?Connected revenue models are a new way of monetizing products and services. The Smart Toothbrush is an example of a connected revenue model that offers value-add for third parties. Companies can leverage connectivity to create new revenue streams, such as through pay-per-use models or pay-per-performance models. Insurance companies paying for dental care is an example of how the ecosystem is broader than the supply chain, as companies can create value for customers beyond just the product or service they offer.

1.?????Pay-per-Use - In this model, customers only pay for what they use. This model is commonly used in industries like utilities, transportation, and cloud computing. Examples of companies using this model include Zipcar, Uber, and Amazon Web Services.

2.?????Pay-per-performance - In this model, customers pay based on how well the product or service performs. This model is commonly used in the software industry, where customers pay for software based on the number of users or the amount of data processed. Examples of companies using this model include Salesforce, HubSpot, and Adobe.

3.?????Payment through the ecosystem: The Smart Toothbrush is an example of a connected revenue model that offers value-add for third parties. Companies can leverage connectivity to create new revenue streams, such as through pay-per-use models or pay-per-performance models. Insurance companies paying for dental care is an example of how the ecosystem is broader than the supply chain, as companies can create value for customers beyond just the product or service they offer. This model is used in industries like healthcare and insurance.

4.?????Micro-transactions: In this model, customers pay based on the value they receive from the product or service. This model is commonly used in industries like software and gaming. Examples of companies using this model include Microsoft Office 365, Spotify, and Candy Crush.

5.?????Payment through Reinvestment: In this model, companies focus on building long-term relationships with customers by offering them additional value. This model is commonly used in industries like retail and education. Examples of companies using this model include Amazon Prime, Lynda.com, and Netflix.

In addition to paying with their wallets, customers today also pay with their data. Companies that can collect and analyze customer data can gain insights into their behavior and preferences, which can be used to create more personalized and targeted marketing campaigns.

Technical Capability to support connected business models

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To support the examples of connected strategy and technology mentioned above, companies need to invest in various technologies, including:

Internet of Things (IoT) devices - for collecting and transmitting data from various sources, such as wearables, sensors, and connected products.

Big data and analytics - for processing and analyzing large amounts of data to gain insights into customer behavior, preferences, and needs.

Cloud computing - for storing and processing data, as well as providing access to applications and services from anywhere at any time.

Artificial intelligence and machine learning - for automating processes, improving decision-making, and creating personalized experiences for customers.

Mobile and web applications - for providing seamless experiences to customers across multiple channels and devices.

Cybersecurity - for protecting sensitive data and preventing unauthorized access to systems and networks.

Implementing these technologies and integrating them into a cohesive system can enable companies to create and deliver personalized experiences, improve operational efficiency, and drive innovation.

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About the Author:

Manas Das is an experienced Analytics leader, a proven track record of designing and scaling analytics solutions across FMCG, Energy, Auto and several other industries. Manas is currently engaged in developing scalable commercial analytics platforms for a Pharmaceutical company in the United States.