Oct 15, 2019
| 2 min read

Podcast #72: Connecting the World of Digital Strategy - A Conversation with Nicolaj Siggelkow

Nicolaj Siggelkow has been researching the front lines of digital innovation, strategy and transformation as a Professor at the Wharton School and Author. In our conversation, he shares some of the key insights from his latest book, Connected Strategy.  He discusses the critical importance of starting from the perspective of the customer journey rather than from the perspective of pure technology. He shares how companies like Netflix have been able to create sustainable competitive advantage through learning loops, by having deeper customer data insights and being able to apply what they learn back to the initial product ideation through the delivery phases. He outlines some of the key steps that business can take to extend their advantages as they fully embrace Connected Strategy.

Recommendations:

Connected Strategy: Building Continuous Customer Relationships for Competitive Advantage

Nicolaj Siggelkow's Website

Connected Strategy Website

 

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Good day everyone and welcome to the latest Momenta Podcast. Our guest today is Nicolaj Siggelkow who is a professor at the Wharton School, and he specializes in strategy and innovation. He’s the Co-author of a new book called Connected Strategy, and we’re going to be dialing into the implications of this, but first would love to get a bit of context and understand some of your personal history, and what had brought you to where you are today, and ultimately focusing on connected strategy.

Well, thank you Ed for having me on the program, it’s wonderful to be here. I originally am from Germany as you maybe can tell from my accent, I came from Germany after high school, I was an undergrad at Stanford, did my Economics degree there, got my PhD at Harvard in Business Economics, and have been here in faculty for the last 21 years teaching strategy. Another role that I’m playing here at Wharton is I’m also Co-director of the Mack Institute for Innovation Management, and it was through that work both of my students with executive audiences, and here at the Mack Institute that this topic of connected strategy came up, that I’ve been pursing with my colleague and good friend Christian Terwiesch.

That’s great. If you could share a little bit about the thesis of the book. I think one of the themes that comes up a lot in our discussions is this idea that connecting physical processes to the digital world has downstream implications that are pretty profound, that go beyond just technology. I’d really love to hear what the key drivers behind the work were that you put into the book, and then we can dive into some of the thesis there.

The overarching idea is that what we see right now across a whole set of industries, is that firms are fundamentally reshaping the way they interact with their customers. So, rather than sitting there waiting for a customer to come to us, firms are now trying to create much more continuous relationships with their customers. Maybe one example that was also one of our initial examples which really motivated us is healthcare. Usually the way I interacted with the healthcare system is, I wait for something really bad to happen, then I go to see my doctor, I go into the hospital. Once I’m in the hospital I have complete attention on me 24/7 by doctors, by nurses, and then at some point I get kicked out and I get completely disconnected from everything, and everyone now is basically just waiting for something catastrophic to happen again, so I get readmitted.

I think the moment you put it that way you can start to see, wow, that doesn’t sound very efficient, either for me as a patient, or from the system as a whole in terms of how much cost we have. So, that I think was one of the things that really got us fascinated about these connected strategies was, that quite often firms were able to create a better custom experience, or patient experience, whilst at the same time reducing cost. If you can do both things at the same time, create a better product or service, or a better customer experience, whilst at the same time reducing cost, then you might have some disruption at your hands. That’s what we’re seeing in a number of industries, companies coming in and really disrupting those industries, because they’re able to do both of these things at the same time.

What has changed that has enabled this ability to have both the technological transformation, but also this enhanced customer experience that couldn’t be done before?

What has really changed is technology. We sometimes think of four different types of technologies, there’s technology that allows us to sense problems, and that is the cost of sensors has come down, the cost of extracting information has come down. Then there is the cost of transmitting that information, and there’s the cost of analyzing that information, and the cost of reacting to it. All of these things have come down dramatically, and this is what starts to allow us to have these new connected strategies. But what’s really important to note is that firms who are creating connected strategies quite often are not the firms who are developing these technologies, so a connected strategy is technology-enabled, but you don’t have to be a technology innovator to have a connected strategy. So, if you think about Uber, Uber did not develop cellphones, GPS, and Google Maps, but they said, ‘Well, if you put these technologies together, we can create a new business model that can be quite disruptive’. Fundamentally what connected strategies are about are really business model innovations, rather than technological innovations.

And that I think is again this profound change that is so inherent in a lot of these Internet of Things ideas. So, when you look at companies that are successful, in your view what defines a successful connected strategy, and can you point to some examples? I think Uber is one, but what are they doing different than other firms that may have the same?

I think there’s probably two aspects to this, one is are we able to remove a pain point from the life of a customer, and that pain point might be, ‘Oh, I tend to be forgetful and I don’t take my medication’, or the pain point might be, ‘I would love to finish a marathon, but can you help me achieve that goal?’ The pain point might be, ‘Right, I want to order something very quickly, can you help me in doing that?’ So, there’s certain particular pain points, and we can talk more about what types of different connected strategies you can create to remove these various pain points. So, that’s usually one element of what those firms are doing.

The second thing which is somewhat related to that, is that firms may be able to address what we might call more fundamental needs of a customer. Let’s take an example of a running shoe; I’d say, ‘How the heck can I have a connected strategy with a shoe?’ But of course, nowadays when you buy a high-end Nike shoe, you’re not just buying a shoe, you’re buying a shoe that has a chip embedded in it, that chip talks to my cell phone, that cell phone connects me to a virtual running club. Then all of a sudden Nike who didn’t have any connection with me at all, or maybe just once every one and a half years, but then my connection was with Foot Locker, or the retailer I was buying the shoe from; right now Nike understands when I’m using the product, how I’m using the product, and Nike might start to understand really what I would like to do is not just to run, but to finish my first marathon.

If you can now help me achieve that goal, well now we’re talking about a very different relationship, and a very different value proposition that the firm has with me, is not just I’m selling you a shoe, but I’m selling is achieve a life goal that you might have. So, it’s both of those elements, sometimes there’s minor pain points, but over time the hope of these connected strategies is that you are able to fulfil more fundamental needs of your customer.

It seems like a lot of the early connected strategies, at least in our conversation, some of the benefits that have come from being connected weren’t necessarily anticipated, they were discovered/achieved serendipitously in the process of trying to solve one problem, that a vendor might discover insights about their customers that can help solve other problems. As you look back at the evolution of your thinking, how much of the initial thinking that you’ve seen has relied on this bit of serendipitous discovery, and as there’s more awareness and as some of these process and applications or solutions start to mature, does it become a bit more systematized or turned into method?

I think the key element is that there needs to be learning in that process, and you can call it serendipitous and partly it is, but it partly is also being open to the serendipity to happen and to react on it; if I discover something that I actually take advantage of what I just discovered, and learn it, and put it into my processes, which is not always obvious and not that easy. Indeed, I think this is actually a very-very core element of connected strategies, because a lot of this connectivity that we talk about will probably in a few years become table stakes, so everyone will have to have an app that I can look on certain stats, everyone wants to have a bit of personalization. So, a lot of these things will become table stakes, and not having them will create a disadvantage, but having them may not actually create you a competitive advantage, it’s just to keep up with your competitors.

So, where we really think that the source of sustained competitive advantage will come from, is through these learning loops, through the ability that I have now repeated interactions with you, and I’m starting to learn more and more about you which may allow me to a) understand more and more your particular needs, and b) may allow me to change my products, change my services, so that I can address the needs that I now really understand well that you have. Now, that sounds always very simple and straightforward, and is really-really complicated and difficult, and I think this is where firms will eventually differ is indeed in exploiting the things that we find out over time, and really act on that so we can refine our offering to a particular customer.

How does this impact the product design or ideation stage? From an organisational perspective as you foresee this, or you’ve identified this significant change and a need to think strategically, how does this change how people on product design teams need to think about how their roles may evolve over time?

Great question, so think about Netflix, I think this is a nice example of that process in play. Netflix starts to learn more and more about their viewers, or a particular viewer. Contrast Netflix knowledge about viewers to the knowledge that traditional movie studios have, and you can really start to have sympathy for traditional movie studios, because they don’t get any information basically. I kind of know, okay this is how many people went to the first weekend of my movie, maybe I’m lucky and I have some relationships with some theatre chains, that through the loyalty programs may give me some information about who potentially was in the movie theatre.

Contrast that with Netflix that knows exactly not just the movies you watch, but any movie you have even considered because you clicked on them, they know how long you watched it, when you watched it, n what sequence you watched it. So, Netflix’s information about a particular customer is so much deeper than that of any movie studio.  What does that allow them to do? The first step it allows them to start to personalize-customize recommendations. Secondly it allows them to say, ‘Okay, now I know that this particular viewer loves to see political satires, I guess I need to license in more political satires, because I have quite a number of viewers like that viewer’, so this is not just learning at the level of an individual, but now at the level of a population, or of a segment of viewers. That allowed them to be more systematic in some sense about the licensing; what kind of shows do I need to license in, and then at some point they said, ‘Oh, wait a second, we know much better than any movie studio, or any production studio what viewers want. Why don’t we commission those things ourselves?’

That’s I think where we start to see that learning loop in context. Now, as a matter of fact we actually had a conference sponsored by the Mack Institute, where we had someone from Netflix who talked us through this, and it was at least on his insistence not so much that the creative side gets so much influence by it, but it is whatever product they produce, whatever show they produce, they know exactly who’s going to watch it. So, they have very much now a target market in mind when they start to commission things. This I think is a nice example of that learning in action.

Well, it would seem that there’s an intrinsic advantage that Netflix has, just to use an example, because their model there I guess one would say they’re completely vertically integrated; from production all the way to distribution they have the complete visibility across their distribution chain. So, for companies that don’t necessarily have that advantage of being able to track, it’s a pretty simple distribution model. But then when you look across different industries what are some of the considerations for businesses that may have established distribution channels of products, and we might think about capital equipment, where you have capital equipment producers that are increasingly connected, I think of Deere and Caterpillar Center, but they all work through these networks of traditional physical distributors, who then distribute and service the customers. Yet the data, which we’ll get to in a little bit; and I do have some questions about domain over the data, and ultimately who owns it, but what are some of the changes, challenges, and potential frictions that can arise for companies with that traditional model, looking to adopt a more connected approach?

I guess in some sense the hope and I think the aspiration of connected strategy is that we’re creating more value. We’re creating a product or service that customers like more, and we’re able to drive efficiencies.

So, the end goal of connected strategy is we are creating more value; now the question is how do we share that value? How do we make everyone get a slice of that pie so that they are willing to participate, and create that connected strategy? So, that is even in the simple interaction between a firm and a customer, and it becomes even more complicated if now we have other parties in between; if I have my distributor and the end customer. So, you are absolutely right, and everyone is wrangling right now about who owns the data, who gets access to the data? If I’m John Deere and I put a sensor on the tractor, well that information can flow to my server, I don’t need my distributor in between. Now the distributor might be unhappy or not, although the distributor knows certain things about the customer that I don’t, and I know something about the customer that my distributor might find helpful.

So, clearly those are very interesting organisational challenges, but if at the end of the day we are growing the pie, we should be able to find a solution of sharing things. As a matter of fact, one of the chapters in our book is all about revenue models, because that’s something that’s very much linked to this notion here, that as the information grows in the system there may be new revenue models that are possible, that were not possible before. Again, at the end of the day it’s a business model innovation, and we’re certainly not saying it’s easy, but if we’re growing the pie, presumably ways of how we can share things that we can all at least get a slice of the pie. Now obviously there will always be wrangling of who gets how much, but that’s sometimes-what business is about.

That also would impact how roles within an organization would change as well, correct? As you’ve described there’s the value chain and the establish functions, that people who were in distribution and service for instance used to take on, and now with these insights that are flowing back upstream how do you see various organizations addressing some of the opportunities and challenges that that also can create?

I think you’re putting your finger very nicely on one of the key implementation challenges of connected strategies, and that is quite often it’s not the technology, it’s the organization, there are organisational changes that are required. So, for us to have the ability to learn about that one particular customer for instance, whenever we interact with that customer, well, it is important for us to recognize that we’re interacting with the same customer every time we’re interacting with that customer, be it online or offline, or in this office or that office, or if it’s a B2B relationship whether it’s this person from the company calling us, or that person from the company calling us. That turns out to be not a trivial problem, quite often we have a lot of silos within organizations, we have different IT systems in organizations, so you’re being treated as five different customers depending on which IT system you’re sitting; and we never actually learn, ‘Oh it’s the same, it’s Ed again’, right. It’s the same person who we saw in our restaurant, now is in the theme park, and now he plays a video game, this is actually the same person. In order to stitch all of this together to be really customer-centric, quite often requires some changes to the organization because usually we are organized by functions, not by customers, or not by entire customer journeys.

So, absolutely right that quite often there are quite some organisational challenges as well, in order to implement these connected strategies.

The adoption of advanced analytics of course, and of course machine learning and AI have been very top of mind in terms of the role that they play in refactoring a lot of tasks of course. I’d love to get your thoughts on how some of the successful digital companies and connected strategy companies, are employing machine learning/AI technologies to really enhance the efficacy of their products and solutions.

I think there are certainly very powerful tools, but I think where quite a number of companies are stuck at is, they don’t know what problems these tools are supposed to solve! So, there’s a little bit of disbelief, ‘Well, we’ll just have big data and we’ll run our algorithm, and it will tell us something interesting’. I’m somewhat skeptical, both Chris and I are somewhat skeptical about that approach, so I think because a lot of companies currently are stuck at this phase of, ‘Well, we’ve collected all this data now because it has been very cheap, but we have no clue what to do with it’, ‘Well, let’s get an AI guy in there’, ‘Well, I’m not quite sure that’s actually the solution’.

What we would advocate is you first really understand in quite some depth the entire journey that the customer has with you, and what we mean by this is that the journey of a customer usually starts with some awareness of a need; I sort of know that I should be saving for retirement, let’s say. Okay, so now I’m aware of that need, now I need to think about what are all the options out there for me? So, there’s a gazillion options from life insurance, to mutual funds, to ETF, and I have no idea what all these options are. So, ‘Can you help me understand what these options are?’ Then, ‘Can you help me understand what the best options are for me?’ Now I know this but, ‘Now, how do I order this, how do I buy this? Do I need a broker, can I do it myself? Right then, I need to do…’ and at some point, I enjoy the product or the service.

So, understanding that entire journey, now understanding what other pain points that the customer has along that journey, and then asking the question, ok, so what kind of information would I need from that customer, in order to be able to remove a particular pain point? And now, that matching yes AI might become really helpful, and I get more information about that particular customer, for instance understand what the best portfolio for that customer might be, or, to do some predictive analytics of trying to understand why that customer needs change over time, so I can anticipate those needs. So, clearly there’s some big technology that can help us, but before we understand what problem we’re trying to solve, the technology by itself will not do the job for us.

Yes, you hit on the baby with the hammer paradigm, which is when companies and people who are attracted to bright shiny new objects love to try out new technologies. You hit on this concept that again comes up, which is this idea that you need to truly understand what the customer’s needs are, and where the pain points are, before you start implementing the technology. In many respects that’s a backwards process from how many companies have traditionally applied their business.

Are there some best practices or approaches that you’ve seen for companies that have taken this to heart, or do you see there’s again a sort of evolutionary or learning process? I’m thinking about established businesses; traditional let’s say non-digital businesses that are trying to either modernize or offer new products?

You just talked about shiny new objects, so the term big data obviously is en vogue right now, and we sometimes like to also highlight the value of small data, of really in-depth living with your customer, and really understanding that customer’s journey. That is still fascinating, we have the great opportunity to work with quite a number of companies here through Wharton, and it is still quite fascinating of how few companies truly put themselves into the shoes of a customer; they always think, ‘Well, what are our pain points dealing with the customer?’ But actually, understanding the pain points of a customer is still a somewhat foreign concept, so firms that invest time practically living with their customers for a while, really understanding that well… because sometimes there are quite surprising things, and they maybe sometimes relatively small things that from our perspective look completely trivial, but really make a big difference.

Again, by focusing on this entire customer journey, it opens up a lot more dimensions on which we can differentiate ourselves. If we go back to my retirement example, it’s really difficult to differentiate yourself on selling SMP500 index funds! It’s exactly the same fund. When people say, ‘Well, Nicolaj you talk about differentiation in your strategy class, how can I do this, I’m in a commodity business’. I say, ‘Okay, so then we need to find different dimensions on which we can differentiate ourselves, and by the way…’ for instance in this example there are lots of ways of how we can differentiate yourself, before you come to the moment where I’m selling you my SMP500 index fund, because at that point I really almost don’t care, because you’ve solved all these other problems for me. So, that I think is what becomes really important for firms to pursue in order to create some advantage.

You’ve hit on this concept of differentiation through experience, as products become services and services become experiences, you do have a much more individual or differentiated touch that becomes elevated, becomes a lot more important, particularly as technology erodes away some of the natural frictions that a limited distribution used to be able to benefit from.

As we look across industries, and you’ve cited a couple of them, you’ve cited media, Netflix, and financial services, how do you view some of the different challenges that various industries, particularly we could say energy for instance, or agriculture which we look at a lot, or manufacturing, what are some of the opportunities and challenges ahead for, we’ll call them brown field opportunities, which is one of the terms we like to use at Momenta, really that apply to what we’ll call industrial IoT companies.

Well, I think that arena is quite well-positioned, because you don’t have that much regulatory constraint relatively speaking, then let’s say in healthcare, when you think about HIPPA laws, or sometimes in the financial industry where there are heavier regulations. And so, I think it is in this sort of industrial space where in some sense at least the regulatory frictions are much less, and so as a result we should have quite some opportunities there.

Now, at least in my experience with firms in that field, I’ve seen a little bit of a reluctance of engaging in these new technologies, because we don’t think ourselves so much as information technology companies, as more like industrial technology companies. Quite often these companies are driven by the technology and their pride, and we have the best product and that’s how we’re going to differentiate ourselves in the marketplace, by always having the better product, more features etc., and this is exactly that technology push, rather than understanding what my actually customers’ needs are. So, that shift in thinking in those context sometimes is a little bit more difficult because people have grown up for 30-40 years, and have made careers out of being really good on the technology side, and of course that is very important that we have great products, but quite often they are more driven by the technology rather than a deep understanding of the customers.

This is why sometimes firms in these contexts are really upset, if new firms come in with in theory our products but are very successful, and they’re saying, ‘What the heck is going on? Why are they successful?’ ‘Well, because they’re solving some other pain point of your customer that you’ve never even thought about’, of making it say easier to monitor the thing, or easier to order, or easier to pay for, or some other added value that they are providing to the customer, and they’re saying, ‘Overall the value I’m getting out of that relationship is more than the value I get out of your relationship. Yes, your product is a little bit better, but by gosh you are really hard to deal with’, and all that other stuff.

It’s an interesting point that you make too because, technology of course, and technology lock-in has been a fundamental area of sustainable competitive advantage, at least in the technology industry. If you think about being in the database business, or working with enterprise applications like SAP, or Oracle’s sustainable advantage was that it used to be that buying SAP was like pouring cement into an organization, and as soon as you move to a software as a service model that changes the dynamics in many ways.

I’d love to get your perspective on what you see is the evolving nature of sustainable competitive advantage, when you have companies that are building out a connected strategy.

Let’s come back to this notion of differentiation here, and I think what is really important is understanding that different customers will have different preferences over what kind of connected relationship they want to engage in, and maybe even the same customer at different occasions with have different preferences over how I want to get engaged with the company. So, unless I understand that really well, I might run into trouble.

In our book we’re spelling out four different types of what we would call connected customer experiences, that conceptionally work on different parts of that customer journey that I talked about a little earlier.

  1. We talk about one connected customer experience, which we call, ‘Respond to desire’, so here you have a customer who knows exactly what he/she wants, and now they just want to press a button and have the rest of that journey be as smooth as possible. So, that is, I need a car to take me from the airport right now, so I press a button and that hopefully works very smoothly.

 

  1. Then there is what we would call the curated offering, where a customer knows what they like, but not exactly, so my example of, I know I want to save for retirement, but how do I do this? I want to see a comedy, but what is exactly the best comedy I could watch? ‘Netflix, help me. Don’t tell me you have 10,000 comedies’. So, that’s curated offering.

 

Coming back very quickly to your industrial customers, what I’ve seen in this space is that firms really pride themselves on the thickness of their product catalogue. They’re going to the customer saying, ‘Look, isn’t this great! We’ve got 10,000 products, and here it is’, and usually customers say, ‘No, that’s not great, just show me the five that I actually need’, that’s curated offering; do I really understand the customer well, so I can show the customer exactly these are the things that you should be concerned about?

 

  1. Then even further back in the customer journey is what we would call, coach behaviour. So, sometimes customers are not aware of their needs, or they only become aware of their needs at rather sub-optimal times. So, when I’m lying on the floor with a heart attack, that is not the best time to become aware of my need in terms of healthcare. When I’ve just turned 63, that’s not the optimal time to become aware of saving for retirement. After I’ve missed my medication for three days in a row, that’s not the optimal time that, ‘Oh gosh, I forgot to take it’. So, quite often we would like to do certain things, but we have a hard time, be it inertia, be it overwhelmed, whatever. So, coach behaviour is, can I nudge my customer or my patient, can I get them to do things that are good in their own interest?

 

  1. Then the fourth type of connected experience is what we would call an automatic execution, where the firm now automatically deduces your needs, and act on this before you are even aware that the need has arisen. So, I’m sending you a replacement toner cartridge for your printer before it has run out, because your printer knows when it’s about to run out, so your printer can reorder that itself.

So, we have these different kinds of connected customer experiences, and what we’re really at pains to emphasis in the book is that there is not one best way. Certainly, we don’t envision everything going down to automatic execution, so when I sit in front of my TV, I don’t think I want Netflix to immediately start screening something, ‘Hey give me optional five, and then I choose. I like that better than you think you know exactly what I want to watch’.

So, understanding customers, what is the right type of connection, how much do they want to still be in the driver’s seat, versus how much do they want to delegate decision-making to the company, because frankly I personally don’t get any join out of reordering toners, if you can do that, wonderful, I don’t want to deal with that. Understanding customers along those dimensions I think will become really-really important for firms to create a competitive advantage in the marketplace, because if you just try one size fits all, more likely than not we’re going to alienate quite a number of customers by either doing too much or too little, in terms of what they really would like us to do.

That’s super-helpful, and I can see someone faced with the paradox of choice is going to want curated alternatives, but on the other hand being able to automate many processes, particularly in domains such as healthcare can be just extraordinarily valuable.

Going back to the topic of data of, not so much stewardship or ownership, but the relationship between companies and their customers, and some of the data constraints whether they be regulatory or social, that companies have to think about when they’re devising strategies. In particular I’d like to contrast some of the issues that have arisen in the EU because of GDPR, and we obviously have HIPPA here in the US. Clearly, we’re starting to get a lot of pushback publicly around the big internets and their use of data, and maybe the lack of consent that’s perceived at least, in terms of how people’s data gets used to ostensibly offer them good services. But then how do you ensure that you’re doing things the best way for your customers, and then the most compliant in terms of the regulatory restrictors.

There’s quite a number of questions embedded in there, so let’s start out with, one of the fundamental goals of a connected strategy is that we are slowly moving up this hierarchy of needs of customers, that basically means trust becomes a tremendously important asset in building connected strategies. Now if trust is a very important asset, then obviously issues around data privacy and data security become really-really important. I think we can talk about data privacy and data security almost outside the regulatory framework, where clearly there are things you should do to be legal, and obviously we want to do that, but I think we need to go beyond that, not just what are the rules that we have to follow.

I think the way eventually this will play out is, I cannot jump immediately from, ‘Hey, just trust me. I’ll be your trusted adviser in health and fitness’, or, ‘I’m the trusted adviser in financial’, but, ‘You as a customer, please give me this amount of data, and then in return I will show you how I can make your life better. And if I can show you that I can provide value back to you, then you might be willing to give me somewhat more data’. So, this is a-all, why we said really understanding these pain points is important so that you can target and ask the customer for, ‘This is actually the slice of data that I want’.

This is also particularly important in the B2B context, since we’re talking about industrial companies for instance, quite often the B2B context customers aren’t naturally hesitant of sharing data with a supplier let’s say, because what are you going to do, are you just going to screw me? So, by saying, ‘Okay, don’t just give me any data, I just want this particular data because that will help me in the following way, and I can help you in the following way. If I can show you this over the next year, that your costs have come down, because I’ve been able to send you replacement parts earlier than otherwise, the downtime of your machines has been less than before. So, now that I’ve shown you value, how about you give me sight of some other information that I can help you with, buying replacement parts’, not just parts but maybe entire equipment, or whatever.

I think it is that slow process of building trust through, ‘Give me data, and I’ll show you how I create value with that’, that is probably the only sustainable part forward. Of course, there’s always short-term gains, like reselling the data that I got from someone else, but we don’t think that’s really a long-run sustainable strategy.

Clearly there’s a lot of debate, or a lot of controversy about those sorts of models, but I think what you’ve articulated there is this continuum of opportunity. I’d like to look forward a bit and get a sense of some of the areas and some of the changes that you’re most optimistic about, given all the work that you’ve done in putting together these useful frameworks in your book, and also some concerns or potential risk that are out there that keep you up at night.

Again, I think the overarching hope that we have through these connected strategies, and the potential of these connected strategies that we’ve seen, is really that it will drive a tremendous amount of value creation, that were really creating better experiences for customers, better experiences let’s say for patients, while at the same time reducing cost.  So, that’s I think is the great promise of these connected strategies, and that’s what really made us excited about them in the first place.

The concerns are of course distributional, who gets this extra value? Sometimes the value gets created in an entire population, and then the question is who gets how much of the benefit. If you think about natural concerns that we might have of sharing too much information with our insurance company, I think overall, we can probably drive down costs quite a lot, if we had deeper information exchange let’s say with insurance companies. But then the question is, who is going to benefit from it, is it just the insurance companies, is it just the really healthy people? And so now if I’m not healthy I’m really getting screwed, but isn’t that the kind of role of what insurance is, it’s somewhat of a risk pooling?

So that I think as well is where regulation will have to play an interesting role, of making sure how are we creating a system where the gains that we’re producing get somewhat spread around, in a way that everyone wants to participate in that particular system. Those are sometimes I think always the concerns that go along with the data privacy/data security, obviously any data that we have can be used in ways that also don’t just create value, but potentially shift value, kind of, ‘I know now something about you, and I can exploit you. I know you’re away from home, so let me send the burglar round to your house’. Obviously, there are those concerns, they’re not around connected strategies per se, they are about that much more richer information flow that we’re going to have.

Looking forward I think part of this process are somewhat inexorable, because I think everyone’s expectations are slowly rising, that when I interact with an organization, when I interact with a company that I get much more personalized attention, a much more individualized treatment. It’s not just I come to you and you just treat me as if you’ve never seen me before. I go to Amazon and Amazon know stuff about me, and they can start to interact with me in much more personalized ways than if I go to a Walmart store. So now Walmart has to ask itself, ‘Okay, how can I create those kinds of recommendations that I can do online, how can I do it in offline ways so as not to fall behind?’ because the expectation of customers, of patients, of students are rising, that you are providing more customized experiences.

Again, this is just a slower process, but I think it is a process that will continue as generations grow-up with more customized things; ‘What do you mean I have to listen to everything on the radio? Just send me the stuff that I like’, and again we can think about how good this is, and how bad this is, and echo-chambers etc., but that is I think a general direction in which things are moving, which are probably hard to roll back.

Yes, it’s funny, a friend of mine had cited a recent study that showed that the average attention span for Americans is around 16 seconds, people start getting impatient if they have to wait longer than that. So, it is true, the bar is really rising.

This has been incredibly fascinating, and we’ll put up a link to your book Connected Strategy: Building Continuous Customer Relationships for Competitive Advantage. Where can our listeners go if they want to learn more about your work, and understand a little bit more about what you’ve been doing?

There are two websites you can go to, one is just my name, nicolajsiggelkow.com where you’ll find more about my work. If you’re really interested more in the connected strategy things, we created our website called connected-strategy.com.

Part of the fun thing about writing this book was that we were able to teach it while we were writing it, so what we’ve done inside the book is we have three chapters we call workshop chapters, where we have worksheets that you can fill out. When you read a book sometimes you ask yourself, ‘How do I apply this to my organization?’ well, we actually guide you through how to do that, and when you go to our website you can download for free all of these worksheets, and we’ve also posted some examples where we’ve filled out all these worksheets. We have lots of podcasts on our website with some of the protagonists from the book, and others who are dealing with connected strategy.

So, there’s a lot of resources that you can access for free on that website, which will hopefully allow you to apply some of these ideas more easily in your own organizations.

Great. It’s been a fascinating conversation.

Again, this has been Nicolaj Siggelkow who is a professor at the Wharton School. Again, this is Ed Maguire from Momenta, and we want to thank you again for taking the time, it’s been fascinating.

Thank you for having me.

You’ve been listening to Momenta Partners Uncommon Perspectives Podcast Series, we hope you’ve enjoyed the discussions, and we as always welcome your comments, input and suggestions. Thank you for listening.

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