Digital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business

Marco   Iansiti; Karim R. Lakhani

Article | Harvard Business Review

Digital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business

Abstract

When Google bought Nest, a maker of digital thermostats, for $3.2 billion just a few months ago, it was a clear indication that digital transformation and connection are spreading across even the most traditional industrial segments and creating a staggering array of business opportunities and threats. The digitization of tasks and processes has become essential to competition. General Electric, for example, was at risk of losing many of its top customers to nontraditional competitors—IBM and SAP on the one hand, big data start-ups on the other—offering data-intensive, analytics-based services that could connect to any industrial device. So GE launched a multibillion-dollar initiative focused on what it calls the industrial internet: adding digital sensors to its machines; connecting them to a common, cloud-based software platform; investing in software development capabilities; building advanced analytics capabilities; and embracing crowd-based product development. With all this, GE is evolving its business model. Now, for example, revenue from its jet engines is tied to reduced downtime and miles flown over the course of a year. After just three years, GE is generating more than $1.5 billion in incremental income with digitally enabled, outcomes-based business models. The company expects that number to double in 2014 and again in 2015.

Keywords: Digital Innovation; digitization; industrial internet; Technological Innovation; Production; Competitive Strategy; Engineering; Aerospace Industry;

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Citation:

Iansiti, Marco, and Karim R. Lakhani. "Digital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business." Harvard Business Review 92, no. 11 (November 2014): 90–99.

In February 2016, Kathy Hannun--a project leader at X, Alphabet Inc.'s so-called "moonshot factory--had to prepare a recommendation for the senior leadership of X regarding the future of Foghorn, a project she was leading to develop a carbon-neutral process for converting sea water into fuel. Recognizing the blueprint for projects at X--(1) addressing a huge problem with a (2) radical solution using (3) breakthrough technology--Hannun had to decide whether to recommend killing the project. Despite the technical feasibility of the Foghorn process, its expected cost per gallon of fuel produced was signficiantly higher than the established "kill metric"--the maximum unit cost that Hannun and colleagues had set for continuing the project. The case provides an opportunity to examine the management of radical innovation and the challenges associated with assessing early stage ideas. Topics covered include the importance of experimentation and failure as well as the management of opportunity costs in solving large problems.

Case | HBS Case Collection | February 2018

EmQuest: Travel Distribution in the Digital Era

Karim R. Lakhani and Gamze Yucaoglu

EmQuest, Emirates Group’s travel distribution company, must decide what to do with its contract with the global distribution system it uses, Sabre. Since its founding in 1988, EmQuest was servicing travel agents in the MENA region by providing a connection to over 400 airlines as well as numerous other travel suppliers. EmQuest mainly relied on Sabre to provide this service to the agents, and its contract was coming to an end.
In the last decade years, since the beginning of EmQuest’s Sabre contract, while EmQuest grew, a lot happened in the travel industry: the Internet transformed customer habits, low-cost carriers emerged, and the Middle East experienced a boom in tourism. The conditions under which EmQuest had first signed its contract with Sabre a decade before were much different in 2017.
With change happening so rapidly and impacting the fundamentals of the travel business model so dramatically, it was a real challenge to predict where the industry would be in the next decade. Yet the management needed to make a decision regarding the Sabre contract in 2017, amidst such a whirlwind in the market.

Keywords: UAE; emerging markets; for-profit firms; business model; Business Strategy; competitive advantage; growth and development strategy; value creation; change management; decision; Business Model; Competitive Strategy; Growth and Development Strategy; Decision Choices and Conditions; Travel Industry; United Arab Emirates;

Citation:

Lakhani, Karim R., and Gamze Yucaoglu. "EmQuest: Travel Distribution in the Digital Era." Harvard Business School Case 618-040, February 2018. View Details

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Digital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business

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