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Ubiquitous digital connectivity is now essential to competitiveness
Marco Iansiti, the David Sarnoff Professor of Business Administration, believes all businesses—both established and startup—must embrace digital transformation. Iansiti’s analysis of innovation in digital technology at General Electric, with Associate Professor Karim R. Lakhani, shows how firms can rethink their business models to identify new opportunities for creating and capturing value.
The fundamental properties of digital technology (exact replication infinite times at zero marginal costs), along with cloud computing, have enabled the transformation of machine and service operations, organizational tasks, and managerial processes. Digitally enabled outcomes, rather than units sold or services performed, are the basis of new business models. For example, GE originally sold capital goods, and then became a contract service provider in the early 2000s. Now GE has changed, again, with its “industrial Internet,” an open global network of machines, data, and people that provides analytics and designs solutions to optimize its customers’ complex operations.
“The paradigm is not displacement and replacement,” says Iansiti, “but connectivity and recombination.”
(Published May 2015)
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