Stephen Sacca, SF ’90
Director, MIT Sloan Fellows Program
Is the increasing dominance of digital business jeopardizing the human factor in the marketplace? It’s a concern I hear often, but talking to faculty and alumni around the world, there’s plenty of evidence to the contrary.
Welcome to the first of our two-part exploration into the possibilities and challenges of the digital world featuring stories from MIT Sloan Fellows alumni and faculty. In the winter issue, we’ll focus on how digital tools can make us smarter and safer and actually enhance personal power and human interaction.
In the spring issue, we’ll focus on the back end of the digital business realm—innovations that the consumer might not see but which have an enormous impact on the ultimate customer experience. Drop me a line if you would like to share your own digital business story in the next issue.
What happens in the C-suite of a major international brand like Nabisco when comedian Stephen Colbert spends a generous few minutes of his comedy show poking fun at its brand platform? They chuckle along with him, then uncork the champagne.
Wheat Thins’ high-profile appearance on The Colbert Report a couple of years ago was more than an “any publicity is good publicity” case study. Yes, the substantial airtime on a popular television show was a boon in itself, but what happened next is less about the power of publicity or an influential comedian or a popular snack food. It’s about the power of the consumer. Viewers around the world took the Colbert segment viral, sharing the video on Facebook and in other social media outlets. In the end, the segment attracted almost a quarter of a million views.
The digital commerce realm has taken many economists and business experts by surprise, says MIT Sloan Assistant Professor of Marketing Renée Gosline. Her research focuses, in part, on the impact of technology and social media on consumers. “Few foresaw the digital marketplace as an environment where consumers would rule,” she notes. “They worried that companies would have greater control, bombarding people 24/7 across multiple media and taking advantage of that access to sell them inferior products at higher prices.” It turns out, she says, that they vastly underestimated the consumer.
“Customers have ascended in the marketplace power hierarchy,” Gosline observes. “This is not to say that they are in complete control, but there’s a more equitable balance.” She notes that her research has uncovered surprising new ways of understanding existing biases with regard to cognitive decision-making. “We have found fascinating cognitive phenomena resulting from the change in social structure that digital business has created. We’re finding all new twists on the classic sociological theories about how people make choices about spending money.”
Consumers use the Internet to increase awareness and learn from other consumers about the quality of products and services. They share reviews and stories with one another. In the marketing realm, customer-to-customer interaction (CtoC) has become an influential wild card. As much as it can compromise a company, CtoC also can boost a company.
Gosline’s research shows that storytelling is a key component of CtoC impact. “This is nothing new. We’ve always known that a good story has a tenacity that other forms of information do not. But there’s a wrinkle. The CtoC gold standard seems to be when consumers share a company’s own story about customer satisfaction, combining the authenticity of the story as relayed by the company with the legitimacy of that story as confirmed by the customer. Consumers then see the story as more than just a persuasion attempt by the company and more than just a viral rumor spread by consumers. The two factors together tend to greatly increase the veracity of the story.”
Gosline’s research also indicates that consumers have adapted to the 24/7 barrage, ignoring or muting ads to suit their interests. She tells the story of her 2-year-old niece. Barely verbal, the toddler knows how to swipe an iPhone to access the content she wants to see. She also knows how to avoid content she doesn’t want to see. “I was showing her a YouTube video and she knew, when the pre-programmed ad preceded the video, that she would have to wait to be able to skip it. She looked away from the screen while the ad played and snapped to attention when the program began. Already she has developed a facility for making those decisions. In the digital marketplace, consumers are becoming savvier younger than ever before, and retailers are scrambling to adapt to that continually morphing reality.”
For Brian Beachkofski, SF’ 12 and John Grossman, SF ’12, the key to improving the human condition is data. Beachkofski (senior director) and Grossman (co-president and general counsel) work for Third Sector Capital Partners, Inc., a nonprofit consulting firm that guides governments, social service agencies, and private funders in building programs that successfully address social challenges. The foundation of Third Sector’s approach is data. Smart data, and lots of it.
Data makes possible an innovative “pay-for-success (PFS)” social service model that works like this: a government agency identifies a critical social need—chronic homelessness, for example. Funders like banks or charitable foundations provide upfront capital to a high-performing social service provider that can help meet that need. If the providers achieve predetermined outcome levels, as verified by an independent evaluator, the government repays the private funders’ initial investment. Third Sector, a leader in developing PFS initiatives, serves as a facilitator and advisor to all parties in the process, using data as the basis for modeling the project and projecting the benefit to the at-need population.
Beachkofski, Grossman, and their Third Sector team have been working with nonprofit and government partners in Cuyahoga County, Ohio, to reunite children who have been placed in foster care with their families. Unfortunately, many of those families are homeless and struggle with domestic violence, substance abuse, and mental illness. As a result, their children—nearly two-thirds of whom are under the age of six—suffer the loss of consistent caregivers and spend significantly longer lengths of time in foster care. Data indicates that this extended time in the child welfare system results in poor outcomes.
Using a PFS model, the county government partners with a local nonprofit service provider to provide these fragile families with access to housing and other support services. The end goal is to reunite families faster, improving lives while creating greater accountability for government spending.
The program could not have been created 10 years ago, Beachkofski says. “We’re able to make these connections because of the availability of statistics and the ability to integrate multiple sets of data on homelessness, on foster care outcomes, on educational performance, and much more. What makes the difference is understanding how different outcomes intersect—how homelessness affects health and educational outcomes, for example. Looking at sets of data in isolation does not tell us all we need to know. We must look for the connections to tell us the more authentic story.”
Going forward, Grossman notes, the challenges are less to do with the limitations of data than about public perceptions regarding privacy. “In this society, we are continually trying to balance privacy with public benefit. The more data we have, the more we are able to get a true picture of outcomes, but the extent of data will always be curtailed, to some degree, by the individual impulse for privacy.”
“Digital tools will revolutionize the construction industry,” says Keiko Miyazaki, SF ’14, head of global strategy and marketing for PanaHome Asia Pacific, Panasonic’s real estate arm, “but maybe not just yet.”
Miyazaki points out that not everyone is comfortable living and working in the cloud, and professionals in the construction industry, as a group, tend to be more resistant than most. “All the cutting-edge digital tools in the world won’t contribute to progress unless they are used,” she notes. “Many building professionals prefer to stick to pencil and paper and leave cloud environments to airline pilots.” Miyazaki is based in forward-focused Singapore, but PanaHome is expanding across Asia into Thailand, Indonesia, and Vietnam, where the building industry is more deeply entrenched in traditional methods.
Miyazaki notes the irony of the situation. Building construction is an industry that naturally lends itself to digital tools, she says. Indeed, such tools are being unveiled daily across the marketplace. Some of them aim to produce a sort of virtual construction site, digitizing all aspects of a building project in one central cloud-based database, making it easy to monitor individual—as well as intersecting—aspects of a project as it progresses.
Miyazaki entered the building industry two years ago motivated to help advance it into its digital future, one of Panasonic’s key goals. She believes digital tools will increase creativity, efficiency, productivity, and sustainability. “I know we can make houses better—not just cheaper or fancier. We have the resources to create more responsible buildings, buildings that are better for the environment, that provide greater quality of life, and that last for 50 years. The technology is out there.”
So why the resistance? Miyazaki says that one of the most intractable obstacles is the why-fix-what-isn’t-broken mindset. “Builders have been building buildings in the same basic ways with pretty much the same tools for generations. They are more interested in utilizing building tools or materials to directly meet construction goals or reduce costs than they are seeking to apply technologies to improve the process or enhance creativity.”
Another barrier to a digital construction site is the diversity of professionals who contribute to a building project—electricians, plumbers, masons, woodworkers, window, HVAC, and insulation installers. Each of those subject experts works in a self-contained realm, to some extent, speaking the distinctive lingo and undertaking the specific processes of that trade. Dovetailing all these different procedures and priorities into one overarching digital construction site that is easy to use for professionals from all industries remains a challenge.
Miyazaki believes that the best hope for digitizing the construction industry is a charismatic pioneer with an irresistible new model. “What we need is a Steve Jobs to invent a set of pioneering digital tools that everyone can use—that everyone wants to use—because they are fun, easy, intuitive, and contribute obvious value to the process and the bottom line.” For her part, Miyazaki sees her role as preparing the building professionals she works with to embrace digital innovations as they are introduced. “So far, I haven’t seen any iPads on construction sites, but the time is fast approaching. We can’t stand still if we want to build buildings that will accommodate our future as a civilization.”
Picturesque San Francisco Bay is actually one of the most treacherous waterways in the United States. Beset by dense fog and powerful currents, the bay has seen its share of nautical casualties. In 2007, a container ship plowed into the Bay Bridge in heavy fog. Five years later, an oil tanker “lost situational awareness,” according to the official report, and also hit the bridge.
So when the Coast Guard was approached by America’s Cup organizers in 2012 about hosting the iconic cup races in San Francisco Bay, the challenge furrowed a few brows. US Coast Guard Commander Jason Tama, SF ’11, however, saw it as an opportunity to demonstrate the potential of a promising new technology. A career military officer and recent Brookings Institution Fellow, he has a particular interest in fostering innovation within the military. Working closely with the America’s Cup team, Tama and his Coast Guard colleagues led an initiative to develop and deploy the nation’s first virtual aids to navigation (AtoN).
“Waterways are divided by lanes, just like automotive highways,” Tama explains, “and the traffic in San Francisco Bay can get as congested as other California thoroughfares—130,000 vessels traverse it annually. Fully delineating those lanes and calling attention to obstacles like the Bay Bridge is a fairly outsized task. Buoys are expensive to place and maintain and tend to drift, especially in deep water.”
Tama’s team devised a system of virtual aids to navigation that display traffic lane and hazard markers on a vessel’s electronic navigation screen. AtoN are broadcast to vessel “dashboards” via the Nationwide Automatic Identification System. As of this writing, more than 250 virtual AtoN are in place throughout the United States either instead of physical buoys or to call attention to existing buoys or obstacles. The Oakland Bay Bridge now has five virtual aids protecting its pylons.
“These virtual aids to navigation can be a tremendous enhancement to the safety and efficiency of waterways, ” Tama says,” and the technology is being adopted across the nation.” He believes that collaboration across disciplines, platforms, and industries is the key to such innovations. “The America’s Cup organizers posed this challenge, adding their own nautical expertise and culture of innovation to the mix,” Tama says. “There are a lot of good ideas out there, and we needed this catalyst to help us move forward and show this technology could be used across the entire marine transportation system.”
Read Tama’s article in Wired magazine, “How to Get Startups in on the Military-Industrial Complex.”
Dapo Tomori, SF ’09, is passionate about improving the healthcare industry—one app at a time. Senior Director of Medical Affairs, CNS, at Takeda Pharmaceuticals, Dr. Tomori’s goal is to get better information to patients, physicians, payers, and policymakers so that all of them, individually and in concert, can make more informed decisions with better outcomes. “Digital tools,” he says, “give us the opportunity to personalize care to an unprecedented level.”
Dr. Tomori sees solutions in a broad spectrum of technologies that are increasing the pertinence and personalization of information. “It’s important to channel the latest innovations in science and medicine to improve real-world patient and population outcomes,” he says. “The digitization of the healthcare ecosystem improves communication on multiple levels, and communication is at the root of so many advances in healthcare. Technology innovation can enable what we call P4 medicine—predictive, preemptive, personalized, and participatory.”
Dr. Tomori is dedicated to identifying treatment outcomes that matter to patients and to the healthcare ecosystem and using those insights to drive healthcare R&D. It is critically important to take into consideration behavioral factors and societal trends when developing technology-enabled patient solutions, he says, and gives as an example the current impulse to simplify our digital lives. “Our messaging, music, camera, and GPS are integrated now into a single device—our phone—which we carry with us everywhere out of necessity. People don’t want to have to keep track of additional devices, so inventing a new handheld device may be less helpful than inventing a phone app that accomplishes the same task.”
A phone app can serve as a virtual coach in helping manage health issues, send reminders to take medicine, keep track of dosages, and inform the patient of contraindications. An app also could be used to passively monitor symptoms and treatment responses outside of healthcare settings. Dr. Tomori thinks that such passive sensing technologies will greatly facilitate continuity of care beyond the walls of healthcare institutions. He foresees an increased use of phones as patient monitors, tracking vital signs, even detecting if a patient has not been active for a number of hours. “Thanks to phone apps,” he says, “doctors and medical institutions will be able to check up on patients virtually and call them if they detect a problem.”
Dr. Tomori believes that when designed intelligently and attractively—consumers today expect digital helpers to be elegant and cool—apps make it possible for doctors to practice better, for patients to more effectively manage their care, and for payers to bill more accurately. “Ultimately,” he says, “it all adds up to a smarter, healthier world.”
We’re already at work on the next MIT Sloan Fellows Program Newsletter. Please drop us a line at firstname.lastname@example.org if you have ideas about themes and news items for future issues.
Stephen Sacca, Director
Libby Dilling, Marketing Associate
Marc O’Mansky, Associate Director
Michelle Pierce, Assistant Director
Stacey Lantz, Program Coordinator
Wendy Scott, Program Assistant
Laurel Aroian, Associate Director
Cathryn Noyes, Admissions Associate
Davin Schnappauf, Program Assistant II
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