strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: November 29, 2005

 
 

Building a Better Matchmaker

Unrealized Potential
At first glance, this “matchmaker” concept appears to contradict the current conventional wisdom about information technology in the workplace. In his book Does IT Matter? Information Technology and the Corrosion of Competitive Advantage (Harvard Business School Press, 2004), strategy+business columnist Nicholas G. Carr argues that intensive information technology has become commoditized. Computer-based systems represent a cost of doing business, not a strategic advantage. With so many expensive and unproductive IT experiences business owners can draw upon, this point of view has become persuasive.

But early experience in building customer-sensing capability is leading to a more nuanced view of IT. Less is more. Details of implementation matter. Relevance can’t be taken for granted, but it is achievable. “Using smaller, more flexible IT solutions to incrementally tackle focused problems would lower risk and enable companies to define their business processes for the good of the business, not their software,” write Harvard Business School professor Marco Iansiti and venture capitalist Gregg Rotenberg in their 2004 white paper Beyond the IT Monolith (Harvard Business School). “Technology should match the business problem, not the other way around.” Creating a well-designed CSC initiative, in short, is not a technology problem but an organizational change issue. Those who get it right first will benefit, not because they’ve put a particular software package in place, but because the process has forced them to redesign the information flow of their entire system, from the customer back through their supply chain.

In that light, it’s worth looking closely at the matchmaking systems already in use. Dell Inc. and Amazon.com Inc. employ highly responsive Web sites, in which customers enter information about themselves, their purchasing behavior is subsequently tracked, and they receive individual recommendations. Private banking firms use focused financial-planning-and-advice software programs to develop individual investment strategies for high-net-worth customers. In the auto industry, as the Wall Street Journal reported, Ford has rolled out a series of interactive Web sites for guiding customers, first in selecting sport utility vehicles (SUVs), then sedans, and recently trucks. By July 2005, about 52,000 customers were using these sites each month. Toyota Motor Corporation and General Motors are also developing sites, and so are a few large dealerships. Automotive retailers, such as Carmax and Autos.com, are themselves examples of customer-sensing capability: presenting tailored information to customers, learning their needs as they compare features and prices across brands. Other retailers, such as home improvement stores, are experimenting with similar systems.

But the full potential of these early efforts is still unrealized. The Dell Web site, for instance, seems designed for customers who come to it already knowing what they want. There are plenty of opportunities to identify processor speeds and disk capacity. But are you buying a computer for the kids to use as a platform for video games, as the home base of a new small-business venture, or as the central control of a home-entertainment network? Is the prospective buyer a tech-savvy user who’ll customize the equipment based on 15 years of experience, or a novice making a first investment in a home PC who is likely to need a regular dose of customer support? Dell never asks.

Similarly, Amazon’s science of selection could be better developed. The premier online retailer has fine-tuned its lists of recommendations to reflect all the categories in which each shopper has a purchase history. But the Amazon databank reflects only the record of buys, not the changing interests of the buyer. A traveler who peruses and purchases guidebooks for Miami will find Florida on his list of “Amazon favorites” long after the vacation season is over.

Carmax’s computer-enhanced selling tools explore consumer interests, but they too neglect a crucial feature. After an online user has narrowed down a set of preferences and chosen a model, the “online auto superstore” delivers the prospect to a Web page titled “Interested in This Car?” The page instructs the prospect to e-mail or phone the dealer. Carmax thus walks away from much of the value of its own system.

 
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store

 

Resources

  1. Marco Iansiti and Gregg Rosenberg, “Beyond the IT Monolith,” 2004, Harvard Business School White Paper no. 9-604-070: Principles and practices for “less is more”–style information technologies; useful for designers of computer systems oriented around customer-sensing capability. Click here.
  2. Bill Jackson and Conrad Winkler, “Building the Advantaged Supply Network,” s+b, Fall 2004: The back end of an effective customer-sensing capability. Click here.
  3. B. Joseph Pine II and James H. Gilmore, “Why Experience Marketing Pays,” s+b, Fall 2004: American Girl and REI Web sites as examples for this kind of “customer-sensing” marketing. Click here.
  4. C.K. Prahalad and Venkatram Ramaswamy, “The Co-Creation Connection,” s+b, Summer 2002: Manifesto advocating integration of marketing, information technology, and the supply chain to form a combined vehicle for customer-based product development. Click here.
  5. Jennifer Saranow, “It’s a Match! As Buyers Head to the Web for Research, Car Makers Are Trying to Make Sure They Find What They Want,” Wall Street Journal, July 25, 2005: Comprehensively and engagingly portrays the range of online services for car buyers today.
  6. Barry Schwartz, The Paradox of Choice: Why More Is Less (Ecco, 2004): A reminder of the danger of overwhelming people with too many choices.
  7. Steven Wheeler, “How the Auto Industry Should Embrace CRM,” s+b enews, 05/01/02: A step along the way to the thinking underlying this article, with the additional element of telematics. Click here.