The business story of the 1980s and ’90s was, in large measure, the story of commoditization. Globally, in one market after another, companies large and small learned techniques for producing high-quality goods and services at competitive prices, and found they could compete with the most powerful and seemingly entrenched incumbents. Companies that successfully emerged from this upheaval were those that made smart business-design choices, enabling them to differentiate themselves in the minds of customers —even when their products and services were no longer unique.
Today, the explosion of digital information makes available a new array of strategic options, bringing within reach the Holy Grail of differentiation: the ability to offer all stakeholders a set of value propositions that no other company can match. These options include new ways to mine customer data, reach entirely new customer sets and leverage the creativity and energy of talent.
However, despite years of discussion about the value of information and the fact that information is most companies’ greatest asset (in 2001, for the first time, U.S. investment in information technology surpassed spending on traditional plants and equipment), few established companies have been able to differentiate themselves to that degree. As a result, although companies may use information to improve their own operations, few have been able to turn it into honest-to-goodness revenue.
Why have companies tapped only a tiny portion of the potential for their information to drive new growth? For one thing, managers often limit their thinking about information assets to computer systems and customer-relationship management databases. In fact, information assets encompass warranty information, transaction histories, technical knowledge, research results, point-of-sale data, equipment monitoring software and data, and a host of custom analytic tools. After the bursting of the dot-com bubble, some managers also tend to generally disparage ideas involving digital assets. Nonetheless, a thoughtless rejection of digital business is just as expensive as the thoughtless enthusiasm many businesses fell prey to in the late ’90s.
The experiences of two companies suggest, however, that there are a variety of ways to generate new growth using information assets.
GE Medical Systems: Capitalizing on Byproduct Information
General Electric is putting information assets to work in its GE Medical Systems (GEMS) unit. In 1995, GEMS was a $4 billion division that sold medical imaging equipment. Today, it is an $8.5 billion company comprising three business segments — health-care services, imaging equipment and information technology.