Grow horizontally

03.14.14   |   Strategy & Innovation

In manufacturing categories as diverse as apparel, food electronics and automotive, digital technologies we have begun to see innovative brands use digital technology to open up brand new lines of business.

Beyond the classic new product launch or line extension into a narrow product category, these brands are creating ‘digital services’ that add new depth to the customer relationship and, in many cases, new revenue streams.

A well-known example is Nike Plus+, the suite of digital services that transformed Nike from being in the sports apparel business to being in the business of enabling athletic performance. A more modest example is My M&M’s, which moves M&M’s beyond one-size-fits all candy, to fun, mass-customized candy creations opening up a lucrative new B-to-B and special occasion market. A newer example is Reebok’s move into wearable technology with the launch of the CheckLight head impact indicator, partnering with MC-10 the wearable sensor maker.

What about Leading Health Manufacturers? It’s surprising there aren’t more established Health brands – think Consumer Health or Pharma – that have taken advantage of the opportunities to redefine their products through digital services. Health products, more than almost any other category stand to benefit through digital services that provide added value in addressing an ailment. Yet, many of the stalwarts in the field seem content to take a ‘wait and see’ approach, while start-ups and established brands from other categories, like Reebok or Nike, create Digital Health products.

Of course digital service innovation is especially challenging in Health but by waiting established Health brands may forfeit the opportunity to claim the broader digital value territory that surrounds their products to other companies. What Nike, BMW, Lego and numerous other examples show is that physical products can be made more valuable through digital augmentation, and any manufacturer, not just software companies, can potentially monetize digital services. Similarly they teach us that our brands need not confined by the narrow vertical product category they currently occupy – there is rich possibility in ‘growing horizontally’ to more fully meet our customers’ needs.

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