Business use of APIs and IoT platforms to accelerate products and services has become commonplace. Design, in combination with IT and business strategy, must now provide products and services personalized for one and applicable to millions to address the demands. Processes where IT strategies and design act as a whole to continuously improve business and produce added value will be sought to resolve this conundrum.
Businesses have produced many innovations through the IT conversion process, in which merchandise and services are modified to be controllable by IT. This conversion produces destructive creation that often alters the way businesses operate.
Innovation enabled by IT conversion results in the reduction of production and logistical costs. Electronic data is reproducible without any production facilities and it is faster and less costly than physical delivery. As an example, music and book business transactions are completed in seconds in the palm of the user’s hand. This capability resulted in a transformation where existing stores and related logistics networks lost their reason for existence. Thus, a small number of platforms gained the business initiative.
With IT conversion, value transfers from hardware to software. Even if the hardware remains the same, updated software increases value. The public has learned this lesson from its experiences with smartphones.
If the protocol (a set of rules governing the transmission of data) is determined, IT-based businesses can easily interconnect and cooperate using application programming interfaces (API). Because of this characteristic, a system that combines an existing service and the internet to do business has become common. Consequently, starting a business is faster and the cost is lower. The following example is well-known. While a ride-sharing service focused on its core competencies such as the development of smartphone apps for the driver and passenger and the construction of a business model, it depended on third parties for other elements such as payment and navigation, procuring them online.
The API economy will continue to develop in the future. Technological advances brought by IT and the reforms to leverage it will enable the continuous improvement of business.
With IT, the personalization process, which has been previously done by segmentation or attribute group, can be focused entirely on an individual – a design for one. Regardless of the number of customers, a personalized service can be offered whenever a user needs it. For example, businesses with a subscription model are expanding and taking full advantage of this innovative personalization technology.
The subscription model, in which the customer agrees to pay a specified amount of money for a designated time period, is often used in the transmission of music, electronic books and videos. Providers offer services that are fully optimized for an individual, such as recommending items that the user wants with extremely high accuracy and offering special discounts or campaigns only for that individual. This results in improvement of user satisfaction and continuing trust and renewal of the contract. This is significant given that today’s fluid customers can easily cancel an agreement online. Businesses use innovative IT technology to first let customers join with a low fee and then turn them into faithful, long-term clients with other incentives.
Another important trend is the application of continuous improvement flow, a development technique used in IT for business. In the IT world, development and operation are not separate phases but rather overlap in an iterative process to continuously improve the software. This method is called DevOps. In DevOps, a software developer uses the software in actual operation. After receiving feedback from users, the developer identifies points to be improved, enhances the software and then places it back into the operating environment.
This flow can also be used for the improvement of a variety of business designs. For example, sharing and other services with a short cycle, where users pay for only what they request and use. Continuous improvement of the model is key to expansion in this business model. The same process can also be applied to the subscription model. In the subscription model, it is necessary to continually improve customer satisfaction through a series of messages to convince users that their judgment is correct, familiarize themselves with the service, expand use and decide to renew the contract. To remain successful, this process must be coupled with continuous improvement.
The technique in which the designing of the service and improvements based on a continuous feedback cycle can be called DesignOps. With the growing popularity of the subscription model, this will probably be an indispensable process for business designs in the future.
It is easy for services integrated with IT to be more open, asking the world for its opinion. This open strategy is also useful as a means to enhance continuous improvement. For example, a large ecommerce company is known for using this approach to actively disclose to third parties the systems that they are developing for their own use. The reason for this is so that they can collect user feedback and competitor comparison information from a wider range of resources, integrating this information into the continuous improvement loop. As a result, the cloud and logistics services that this company disclosed have become the world’s largest. These services are still repeating the improvement cycle and are likely to become even more competitive in the future.
The company is aware of user feedback and comparisons with competitors through the initial technical development phase. When a new development starts, this company writes a press release for reporters first, crafts expected questions and answers and then designs the user screens. Next, it creates a user manual, after which the company starts the required technical development. The company’s process is intentionally the reverse of the most commonly used method. This is a shrewd, strategic technique because the technology to be developed, the services that use the technology and the businesses that use the services are explained to the users in advance – as are the benefits. As a result, the company may start continuous improvements based on user feedback on a service that does not yet exist.
A big wave of IT-based transformation is about to engulf the automobile industry. With the help of IT, the ride-sharing service has changed the role of a private car to that of a taxi or delivery vehicle paid in increments according to usage. In addition, the transition to autonomous vehicles, which separates the driver and completely automates its operation is underway. In the future, IT might obtain the core of the automobile industry from car manufacturers.
Under these circumstances, a large automobile manufacturer announced the future development of an autonomous driving platform. The company aims to develop its own proprietary, auto-driving technology while manufacturing cars with a competitive edge. In addition, the company plans to offer automated driving car systems to other companies. Other companies are using open API to offer services at will. It is significant news when an existing industry leader proposes an ambitious effort to fully adopt a new business model made by IT. This is a model of industry transformation that many different types of businesses may be facing in the future.