Wharton@Work

April 2019 | 

Connected Strategy: Creating Competitive Advantage through Deeper Customer Relationships

Connected Strategy: Creating Value through Your Customers

“Something fundamental is going on,” says Wharton professor Nicolaj Siggelkow. “Managers in every industry are buffeted with a bewildering set of new technologies, including artificial intelligence, ingestible sensors, augmented reality, and 3D printing. At the same time, they’re seeing new companies entering their markets who are using technology and information gathering to disrupt them.”

In response, he says, many incumbents are struggling with how to react to these developments. “They know they need to connect better with their customers, going well beyond occasional, episodic interactions. But they’re not sure how to do that. Some are even wondering if they are obsolete and have to bow out to new entrants.”

Obviously you can make your customers happy by lowering prices or providing superior service, but both come at a cost. Siggelkow says a firm’s existing trade-off between the quality of the customer experience and the expense of providing it — a trade-off faced by every business in every industry — can be broken by embracing a new business model. That’s where connected strategy comes in.

Born in the classroom while working with hundreds of executives seeking an answer to the “how can we react” question, connected strategy is a revolutionary way to develop both stronger customer relationships (connecting differently with customers and making them happier) and connected delivery models (providing this great customer experience at a lower cost through new connections). Incumbent firms like Disney, Nike, and 130-year-old publishing company McGraw-Hill are using connected strategies to create value for themselves and their customers.

For several years, Siggelkow and fellow Wharton professor Christian Terwiesch developed frameworks to help business leaders create their own connected strategies. Participants in Strategy and Management for Competitive Advantage learn how to rethink the ways they connect to their customers, and how to survey their ecosystem and find ways to connect various players in new ways.

Siggelkow and Terwiesch saw over time what resonated, and refined their models. Now, they are sharing their work with an audience outside the classroom in their new book Connected Strategy: Building Continuous Customer Relationships for Competitive Advantage.

The highly actionable guide takes readers inside companies that are competing against newcomers and those that are shaking up their industries. It also shows them how to develop their own connected strategies. Three workshop chapters are titled Using Connectivity to Provide Superior Customer Experiences at Lower Costs; Building Connected Customer Relationships; and Building Your Connected Delivery Model.

“As readers go through the workshops and exercises,” says Terwiesch, “they will get a better appreciation of what is happening in their industry and become more systematic in their thinking about these issues.” Instead of thinking through thousands of possibilities for connecting with customers, the book provides a framework that includes four powerful connected customer experiences and five different connection architectures, leading to a rich but manageable set of options for managers to investigate. Worksheets help readers think through what it would mean if their company competed using each one.

Siggelkow says the book also dispels a common misconception. “Connected strategy is not primarily about technology. Clearly, it plays an important role, and you will have to adopt new technologies. But you may also have to change whom you interact with, how you charge for products and services, and how you structure your company internally. By reconfiguring these key elements, you are not blinded by the latest technology hype but can create real opportunities.”