Data Wrapping for Business Value

Understanding Data Wrapping for Business Value: A Comprehensive Guide for Students

Data wrapping is a powerful strategy where companies combine a product or service with sophisticated analytics to significantly enhance the customer value proposition. This approach, identified by MIT Sloan Center for Information Systems Research, helps businesses reinforce, streamline, or enrich how customers use or experience an offering. Think of Amazon customizing your shopping experience or heavy equipment manufacturers predicting and preventing part failures – these are prime examples of data wrapping in action, solving meaningful customer problems.

The Core of Data Wrapping: Two Essential Capabilities

To successfully implement Data Wrapping for Business Value, two key capabilities are indispensable: analytics and customer intimacy. Both must work in synergy to maximize value, as relying on just one will limit the potential for creating excellent data wraps.

What is Analytics in Data Wrapping?

Analytics encompasses the data itself, advanced data science tools and techniques, and the overall analytics-savviness of a company. This capability is crucial for creating customer-facing features and experiences fueled by data. High-quality analytics relies on a company being both digitized (having master data and integrated systems) and digital (possessing a digital offerings platform with reusable components). It leverages skilled technologists and product managers to ideate, assess feasibility, and execute sophisticated analytics with advanced methods.

The Importance of Customer Intimacy for Value Creation

Customer intimacy refers to a company's deep understanding of customer needs and actual behavior, built through strong connections and knowledge. Companies foster customer connections through various touchpoints like call centers, salesforces, ecosystem partners, co-creation efforts, digital technologies (e.g., social media, mobile apps), and embedded sensors in offerings. These connections generate valuable data on customer demographics, sentiments, context, usage, and desires, forming the foundation of customer knowledge.

Both analytics and customer intimacy are vital because data wrapping use cases become more valuable as they are more tailored to the customer and automated. These characteristics require robust capabilities in both areas to truly deliver superior customer value.

Data Wrapping Use Cases Along the Customer Journey

Data wrapping can be applied at any customer touchpoint, such as purchase, usage, or service, typically where customers need the most help or where the company can create the most value. MIT CISR research categorizes these use cases into three types based on their contribution to a solution: Data, Insights, and Action.

1. Data-Based Use Cases

These use cases empower customers with raw data, often presented as reports, dashboards, visualizations, or even APIs, allowing them to use it meaningfully. An example is a B2B financial company offering institutional clients API access to near real-time transactions for generating custom reports. Similarly, many machine manufacturers provide customers access to machinery data via portals or email, helping them understand usage and manage operations.

2. Insights-Based Use Cases

Insight-based use cases equip customers with decision-making aids, such as suggested next steps, alerts for aberrational activities, or benchmarks. A consumer products company, for instance, created a chatbot to help shoppers determine product quantities needed for a party. An institutional bank might provide clients with inferences on investor trends, portfolio risk, and inflation, generated from client and external data, to guide long-term investment strategies.

3. Action-Based Use Cases: Driving Reliable Benefits

Action-based use cases are designed to favorably change a situation for the customer, with the company playing an active role in problem-solving. These cases reliably lead to benefits because the company directly influences the outcome. For example, an equipment provider uses sensor data to predict potential failures and proactively replaces parts, preventing unplanned disruptions. A retail manufacturer might use models to detect sales pattern outliers, then identify strategies to boost sales for retailers, providing direct implementation support.

While all three types help customers solve problems, data- and insight-based wrapping rely on the customer to realize the value. Action-based use cases, however, provide the strongest level of vertical integration, enabling companies to better understand and capture the value created for the customer.

Real-World Application: Data Wrapping at Cochlear Limited

Cochlear Limited, a global leader in implantable hearing solutions, exemplifies successful data wrapping. With 2017 revenues of $1.2 billion, Cochlear designs and manufactures solutions combining surgically inserted implants and external sound processors. Their success highlights how robust analytics and deep customer intimacy translate into tangible business value.

Cochlear's Innovative Features

In September 2017, Cochlear launched its Nucleus® 7 Sound Processor, developed in collaboration with Apple. This offering includes the SCAN Scene Classifier feature, which uses algorithms to analyze a user's environment (e.g., crowded street, quiet room) and automatically adjusts processor settings for optimal hearing. This action-based wrap solved a common problem where patients might not manually choose the best settings.

Another feature, the coil operation feature, tracks