Article - DICE: The Key to Creating Competitive Advantage through Digitization
David Wittenberg, Professor of Entrepreneurial Innovation, Indian School of Management & Entrepreneurship (ISME), believes that the future will belong to those who are creative enough to imagine valuable new uses for new technologies, wise enough to follow the Design Thinking process when investigating possible solutions, innovative enough to build the right solutions, and entrepreneurial enough to turn their solutions in to business ventures.
While I was dining at a local eatery recently, three news stories playing on the restaurant’s TV caught my attention. One was about digital start-ups, including BookMyChotu.com. The second was about RFID tags and toll booths. The third story was about a new directive for government ministries to switch from paper cheques to electronic payments.
These stories shared one element: they all involved digitization of an existing process, whether booking household help, paying tolls, or paying bills. I hoped that all the initiatives would be successful, but I wondered if the entrepreneurs, the highway planners and the bureaucrats who were responsible for them had applied DICE to ensure that they would succeed.
What is DICE?
DICE stands for Design, Innovation, Creativity and Entrepreneurship. This set of skills may seem radical, vague or impractical to managers who studied engineering, computer science, finance or marketing. Yet, it is exactly these skills that will enable companies to create and sustain competitive advantage in our high-tech, globally-connected economy of the 21st century.
Design is similar to art in some ways, but there is one important difference. A painter or sculptor creates art in order to express his own vision, usually without having to think about how others will respond. By contrast, a designer creates products, garments, software and many other types of solutions just as an artist creates, but with the express purpose of delivering great experiences for customers and users.
Innovation, in simplest terms, means inventing things. In the corporate world, my preferred definition of innovation is “combining existing elements in new ways to create value for customers.” The emphasis is two-fold. Corporate innovators do not need to invent new elements; they merely need to become masters at making new combinations. Second, corporate innovation only succeeds when it creates enough value for others who are willing to pay for it.
Creativity in business signifies the ability to imagine and produce things that are entirely original. It’s important to distinguish business creativity from the type of creativity shown by musicians and craftsmen, who excel at reproducing and rendering the original works and designs of others. Companies are full of skilled technicians; the need of the hour is those who can imagine new ways of doing things.
Entrepreneurship is the drive and ability to start, build and run one’s own venture. Large firms are often uncomfortable with entrepreneurial individuals because they may not conform, and they may question or challenge their bosses’ decisions. Nevertheless, companies need ambitious, independent leaders to launch the new business units, product lines, and platforms that will keep them growing and gaining market share.
DICE and Digitization
The world of IT – information technology – often claims to be the world of innovation. It is true that computers have done more than any invention of the past century to transform the way we work. At the same time, a thoughtful review of the history of the digital era reveals that almost all of the inventions in the world of hardware and software have done little more than to increase computing speed and power, to make computing mobile, and to make microprocessors perform more business and personal tasks.
Digitization often promises exceptional results, but sometimes fails to deliver on those promises. While I was watching the TV news report on RFID-enabled toll booths, I recalled what happened at the toll plaza near Ambience Island on the Delhi-Gurgaon Expressway several years ago. Most drivers took a pass on the new RFID tags, preferring to stay with cash payments. As cars and vans approached the toll plaza, drivers ignored the signboards and often ended up in the wrong place, blocking the tag-only lanes. During peak commuting hours, despite all efforts to ease the situation, waiting times to cross the tollbooths reached 30 minutes.
Complaints by commuters became so numerous that eventually, the authorities decided to remove the toll plaza entirely. Here, digitization offered the promise of significant savings of time and money for commuters, yet the gains were not realized, and the effort failed.
On the other hand, the story about BookMyChotu.com made me think of the success that digitized services such as Uber and Ola have had in transforming the taxi industry. Here, wireless connectivity, global positioning services (GPS), and mobile wallets combined to revolutionize the way many people book and pay for their rides.
The connection between DICE and digitization may not be obvious. Analysis reveals that one factor alone—design—may explain almost completely why the Gurgaon toll plaza failed and Uber succeeded.
Design can be defined as “making things look good and work well”. The Highways Authority and the founders of Uber both thought that they were making things work well, but only one of them had followed the process of Design Thinking.
Uber started by understanding its users, their habits, their beliefs and their problems. They identified a challenge for travelers: it was difficult to book a taxi. Further, they identified an unmet need of drivers: more fares to earn more money with their cars. Uber imagined a cab-hailing application that would run on a mobile phone, based on their insight that their target
users were already comfortable using mobile apps. They prototyped their service in one city, ironed out the bugs, and expanded globally.
The builders of the Gurgaon Expressway also identified a user problem: slow traffic between Delhi and Gurgaon. They knew that a highway would allow for faster travel, but their challenge was to recover the cost of construction. They proposed to meet that challenge with a toll booth. However, they skipped the step of studying the users to understand how they would react. They assumed that drivers would want the savings offered by an RFID tag. They also skipped the step of prototyping and testing the system with users. They built the toll plaza without a pilot or a test. Their assumptions about driver behavior and payment preferences turned out to be wrong, and the mistake cost crores of rupees.
Applying DICE in Business
By following the five steps of Design Thinking—Empathize, Define, Ideate, Prototype, Test—companies can assure that digital solutions will meet the needs of users and also be acceptable to them. They can validate their ideas quickly and inexpensively, avoiding large losses and achieving great gains in the process.
Innovation is the distinguishing factor that turns digitization into disruption. Many corporations are satisfied to adopt software and hardware that have been proven fit for a purpose. This kind of digitization can improve results. However, since it is merely a “me too” response, the best possible outcome is that the company will catch up with rivals who are already using the application.
Instead of copying others, innovators develop new digital applications. By doing so, they gain first mover advantage over competitors. In the best cases, such as Apple’s iTunes, Wal-Mart’s inventory control system, and Amazon’s online stores, they disrupt entire industries and become global behemoths.
Creativity is the powerful ingredient that enables a company to innovate in a disruptive way. It takes an original thinker to imagine a Facebook, a Flipkart, an Alibaba or an OYO Rooms. Companies that focus only on executing their current processes better will never discover the next breakthrough.
Finally, entrepreneurship is the driving force for much digital innovation. While such giants as IBM, Intel, Bell Labs and Xerox can take credit for many of the technological discoveries that have fueled the Information Age, most of the commercial successes have been achieved by micro, small and medium enterprises. It was not corporate managers, but two entrepreneurial college students, Larry Page and Sergei Brin, who decided to build a better search engine and founded Google.
Computing power has increased exponentially in our lifetimes, and the cost of hardware and software has dropped precipitously. Developments such as artificial intelligence (AI), the
Internet of Things (IoT), and 3-D printers have opened new possibilities for digitization. The future will belong to those who are creative enough to imagine valuable new uses for these new technologies, wise enough to follow the Design Thinking process when investigating possible solutions, innovative enough to build the right solutions, and entrepreneurial enough to turn their solutions in to business ventures.
Opinions expressed in this article are the author’s own.