Insights

COVID-19 has disrupted every aspect of our lives. Our impressive line-up of speakers shared their fascinating experiences of, and reflections on, digital transformation through the pandemic. They described both the disruption experienced in their respective sectors but also how organisational agility and the accelerated pace of change, built on strong digital foundations, has created new opportunities for innovation.

We heard about:

• Deep research and innovation in health and life sciences from Dr Kenji Takeda, Director of Health and AI Partnerships, Microsoft Research (top left)
• Digital transformation accelerated by a pandemic at L’Oreal from Ahmed Wagih, General Manager, L’Oreal Consumer (top right)
• How to reinvent a $1.5 trillion industry in the midst of a pandemic from Saad Berrada, CEO and Co-founder, Fairjungle (bottom right)
• Digital engagement at Manchester United in the era of COVID from Phil Salt, Head of Digital Product, Manchester United (bottom left)

Read a write-up of the event and watch some of the talks here. 

Leaders in the sector recognise the gulf between their working practices and those of manufacturers, with their optimised supply chains and use of machine learning and automation to drive efficiency and productivity. Surely, by adopting these ways of working to manufacture buildings offsite, it would be possible for the construction industry to do exactly the same?

Dahkli suggests that it is the economics of the construction industry which are getting in the way.

Read the article here.

But with large numbers of components and assembly stages, testing every part ‘by hand’ is time-consuming and expensive.
The authors wanted to know if they could use machine learning to reliably predict failure rates and, by doing so, reduce the costs of testing, improve quality control and reduce delivery times.

Their research suggests that taking a machine learning approach to quality control can be beneficial for manufacturers when the numbers of faulty products are low. In those circumstances, the cost-savings of using an algorithm can outweigh the risks and costs associated with supplying substandard products.

Read the article here.

For many engineering and manufacturing firms, digital transformation remains elusive as they struggle to emulate the success of platform-based consumer businesses such as Uber, AirBnB and Facebook. While new technologies are undoubtedly delivering important efficiency gains, full-on digital revolution has proved more difficult to achieve in the B2B world.

Could digital twins be the way forward? As well as connecting the physical with the digital, like B2C platforms they also connect individuals and organisations. As such, they may be the enablers of disruption and business model innovation that the B2B world has been waiting for.

Read the article here.

Over the last decade, at the same time as huge advances have been made in digitalisation, productivity growth has slowed in all the major economies. In this article, Velu suggests that a lack of business model innovation may be a significant factor.

But business model innovation presents considerable organisational challenges. Velu has developed a scorecard approach to help firms understand what is a complex system, develop new ideas and evaluate their effectiveness.

Read the article here.

Digitalising the construction sector is an urgent but difficult task. The potential benefits of developing digital twins of buildings and infrastructure are huge which also means that a lot of technology firms are vying for market share, whether that’s sector specialists like Autodesk or the tech giants like Google and Microsoft on the hunt for new opportunities.

In order to get a better understanding of how digital twin technology is likely to affect the sector, Pärn set about characterising the business model innovation displayed by android operating systems and comparing those with characteristics displayed by the construction sector.

For Pärn, innovations around android have three key aspects:

1) A move from separation to fusion: by creating a single open-source platform, android fused separate and competing technology developments into one concerted effort.

2) This had the effect of creating a community of developers capable of innovating at speed, or moving from efficiency to agility.

3) These developments enabled android to become more than a product, providing its infrastructure as a service.

Pärn sees similar patterns emerging with the business models of major technology providers such as Autodesk, with partially open platforms appearing and communities of developers seizing the opportunity to innovate on them. Pärn overlays these trends with three characteristics essential to the successful deployment of digital twins:

• fidelity - how faithful a representation is the digital of the physical?
• autonomy – can it operate without human intervention?
• insight – what does it tell us about how we can optimise the physical?

Much of the research published to date makes the case for digital twins as a way of optimising existing processes in order to increase productivity. But, asks Pärn, shouldn’t we be wondering if they can do more than that. If, in fact, they can help firms reimagine their business models?

But this is the construction industry where product margins are low – typically between 1.5 and 2% - and regulation is high, creating conditions which are not conducive to innovation. Even before the pandemic, construction was trailing a long way behind sectors such as manufacturing where digital twins are already deployed. According to Pärn, the construction industry is lagging years behind: without government intervention we are unlikely to see digital twins playing a meaningful role in it until 2040. 

Using her six dimensions, Pärn has created a framework for further investigating the state of the UK construction sector and how ready (or not) it is to take advantage of digital twin technologies.

The findings will be important for the future of the sector: digital twins have a transformative role to play in creating a connected ecosystem that would overcome the current problems of industry fragmentation, improve design not just through visualisation but by providing insights into how a building is used throughout its life, support modularisation and pre-fabrication and revolutionise the services specialists can provide.

Firms are finding that in spite of their increasing investment in the different realms of the customer experience they are unable to reap the potential rewards.

We look at how firms can use digital platforms to manage the customer experience and develop new business models and revenue streams.

Read the white paper Generate revenue from digital platforms by managing the customer experience.

We know from previous research that relying on satisfaction ratings to measure customer loyalty is problematic. It often masks underlying dissatisfaction with a company's products and services and that a significant proportion of its customers are at risk of churn. With better insights, these customers could be prevented from seeking alternative providers.

This research applied a more nuanced approach to understanding customer loyalty, looking at what customers think, feel and do in order to arrive at a more accurate prediction of their future behaviour. By combining this framework with advanced machine learning techniques and applying them to attitudinal,
emotional and transactional customer datasets in a B2B context, we have developed an approach which was 93% reliable in its prediction of churn.

Read the white paper Unlocking the secrets of customer loyalty. 

But the authors also recognise that designing and implementing a digital thread is not easy. And these days, it's the cultural and organisational issues that are more challenging than the technical. To help firms overcome these barriers, Cambridge researchers have developed a structured approach that will help firms assess whether they have the knowledge and capabilities they need to succeed.

Read the white paper here

But to succeed they will need to overcome cultural barriers, according to research carried out by the Cambridge Service Alliance, in conjunction with HCL. Businesses "need to understand the importance of fostering and incorporating trust, patience, and mutual support backed by a strong technological core to ensure stability and progress in trying times." 

Those that are able to do so will emerge from this crisis stronger than ever.

Read the blog here.

While our understanding and application of neural networks are progressing at speed, there is still much work to be done. One of their drawbacks is that while they are very good at giving you an answer, they aren't so good at telling you how sure they are about that answer. By using advanced mathematical tools (specifically, a Bayesian framework) we are helping them to get better at recognising and quantifying their uncertainty.

In this article, we explain the theory and show how it is being applied to a very real-world problem: helping an aircraft manufacturer manage its inventory more efficiently.

Read Inside neural networks: and how they are helping organisations make better decisions

Dr Mohamed Zaki and Professor Janet McColl-Kennedy, worked with CSA partners to devise a more nuanced way of understanding the customer experience using machine learning. 

Read the article here.

New technologies and new business models have already changed the way organisations interact with their customers. In the not too distant future, developments such as AI, robots and virtual reality will be a completely normal part of the customer experience. However, these new ways of engaging with customers will not replace face-to-face encounters but will work alongside them, making already complex service systems even more so. In this world, managers will need to understand customer experiences across the digital, physical and social ‘spaces’. Until now service research has looked at these three distinct service environments separately but organisations increasingly need to understand how they come together to create satisfying customer experiences and to design their services accordingly. The purpose of this report is to explore innovations in customer experience at the intersection of the digital, physical and social realms. 

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