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October 22, 2019

Lane Change

Practicing the grand old art of reinvention

Mickey and Minnie Mouse. Donald Duck. Goofy. Winnie The Pooh. Tigger. You can come up with scores of reasons as to why Disney World is known as the happiest place on earth. Who could walk away not feeling that way? Look at the Disney business model. When you enter the gates, it’s like entering another world—40 square miles (roughly the size of San Francisco) of attractions for people of all ages and nationalities. Resorts, restaurants and shops galore.

And for those who have made the trek, you might also notice something else—it may be one of the most connected places on earth.

While the rides and attractions have mostly remained the same over the years, technology has redefined how Disney connects with its customers. In the old days when you visited Disney, you’d purchase a ticket at the entrance to the park and then decide which rides and attractions to visit. When you were hungry, you’d head to one of the many restaurants. Faced with a long wait at say, Magic Mountain, you would just come back later.

But Disney’s evolution—the pivot, if you will—changed all of that. Today, before you ever arrive at the park, you get a MagicBand. The wearable device is an all-everything conduit of connectivity, serving as an entry ticket to the park, a digital wallet that pays for everything you want and your room key. Hungry? Place an order on the band and location sensors take you to your food. Lines too long? Your band will help nudge you to another corner of the park.

Incorporating a digital element into the mix made the Disney experience bigger, better and faster. It’s the kind of decision that Christian Terwiesch and Nicolaj Siggelkow say more business leaders must have the faith to make. In the case of Disney, Terwiesch and Siggelkow, co-directors of the University of Pennsylvania’s Mack Institute for Innovation Management, say the pivot was a strategy designed to better interact with its customers’ needs.

“As a brand, you do not want to compete for every transaction,” says Siggelkow, professor of Management at the The Wharton School of the University of Pennsylvania and a Fellow of the Strategic Management Society. “You want to enter a long-lasting connected relationship. That’s how you create your own audience. In a truly connected customer relationship, your competition is irrelevant.”

In their book, “Connect Strategies: Building Continuous Customer Relationships for Competitive Advantage,” Terwiesch and Siggelkow stress that brands must move their interactions with their customers from the traditional model of episodic interactions to a continuous relationship that offers highly customized products or services when or even before the customer wants them. It’s a strategy they call a “connected customer relationship.”

In a world where everyone is becoming smarter and more connected, brands have to redefine themselves for the new age. By entering into these connected relationships, you create market sizes of one. “You truly can customize your products and services to one customer,” says Terwiesch, who also is professor of Operations and Information Management at Wharton. “As you receive more and more data, as you replace the sporadic interactions between brand and customer through continuous relationships, you get better and better at understanding them.”

By MJ Pallerino

This article appears in the new May/June 2019 issue of Connect magazine published by NextPage, which can be found online here. If you would like a free print subscription to Connect, please click here.

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