Don't Just Listen, Connect

In the reace to close the gap between you and your customers, how close can you go? When does "very close" become "too close"? For John J. Sviokla, it no longer makes sense to speak in such terms. When it comes to interacting with customers -- to learning about what they want to buy and showing them what you have to sell -- the key factor is not distance but connectivity.

Digital technology is making possible a wide range of offerings that break the skin (in some cases literally) that has traditionally separated companies from customers, or customers from products. "We're going to see much more embedded intelligence in products. That's a given," says Sviokla. Companies, he adds, will "move from managing individual customer relationships to managing a network of products out in the field."

Sviokla, 44, is vice chairman and leader of the digital-strategy practice at DiamondCluster International Inc., a consulting firm based in Chicago. His clients include Goldman Sachs and General Motors (for which he consulted on the creation of Covisint, the ambitious B2B exchange launched by the Big Three automakers).

Before joining DiamondCluster (then called Diamond Technology Partners) in 1998, he was an associate professor at Harvard Business School. There, along with colleague Jeffrey Rayport, he taught the school's first course on e-commerce and penned the Harvard Business Review article that introduced the term "marketspace" to the world.

In an interview with Fast Company, Sviokla made a series of connections between where technology is today and where companies must be tomorrow.

What will the boundary between companies and customers feel like five years from now?

It will feel less like a boundary and more like a connected network. We're going to see much more embedded intelligence in products. That's a given. For example, without being told, companies will know what kind of washing machine a customer has, if it's still under warranty, and if it needs parts -- or if the time has come to get rid of it. Merloni, an Italian white-goods manufacturer, is already embedding technology into its washing machines that will provide exactly that kind of feedback.

Lexus is doing something similar with its cars. When you bring a Lexus in for service and your dealer hooks it up to a computer to run diagnostics, a profile of your driving habits gets uploaded to the Lexus engineering department. That lets the company build a more accurate picture of how people experience its products.

The boundary between where a product ends and where a customer begins is changing. And it's a fundamental change -- one that will let companies move from managing individual customer relationships to managing a network of products out in the field.

How will companies benefit from moving in that direction?

Managing a network of products leads to increases in profitability, because customers are usually willing to pay extra for a superior process. And a superior process is often much harder for other companies to imitate than a superior product. Companies will also find additional revenue streams as they move further along the product life cycle in terms of financing and selling new services.

Take a company like Carrier, which is launching a Net-enabled air conditioner. Carrier will be able to look at power consumption and tell if a compressor needs to be replaced, cleaned, or repaired. Once a company has something like that, it can go to a consumer and say, "If you delay the time when you start this air conditioner by three hours, we can help you save 10 cents per kilowatt-hour."

But it's not really about using the Net to turn an air conditioner on and off. It's about getting tighter with customers through a kind of giant Nielsen-ratings system that gives feedback on how products are actually being used. Customers will assume that a company can interrogate the products that they own, whether that product is sitting in their house or in their car or in their hands.

How close can companies really get to their customers? Is there an ultimate boundary?

Well, telematic medicine will lead health-care and insurance companies under the skin of their customers. Under-the-skin adjustment and monitoring of insulin levels for diabetics, for example, has been shown to be tremendously more effective than self-administered injections. This will start with conditions like diabetes, but it's not difficult to imagine patients with heart disease swallowing a telematic monitor that helps them watch how much salt and cholesterol they consume, and warns them whenever they approach unhealthy levels.

Will people sit still for that kind of thing?