Digital Innovation to Transform the Customer Experience

Digital Innovation to Transform the Customer Experience

Evangelos Katsamakas (Gabelli School of Business, Fordham University, USA) and Aditya Saharia (Gabelli School of Business, Fordham University, USA)
DOI: 10.4018/IJSITA.2019070103

Abstract

Digital innovation is becoming a strategic priority for business and IT leaders in many companies. This article explores digital innovation at Six Flags Entertainment Corporation, the world's largest regional theme park company, with emphasis on the strategic leadership role of its Chief Information Officer (CIO). The article shows that digital innovation requires appropriate technology infrastructure, organization, leadership skills and a systematic process to evaluate existing and emerging technologies. Innovation ideas may come from many internal or external sources. Five digital initiatives illustrate how digital innovation can create new revenue streams and transform customer experience. Insights are provided on how to justify such initiatives and how to strike the right balance between a focus on innovation, while meeting the traditional operational needs. Overall, a focus on digital innovation is an opportunity for a strategic role of IT leaders, but that requires new skills and new education.
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1. Introduction

When information technology started permeating the business world, the traditional guiding principle in selecting IT projects was business and IT alignment. According to this principle, the business strategy defined the IT infrastructure and application architecture. This approach was early on propagated by King (1978) and then formalized in Rockart’s critical success factor approach (Rockart, 1980), according to which organization wide CSFs are used to define business and IT infrastructure. Correspondingly, CIOs have in the past focused on building IT infrastructure and adoption of enterprise applications. Yet achieving business and IT alignment has not been a smooth journey, not least of them because of the earlier focus on achieving cost reduction through ad hoc efforts to automate specific processes, particularly back office activities. IT was perceived as being “mired in technical weeds,” with lines of business (LOB) often taking a view of IT as an obstacle, not an enabler, for strategic innovation.

However, digital technologies have the potential to transform and add significant business value to organizations (Kumar et al., 2015). With IoT, big data, AI, virtual reality and other recent technologies, together with traditional enterprise systems, IT is leading business transformation by creating new business models (Bakos & Katsamakas, 2008), new customer experience, new business opportunities, and optimized operational processes (Stamas et al., 2014; Hansen & Sia, 2015; Hess et al., 2016; Westerman et al., 2014). In this new environment Chief Information Officers (CIOs) are working actively with the leaders of lines of businesses (LOBs) to identify and implement new transformation initiatives. IT is no longer perceived as being mired in technical weeds, disconnected from the core business objectives and a bottleneck for speedy deployments. The holy grail of business and IT alignment seems to be within reach of CIOs, particularly those who are willing to look beyond the narrow scope of managing IT infrastructure (Stackpole 2018). CIOs, on their part are increasingly taking on roles beyond managing IT function; and in many cases driving the business strategy.

In this article, we explore the digital transformation initiatives at Six Flags Entertainment (SFE), world’s largest theme park operator (Yin, 2017). Our exploration focuses on digital innovation (Nylen & Holmstrom, 2015; Kohli & Melville, 2019) that transforms customer experience, one of three major areas of digital transformation activity (Westerman et al., 2014). SFE while not at the cutting edge of the technology, adopted several emerging technologies to change it business model, create new touch points, augment the rides with an augmented reality application, use of 3D printing to create merchandise on demand. Defining and implementing these transformative initiatives required a close partnership between IT and lines of business (LOB) managers. Successful implementation of several digital innovation initiatives at SFE led to its CIO, Michael Israel being included in CIO 100 list.1 We use the SFE experience to provide insights on how to drive digital innovation that enhances or transforms customer experience. Generalizing the approach taken at SFE, we provide important lessons for CIOs and other IT leaders who seek a strategic role and impact. We demonstrate that by thinking “digitally” and focusing on transforming customer experience IT leaders can play a strategic role, giving their company a competitive edge.

The rest of the article is structured as follows. Section 2 provides a detailed company background, and section 3 discusses IT operations at SFE. Section 4 focuses on identifying opportunities for digital innovation. Section 5 presents selected examples of digital innovation initiatives and their business benefits. Section 6 outlines managerial implications in the form of digital innovation lessons for IT leaders. Section 7 summarizes the contribution, an important implication for CIO education, and recommendations for future research.

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