The Digital Transformation Playbook: Rethink Your Business for the Digital Age

Lead User Participation
Lead users (a term coined by Eric von Hippel
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) are your most active, avid, or 
involved customers. Their greater needs lead them to have greater interest in 
interacting with your products or business, and they can often be a unique and 
powerful source of data. We saw one example in The Weather Underground: 
the volunteer army of meteorological enthusiasts who happily contribute real-
time feeds of additional weather data to TWC as part of participating in that 
community. Other companies use exclusivity to identify and leverage their 
lead users. Alexandre Choueiri, L’Oréal’s president of international designer 

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collections, explained to me that the cosmetics firm creates and engages confi-
dential customer communities for designer brands such as Viktor & Rolf. The 
allure of joining a special club (literally called the “secret service”) appeals to 
consumers, and the exclusivity helps the brand learn more about loyal users—
not just casual one-time purchasers. “You get fewer people,” Choueiri told 
me. “But they’re really engaged. We sell this brand through the retailers, so this 
engagement tool is how we get data.”
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By engaging lead users, brands can solicit 
input and feedback from much more selective and important communities.
Supply Chain Partners
Business partners can be crucial sources of additional data for building 
your data asset. Companies producing consumer packaged goods now work 
closely with large retailers and with retail data services like Dunhumby. 
Power, leverage, and levels of trust can greatly influence who shares data 
with whom in many industries. In the travel industry, large airlines (such 
as Delta) can have nearly 100 million customers enrolled in their loyalty 
programs. But airlines and the online travel agencies (such as Travelocity 
or Orbitz) share only limited data. As a result, neither the agencies nor the 
airlines have access to the full picture of customers’ travel behaviors when 
they want to customize pricing and offers at the point of sale. Increasingly, 
data partnerships will be a key element of how businesses negotiate terms 
of working together.
Public Data Sets
Another important source of new data is publicly accessible data sets. Some 
of these are in online public forums. The car reviews website Edmunds.
com, for example, contains many years’ worth of discussion forums—pro-
viding huge amounts of unstructured data in customers’ conversations 
about car models, makes, preferences, and experiences. Many social media 
platforms, like Twitter, are easily searchable for real-time data. In addition, 
governments are increasingly providing public access to large data sets in 
machine-readable format. The U.S. government’s census data, for example, 
has been in huge demand since being made available. In addition, more and 
more city governments are opening up APIs to let innovative businesses 
make use of government data and to spur new business opportunities.

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Purchase or Exchange Agreements
Lastly, there are many opportunities for businesses to purchase or swap 
legitimate, valuable data with other firms. Businesses should avoid compa-
nies that offer shady sets of customer records collected through question-
able means. Instead, firms should seek out the many reputable services that 
enable anonymized data comparisons. Anonymized data lets a company 
learn things like the conversion rate of offers (the portion of customers 
accepting the offer sent). The company’s data shows which customers got 
the offer, the retailer’s data shows who made a purchase, and the third-party 
service measures the conversion rate without revealing customer identities 
(which could be a violation of privacy terms).
Sometimes data can be received through an exchange or donation. 
During the 2014 World Cup, Waze shared anonymous driver data with city 
governments in Brazil to help them identify and respond more quickly to 
traffic buildups and road hazards. In Rio de Janeiro alone, up to 110,000 
drivers a day were providing traffic data through Waze’s API. Since then, 
Waze has been developing partnerships with other governments, such as 
the State of Florida. The company is not asking for payment but rather is 
seeking an exchange of more data. By receiving real-time data from high-
way sensors and information on construction projects and city events, 
Waze is improving its own data asset.
There are many more sources of data available today. The challenge for 
your business is often simply choosing which ones will best fit your needs. 
A recent forecast published by the Journal of Advertising Research summa-
rized the changes anticipated in market research: as businesses are faced 
with a “river” of continuously generated data, the goal of research is not to 
expensively manufacture data, but to find the right tools to “fish” in that 
river in order to draw forth the insights and intelligence needed.
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Turning Customer Data into Business Value:
Four Templates
As organizations gather more data and develop it into powerful assets, the 
next challenge is to continuously apply these assets to create new value for 
themselves.

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We’ve seen examples of how product or service data provides value 
by enabling a business’s core service to customers: think of TWC’s use of 
weather data and Google’s use of mapping data. We’ve also seen that busi-
ness process data can yield value by optimizing and improving decision 
making, even in surprising ways—like Stringer’s use of budgetary data.
If we look at customer data, we can find recurring patterns of best prac-
tices used to add value across differing industries and organizations. We 
can think of these practices as four templates for creating value from cus-
tomer data: insights: revealing the invisible; targeting: narrowing the field; 
personalization: tailoring to fit; and context: providing a reference frame.
Let’s take a look at each of these four data value templates and see how 
they are applied in different industries to create new value.