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UC Irvine helps companies reinvent themselves for the
digital age
By MARGOT ROOSEVELT
2015-03-27 16:57:33
Vijay Gurbaxani is in the business of scaring businesses.
“We are facing a digital tsunami,” he warned 300 executives at a UCI
conference last week. “We are in the midst of an industrial revolution
which creates winners and losers. We have to adapt.”
But Gurbaxani, 57, a professor of information systems and computer
science, is no prophet of doom. The Center for Digital Transformation,
which he founded at UCI’s Paul Merage School of Business three years
ago, is dedicated to the idea that companies can reinvent themselves.
The center sponsors research, partnering with technology firms such as Qualcomm and SAP. It organizes
forums with experts in areas such as health information technology and big data analytics. And it trains
executives in best practices and ways to measure progress.
Nearly half of business leaders are not ready for digital transformation, Gurbaxani said, citing a survey of
more than 100 companies he unveiled at the gathering.
Executives from such companies as Wal-Mart, IBM, UnitedHealth Group and Corelogic outlined initiatives at
the conference, which was titled “Road to Reinvention: Leadership in the Digital Age.”
Not all were sure where their “road to reinvention” might lead.
After Gurbaxani showed an Airbnb slide of a luxurious bedroom for rent at a French ski resort, Shafiq Khan, a
senior vice president at Marriott, remarked that the upstart home-sharing website is no longer simply “in the
couch business (for) a kid who can’t afford a $200 hotel room. It has moved into other sectors.”
And how will hotels compete against Airbnb, a company with no physical assets? “We are absolutely
cognizant of the fact they are a threat,” Khan said. “Are they a 1 percent threat or a 10 percent threat? We
haven’t figured that out yet. When we do, we will act.”
Digital aggregators such as Expedia are another challenge. “You give them your inventory and, over time,
they have inventory from you and other hotels,” Khan said. “Once they have scale, they have leverage.”
He added that, like Google and Apple, travel aggregators “have a proposition broader than ours. They are the
new owners of the customer relationship.”
Jimmy Suh, chief revenue officer of Standard Hotels, a hip boutique chain whose Los Angeles rooftop pool
and bar is a popular hangout, said his company doesn’t vie for the bargain-hunters who patronize
aggregators.
“They bring a customer segment that cannot appreciate the experience we deliver,” he said.
Instead, the Standard creates “spaces where people gather,” Suh said, “and, oh, we sell guest rooms as
well.”
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The hotel chain digitally tracks guests as they dine, drink, listen to a DJ or buy a book. “What we do culturally
is critical,” Suh added. “You have to hold the consumer. Every click they make, every time they use a credit
card, we capture that information so we can do better marketing.”
Retailers and manufacturers also shared strategies.
Oakley, the Foothill Ranch eyeglass maker, and its parent, Luxottica Group, are partnering with Google
Glass to redesign the Internet access device that attaches to conventional specs. “Hopefully, it will be more
stylish,” said Jon Krause, senior vice president of operations.
Oakley has focused on digital innovation for years. “We are on generation six of our website,” Krause said.
Clients use the site to customize sunglasses, choosing from nine finishes for frames and six lens colors.
“If our digital media doesn’t work, customers go elsewhere,” he added.
At Luxottica’s LensCrafters stores, “AccuFit” technology uses sensors to measure the distance down to a
tenth of a millimeter between one’s pupils and the frames – a digital solution for fitting.
Similarly, companies such as Nike cannot be content to sell only shoes and clothes, Gurbaxani told the
group. Customers say, “If you don’t give me the digital tools to work out, to train and run, then I won’t use
your product as much.”
Nike ads tout the slogan “Your Personal Trainer. Anytime. Anywhere.” The company offers apps and devices
to measure training, running and even your golf game.
Likewise, “Disney is re-imagining itself as a software company,” Gurbaxani said, noting that the entertainment
giant has spent up to $1 billion rolling out its MyMagic+ system at Florida’s Disneyworld and on its cruise line.
The digital wristband, to be deployed at Anaheim’s Disneyland next year, serves as a park ticket and
Fastpass for rides. It can be used to make dinner reservations, pay for souvenirs, and open a hotel room
door.
“You arrive and the system can tell who you are,” Gurbaxani said. Your son likes Mickey Mouse, so Mickey is
there to greet him.”
Wal-Mart is also diving into digital. The company has 2,500 software engineers and operations experts at its
Sunnyvale e-commerce headquarters.
“E-commerce ... is where our focus is right now,” said Chief Operating Officer Michael Bender.
Customers with mobile phones use a “Search My Store” app.
“Our customers are saying, ‘Give me some time back – I’m a busy person,’ ” Bender said. “They go to a
200,000-square-foot store and have no idea where something is. We give them the ability to navigate.”
Wal-Mart’s mobile pharmacy app enables prescription refills and sends reminders when they’re due.
Gurbaxani warned that companies must “continuously reinvent themselves.”
“Stuff that used to be proprietary has become a commodity,” he said. “Everybody has access to the same
tools – so how do you differentiate yourself? Without codifying know-how into software, you can’t scale
innovation.”
Joseph Essas, chief technology officer at Open Table, offered a case study.
The San Francisco-based firm began by selling restaurant management software – organizing reservations,
for instance, and tracking open tables for servers.
“All that was very nice – software for restaurants to be better at what they do,” Essas said. “But its boring. It’s
a commodity. The guy next door can create better software. Then you have to discount to keep your clients.”
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Open Table realized “the way to get creative is to add value,” he said. “We created a network to expose
consumers to what was available inside the restaurant. Suddenly we had a whole network of diners. The
value isn’t just the software but that customers can come to our platform. And restaurants benefit from the
data.”
Today, Open Table’s database has 16 million diners who book seats at 32,000 restaurants. “You can tell a
restaurant, ‘The people who come to you normally go to more expensive restaurants, so now maybe you can
raise your prices.’ ” Essas said.
“And we can say to customers, ‘April 5 is Easter. So here are 10 restaurants serving Easter brunch.’ ”
As executives from UPS, Kimberly Clark, Ingram Micro, Toshiba and City National Bank peppered the
panelists with questions, Gurbaxani hammered home a bottom-line message: “We are all software
companies. Some companies just don’t know it.”
Contact the writer: [email protected]; Twitter @MargotRoosevelt
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