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Perspectives

Making Sense of Code Halos via the Crossroads Model: Stage 3, Enrichment

2014-04-15


As discussed in the previous installment, the Crossroads Model takes companies that embrace Code Halo™ thinking through a predictable five–step model that rewards winners with market relevance and growth and helps avoid Extinction Events. This installment focuses on Enrichment.

As discussed in the previous installment, the Crossroads Model takes companies that embrace Code Halo™ thinking through a predictable five–step model that rewards winners with market relevance and growth and helps avoid Extinction Events. This installment focuses on Enrichment.


Companies that adhere to a traditional definition of assets — machinery and infrastructure — now face a predicament: In the world of digital data explosion, how important is virtual data? The answer cannot be simpler: It is as important as physical assets, if not more. If your company has a robust system of data analytics and is awaiting the Spark to spew out tangible results, the phase of Enrichment is just one more step toward it. It opens the floodgate wider for more data to pour in, inflating Code Halos with refinements and specifics.

Of the five phases, Enrichment can seem like an endless plateau. The growth might not appear worthy of the changes to the business models. A newly introduced mobile app, a social networking Web site or a telematics device inch along unimpressively. But in fact, a lot is happening. The Enrichment phase does a lot to improve and perfect the algorithms dealing with Code Halos. Your company's algorithms grow smart enough to derive meaning from business analytics, the Code Halos inflate further, and the focus shifts from assets to data.

A give–to–get equation begins to takes place. Apple iTunes got off to a normal start between 2003 and 2007, when it massively built its foundation by collecting and cataloguing halos of consumer musical tastes. Soon after that, it grew astronomically, with the iTunes Store now possessing 575 million active user accounts. Applying Code Halos thinking, Apple constantly tweaked its service during the slow-growth phase to develop a highly tailored service for each consumer.

Though seemingly dormant, this is the phase when commercial models mature and become market–ready. At this point, the growth chart of the company might not look promising. But as the customer base builds up, mounds of data — coupled with in–depth analytics — accelerate growth. Facebook, for instance, took four long years to reach its first 100 million users in 2008. But following that, it added 100 million new users every 167 days, leading to one billion users in 2012.

For Code Halos to work, companies need to build their user communities. Netflix and Amazon are typical examples of companies that evolved from simple transaction platforms into engines for managing the customer experience by focusing on Code Halos.

Changing the Future of Work: Enrichment

Enrichment is a period of user growth, and despite imperceptible business results, the growth is on. Google's search engine, for instance, won't work unless it's used – users feed Google with data through their millions of searches. With its sophisticated PageRank algorithm, Google constantly derives meaning out of the loads of data it receives every second.

The goal of big data is to make meaning; mere volume does not matter. For business results to be achieved, Code Halos have to swell in volume and meaning. At this point, two very important phenomena occur in tandem:

  • Code Halos "inflate" with information from a growing number of interactions. If you have effective algorithms and analytics processes in place to decode the meaning, the Code Halos around your processes, products, customers, employees and partners will inflate with knowledge. Think of Pandora's Code Halos expanding with every song you choose from its list. The GE Jet Engine flies multiple times daily, throwing off more and more data.

  • Commercial models begin to mature. Key processes can either become radically more efficient or altered in a fundamental manner to provide more value to customers, employees or partners.

It might be tempting for companies to skip this phase of no apparent growth. There are telling examples of hundreds of failed startups that, despite efficiently moving past the Ionization and Spark phases, found themselves stagnating in the market when decision-makers did not, or could not, derive meaning from their data and catalyze change through Code Halos.

Equally important, by skipping the Enrichment phase, they failed to understand the nuances of new business models. Blockbuster thrived for years with its huge database, but when it missed the shift in how people wanted to consume media, it did not enhance its customer interaction. Despite the volumes of data it had accumulated, the company did not fully understand the new commercial models. The result was a business model that lost its relevance in a fast–changing market.

Companies that are moving toward the end of the Enrichment stage can expect a rapid increase in their growth charts, as the Crossroads comes into view. At this point, Code Halo–powered companies are set for a phenomenal and swift ascent in the market within a short period of time, usually within 12 to 36 months.

Our next installment covers the Crossroads stage.

To learn more about the Crossroads Model and how Code Halos transform companies – and entire industries – read our white paper Code Rules: A Playbook for Managing at the Crossroads, available on our Code Halos Web site. Once you understand Code Halos and the Crossroads Model, you can begin crafting a strategy for winning the new "code rush."

In addition, check out our new app at the Apple App store and look for our book, "Code Halos ... How the Digital Lives of People,Things and Organizations are Changing the Rules of Business," recently published by John Wiley & Sons.

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Making Sense of Code Halos via the Crossroads Model: Stage 3, Enrichment