Page 28 - Harvard Business Review (November-December, 2017)

SPOTLIGHT WHY EVERY ORGANIZATION NEEDS AN AUGMENTED REALITY STRATEGY

the value-creating capabilities of SCPs. AR demand through AR. AR allows instruction Here are the essential questions
assists technicians serving customers in the to be tailored to a particular worker’s companies face:
field in much the same way it helps workers experience or to reflect the prevalence of 1. What is the range of AR
in factories: by showing predictive analytics particular errors. For example, if someone opportunities in the industry, and in
data generated by the product, visually repeatedly makes the same kind of mistake, what sequence should they be pursued?
guiding them through repairs in real time, he can be required to use AR support Companies must weigh AR’s potential
and connecting them with remote experts until his work quality improves. At some impact on customers, product capabilities,
who can help optimize procedures. For companies, AR has reduced the training and the value chain.
example, an AR dashboard might reveal to time for new employees in certain kinds of 2. How will AR reinforce a company’s
a field technician that a specific machine work to nearly zero and lowered the skill product differentiation? AR opens
part will most likely fail within a month, requirements for new hires. up multiple differentiation paths. It can
allowing the tech to preempt a problem for This is especially advantageous for the create companion experiences that
the customer by replacing it now. package delivery company DHL, which expand the capabilities of products,
At KPN, a European telecommunications faces surges in demand during peak give customers more information, and
service provider, field engineers conducting seasons and is heavily dependent on the increase product loyalty. AR interfaces that
remote or on-site repairs use AR smart effective hiring and training of temporary enhance products’ functionality or ease
glasses to see a product’s service-history workers. By providing real-time training of use can be big differentiators, as can
data, diagnostics, and location-based and hands-on guidance on navigating those that substantially improve product
information dashboards. These AR displays warehouses and properly packing support, service, and uptime. And AR’s
help them make better decisions about and sorting materials, AR has reduced capacity to provide new kinds of feedback
on how customers use products can help
companies uncover further opportunities
AR DRAMATICALLY REDUCES for product differentiation.
The right differentiation path will
ERRORS AND INCREASES depend on a company’s existing strategy;
what competitors are doing; and the pace of
technology advances, especially in hardware.
3. Where will AR have the greatest
PRODUCTIVITY IN FACTORIES. impact on cost reduction? AR enables new
efficiencies that every firm must explore.
As we’ve noted, it can significantly lower the
cost of training, service, assembly, design,
and other parts of the value chain. It can also
how to resolve issues, producing an 11% DHL’s need for traditional instructors substantially cut manufacturing costs by
reduction in overall costs for service teams, and increased the onboarding speed for reducing the need for physical interfaces.
a 17% decrease in work-error rates, and new employees. Each company will need to prioritize
higher repair quality. AR-driven cost-reduction efforts in a
Xerox used AR to connect field way that’s consistent with its strategic
engineers with experts instead of providing AR AND STRATEGY positioning. Firms with sophisticated
service manuals and telephone support. AR will have a widespread impact on how products will need to capitalize on AR’s
First-time fix rates increased by 67%, and companies compete. As we’ve explained in superior and low-cost interface, while
the engineers’ efficiency jumped by 20%. our previous HBR articles, SCPs are changing many commodity producers will focus on
Meanwhile, the average time it took to the structure of almost all industries as well operational efficiencies across the value
resolve problems dropped by two hours, as the nature of competition within them— chain. In consumer industries and retail,
so staffing needs fell. Now Xerox is using often expanding industry boundaries in marketing-related visualize applications
AR to connect remote technical experts the process. SCPs give rise to new strategic are the most likely starting point. In
directly with customers. This has increased choices for manufacturers, ranging from manufacturing, instruct applications are
by 76% the rate at which technical what functionality to pursue and how to achieving the most immediate payoff by
problems are resolved by customers manage data rights and security, to whether addressing inefficiencies in engineering,
without any on-site help, cutting travel to expand a company’s scope of products production, and service. And AR’s interact
costs for Xerox and minimizing downtime and compete in smart systems. capability, though still emerging, will
for customers. Perhaps not surprisingly, The increasing penetration of AR, be important across all industries with
Xerox has seen its customer satisfaction along with its power as the human interface products that have customization and
rates rise to 95%. with SCP technologies, raises some new complex control capabilities.
Human resources. Early AR adopters strategic questions. While the answers 4. Should the company make AR
like DHL, the U.S. Navy, and Boeing have will reflect each company’s business and design and deployment a core strength,
already discovered the power of delivering unique circumstances, AR will become more or will outsourcing or partnering be
step-by-step visual worker training on and more integral to every firm’s strategy. sufficient? Many firms are scrambling

54 HARVARD BUSINESS REVIEW NOVEMBER–DECEMBER 2017