Smartness configurations and value propositions towards customers

As businesses devote growing budgets to their offerings’ smartness (e.g. Google’s 450 million dollar investment to advance its smart home security offering), numerous calls emerge for guidance on investing in smart offerings (e.g. Bilstein & Stummer, 2021; Langley et al., 2021). Research suggests that investments in these offerings can occur along the four characteristics of smartness: awareness (i.e. capturing more data), connectivity (i.e. better connecting the involved actors), actuation (i.e. acting increasingly independent), and dynamism (i.e. improvements based upon AI-based learnings) (Henkens, Verleye, & Lariviere, 2020). Against this background, we study what smartness configurations can result from increasing these four characteristics and how businesses can communicate about these configurations to customers via value propositions. Additionally, we investigate why businesses choose specific configurations and value propositions, thereby revealing businesses’ mental models about customers (i.e. assumptions and beliefs about customers) that underpin these decisions. Based upon a case study of nine smart offerings, we have identified four smartness configurations that go along with specific value propositions and mental models. All-the-way configurations entail solely increases of the smartness characteristics in inherent ways (i.e. for all customers). These configurations focus on transactional value, namely cost-savings and convenience through minimal customer participation. These decisions are inspired by businesses’ mental model of customers as powerful actors who compare smart offerings in terms of performance excellence. Customized configurations encompass primarily increases of the smartness characteristics in optional ways (i.e. upon customer requests). These configurations focus on both transactional and individual transformative value (e.g. customization). These decisions are rooted in businesses’ mental model of customers as empowered actors whose lives can be facilitated by customizing smart offerings. Constrained configurations involve primarily increases of the smartness characteristics in limited ways (i.e. suboptimal for customers). These configurations focus on both transactional and individual transformative value (e.g. customization). These decisions are underpinned by businesses’ mental model of customers as vulnerable actors who may be unaware of the risks of smart offerings. Mini-maxi configurations entail combinations of inherent, optional, and/or limited increases of the smartness characteristics. These configurations focus on the trade-off between transactional and individual transformative value (e.g. privacy). These decisions are driven by businesses’ mental model of customers as vulnerable actors who may be unaware of the risks of smart offerings. These findings offer three contributions. First, by revealing the possible smartness configurations, the conceptualization of Henkens et al. (2020) is advanced and smartness investments research is progressed (e.g. Pardo et al., 2020). Second, we answer recent calls for studying customer value propositions in the context of technology-enabled services in general (Leroi-Werelds, 2019) and smart offerings in particular (Zeithaml et al., 2020). Although all-the-way configurations aspire solely transactional values, other configurations pursue also transformative values as solicited by Anderson et al. (2013). Third, by unraveling the mental model that underpins the choice for specific smartness configurations and value propositions, we respond to requests for guidance on strategically investing in smartness (Langley et al., 2021). Overall, these insights help businesses to manage smartness configurations and value propositions along their mental model.