The practices of entertainment giant Disney illustrate a seismic shift in how firms create competitive advantage through what we term connected strategy. Firms with a connected strategy fundamentally change how they interact with their customers and what connections they create among the various players in their ecosystem. At its core, a connected strategy transforms traditional, episodic interactions with customers into connected customer relationships that are characterized by continuous, low-friction, and personalized interactions.

For years, Disney has organized mini-camps for children as part of its cruise operations. Stressed-out parents on a Disney cruise can drop off their kids for a few hours in order to get some private time on board. Disney has always taken its responsibility for the children in its care seriously. Until 2005, this meant stopping camp activities every thirty minutes for roll call, thus creating extra work for the staff and interrupting the fun. In 2005, Disney began using monitors to track their small campers—monitors originally developed in the medical field to keep track of dementia patients who were at risk of wandering off. The children were outfitted with little bracelets that identified them and pinpointed their location within the ship.

This was the starting point for a whole new Disney experience named MagicPlus. With the ability to know the identity and location of every guest, Disney soon asked how else it could use MagicPlus to enhance the guest experience and improve operational efficiency.

The answers that emerged touched on a remarkably broad range of its theme park operations. As part of its meet-and-greet program, Disney characters routinely interact with young guests in the park. Before MagicPlus, later renamed MagicBand, Disney’s cast members posing as Mickey Mouse or Captain Jack Sparrow knew little about the children. With the MagicBand, Mickey and the captain not only knew each child’s name but were also aware of the family’s prior visits to Disney theme parks around the world. If six-year-old Sydney met Mickey Mouse last year in Orlando and this year was at the Anaheim park, Mickey would “remember” the first encounter, making the child’s experience truly magical.

Beyond creating enhanced customer experiences, the MagicBand also improved park operations, thus reducing Disney’s costs—a truly magical outcome from a business perspective. From tracking food orders to handling guest complaints, from identifying each guest to having access on a tablet to all their prior interactions with cast members, efficiency was greatly improved. Moreover, the MagicBand allowed guests to make reservations at busy attractions for predefined time windows, slashing their wait times. This enabled Disney to direct the stream of visitors and jump-start operations at the beginning of the day, increasing the overall number of visitors that could be handled by a theme park while maintaining a great visitor experience.

Connected strategies unfold in a rapidly changing environment. Given its success, one would imagine that Disney would equip every park with the MagicBand. But this is not the case. When Disney opened its Shanghai Disney Resort, it decided against the move. It wasn’t that the Chinese failed to appreciate the magic. Instead, by the time of the park’s opening, a more efficient alternative had arrived, and almost every visitor already had this magical technology in his or her pocket: a smartphone. Equipped with the right apps, today’s phones offer all the information and access to Disney that the MagicBand had provided.

The common theme of the Disney story and many more case studies in this book is that we are living in a world where new forms of connectivity are transforming the way companies do business. Connected strategies allow you, as an executive, to create superior customer experiences while simultaneously achieving dramatic improvements in operational efficiencies. In short, connected strategies can substantially relax the trade-off that firms have traditionally faced between providing superior customer experiences and lowering costs. Adopting connected strategies allows firms to create a formidable competitive advantage. Not surprisingly, their rapid rise is creating new winners and losers in its wake.

The technologies behind connected strategies are improving at a dizzying speed. The world’s estimated three billion smartphones pack the power of supercomputers from only a decade ago. The Internet of Things enables instant communication among systems that couldn’t talk to each other before. Wearable health and fitness trackers now rival traditional medical devices in their accuracy. And recommendation systems driven by artificial intelligence deliver insights faster than humans ever could. With all these advancements, magical user experiences are coming to life in many industries. What is fascinating, however, is that the technology per se is usually relegated to a supporting role. The key innovation of connected strategies lies in their revamping of a firm’s business model. Consider the following four examples.

Amazon redefined how retailers interact with customers. Until recently, customers were forever making long shopping lists and driving to various stores. Now, they can tell Amazon’s Alexa to order food, clothing, or just about anything else, and the products are delivered to the customer’s house, sometimes within hours. Beyond Alexa, Amazon also introduced the Dash Button, a small Wi-Fi device that customers can attach to the refrigerator, washing machine, or bathroom vanity and press to reorder bottled water, detergent, toilet paper, and much more.

College textbook publishing is also going through a fundamental transformation. In the old days, students would buy or rent their textbook, read the assigned chapters (or at least intend to do so), and then prepare for their final exam by tackling a set of practice problems at the end of each chapter. Now, McGraw-Hill Higher Education, for example, has abandoned the word book and instead aims to sell digital learning experiences. Not only are the books fully digital, they are also smart. As students go through the semester, technology tracks their reading and feeds the data back to the professor and the publisher. When a student is struggling with an assignment, the book redirects the student to the appropriate chapter and potentially offers a short video message on how to handle a similar assignment. Each student thus receives a curated and customized learning experience, rather than a standard textbook, and textbook publishers are moving beyond their traditional role to become tutors as well.

Customers used to interact with Nike once a year to buy running shoes, and that interaction was actually with a shoe retailer, not Nike. Now, customers purchase a wellness system that includes a chip embedded in the shoes, software that analyzes their latest workout, and a social network with other Nike runners for support. Customers interact daily with Nike, allowing the company to transform itself from shoe manufacturer to purveyor of health and fitness services, and to coach customers to achieve their goals.

Millions of consumers have embraced wearable technologies and let devices such as Apple Watch or FitBit track their daily lives. Some extreme users, also known as quantified selves, are measuring every aspect of their bodies, from glucose levels to body weight to nutrition to sleep cycles. When Apple knows more about a patient than her doctor, this has major implications for the health care industry. Many digital delivery systems are integrating this data stream with the patient’s electronic medical record. In the old days, patients and doctors would see each other during periodic visits. Now, changes in body weight or blood pressure and medication compliance are reported to the care provider daily, prompting timely action triggered by abnormalities in the data feed. At the cutting edge, firms like Medtronic have gone one step further. Some implanted devices not only track health data and communicate it but are even smart enough to take action automatically when they detect abnormal patterns in clinically relevant variables.

As you might have noticed, there are two common threads to these developments. First, firms are fundamentally changing how they connect with their customers. Rather than having episodic interactions, firms are striving to be connected in a continuous way, providing services and products as the needs of customers arise, sometimes even before customers have become aware of their own needs. These firms create a connected relationship with their customers.

Second, firms not only address a wider range of needs, they do it at lower costs. For most of its business, Amazon doesn’t need expensive retail outlets; the customized, artificial intelligence–based tutoring by McGraw-Hill forgoes expensive instructors; the motivation to achieve goals in Nike’s system is created by a peer-based network, not personal trainers; and the implanted medical devices that automatically take action also save money by avoiding hospitalizations. The potential of connected strategies is to create customer experiences that feel like magic while improving operational efficiency to enhance financial success.

Given their tremendous potential, connected strategies create great opportunities for you—but also for all of your current and future competitors! Connected strategies will lead to disruption in many industries. At a time when a mobility platform is valued more than some of the biggest car companies in the world, increases in connectivity can often be seen more as a threat than an opportunity. But, in almost any industry, potentially disruptive threats come and go, and at any given moment you might fear disruption from a dozen different new ventures. Which ventures will survive? Which ones are truly disruptive? We hope that the frameworks and tools in this book will not only help you in creating your own connected strategy but also provide you with a new perspective, allowing you to separate technological hype from true strategic challenges.

What is a connected strategy? What tools and frameworks can you use to build one for your organization? How does it help you create a competitive advantage? What are great examples to learn from? Answers to these questions are at the heart of this book.