In a conversation with Sidecar, research fellow at the MIT Initiative on the Digital Economy Michael Schrage argues that investing in one's customers, and in turn creating better customers, is the key to groundbreaking retail innovation. The most successful companies today have embraced this paradigm shift by making their customers more valuable to their business, says Schrage. Netflix, for example, has transformed consumers into movie and TV bingers through careful technology investments in recommendation engines and streaming. Subscribers who avidly watch Netflix’s programming and enthuse about their favorite shows with friends are far more valuable to Netflix than the average consumer.

In this podcast, Schrage explains how retailers can emulate top companies like Netflix and actually create better customers.