Managing Digital Disruption
Do you have a digital business model? Will you?
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Ray provided a number of interesting insights for businesses to consider in the age of big data and the internet of things (IoT).
52% of the Fortune 500 firms since 2000 are gone because they didn’t make the digital shift. I think we'll see a similar trend over the next 15 years with companies that adopt and use IoT and big data and those that don't. In the future, companies will differentiate themselves based on the customer experience (CX) they provide. Those that use knowledge of the customer will be able to provide a superior CX.
Disrupt or be disrupted. Transformational innovation, like Uber and AirBnB, is breakthrough and disrupts markets. The iPhone killed 27 business models (e.g., flashlights, cameras and digital recorders).
- Digital disruption is more than just a technology shift. It’s about transforming to a digital business model. Design thinking inspires UX.
- We are moving from selling products and services to keeping brand promises in an attention economy. Customers take brand promises seriously. If you're inconsistent with your brand promise, the brand loses credibility and customers.
- New unit cost pricing models enable disruptive business models to thrive as evidenced by Uber's ability to change prices based on real-time demand.
- Data is the foundation of digital business. Every touch point, every click every digital "tell" is relevant insight.
- If 20% of your revenue is not coming from an insight stream by 2020 you won’t have a digital business model and your ability to survive is suspect.
- You can be the content, the network and the arms dealers. Today’s digital winners vertically integrate all three. Four companies are doing it now: Amazon, Apple, Google and Microsoft. They are the new vertical monopolies. Amazon is saving the postal service while competing against the other shipping companies.
- Digital artisans emerge as organizations with the best math and design will dominate in a “winner take all” world. GE knows when a transmission line will go down eight to ten days before it does.
- P2P democratizes distribution. Tesla changed the rules of low volume production, eco luxury and direct-to-consumer. Etsy democratizes the creative process.
- Design for customer segments of one – mass personalization at scale. Move from transactions to experiences to earn customers for life. Digital enables the delivery of mass personalization at scale.
- We serve five generations of customers and workers by digital proficiency, not by age. Age is not an indicator of digital proficiency: 1) Digital natives; 2) Digital immigrants; 3) Digital voyeurs; 4) Digital holdouts; and, 5) Digital disengaged.
- Digital Darwinism is unkind to those companies who wait.
- The reality of how we allocate: 1) regulatory compliance; 2) operational efficiency; 3) revenue growth; 4) strategic differentiation; 5) brand. We need to flip the pyramid to automate the other tasks that are built for computers and robots. Start with the customer and the brand.
- Business needs = simple, scalable sexy. IT requirements = safe, secure, scalable. Business and IT collaboration are key to company enjoying digital success.
- There are five steps to disrupting digital business: 1) design new experiences and outcomes; 2) develop a culture of digital DNA; 3) apply new business models and technologies to existing infrastructures; 4) move from gut-driven to data-driven decisions; and, 5) co-create and co-innovate with new partners.
Do Ray's hypotheses resonate with you?
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