Three key ways Digital Disruption affects business

imageWe are well past the point where we might argue whether specific industries will or won’t be impacted by technology. The answer is a very firm: yes. We must now understand how the potential afforded by new technologies will change the shape of specific industries:

  • their economics and the business models they enable;
  • the ways in which organisations engage with customers; and
  • the ways in which organisations engage with, and harness the energy of, their staff.

New technology; new business models
It is difficult to read about digital disruption today without a reference to Uber or AirBnB. The ‘sharing economy’ has well and truly had an impact on taxis (in the case of Uber), and hotel accommodation (in the case of AirBnB). Other examples include ZipCar (in the US, or GoGet in Australia), which are transforming models of car ownership towards shared ownership, or car-as-a-service.

The common denominator in these cases has been an ability to connect asset owners with ‘slack capacity’ – that is, an under-utilised asset – to a potential customer with unpredictable, or ad hoc needs that fall short of outright ownership. In doing so, companies like Uber and AirBnB must also address issues of security (personal security, information security, and payment security); navigate government regulations not yet caught up to such operating models; and operational scale of the required infrastructure.

The emergence of several technologies have assisted in this regard, but the main contributors are cloud-based services, smartphones, and electronic payments. Over the past decade, these three technologies have combined with open-source programming tools to allow primarily digital services to be designed, developed and scaled extremely quickly.

They are by no means the first, however. Retail, entertainment and travel are three industries whose business models were disrupted in the late ’90s and early ’00s in the first wave of technological transformation driven by the Web.

One common business tactic that was enabled during the early development of the Web was that of disintermediation – the process of disrupting your own supply chain by cutting out one or more layers of ‘middle-men’ and going direct to your customer. There are several business challenges wrapped up in this one strategic move:

  • Operational scale – your ability to manage (accept, process and fulfil) tens of thousands of individual, small orders to consumers instead of a handful of large orders to Distributors.
  • Service scale – your ability to provide pre- and post-sales service to your direct customer
  • Value proposition – understanding your value to the end consumer – and delivering against that value – rather than your value to a distributor or retailer.

You can see this transformational wave continuing today in the media and entertainment industry, with high-profile sporting clubs and ‘content owners’ creating their own TV stations and managing pay-per-view and subscription based services direct to their ‘fans’. This is but one example of this form of digital disruption.

Engaging with Customers
Hand-in-hand with these new models of distribution, and new business models, is the need to learn new skills of customer engagement. ‘Customer Experience’ is one perspective on this challenge – a combination of customer intelligence (data & analytics); customer service (pre- and post-sales touch-point design); and horizontal organisational structures (tracing an end-to-end ‘customer journey’).

Customer Journey maps have become a standard tool of the Customer Experience team, combining insights (obtained through qualitative and quantitative research) on the customer’s various interactions with the organisation. These maps serve as a reference for the current state of play; a diagnostic tool to help assess opportunity for enhanced or new value; and a vision of the future for how customer engagement may look tomorrow.

The process of creating such maps – both the research into today, or looking to the future – open up opportunities for collaboration with customers that have previously been limited. Co-design activities (in which customers are engaged in the design of new products and services) are infiltrating organisations via Customer Experience, Strategic Design and Design Thinking programs. Co-design – or Participatory Design more broadly – can be seen in the guise of “Community Engagement” or “Citizen Experience” inside government also, part of a world-wide trend towards closer collaboration with citizens during the policy creation process.

Even without the driver of a direct sales relationship, organisations are looking to create closer ties with consumers. Brands are looking for digital technologies to connect them with consumers purchasing via department stores and online retailers. This is a particularly strong driver for much of commercial social media activity – access to consumers, and their data – is seen as a strategic objective for most manufacturers. It remains a critical piece of the puzzle for retailers; and now is a battleground with technology suppliers who’d like it for themselves.

Technology, though, does not end at the point of purchase, or service touch-points. ‘Smart’ products can carry a manufacturer into the customer’s home, and maintain a rich ‘connection’ beyond the utility of the product itself. Smart products become a platform upon which value-added services can be offered to the customer, as well as through strategic partners.

In many industries, the ‘arms race’ is in creating *the* connected platform on which product genres operate.This includes defining operating standards for data formats, and open APIs.

All of this is aimed at creating an environment within which your organisation has a direct relationship with the end consumer of your product or service; where the value provided by you reaches beyond the ‘product’ and includes (at least) a service layer; delivers data into your organisation that can be aggregated, analysed, and mined for new insights.

New Ways of Working
The impact of technology penetrates within the walls of the organisation. In particular, digital technologies are:

  • A. Breaking the connection between work and the work-place;
  • B. Eliminating the delay between information being collected and it being available for action
  • C. Providing predictive capabilities through ‘Big Data’
  • D. Connecting staff across time and geography

A. Work and the Workplace
Remote and mobile working has been part and parcel of organisation life for many, many years. Information Technology and telecommunications have facilitated these ways of working since door-to-door salesmen first pounded the pavements of suburban America. What we’re seeing today, however, is the breaking of the connection between enterprise data and the enterprise – the ability to access ‘core’ systems from anywhere (securely, reliably). And with that shift has come the availability of flexible work arrangement for millions of ‘corporate office’ workers who previously had to make the very real compromise between flexibility and productivity.

This is no longer the case.

With this transformation in work arrangements has come the ability for organisations to transform the physical layout of the corporate office – a fundamental shift away from the cubicles that have dominated the office landscape for the past several decades. Workplace transformation programs – whether they start out as digital programs or not – are looking at the combined impact of new physical working environments and the enabling technologies that allow these new ways of working to occur.

The most forward-thinking organisations are intentionally addressing the questions: How do we wish to engage with our customers? How do we wish to engage with each other? They are using their answers to these questions (often arrived at through Customer Experience or Service Design initiatives) to drive interior architecture and technology infrastructure decisions. Rather than repeating the decisions that resulted in today’s legacy technology platforms, these forward-thinking companies are adopting a people-first approach to infrastructure.

B. Real-time Information Availability
The creation of ubiquitous and reliable networks – from fibre optic cable to 4G, 3G and 2G mobile networks – has vastly improved the speed and richness of the information available to organisations. Whether we’re talking about rural fire and emergency services responding to a bushfire, or a supermarket chain monitoring environmental controls and store security, an increasingly connected world is opening new opportunities for organisations to improve the efficiency and speed of their operations.

The applications for this technological environment are many. Resource companies use operational telemetry data to remotely monitor and, increasingly control, heavy equipment. This removes people from dangerous operating (and remote) environments, improving safety and work conditions. Further, operational telemetry can be coupled with predictive analytics to schedule maintenance activities to take place *before* equipment failure occurs. This applies equally to the refrigeration units at a storage warehouse or supermarket.

The benefits of this connected world don’t stop at the big end of town. Small business owners have long lamented feeling tied to the office when the reality of their life is much more chaotic than that. Long hours at the shop after the doors have closed catching up on paperwork may seem part of the romanticism of small business ownership, however access to cloud-based services and remote access to business data have finally removed this need from many owner’s lives forever.

C. Benefits of Big Data
‘Big Data’ is finally finding its feet in business. The Data Warehouse initiatives of the ’90s and ’00s have been given the analytical and processing capabilities needed to make the most of all that data. Predictive algorithms are being applied to consumer behaviour, helping organisations proactively meet the dynamic needs of individuals. The technology is powerful enough now that the question is less “What can we do with it?” and more one of “What do customers want from us?”. With the potential to provide value in a wide variety of ways, the need to understand customers and staff, and their needs, has become more important than ever. Customer-centricity initiatives provide significant answers to questions of critical market competitiveness.

D. Connecting Staff across time and geography
As technology removes barriers to productive work away from the corporate towers and store-front alike, colleagues are afforded a plethora of opportunities to work with each other. Chat systems, collaborative document creation, shared file storage, video conferencing, and more, bring us closer together whilst also allowing us to remain far apart.

Digital Disruption looks very different in different contexts. The challenge for organisations is not: “How do we make everything digital?” Rather, the challenge is: “How do we want to be working – as a business; with each other; with our customers – and what role do digital technologies play, integrated with our physical spaces in enabling that future vision?”

  • Dan Szuc

    February 26, 2016 at 1:06 pm Reply

    Good reading, thank you

  • Vicki M

    March 8, 2017 at 11:32 am Reply

    All things we are grappling with … thanks Steve!

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