Adobe Symposium 2014
I presented a keynote at the Adobe Symposium #AdobeSymp on 22 July 2014 with Brett Cooper from Telstra Digital (@chilicooper) about how “Digital disruption can be a positive experience”.
Often we associate disruption with a negative connotation and words such as disturbance, deviation, interference, interruption, or discontinuity, come to mind. However, as consumers and businesses often experience, digital disruption can also be a very positive experience.
Disruption is defined in Wiktionary as an “unplanned, negative deviation from the expected delivery … according to the organisation’s objectives”. This definition of ‘disruption’ paints a fairly bleak and negative picture but if everything was predictable then we would never have experienced the industrial revolution.
“Predictability doesn’t necessarily equal value.”
So, the question is, how do you make disruption a positive experience?
Why is this important?
Well it’s obviously difficult to make digital disruption a positive experience… otherwise everyone would be doing, and succeeding, at it.
The Deloitte report Short Fuse Big Bang that was released about 18 months ago predicted that two thirds of the Australian economy would face significant disruption within the following 5 years. The reality has been that digital disruption has occurred a lot faster than was predicted.
In the follow-up Deloitte report Harnessing the Bang, it is noted that it has actually been more like 5 months, rather than 5 years, for most industries to realise they are being disrupted. Furthermore, in the ‘Short Fuse, Big Bang’ quadrant of the report, the gap between those companies with increasing and declining revenues is widening, which is a clear sign that disruption is taking hold in these sectors.
Clearly, some companies that are adopting digital business models making disruption positive.
Last year, I presented at the Adobe Symposium about “Disrupt or be Disrupted” and how successful digital businesses create value by controlled collisions of mobile, analytics, social, cloud & cyber. These elements still hold true but I think that they are now almost ‘ticket to play’ and we are now entering ‘Act 2’ of Digital Disruption.
It’s not really sufficient to convert your existing products & services into a digital equivalent to be a successful digital business. To really create a positive experience, you need something else…
‘Act 2’ of digital
In my view, it is very hard to predict the future but I think that you can predict trends with a lot more certainty. This is one of the reasons why Mary Meeker‘s Kleiner, Perkins, Caulfield, Byer Internet Trends report is so insightful. It helps businesses to make decisions about where to invest their scarce resources.
“Successful digital businesses prioritise new capabilities over old business models.”
In my view, these are the long-term trends for how to create and/or change your business into an ‘Act 2’ digital business. Most of these aren’t new trends… in fact, some of them have been prevalent for many years and the technology is only now catching up with the promise.
Your strategy should contemplate how to include one or more of these trends to convert it from a ‘me too’ strategy into an ‘Act 2’ digital strategy.
- Unbundling of services.
Information flows have increased and transaction costs have fallen such that consumers are willing to select the individual elements of products, services and experiences that they actually want. This allows consumers control over their experiences and provides the ability for mass customisation. I like to think of this as the “Apple effect” where customers are willing to buy individual songs, applications, books & movies, rather than have others pre-select a bundle for them.
Examples: Netflix, Apple iTunes, MOOCs, AFL LivePass, MLB.TV, Foursquare & Swarm.
So what…? How do you unbundle your industry? How does this change your pricing strategies?
- Everything is ‘on demand’.
Supply chains are shortening. Digital business models are re-creating value chains and flattening organisation structures. People expect that everything is ‘on demand’ and consumers see value in immediacy. All industries are being affected by the ‘on demand’ model – even those that you wouldn’t expect – such as automotive & manufacturing.
Examples: Amazon Prime, The Iconic, L’Oreal Vending Machines, Appliances Online, Tesla.
So what…? How could you change your business model to be ‘on demand’?
The prosumer term was first coined by Alvin Toffler in 1980 so this trend isn’t at all new. It’s just that digital technology can now create ecosystems at low-cost. Producer / consumer, or prosumers, is where your consumers become your producers and vice-versa.
This trend has many similar names and related trends, such as User Generated Content, peer-to-peer and crowd-sourcing. If you aren’t considering how to harness the “Wisdom of Crowds” in your business model, then you are probably missing a key part of your digital strategy.
Examples: Lego Mindstorm, Amazon recommendations, Telstra CrowdSupport, BBC World Service tagging project, GiffGaff, Kickstarter, Wikipedia, Pandora, Foursquare,
So what…? How can you create an ecosystem in your business model and include your consumers, and their insights, as part of your product?
- Trust economy.
In a digital business model, the key ingredient is trust. Trust has always been an important part of business, probably essential, the catch is that trust is much more visible in a digital business. Furthermore it is now much easier to see trust at the personal level rather than at the brand level.
Successful digital businesses build trust into their ecosystems and deliver value based on personal interactions.
Examples: TripIt, Google Now, eBay, Airbnb, uber.
So what…? How can you create a trust based exchange within your business model? Who captures that value?
- Scalable learning.
The industrial revolution was based on efficiency at scale. I like to term this as the ‘factory’ model where success was determined by efficiency in production. However, the digital revolution, with it’s era of accelerated and constant change, is more akin to learning at scale. In general, barriers to entry are quite low and imitation is relatively easy. Competitive advantage is based on your ability to continuously build momentum, learn from your ecosystem, open up the boundaries of your organisation, and ultimately outlearn your competitors.
Examples: Team wikispeed, Goldcorp, Li & Fung, Zara.
So what…? How could you institutionalise learning in your ecosystem and outlearn your competitors?
Finally, how do you do it?
I’m constantly asked “Well how do you do it?”. The ‘what’ is reasonable simple. The first step is to start on a more efficient digital sales & service model, the second step is to look at new revenue sources and the third step is to introduce different business models. However, I think the ‘how’ is more interesting (and difficult). It isn’t a project. It doesn’t have a start and end. It requires continual momentum and perseverance.
I always look at ‘how’ as the following:
1. Build trust within your ecosystem as a ‘digital’ business. Without trust, you can’t move from being a ‘me too’ efficient sales & service digital operation into new digital revenue sources and new digital business models. Look at how you translate to personal trust rather than brand trust.
2. Out-learn your competitors. Standing still isn’t really an option in a digital business or a digital operation. There are low barriers to entry, imitation is relatively easy, and competitive advantage is temporary. Long term sustained performance needs smarter institutions that can continuously learn – from themselves, customers, partners, suppliers and competitors.
3. Create value for your ecosystem and some of it will make its way back to you. This is basically the way that Google think about strategy. Companies that create value for consumers can capture some of that value, somewhere in the value chain. The interesting part is figuring out where.
Hope you enjoy the presentation.
The SlideShare version of my presentation is below.
A PDF version can be downloaded here Adobe Symposium 2014 Final.
- Digital Disruption, Short Fuse, Big Bang. http://www.deloitte.com/au/digitaldisruption
- Institutional Innovation, DU Press. http://dupress.com/articles/institutional-innovation/
- KCPB Internet Trends 2014. http://www.kpcb.com/internet-trends
- L’Oreal Makeup Vending Machines, Huffington Post http://www.huffingtonpost.com/2013/10/30/makeup-vending-machines_n_4178304.html
- Adobe Symposium AU 2014. http://symposium.adobe.com/au/