8 major consequences of digital on management

The digitisation of the economy is merely one additional layer on top of previous revolutions in the economy, not something that makes past methods entirely obsolete. There's now a new context and new rules for a game that's not entirely new. Let's explore 8 major consequences of this (r)evolution.

The phenomenon that we call digital is first driven by the mass availability of relatively affordable digital technologies designed to support inexpensive interactions and transactions with far less friction than in the past. Thus activities that used to be out of reach of most people and reserved to insiders of various domains of human life have become affordable and accessible to a far larger number of people and businesses; that is the case for example in publishing, tinkering with hardware a.k.a. hacking, producing movies or music, shooting pictures, distributing and selling content... While digital technologies are necessary for digitisation, they are far from sufficient in human organisation because we also need a culture and practices to fully leverage new capabilities. But when technical means and mindset combine there are deeply transformational effects rooted in the following eight top consequences:

1. foundation of advantage stems from practice instead of mere access - as such access to a knowledge resource or a tool is no longer a source of advantage for individuals where access has become easy and relatively inexpensive. It follows that what makes a difference is not what we can access whether in terms of tools or means of production and distribution or in terms of education, but rather what we can do with what we access. Therefore we're increasingly in an economy where good practitioners have an advantage over even very well trained individuals with limited ability to put their knowledge to work;
2. (re)invention of activities with new ways of seeing - since the science, technology and engineering that we are exposed to shapes our way of seeing the world and our business, it is now clear that professionals with a keen understanding of these new means of production will look as almost any activity in totally novel ways doing away with many of the constraints previously assumed to be impossible to escape from. For example, when thinking about a complete online banking experience throughout the customer lifecycle, the founders of N26 found ways to abide by fundamental KYC obligations in financial services without need of physical presence. Another example is that of e-learning where players like Coursera dropped a fundamental assumption as regards the learners' desire to receive a diploma sanctioned as such by some authority, thus making it possible for large numbers of people to afford access to certifications and complete specialisations from reputed institutions of higher education;
3. from captive markets to empowered buyers - with the technical means being available to the masses the balance of power between buyers and sellers has shifted in many industries, in part because the buyers have better access to crowd-sourced information about the goods and services they are considering and in part because their voice as users has a far greater reach than in the past. For example, both retail and business buyers have access to vast amounts of information about a product or a service well before speaking to one of its representatives and once they own it they have an influence on future buyers like never before; it is what was described by Google as the Zero Moment of Truth and popularised by influence and word-of-mouth marketers with particular intensity in the past decade or so;
4. standardisation of interfaces between systems as driver of freedom - ease of integration between tools through standard methods like APIs, XML and web services for example. That second aspect of maturing digital technologies creates more freedom for users and more difficulty to create lock-in for sellers of technologies. It also reduces the relevance of monolithic integrated platforms, forcing even players who were dominant in that space to adopt modular architectures. For example, services like TIBCO's Mashery or platforms like Jitterbit, Zapier or Mulesoft embody the strategic importance of APIs in modern business;
5. companies as networks and ecosystems - as technical means provide for more modular and loosely coupled architectures, interactions across organisational boundaries become much cheaper and the transactions between economic agents become better, faster and cheaper. As a result the organisational forms of vertical or horizontal integration provide less economic advantage than they used to since the same results can be achieved faster by assembling a network of focused companies that can coordinate across company boundaries to achieve shared goals without the overhead of a corporate structure and the politics that go with it. Increasingly critical parts of what companies do may be run outside the walls of the company itself by specialist players taking full advantage of economies of scale and focus. In many cases that gives rise to complete ecosystems of interdependent yet loosely coupled players collectively capable on taking on their more integrated counterparts. When one player owns and operates the critical assets that bring all these players together they have a dominant influence and shape the business into a platform. For example, the companies using Android are successfully competing against Apple's iOS community, while makers of frameworks like Symfony are the driving force behind communities like Drupal, Laravel, eZ Publish or OroCRM. And of course, players like Uber or Airbnb act as virtual market makers putting buyers and sellers in contact through match-making engines that operate according to rules set by their owners thus giving them an ability to capture a significant share of the economic value created by those transaction;
6. business as uninterrupted flow of information - since the technologies underpinning a given period in History shape how individuals and businesses think of the world and their interactions in it, the emergence of machines able to process and transfer large amounts of information has given rise to a mental model of business seen as pure information. When looking as business like that we can see opportunities to streamline processing of information so as to avoid duplication, errors and interruptions of flow. We are therefore moving into a realm that is conceptually close to processes and flows of components and products in industry, which makes the leap evident from Toyota's Kaizen to modern tech's lean, agile, Scrum and Kanban. Much of today's talk about agility and flexibility is the results of a way of designing business as an uninterrupted flow of information. For example, when major players in financial services are implementing tailored versions of blockchain technology to facilitate traceable straight-through processing they are clearly aiming at bringing to market almost automated financial factories able to leverage the pooled resources of several institutions to replace their current mechanisms for recording transactions in a safe, secure and traceable way;
7. when offline is no longer that and becomes connected instead - with the mass availability of functionally specialised components that have one or more sensing, processing, storage and networking capabilities, it becomes increasingly possible to add intelligence and interactivity to places and infrastructures previously considered to be part of the realm of offline. As a result buildings become "smart buildings", several functions of the consumers' homes can be operated remotely and even legacy hi-fi systems can access content from Spotify or Tidal. The consequence is that the traditional differentiation between online and offline is gradually becoming obsolete;
8. the journey to evidence-based management - with digital technologies the promise of traceability and constant quantification comes nearer to reality. As all sorts of data become relatively easy to collect and process, the challenge become that of putting together the processes and tools required to control and exploit the data necessary to run business operations in a way that's evidence-based. For example, when Bridgewater Associates founder Ray Dallio decided his company's competitive advantage would be based on having a culture and methods designed to make the best ideas emerge, he created a specific form of evidence-based management in which they needed the tools and processes to rate ideas and individuals' performance in sessions where these ideas were discussed. It's well worth taking a look at his presentation at TED.

Internal consistency as bedrock to market success

Communications is growing more important in marketing and is more coupled with sales than ever before, but something much less visible is going on as all three are critically dependent on an organisation's digital backbone. Whether that organisation sells online or not does not really change the situation.

That's in part because the conceptual boundary that was traditionally considered as an impenetrable shield has become porous and transparent in the digital age, making it possible for the outside world to see through it and get a degree of information and understanding about the inside of a company or institution that's unprecedented in recorded history. So for all practical purposes, we should consider internal alignment, effectiveness and efficiency as directly beneficial to the organisation’s public image and ultimately its ability to address the needs of its key constituencies.

Furthermore activities traditionally considered as having more of an operational impact without influence on marketing and communications are, in fact, more than ever providing the bedrock for the value proposition and for the promise of the brand. For example, a telco’s back-office, billing and customer care services will have a critical impact on the brand’s reputation and in the field of e-commerce the quality of customer service may easily become a critical source of competitive advantage as has been the case over the years with Zappos (part of Amazon since 2009).

We've represented this on the following framework that we use to assess marketing, communications and sales in companies and other institutions. There are other much more complex models out there to help examine how goals, processes, tools and skills align to deliver beneficial results to a company, but we've found this one to help concentrate attention on key elements and their interactions, while at the same time being easy enough to explain to a business audience.

Framework of analysis for digital transition in marcoms

The framework shows:

• a porous organisational boundary that compels companies and other institutions to invest resources in internal consistency, impeccable processes, adequate tools and competent people;
• the critical role played by goals in determining which processes and tools should be deployed towards achieving those goals for the company;
• how processes and tools depend on skills and quality of human resources;
• the major importance of an "always be testing" mentality and on focusing on the feedback that those tests generate;
• a need to reconsider goals - thus potentially processes, tools and skills - on a regular basis depending on the results of feedback collected in constant testing and measurement of the effects of the way an organisation functions.

POEM and the tweeting bra

Over the past decade we've seen momentous changes in the media landscape with the emergence of the (social) media of the masses that have become increasingly intertwined with traditional mass media although the latter have had to deal with convergence from their old platforms to the Internet. As a result, many have claimed that brands have themselves become media, that they now control the channel and are supposed to produce and distribute content associated to the brand so as to orchestrate new forms of marcoms. While this is true to a certain extent, brands face real challenges and complexity in organizing their communication and in using the various channels that are available to spread its messages, interact with specific and increasingly fragmented audiences and acquire new customers. Principal challenges are as follows:

1. the limited ability to fully grasp the importance and nature of new forms of (social) media in order to be able to put them to use in a consistent manner
2. a relative lack of creative thinking in putting together structured campaigns that leverage all types of relevant media, whether traditional or social
3. a profound lack of skills, tools and processes required to produce and distribute relevant good quality content to specific audiences
4. often there is a disturbing disconnect between the marcoms initiatives and the business strategy, the business model and the fundamental business assumptions of the brand
5. assuming all challenges above are addressed properly, there remains the issue of putting together and actually assessing systematically proper indicators of performance measured by one or more analytics platforms. In this area there is often too much focus on the tools and too little on the skills of the analysts, on the methods of analysis and on the focus that has to remain very close to the things that matter in a given business or industry

Leading consulting firms in the digital space have produced impressive output when it comes to characterizing types of content and kinds of channels that can be used by a brand. Among those there is the below overview of content, channels and formats by the Altimeter Group and the social media brandsphere by Brian Solis.

Working on a project involving the assessment of social media initiatives and contributions to putting together a marcoms strategy for a new business, we developed a simplified framework for structuring a brand's approach of paid, owned and earned media. This framework was partly inspired by an analysis of owned, paid and earned media done by Forrester which can be found at this link. The BusinessQuests framework is aimed at:

1. defining the three kinds of media in a simple and unambiguous way
2. identifying their primary purpose and possible unintended effects
3. outline the relationships between the three types of media as an effort to contribute to dispelling some myths, e.g. that digital and social marcoms can be done without any significant financial investment or that an agency can orchestrate a viral campaign out of thin air

Our framework is as follows:

While earned media is highly desirable it is also elusive and difficult to generate "artificially" because it takes something special in the content or in the nature of a given initiative to convince channels that have an established relationship with a given audience to relay a brand's content. Many experts give the example of how Apple has been consistently able to get substantial free coverage in the media for new versions of its iconic smartphone, however they fail to show the ties between the excellent work done in the past to build the brand through expensive campaigns in the (paid) media and they also omit the fact that Apple is able to attract attention in great part because of its ability to preserve secrecy and control the flows if information within the company and between the company and outsiders. So it would be really hard for most brands to aspire to such levels of achievement when it comes to earned media without first investing in various aspects of their business, paid media being the least critical or impacting. A better example might be provided by a campaign called "Tweeting Bra", which was run by Nestlé in Greece in October 2013, i.e. during the breast cancer awareness month. That campaign, which was put together by OgilvyOne Athens combined magnificently traditional paid media in the form of TV ads, star power in the form of a lady celebrity journalist, social media both as part of the initiative to raise women's awareness about good practices to prevent and cure breast cancer and as a medium for viral transmission of the info of the first "tweeting bra" ever. Here's the ad that aired on Greek TV to drive traffic to the microsite:

The initiative achieved its primary goal which was to generate traffic for a microsite dedicated to the issue of breast cancer, which was released by Nestlé as part of the campaign that was associated to Nestlé's Fitness line, whose primary target is the same as the audience of the initiative, i.e. women caring about their health and well-being. But more remarkably, the campaign also achieved significant exposure in unpaid media, i.e. earned media often in remote countries thus giving Nestlé's initiative an impact well beyond what the company initially aimed for.

E-commerce in China: a whole different world

Researching on critical factors of success in e-commerce targeting the world's most dynamic economies and some findings are just amazing. Of course the context is profoundly different from what we have in Europe, but consumer preferences may be even more different and perhaps counter-intuitive in certain cases, e.g. sites designs that would feel crowded and too "loud" in many European markets appear to be just about what Chinese consumers like in many product categories. Really fascinating read, which also makes it very clear that China is as much a big commercial opportunity as it is a riddle for European companies.

Here's a short sequence from a show on CNN in which the boss of leading player Yihaodian (backed by WalMart who have been smart enough to not interfere with the way the business is managed locally). He claims that one of their approaches is to list the top 5 things foreign players are doing when entering China and do the exact opposite (100% different as he says). Better watch:

Market share and trends for top e-commerce platforms

E-commerce has been a very hot area for many years and we were lucky to be involved in different roles in e-commerce businesses. After the disappointment of the early years of our century, click-and-mortar visions have morphed into cross-channel and then omni-channel approaches focusing a lot on delivering a consistent experience to consumers across touchpoints throughout a wide variety of possible customer journeys. What is the market share of each of the top e-commerce platforms in different segments of e-commerce sizes? What are the trends? Which look like good entry-level options with potential to scale? Some answers in a summary of a bit of research in this post.

Kate Spade Saturday concept trial in Manhattan

Back in the summer of 2013 Kate Spade Saturday tried a concept involving huge touch-screens deployed at different locations in Manhattan to offer a service making it possible for consumers to order and get the products delivered anywhere in the city. The concept was deployed in cooperation with eBay.



The whole operation definitely captures attention. It may be a good way to communicate with the public about the brand and its cool, innovative spirit, but is this a viable business model?

From inspiration to acquisition

According to recent reports, ASAP54 recently got a round of funding in excess of € 3m to develop its app, which allows smartphone users to process images and identify products in the picture. With only minimal interaction with the user, the app will offer a list of products similar to those in the picture and allow the user to filter them according to criteria like color and price range. So, your favorite actor is wearing a jacket that would suit you perfectly? All you have to do is take a picture or a screenshot and have ASAP54 suggest similar products along with links to shops selling the jacket. Same thing for nice design objects or furniture. The app will also allow users to publish their "asaps" and their lists of asaps which could end up looking like moodboards or like more intelligent versions of Pinterest's pins. The following video will give you an idea of how the app will work.

ASAP54.

The obvious business model for this app feels like being affiliation, whereby online merchants will pay ASAP54 a fee for business the app sends their way, but there is also strong potential for that app actually becoming a tool of trend-setters and influencers in fashion, interior design and styling.

Service (re)design needed at MediaMarkt.be

Very simple and modest case study of some of the worst pitfalls in designing and promoting an e-commerce service. It is quite surprising to see that type of situations in rather big companies and it's probably a good example of the reason why e-commerce requires proper service and UX design, especially when the ambition is to offer a consistent cross-channel experience.