The next transformation upon us isn't about technology, it's about business.
Many established organizations are now frantically scurrying to re-invent their value proposition in the new digital world. I've now seen enough of this happen -- up close -- that I can start to share the patterns I've observed. And, as with all useful patterns, there are obvious implications at hand.
In "The Next Transformation", I did my best to describe this surprising shift, and make a case for its inevitability. In "The Digital Business Platform" I took a quick jaunt through the common elements I've observed in the supporting functionality.
And, in this post, I'm going to try to feebly attempt to synthesize common elements I've observed in these newer digital business strategies.
But, like clothes or food or music, everyone is going to end up wanting something a bit different -- and that's what it's all about, isn't it?
Rationale For A Digital Business Strategy
Many of the businesses and organizations we work for were conceived in a very different world than today. No pervasive connectivity, no mobility, no social platforms, no cloud, no digital natives, etc.
In a sense, the majority of the operational models we work in were designed for a physical world, and not a digital one.
It's one thing to recreate physical experiences using digital tools (e.g. use word processing instead of a typewriter); it's another thing entirely to completely re-envision your business in an entirely digital world. Collectively, we've made good progress on the first phase, and -- in many ways -- we are just starting the second one.
There seems to be no shortage of familiar business models that have been severely disrupted by the first wave of digital business models -- the music industry, media, etc. As the second wave begins to hit, I would expect just about every organization to be severely impacted.
As I meet with customers who are starting to grapple with this new set of strategic challenges, some common themes often emerge:
* are we playing defense, offense -- or a bit of both?
* are we doing a bunch of somewhat tactical stuff, or do we have a deeper and more well-thought-out plan?
* is everybody doing a piece here and there, or are we truly organized for success?
The usual profile is the former. But the latter is starting to emerge -- slowly.
How You Might Think About Your Digital Business Strategy
I'm certainly no expert on creating a digital business strategy. But I am intimately familiar with many of the aspects (e.g. social, mobile, analytics, etc.) and I do get to see a wide range of ideas put into action.
1) What are the motivations for changing the current approach?
Most business and organizations are slowly adding and enhancing their digital capabilities, sort of one project at a time. That's fine -- we've all been doing that for a while -- and might be OK. But, before digging in, it's important to establish what -- exactly -- is forcing a substantive change in the approach?
Competition? Uncompetitive cost structure? Declining revenues? A demographic shift? A new opportunity to be seized?
Unless there's a strong case for change, there will be no change. The challenge I observe is usually the "boiling frog" problem -- the water is heating up much faster than most people are aware.
2) Who are you *really* delivering value to?
Yes, customers and clients, I get this. Dig deeper -- much deeper.
Usually, this ends up being a very detailed document with distinct personas, complete descriptions, shared perspectives, a weighted view of their relative importance, and so on. It's not easy or simple work.
Demographics, segmentation and analytics can help; but there's no substitute for a deep and intense empathy with the folks you're targeting with your offers. Most traditional marketing professionals don't appear to be up to this task -- they're too isolated from their audience, retreating to generic graphs and surveys. Or they survey the competition, which ends up being sort of an echo of an echo.
Best yet -- find an emerging (and hopefully unmet) need in your prospect's world -- and target that.
3) How could you meet as many of their wants and needs -- as conveniently and as completely as possible -- using digital approaches?
Don't fall in to the trap of limiting your thinking to what you're doing today, as I so often see. Done right, this is a visioning exercise around finding and fulfilling new wants and desires, and not simply creating a different flavor or consumption model of something that already exists.
Take out that blank piece of paper. Think about the world in five years, and not today. Imagine a world of unlimited resources and budgets. What would you do?
4) Think about the extended digital experience -- from their point of view, not yours.
More than just a web site, or a slick mobile app, what's the 360 degree picture?
How do they find out about you and what you do? How can they lurk a bit to get comfortable before identifying themselves? What kind of killer content would they find compelling? If there are communities involved (and there should be), what would they be talking about?
What would keep these people always coming back for more? How do you get woven into their day-to-day lives? What would cause them to recommend the experience to their friends and colleagues?
5) Think about your physical presence as an extension of the digital experience.
Models with brick-and-mortar aspects potentially have a unique advantage: you can go somewhere and see real things, talk to real people, etc. It's a valuable high-touch capability not to be discounted -- hey, even Apple has a store!
But -- when done well -- the perspective changes. The physical presence amplifies and differentiates the digital experience, and not the other way around. Lots of examples if you go looking for them ...
Heady stuff, I know -- but that's the sort of visioning work I see being done each and every day. And I think we'll see much more of this going forward.
Examples Of Digital Business Models -- Or Their Potential -- Are Everywhere
Perhaps the most visible example to all of us is the digital retail experience. We search, we read, we compare, we share -- it's hard to imagine being an effective non-digital consumer these days.
The retailers are responding in kind: moving from web sites and mobile apps to big investments in social and communities, rich mobile experiences -- all powered by analytics to more precisely predict consumer behavior. Is it all about price? Less often than you might think ... although we all appreciate saving a few bucks. A great price is just part of the experience, isn't it?
Indeed, Walmart (a business built in the physical world if there ever was one) is doing fascinating things with their digital business model through Walmart Labs. They appear to get it. And I know they're not alone.
Many financial service firms (banks, investments, etc.) appear to be well along this continuum. It's easy to see why: competition is fierce, switching costs are low, etc. But it doesn't take long to spot even more room for enhancement when you study their "digital experience" closely. And, of course, that creates opportunities for competitors.
If you're in a B2B model (like EMC is), one strong theme is supporting the knowledge workers in your ecosystem: your employees, your partners, your customers and other potential stakeholders. To the extent that you can deliver expertise around how to be successful in a knowledge worker role (hopefully using the vendor's products and services) -- you differentiate and win.
A related theme is delivering what you do as a service. Jet aircraft engines as a service. Facilities management as a service. IT as a service. The shift from "selling stuff" to "selling outcomes" is massive and pervasive -- and highly amenable to a digital business model.
But this theme doesn't just apply to traditional business models. Many "public goods" (or semi-public ones) are extremely amenable to a digital business model.
One prime example is health care delivery in the US. The financial model is quickly shifting from "delivering cost-effective health services" to "keeping people healthy and well". Instead of trying to get maximum productivity from your doctors, your focus now shifts to keeping people out of the hospital in the first place. And it's not hard to imagine how a digital business strategy -- and supporting platform -- would help achieve this.
My favorite rant is my local government. I live in a small town, and just about every interaction I have with them is in the physical world. I go to an office, stand in line, give them some papers, they give me a piece of paper back. How quaint. None of the different town functions seem to communicate much, either. We have a town meeting every year -- I can watch it over cable, but I can't participate unless I'm physically present. And, of course, I'm rarely in town when they schedule it.
Certainly, not an experience designed around me, the digital consumer. Want me to participate and engage more? Make it easy for me to do.
Education appears to be in the early phases of a massive digital business model upheaval.
The emerging best practice? Do the coursework and homework on-line, meet in class to discuss and review. And educational outcomes appear to be better -- and less expensive. I don't see how the teachers' unions are going to like that one ...
Many power utilities have an economic incentive to decrease consumption. Wire my home with controllers, give me the data, show me my choices -- and I can guarantee you I'll consume far less energy. Get me involved, become an extension of my digital life, the rest will take care of itself. Yet another variation on the same theme.
Frankly, I could fill up blog post after blog post with all the variations that are out there for consideration. Maybe not all of them will be smashing successes, but they're all moving in the right direction.
It's not radical, innovative thinking anymore. It's the way things are going to be.
The Bottom Line
I tend to love "challenge questions" -- the ones that provoke a deep and often emotional response.
Here, the target is plainly obvious -- do you have a digital business strategy? You either have one -- and can articulate it -- or you don't. I've tried it on many occasions, and it clarifies the conversation in about 30 seconds flat.
The fascinating part for me personally? So much of what EMC does is turning out to be tied to one digital initiative or another -- if you follow the bread crumbs back up the organization.
For example, our EMC Consulting team is doing much more with digital experience. VMware's vFabric capabilities gets drawn into a lot of these efforts -- as we're usually talking legacy-free applications. Almost all of the PivotalLabs projects line up this way, as do a large amount of the Greenplum deployments.
And, of course, plenty of enterprise-grade cloudy infrastructure to power all this cool stuff. Vblocks, anyone?
In some ways, we as IT vendors are just on the murky precipice of clearly understanding what more people are using all this cool IT stuff for.
They're starting to use it to transform their businesses into digital ones.