If you dislike change, your're really going to hate being defunct. Because that is what is looming behind the choice to either adapt with the constantly changing business landscape, or not. Change doesn't care whether you like it or not. It happens without your permission, and the bad news is that 2012/2013 is shaping up to be another financial year of massive disruption.
Here are three trends that present your organisation with either threats or opportunities depending on how you're positioning yourself along these waves of change.
Cash is no longer king. Kids no longer have physical wallets, but transact via Google Wallet, iTunes, or PayPal. Digital access to music is more important than analogue ownership. Even downloading seems inconvenient in a world where streaming access via the cloud is replacing the need for physical storage. Your Yellow Pages goes straight to recycling, and Amazon currently sells 180 ebooks for every 100 analogue books that it retails. Meanwhile, Borders has gone bust, and Blockbuster is a distant memory because it didn't keep up with changing customer expectations for digital content. Kodak's moment lapsed this year as its largely analogue business model was finally dealt its death knell.
Ultimately, everything that can be digitised will be digitised.
So, how does this affect your business model?
It's evident that if you're a bank, a retailer, a record label, an artist, an advertising firm, a printer, publisher or production house, that you're going need to find new business opportunities that are focussed on adding value to your clients.
Otherwise you're running the risk of exchanging analogue dollars for digital pennies, and inviting disruptive, non-traditional market players to compete for your market share.
Equally, though, this digitisation is disrupting industries whose products and services haven't necessarily been directly upended by this wave of change. Think about the pharmaceutical industry for example. At this juncture a pill cannot be replaced by 1s and 0s (albeit that future may not be too far away), but the digitisation of everything means that electronic health records, mobile communications with customers (payers, patients, and providers), and iHealth trends are going to abruptly shift the pharmaceutical business model.
Think about the financial advice or accounting industry. Here is a product or service that deals in numbers and dollars - something which can easily be digitised, and already is to some level. What value add can a financial advisor or accountant offer, that we cannot already receive online via our iPads? Data is abundant, and the low end of the profession will seriously struggle as digital software like Xero, Salesforce, and Shoeboxed change how we deal with future projections, sales figures, and physical receipts. The threat here is that if you're doing work that can be automated, digitised our outsourced to overseas, you'll really struggle for relevance.
The opportunity here is to focus on building human relationships, adding value through thought leading education of clients, ensuring that advice is clearly communicated, and strategies are crafted and implemented in a way that is heavily focussed on client ROI.
Debate this question with an agent provocateur at work:
We're all high maintenance today. Social media is teaching consumers to expect tailored communications. Often these are disturbingly relevant to us based on our digital browsing habits.
Think about it for a moment. Have you recently seen an ad display in your Gmail account or on Facebook pitching you a product or service that is really relevant to your last email, search term, or status update? Someone is listening in to each and everyone of your digital conversations, and an algorithm is constantly tweaking bespoke advertisements designed to get your attention.
The old model of marketing was based on demographic segmentation. Demographics is based on statistical data relating to the population and particular groups within it, for example women aged 35-39 who live in Mosman, Sydney. This used to be quite useful as communications campaigns could be loosely tailored around a particular segment. However, today we are all generational and psychographic transvestites in the sense that we have become more eccentric, and demographic labels thus no longer stick.
Many would be offended to be lumped together with a cohort based purely on age, gender and location. And social data shows that consumer behaviours are now so diverse, that demographics is dead.
Rather than conforming to the popular stereotype of the latte sipping, Baby Bjorn-sporting Mosman mum, a 35-39 year old residing on the north shore could be a single, career-focussed woman, who enjoys triathlons, Japanese anime, Angry Birds, and has a secret penchant for marijuana and World of Warcraft.
This information is now available to marketers, which makes a letter box drop to 35-39 year old women in Mosman a case of physical spam.
Thus, for organisations to reach an ever-changing and ever more high maintenance consumer, you need to increasingly focus on psychographics - the study and classification of people according to their attitudes, aspirations, and other psychological criteria. This is where big data comes in, because with every touch of the keyboard, with every song you download, every page you like, every stumbleupon you dismiss, and each tweet you construct, you contribute to Big Brother's knowledge about you.
While social ads have now become disturbingly relevant to us, their effectiveness is still being debated, because they have a certain stalker-ish feel. This presents opportunity for both digital and analogue cross-channel communications - through Personalised URLs and landing pages for targetted campaigns, or bespoke physical brochures with variable imagery and text tailored uniquely to you based on your recent Woolworths spend, Amex liabilities, frequent flyer points, and Facebook likes.
Because psychographics is replacing demographics as the primary segmentation mode, we are now dealing with segments of one. This has huge implications for how your organisation collects data, how it strategically maps customer behaviour, and for citizen privacy.
More importantly, given that tailored communications are approximately 4 times as effective as static commications, smart organisations need to ask themselves the following question:
With every major wave of change, there is always a counter-trend. The faster the world moves for example, the more we have a need to reconnect by disconnecting and going slow. Equally, the more global our world becomes, the more we crave the hyperlocal. In a sense all business is local, and even though we are interlinked, hyperconnected and online 24/7/365, a computer interface can never really replace a human face. There is still no substitute for 'pressing the flesh', the conference hall-way conversations, or wine-stained rapport building. There may be one day, but we are simply not there yet.
Hyperlocal holds one of the key attributes to great marketing - story. This is why Champagne can only be called Champagne if it's from Champagne, and why Aussie and Californian sparkling wine producers have never been able to achieve the premium brand allure of their French competitors, and why Champagne vigorously pursues anyone messing with their brand. Equally, Parmiggiano-Reggiano cheese only derives from this region in Italy, and story is imbued in every syllable of that name.
Our craving for the local is perhaps a response to globalisation's benefits and disadvantages. Seasonal, local produce is back on the shelves. Farmers markets are the fastest growing market in food retail in the US and Australia, and in New York you'd be hard pressed to open up a restaurant that's not 'farm-to-table'. Locality is one of the reasons why Google and Facebook haven't cracked the Chinese market, and is equally the reason why mobile devices place so much faith in geolocation as a form of tailored marketing.
Who you are matters, but where you are is becoming equally important. Imagine the story, the relevance, and the rooted connection that is possible when you're driving through the Hunter Valley or Napa Valley, and as you're manouevring through the country roads on an autumn day against a back-drop of shifting colours, your partner is able to tell the digital story of the 4th generation vineyard owner and his wife who have a geolocated Bed and Breakfast with a view across their organic plantations, and who have a special offer on a comfortable night's stay.
This bridges the analogue and digital divide. Hyperlocality told via the mobile medium is a way for the small, family owner, micro enterprises to tell their story. If the social medium is a way for large business to seem small, it is equally a way for small enterprise to connect in a global, yet local way.
What does this mean for your organisation?
Ask yourself the question:
These waves of change are likely to shape the contours of the business landscape, to erode market share, and to create patent cliffs for organisations that don't stop to:
What do you think?
What opportunities/threats can you currently see on the horizon?
Add your futurist thoughts and comments below to contribute to the global brain pool on this topic.
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