Is your business getting Scrooged?
’Tis the season to be jolly’…yes, but it has also been a very impactful year because of the COVID-19 pandemic that hit the world hard in 2020. Therefore, this holiday season is maybe more than ever a time to reflect on the past year and, of course, a time to start planning for the coming year. Last year most of us haven’t foreseen what would happen to us in 2020.
A lot has already been said and written about this pandemic and I am sure you have heard the joke: “who accelerated your digital transformation in 2020: your CEO, your CDO or COVID-19?”. With the right answer being COVID-19 and, all joking aside, it is kind of true. This pandemic is accelerating the digital transformation of companies in an unprecedented way. Personally I, as a digital platform consultant, have had a very successful year. Especially my B2B clients suddenly realized there was no time left to postpone decisions on investing in their digital future.
Tomorrow it is Christmas and just imagine that this Christmas Eve you, like Ebenezer Scrooge, will be visited by three ghosts. The Ghost of Digital Past, the Ghost of Digital Present and the Ghost of Digital Future. How would you wake up the next morning? Let’s have a look what this would look like.
A visit from the Ghost of Digital Past
What would happen if the Ghost of Digital Past would be paying you a visit? What will he or she show you? Will it be ugly? This ghost would probably take you back to the dotcoms of the late 90s and the early 2000s and show you how companies like Amazon were starting out. He or she would also show you how, especially after the dotcom bubble burst, you dismissed it as something that would potentially become a real threat to your business: “Why would people want to buy my products from the Internet? OK maybe they will buy certain categories, but certainly not that complex product of mine. People will need to see, touch and smell my product, before they can make a proper decision to buy or not.”
Now fast forward 10 years later. You find yourself in the middle of the financial crisis. The ghost shows you the beginnings of Uber and Airbnb, companies that would need no longer than 10 years to disrupt entire industries. But surely, you as a retailer, are still making more money by opening a new store in a new country and a webstore is not that profitable. You can also predict, with a fair amount of certainty, the return on investment on that new store and that cannot be said for a webstore.
In contrast, a CMO at a retail client of mine, started to realize that even though this was still true in 2011, he needed to have a clear digital growth strategy in place. He recognized that he needed to jump on the bandwagon as digitization might not have a large impact in the short term, but it would certainly affect the long-term sustainability of his business. That he was right can be illustrated by the effect that the 2017 Whole Foods acquisition by Amazon had on the stock prices of large grocery chains like Walmart, Target and Ahold Delhaize.
Off course disruption is of all times, but the speed that it is taking on right now is faster than ever before and the COVID-19 pandemic has only been adding to this acceleration. But what do we need to focus on in order to not fall victim to this unprecedented disruption? Maybe the Ghost of Digital Present will be able to show you.
The Ghost of Digital Present enters your dream
The clock strikes two and the Ghost of Digital Present shows up in your dreams. He will show you the current situation you are in and what you will need to focus on in order to have a chance to escape from your digital fate. As always, your number one priority is to bring real value to your customers and nowadays you can do that across two dimensions.
Figure 1: Delivering customer value across two dimensions
The value that your product and/or service brings to your customers, has always been the cornerstone for customer success and that is also not different now. In case your product and/or service doesn’t serve a real customer need, customers will not buy it and hence your business will not be relevant.
The reason why whole industries are currently getting disrupted however, has more to do with the second dimension. The ease of interaction with your company and/or brand(s) and thereby the ease of use of your products and services and the access to the information needed to use these products and services, is making your company stand out from the crowd. This is about the experience that companies/brands are offering to their customers when using their products and/or services and when interacting with the company/brand across all the different touchpoints and channels. This second dimension is the reason why startups like Airbnb and Uber have been able to disrupt two entire industries and why a lot of less well known digital native companies are growing so fast.
Based on these 2 dimensions companies/brands can be classified into 4 different categories.
Figure 2: 4 categories of companies/brands
Sitting Ducks: Hopefully the Ghost of Digital Present doesn’t earmark you as a Sitting Duck as that would mean that your days as a company may be numbered, because your product is not adding that much value (anymore) in your customers’ lives and your competition is outperforming you on the customer experience. A lot of retailers who have dismissed the importance of digital in the past, find themselves in this quadrant and their market share is being eaten by the big tech giants and unfortunately the current COVID-19 crisis is also hitting them hard. In case there is still time left, it is time to move fast and make smart investments in your digital future.
Targets for Disruption: When you are shown that you are finding yourself in this quadrant it is clearly not yet too late, but it is time to act now and start investing in the customer experience as potential disruptors will enter your market sooner than later. As an example, I have worked with a client who clearly was selling a high-value product to its customers. My client was being approached by a small startup that was able to bring them more sales leads following a smart social listening and CRM strategy than their own much bigger in-house salesforce. The risk to this client was obviously to become commoditized in the near future, as they might lose the relationship with their customers to a newcomer in their market.
Digital Players: As a Digital Player you are probably a digital native company, or you have already successfully made the switch to become a more digital business. However you will need to constantly keep making sure that you are ahead of the curve and stand out on the customer experience, as you will not differentiate yourself based on the product(s)/service(s) that you are offering to your customers. It would even be better to rethink your business model and see how you can, for example, wrap extra value adding services around your product. Maybe the Ghosts can show you a trick or two to make sure you stay relevant in the future.
Customer Champions: In case you are finding yourself in this quadrant, there is not a lot of reason to worry about a visit from the Ghost of Digital Past and the Ghost of Digital Present. You are clearly already bringing a lot of value to your customers. You shouldn’t be surprised however, when you would still get a quick visit from the Ghost of Digital Future. This ghost might still be able to help you by giving you a sneak peek into the digital future. Being a Customer Champion today clearly does not mean that you will be a Customer Champion tomorrow as well. It will require hard work to stay relevant in a quickly changing marketplace. Also, Customer Champions like Airbnb, Booking.com and Uber have not been immune to an unforeseen event like the current pandemic which is hitting them hard as well.
So, after the visit of this ghost the reality sinks in that you have got a problem or that you might have a problem in the future in case you do not keep on top of your game at all times. Hopefully the Ghost of Digital Future can enlighten you on a thing or two.
The Ghost of Digital Future shows you the way
As if it couldn’t get worse at four o’clock sharp the Ghost of Digital Future enters your dreams and shows you that the current rate of change keeps on accelerating. Next to that he or she shows you that the bar is continuously being raised by the Digital Players and Customer Champions, when it comes to the expectations of your customers toward the value they get out of the interactions with your company/brand and the use of your products and/or services. New technological innovations will make the acceleration even go faster. To top it all off, the future impact of global trends like climate change and a change in demographics are being shown. The younger generations are more concerned about the wellbeing of our beautiful planet and are also (more than older generations) looking for purpose in everything they do. It is only logical that they will be more inclined to interact with and buy from companies that are not only looking to make a quick profit but also help to make our world a little bit better for the generations yet to come.
The ghost will make clear to you that, if you want to survive as a business in the coming decade, you will need to make (digital) business model innovation your top priority in the coming year. In this light it will not hurt to not only point your attention toward Silicon Valley but also toward the East as a lot of business model innovation is currently happening in China. Of course, we all know Alibaba, but there are also very innovative companies in China that you probably have never heard of before like Luckin Coffee, Meituan-Dianping and Pinduoduo. You clearly also cannot do this all by yourself anymore. It will be all about forming smart partnerships and digital ecosystems in order to jointly shape the business models of the future. A clear example is the current rise of digital marketplaces beyond companies like Amazon and Bol.com.
I hope you will, as Ebenezer did, wake up tomorrow morning fully energized, recognizing it is Christmas morning and that it is not too late to turn the ship around. As mentioned in the introduction, it will be time for reflection, and I hope you will be able to come up with some New Year’s resolutions around your digital journey in the coming year.
In order to respond to this never ending and accelerating change you will need to not only focus on business model innovation but also on speed and adaptability of your company and I would like to share a bit more on this in the first weeks of 2021 in my New Year’s resolution blog post.
Thanks for your attention so far. I hope that, despite the Covid-19 situation, you will be able to spend some quality time together with your loved ones this Christmas period.
Merry Christmas and Happy New Year!
