Get ready for big digital transformation
|100 senior executives with diverse industry backgrounds and expertise attended an IMD Discovery Event on digital and social media. They had the opportunity to analyze how these media have changed the customer decision journey and how they should respond to leap ahead of their competitors.
For Professor Piskorski, the customer decision making process is no longer a funnel but a journey, on which customers consider, evaluate, buy, experience and bond with a brand.
This is particularly applicable to the consideration phase because now customers add more brands (rather than eliminate) as they go along, and in the loyalty (bond) phase, where customers are keener than before to collect and share information. The new customer journey has multiple touchpoints, both online and offline, which means companies have to be present in all of them. For this reason executives need to approach this challenge holistically – rather than having a Facebook strategy or a Google strategy, they need to devise a digital and a social strategy.
Influencers and your social strategy
Being present at every stage of the customer decision journey is a formidable task for most companies. One way they can address this challenge is by placing influencers – third parties who can raise awareness and facilitate purchase of a company’s products.
Firms that place influencers at the heart of their social strategy do so to increase their presence at each stage of the customer journey.
Klout offers a score to Twitter users based on their reach and influence. Look for people with high network influence, “engagement is measured based on actions such as retweets, @messages, follows, lists, comments, and likes.
Companies are using online influencers in two ways.
- The first is by having other people talk about their brands, for instance by sponsoring vlogs (video blogs) by popular online figures. (Download Report: How Brands Use Online Video to Drive Retail Sales)
- The second is creating communities using platforms such as Pinterest, Facebook and Twitter; research suggests that a typical Pinterest user is very likely to buy something she has “pinned” (placed on a virtual noticeboard) or seen pinned by others.
Such communities need not be consumer-focused: Cisco has made effective use of communities in the B2B space to build leads, collect ideas for product development and increase the barriers to entry for its competitors.
Reach out to them and ask for feedback on your content. Give them a bit of special treatment to deepen your relationship. A few shares or retweets from brand influencers could be all that’s needed to shape your PR Strategy.
Though beware of boasting about your effective PR strategy.
Peter Shankman, ‘Customer Service: New Rules for a Social Media World,’ believes, “there could be a potential backlash if you say, ‘we’re going after people because they’re influencers.’ Don’t share the methods of how you’re finding your people because there could be bad press.”
As Shankman mentions in the section “Always Be Aware – It’s the Thing You Don’t Think of That Can Kill You”:
Your PR strategy should be a mix of engagement and voice, (through brand influencers) targeted to your end users.
Using social media to create communities is the second way that companies can seek to influence consumers. Many companies have discovered that Pinterest – a website that allows users to search, “pin” (i.e. place the image of an interesting product on the Pinterest board) and eventually purchase a product – is a great vehicle for increasing brand awareness and engaging with customers.
In fact, according to Professor Piskorski, China is one of the most interesting places to observe how companies develop integrated digital and social strategies for competitive advantage
The blurring of traditional industry boundaries
As the amount of digital and social data increases, companies find it beneficial to start digging into them for competitive advantage.
The exponential growth and availability of data – is transforming the business environment and changing the rules of the game.
Industry analysis, a key framework for strategy formulation for the last 30 years, assumes that industries are well differentiated, something that holds less value in the digital age.
For example, which industry does Apple compete in?
Is it manufacturing, services, electronics or the music industry?
Likewise, the concept of the core competencies of the corporation, which states that organizations should focus on what they do best (and outsource the rest) is becoming obsolete.
The blurring of traditional industry boundaries and the fact that many companies act as partners to others (as opposed to competitors, suppliers or customers) makes the business environment an ecosystem, a network of organizations involved in the delivery of a specific product or service.
In this environment, it is difficult to predict which strategy will be the winning one, since companies depend on their partners. And as Professor Cordón pointed out, most traditional companies are still not leveraging big data to create better business models for themselves.
digital routes of the future
New business models are emerging all the time. Speed of business used to be defined in months and days. Now it is counted in minutes and seconds.
What is big data?
While there are many definitions of big data, IBM data scientists identified the four Vs of big data: Volume, Velocity, Variety and Veracity.
Volume refers to the scale and size of data.
For example, it is estimated that 2.5 quintillion bytes (2.3 trillion gigabytes) of information is generated each day.
Velocity is about the speed at which streaming data is analyzed. Streaming data comes in many different forms, for example the New York Stock Exchange captures 1 trillion bytes of trade information during each trading session.
Variety pertains to the different forms of data. Websites like Facebook generate 30 billion pieces of content each month, including tweets, videos, pictures and polls.
Veracity refers to data uncertainty and its relative usefulness.
Big data is also creating huge opportunities for entrepreneurs who are willing to innovate. Strava, a California-based start-up, is a web and mobile app that allows users to track their athletic activity, such as running and cycling, and to share their results and routes with other users. On Strava you can find the best local circuit for your activity, track your run or bike ride, compete with friends and other users across the world, and see what your favorite athletes are doing.
The sports data business ecosystem is constantly evolving. Consumers benefit from this because the ecosystem’s role is to produce goods and services that add value for customers.
Large companies, such as Nike, have taken this same strategy and rolled it out across millions of their customers. Such a strategy allows Nike not only to provide improved customer value, but also to predict when the customer is likely to need a shoe, and what kinds of shoes the customer will like, and use this data to power its R&D efforts which results in more successful product launches.
Managers should therefore place a high value on collaboration and on developing partnerships that will allow their company to continue innovating within its existing ecosystem.
One crucial thing to remember is that the only data that is good is the data that is going to benefit consumers.
The winners of tomorrow will be those that are prepared to embrace the new opportunities and adapt their business models today and continue to do so in the future. For that they will need new tools to succeed in their big data innovation journey.
Explore the world when determining the company’s purpose. Articulating the company’s why and the reason for its existence also allows it to explore new business models that are aligned with its purpose.
Consider Apple. People buy its products not because of what it does but because of what the company stands for – thinking differently.
The business model canvas is a useful tool to craft your value proposition, decide on the best strategy, and discover the differentiating parameters in order to maximize profit.
Employing lean methodology can help discard business models that are not executable and improve the success rate of those that are, by quickly defining minimum viable products, then using the learnings to enhance agility.
A last word: The three leadership skills to take your business digital
They look for new questions instead of answering old ones
Finding and answering new questions could lead to you creating a new, great and successful business model for your company.
They test a portfolio of new ideas and business models
The digital world is one of testing, learning and improving. Digital companies which succeed don’t know which idea will be successful in advance, so they develop a portfolio of ideas and build on the most successful ones.
For example, retailers often test preferred customer collection techniques.
Do customers want to purchase online and have their goods delivered to their home or work?
Or do they prefer the newer approach of “click & collect”, where packages are collected from a local store?
Perhaps counter-intuitively, a retailer found that in one city “click & collect” increased sales by more than 10% almost immediately.
Experimenting with ideas is vital to improve the customer experience, particularly in the digital space.
They work with fast learning cycles
When it comes to testing and improving ideas, good managers work with fast learning cycles.
The way digital businesses do this is by testing ideas on a small scale, a process called minimum viable product (MVP), moving with agility and making things happen.
Big data is transforming society and remodeling every industry. These changes are also opening up new and endless possibilities.
By now many firms have understood the importance of incorporating social and big data strategies into their everyday operations, but we are nowhere close to being done with the digital revolution.
Artificial intelligence, such as IBM’s Watson project, and the Internet of Things, whereby sensors connect and embed intelligence in billions of objects and devices all around the world, are going to affect the productivity, health and safety of billions of people. They are also going to result in countless new products and services that will transform the customer experience.Creating machines that have the ability to learn and then develop prototypes also means empowering them to adapt websites to best serve individual customers. Thus, with big data, growth is no longer linear, it is exponential.
When big companies act like start-ups to innovate, great things happen.
Innovating involves experimenting with prototypes and failing – several times over.
This often requires substantial resources, which smaller companies may not have at their disposal. Larger organizations are more likely to have the necessary resources but their structure or culture may hinder their ability to innovate.
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Cordón, C., P. Garcia-Milà, and T. Ferreiro. 2015. “Will big data create jobs – or destroy them?” IMD Tomorrow’s Challenge.
IBM. “The four V’s of big data” http://www. ibmbigdatahub.com/infographic/four-vs-big-data
Cordón, C. and T. Ferreiro. “Is your company ready for the big data revolution? (Part II)” IMD Tomorrow’s Challenge.
Discovery Events are exclusively available to members of IMD’s Corporate Learning Network. To find out more, go to www.imd.org/cln