Thursday, 29 May 2014

Where to start with digital strategy - build a digital trading platform

One of the problems we've found with digital strategy thus far is how to get organisations started. There are so many ways in which digital can transform a business, from radically transforming sales and service to automating a swathe of back office tasks that it can be overwhelming and doing nothing or something too small is tempting. To us as well, at times. So I've been thinking about the best way of biting off a meaningful chunk - these are thoughts in progress so comments are even more appreciated than usual!

The first question I came to was whether to start at the value generating centre of the business or in a costly but unsexy back office area. My conclusion is the former. Why? Because energy and momentum is a crucial part of the journey to a digital culture and it's easier to advertise that direction somewhere visible. It's also arguably easier to make a conventional (basic ROI) business case in these areas - the cost of back office functions is often very murky in a pre-digital environment.

What's that value centre? I've always liked Hagel's model for abstracting the purpose of a business (http://edgeperspectives.typepad.com/edge_perspectives/2007/01/retailers_and_c.html) which gives three models:
- Infrastructure management
- Customer relationship
- Product commercialisation
The theory goes that you can't bundle more than one together and still retain focus on performance of the whole. I'll come back to that idea another time, but it's a decent model for my next thought, which is as much semantic as anything else.

One challenge with digital strategy is that it's actually strategic! The basis of success in the economy is changing radically and entire business models, organisations and cultures need to change over time to adapt and succeed. That's hard when dealing with organisations with hard short term targets. So the way I like to explain the first part of digital strategy is building a 'digital trading platform'.

What does that mean? I see it as an trading platform designed with from scratch with digital, measurable and automatic technologies as the default, as opposed to a set of technologies used to marginally enhance the old ways of doing things. It's process and technology and the operating model, organisation and culture needed to trade that platform effectively. The results should be a step change in value creation in terms of efficiency, sales performance or IP generation & monetisation, depending on the organisation's business model.

Why the language? Because it's all about focus on making money where you make it today, in a radically better way. Reinvent the things you know how to do today, rather than seeking value in things you don't understand using strategies you don't understand. Pick one thing to learn at a time! And in doing so, you'll find out a lot about the new skills, practices and organisation you'll need to transform the rest of the business. 

Wednesday, 28 May 2014

Self-drive & instant translate: two remarkable tech stories

The last couple of days have seen two remarkable developments in digital that I thought were worth covering.

First, Google announced that it would be making 200 prototype self-driving city cars to its own design. Second, Microsoft revealed its plans to put he natty instant translation tech it showed off in China a couple of years back into Skype. Why were these titbits of news worth interrupting my holiday for?

I've long been an advocate of self-driving vehicles and Google have long been the visible face of the technology. Their announcement will undoubtedly spur others to launch their own vehicles, most likely including Tesla, who have done for propulsion what Google have done for guidance. I would be now very surprised if a fully self-driving car was not available for purchase at an electric-sized price premium (c. 50%) vs the equivalent conventional car before 2020.

Microsoft's translation announcement is also significant as it shows how quickly natural language algorithms have advanced. IBM's Watson (2012) does the same sort of processing in a super computer environment. Now the same will be available in the cloud for mass use. 

Both this and Google's car are graphic illustrations of Moore's Law. The self drive technology was $80k in 2012. Now it's likely under $40k. Companies that are able to dominate the business models of a Moore's Law market are able to disrupt other markets like never before, leading to the type of multidimensional 'superpower' competition that I've written about previously. 

For most organisations this means investing in software and hardware IP in their business processes and products. The big tech question is when Apple are going to respond. 

Tuesday, 20 May 2014

Future of news - Arab Media Forum

You might remember that we've been doing a series of consumer research pieces with the Associated Press on the future of news in various regions. This leg of the journey took us to the Middle East, where we covered three markets: UAE, KSA and Egypt. I presented this at the Arab Media Forum this afternoon.

Major findings:

  • Middle Eastern residents are avid consumers of the news - on average they'll take in 72 minutes a day, which is the same as their counterparts in Europe
  • Trust is the most important driver for selecting a news channel. Interestingly, speed is almost irrelevant - only six percent of respondents said that it mattered, which goes against traditional thinking...
  • ...and probably reflects the fact that social currency from news is gained by depth of understanding rather than being the first person to hear about it
  • Half of online news users discover stories on social media and 45 percent of users share a story at least once a day
  • This reflects the importance of news as a conversation starter - 97 percent of people talk about it regularly, principally around the dining table (67%). Those closed door conversations have not yet made it online, perhaps because of privacy concerns
  • Video is becoming an important part of the online mix, but would be more so if technical quality increases
The report isn't due for a few weeks, but at the moment the findings point to a market that has thus far embraced social more than video, perhaps because of relatively slow connections (excepting UAE), which allow for opinion sharing but not rich media. For the region's news organisations it means that there is significant opportunity in replicating the tactics and strategies of more advanced markets as connectivity improves - the audience already exists and is savvy.