In his now famous 2011 Wall Street Journal article, ‘Why software is eating the world’, Andreessen Horowitz co-founder and tech icon Marc Andreessen predicted a “dramatic and broad technological and economic shift in which software companies were poised to take over large swathes of the economy”.
Andreessen observed that the technology industry typically ran in 10-year cycles, a rule which is as true today as it was 30 years ago.
In the 80s the big trend in technology was hardware and process optimisation, this is where organisations like IBM and Wang came to the fore. In the 90s it was software and productivity that took companies like Microsoft to prominence. The 00s was all about the web and information retrieval, of course dominated by Google.
Then from 2007 onwards, something fundamental happened (driven by mobile and the release of the iPhone), companies were finally able to leverage the decades of knowledge built up in the computer and modern internet revolution to transform established business structures.
Now the bedrock of business was no longer solely brick and mortar touch points, but industries which ran on software and were delivered as online services.
This is what Andreessen saw, a world in which the next decade was to be dominated by digital native companies and, as defined by digital anthropologist Brian Solis, a world in which traditional organisations realign or invest in new technology and business models to drive value for customers and compete in an ever changing digital economy, or what we now term as digital transformation.
We are now six years on from the WSJ article and 10 years on from the launch of the original iPhone, mobile has reached a peak (or has at least matured) and business leaders around the world are all asking the same question – what’s next?
In the last three years we have seen a dramatic shift in our politics, society and in the economy, much of which has been driven by technology (the fall out of fake news, connected globalisation, the abhorrent lone-wolf terror strikes, and accusations of Russian hacking explains some of this). And we are now beginning to see the same fundamental shifts in business.
When Jeff Bezos in his annual letter to Amazon shareholders talks about a distinction between ‘day one’ and ‘day two’ businesses, or when Google CEO Sundar Pichai exhorts a shift to an AI-first world, they are not highlighting isolated instances. What they are doing is bringing to light a new expression for how value and power will be created and distributed. Similar to what Marc Andreessen observed in 2011.
So what is next? If we look at the three most talked about emerging technologies, machine learning and artificial intelligence, augmented reality, and the blockchain, they give us a clue to the nature of the age we are entering.
Broken down each of these emerging platforms are dependent on data, torrents of data.
Machine learning and artificial intelligence have been around for decades, but have only now become viable as we have the data points from which these systems can collect and analyse to spot patterns which allow them to learn and solve problems absent of human intervention. It is machine learning that has driven the emergence of VPA’s (Virtual Personal Assistants) and smart speakers like Google Home, Amazon Echo, and Apple’s HomePod, as software can now perform tasks like speech and image recognition with unerring accuracy.
The blockchain is simply a distributed data-base which provides accuracy and transparency to ensure data is secure from tampering and revision.
And finally augmented reality is essentially a way to see digital information (data) alongside physical objects, in the context of the real world.
Using tools like Google Lens we can now apply computer vision to recognise physical structures like a restaurant, and then map data we have relating to that restaurant and the customer (such as offers, loyalty points, and reviews) back to the customer, creating potentially profound experiences in the process.
Individually each of these platforms are systems designed to solve specific problems, but when viewed together they clearly point to a fundamental business and socio-technical shift in context and environment that is linked to data.
Whereas software once ate the world, we are now entering a stage in which data is eating the world, and the next 10 years will be dominated by physical, digital and human mediated networks of data and information, which significantly realign how we produce value, establish power, and create meaning in modern society.
In the first of three posts I hope to provide a roadmap of sorts for navigating this new terrain, taking a step-by-step approach to highlight the new lens through which we must view product development, partnerships and business culture in a ‘data first world’.
This will not be that
The first thing to understand as we transition to a world dominated by data and networks (networks being any collection of people, nodes or data that is linked together) is this will not be a bigger version of mobile. It is fundamentally different. And requires a new sensitivity and instinct for how connected systems work.
The recent cyber/data attack on the NHS in the UK (and others) point to a fracture in the old ideas and institutions we have come to rely on. Data has now become the great fault line of business, and almost everything we know and have learnt about digital, technology, and in many cases commerce, must be left behind us.
We have heard a lot about digital transformation over the past 10 years, as companies grapple to maintain relevance in a mobile-dominated world. But we are now entering a great phase of ‘digital construction’, where the emphasis will be on finding opportunities to construct open innovative business models and revenue streams, by inverting the firm, the customer, and the competition.
Inverting the customer
To date most organisations have a vertical relationship with the customer, built around a simple touch and display interaction model. But with millions of machine-to-machine (M2M), person-to-person (P2P), and machine-to-person (M2P) connections across a number of industries including retail, healthcare, energy, finance and transportation we have the opportunity to deliver so much more.
Now competitive advantage for ‘data-first’ organisations is no longer predicated solely on the design of hardware or software, but on the design of an open experience, which injects value into an ecosystem of related services at the individual customer level.
What are your customers doing at 2am on Sunday morning?
The customer lifecycle is now so complex and moves so quickly, that to offer value and relevance with only a first-party understanding of the customer is no longer feasible. ‘Data first’ organisations have realised this and have adopted an all-encompassing view of the customer, in many cases over a 24-hour period.
It is not uncommon for product owners and their peers in these organisations to know what their customers are doing by location, date and time throughout the year. They are laser focused on the activity of their users, particularly off-platform activity, as it enables them to see the kinds of behaviour, natural or constructed, which are connected to the customer experience they deliver.
By inverting the customer in this way, data-first organisations build relevant products and services by being cognisant of:
- The value of time and the moments their customers are most active.
- The environments their customers interact in.
- Possible connected customer experiences (HomePod, links to the coffee maker, which links to the toothbrush, which links to…) and the opportunities to create connected and networked experiences of their own.
- Relevant third-party players.
- Device preference by usage, time and location.
- The complexity of possible interactions and touchpoints and the need to build out clear customer journeys.
- Environmental objects which can be used for further engagement (think Apple AR).
The days in which we create customer solutions based on siloed and often ‘projected’ customer needs and NPS scores which bear no relation to the customer and their daily activities are dissipating. As highlighted by Jeff Bezos, “customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.”
Data is now no longer just a tactical tool, but a strategic one, used to invent the breakthrough experiences Bezos alludes to, and data-first organisations are using this shift in technology and mind-set to add value to the customer ecosystem by inverting the customer, in order to utilise third-party relationships, feedback flows and network effects.
A quote from Apple WWDC 2017: “Technology alone is not enough. Technology must intersect with the liberal arts and the humanities to create new ideas and experiences that push society forward.”
The impact of this statement on incumbent organisations and those yet to be established in this era will be significant. At its core it will change the questions we ask as organisations and entrepreneurs, from ‘how can we deliver this product or service more efficiently?’ to ‘how can this product, object, service, or experience be changed by connection?’. Not only connection to the internet, but connection to third-party services and devices. The speed, number and type of connections will also be a key differentiator.
In meeting rooms across the country, these are the prevailing questions that must be asked, and the organisations which ask them early will be ahead of the game.
In the UK financial services industry we are all aware of the impending implementation of Open Banking in 2018, but many of our product solutions for this new world are built with a siloed, static mind-set. One which sees development of aggregated services as a leap forward, when really we should be pushing beyond this as a day one MVP (minimum viable product). In order to truly deliver on the promise of open ecosystems, we must be more open in our thinking, as well as in the architecture we employ to deliver ground-breaking new experiences.
Only by adopting an open mindset can we hope to tap into the potential of what lies beyond the possible, but it requires us to:
- Move beyond organisational and personal narcissism and commit to creating a stage/platform for others.
- Open up our understanding of the customer, in order to deliver end-to end experiences which are embedded into their everyday lives (think 24-hour customer life cycle).
- Wherever possible look to incorporate diverse and multi-dimensional decision making at all levels of the organisation, particularly as it pertains to product development.
The velocity of disruption is now so fast and customer expectations so nuanced that we can no longer accept shared vision, values and goals across organisations as fait accompli. In order to surmount the diversity of problems presented to us, we must have a repertoire of responses which can only come from adopting an open mind-set (incorporating external partnerships/ informal relationships) and/or by empowering multidisciplinary teams.
Embracing the future: In chaos lies opportunity
The practicalities of monolithic ‘do it all’ institutions are waning, as the boundaries between end-to-end experiences and environments have blurred.
As the convergence of nodes of data linked to other nodes – comprised of people, producers, machines and things – begins to take flight, organisations must quickly understand the way data is reshaping the business landscape and prepare for the competitive and cultural opportunities and challenges it may bring.
As outlined by Amazon CEO and founder Jeff Bezos: “The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.”
In the second part of the series I’ll be highlighting the organisational and conceptual changes in how tasks, processes and products are defined and structured in a data first world. Primarily through the development of The New Customer Journey.