The scale and pace of digital disruption has led to giant corporations like Disney, McGraw-Hill and Omnicom finding their markets changing fundamentally through the onslaught of new types of competition (Apple, Amazon and Google respectively). I don’t believe that Kodak did not see the potential and the threat of digital photography; as a huge organisation, they simply couldn’t reinvent themselves fast enough.
As marketers, we are expected to keep pace with much of this: to be alert to changes in our environment, especially the digital environment. We are told that:
“Disruption is either going to happen to you or because of you”
- Brian Solis. And that’s where the problems begin. First, not many of us have the talents of a Bezos, Jobs, Brin or Musk. Neither may we have the confidence and tenacity to see past the difficult early stages of any innovation.
Imagine the response you will get from your boss if you say that your organisation must respond to digital disruption, and must stop doing all the things that have made it successful for so long. How can marketers position themselves and their organisations to be ready for digital disruption?
My belief is that we should examine the customer behaviour and the markets in which we operate and imagine how the future could look five years, or even ten years ahead. This is hugely difficult. We naturally constrain our thoughts to issues that are immediately pressing, and discount those that seem impossible. Remember, Uber isn’t a better taxi company, eBay isn’t a nicer shop, they are completely different ways of delivering the same benefits, i.e. indirect competitors.
We should seek to identify the memes that are coming into play. A meme, to borrow a term from Richard Dawkins, is an idea or concept that is spreading within a culture, a trend if you prefer. We also need to set aside our ‘black hats’ and all the reasons why ‘it will never happen’, because it will happen, and something like it is probably already happening. Here are a few examples:
Take the value of data as a simple example. Every time we enter our email address onto a web site in order to access a ‘free’ report, or piece of software, or music track, we are giving something away: part of our digital identity. And this identity has value. It can (and will) be passed on to advertisers who want to target us with more relevant advertising.
‘If you’re not paying for it, you’re not the customer; you’re the product being sold.’
- as Andrew Lewis neatly summarised it.
Similarly, ‘personal DNA testing’ company 23andMe processes samples from its customers who, for only $99, then receive a report about their predisposition to various diseases and conditions. Their database now includes more than two million people. The value of the data collected, even when anonymised and aggregated, would be of enormous value to pharmaceutical companies looking to develop the next generation of drugs, or to insurance companies refining their actuarial statistics. The meme here, if it’s not already obvious, is that value can be generated in different ways, and not realised not just from customer revenue.
Satellite surveillance images of Wal-Mart car parks may not sound very appetising, but they are if you’re a Wall Street analyst wanting to get a clear impression of how well the stores are doing – and so whether the share price is likely to rise or fall after the next round of results.
Buy a new car around 2020 and it will be festooned with around 200 sensors, monitoring everything from tyre pressures to your driving style. (That’s around 22billion sensors for the whole industry.) More surprisingly perhaps is that much of this data is not intended to benefit you the driver, but the manufacturer, who will be able to use the information to design better vehicles, and also to be better informed in the case of a warranty claim. Or your insurer, who can offer dynamic pricing according to your driving skills and risk profile.
Consider that much of this data will be generated automatically by devices as part of The Internet of Things (IoT) - estimates for the growth of which range from 20 to 260 billion connected devices by the end of this decade - and you can appreciate how we have just started to glimpse the power of abundant data.
The next meme is the use of technology to replace the soft skills we humans possess; the wine tasting analogy above being a case in point. Researchers at Warwick University have shown that computers can analyse landscape photographic images to determine how ‘beautiful’ they are, based on having been shown thousands of other images that have been rated for beauty by humans. The computer is ‘simply’ identifying patterns of content, and using that to predict how well other images would be rated. More dramatically, computer algorithms have been developed to take a simple cartoon image e.g. of a face composed of a couple of dots for eyes and a line for a mouth, and to create ‘art’ in the style of Raphael! Not good enough (yet) to fool experts of course, but indistinguishable to the layman from the genuine article.
So why does artificial intelligence (AI) and the development of soft skills matter? We’ve been accustomed to robots replacing people in manual, repetitive jobs in factories and warehouses, but perhaps doctors and lawyers also have room to fear replacement. Computers can scan X-rays or MRI scans much more quickly and accurately than surgeons, and can be taught to develop the ‘judgement’ required to make at least a first diagnosis. Lawyers spend a great deal of time reading documents, but since this work can be done by computer scanning – and a summary of the relevant content provided – the value that the human adds will need to be re-evaluated.
In marketing, we think of ourselves as creative types, but how much marketing work is actually repetitive analysis, followed by standardised response? As digital marketing predominates, and data skills replace interpersonal interaction (at least to some extent), AI can potentially supplant even us, and without needing an expense account!
Delegation to AI
The next step on from the deployment of AI in soft skills is to allow the electronic entity to form and implement the judgement that results from the analysis of data. In the lawyer example above, perhaps fairer trials would result if the judge and jury were replaced by computer judges basing their verdicts solely on the evidence available. Perhaps this is a little way off, but many examples of delegation already exist.
Ultra-high-frequency algorithmic trading of stocks relies on computers to make millions of trades (not just decisions but actual trades) at lower margins but extremely fast. This is far from fool proof at present. As far back as May 2010 – the Dow Jones lost 600 points (9%) in three minutes due to algorithms over-reacting to a single large trade. Emergency systems reacted to cease all trading for five seconds, allowing the algorithms to catch up. It then took five months for human investigators to establish what had happened. The algorithms are just too complex to understand, especially when working together in a market, so we just have to trust them to work autonomously.
If you’re still unconvinced that we are already handing control to AI systems, watch the roads, where convoys of HGVs moving autonomously along our motorways will soon be extant.
On a recent holiday, the peace and quiet of our holiday villa was gently disturbed by the appearance of a small, lawn cutting robot. Day after day and through the night, the little chap (we decided it was male for some reason) beetled about, pausing only to return to his charging station for an energy boost. We watched mesmerised as the robot followed a random route, avoided obstacles, yet never strayed outside the property perimeter. GPS control and a stored ‘map’ of the area presumably keeping him safe, and requiring no intervention. What surprised us most though was that we actually developed an affection for the little drone. His non-threatening design and endearing manner made him a welcome temporary family member. We called him Huey (remember ‘Silent Running’ anyone?). If robots are to fulfil their full potential, they will need to be designed to fit better into our lives. In Japan, teddy bear shaped robots are used to lift children into hospital beds, while in care homes, the most popular robot form factor was found to be a small furry dog that could be stroked. The roles of the robot in the latter case can range from a talking and listening companion to a medication dispenser and a walking (dancing?) partner.
Developing a vision for how things could develop over a five or ten year time period will reveal the broad trends and themes that will shape our markets. There will be many reasons why a particular development might not be possible in the short term, but by understanding the underlying forces at play. These could include the demand for personalised products and services, products in continuous development (e.g. Windows 10), the trend to ‘usership’ rather than ownership, the instant and interactive nature of communications, and many other trends according to the sector in which we operate. The pace of change has been frenetic, but this will not cease, indeed it will continue to accelerate with the convergence of technologies.
Alternative generic marketing management strategies should enable organisations to be better prepared for the brave new world ahead. Some approaches that have been tried successfully include: sub-teams to allow a more agile response to specific challenges, continual development of products after launch (‘perpetual beta’) and proactive environmental scanning, using channels such as social media to listen actively to customer concerns and desires.
Ultimately, organisation transformation might be inevitable. Google has constantly transformed, and now uses an umbrella structure under the brand Alphabet to incorporate Google X, Nest, Calico etc., each focused on specific opportunities. In the meantime, smaller steps can be taken to position ourselves ready for the larger changes ahead. User interfaces could be designed to be more pleasurable to use, with say gamification techniques. Universities can develop online offerings with content tailored to an individual’s needs. With the right mind set, and the vision to recognise what might be, we put ourselves in the best position to become the disruptor and not the disrupted.
If you would like to read more about digital disruption you may find this Guide by Anna Kucirkova useful.