Today, Barnes & Noble revealed the details behind the company's prior warnings that things in the holiday quarter didn't go well. Specific weak spots are appearing everywhere for the company, in its retail business, in its college store business, and in its Nook device business. Even the growth in sales of media for Nook devices, at nearly 7% over the same quarter in the prior year, was not growth enough to inspire confidence. Especially given that future sales of electronic content depends on robust sales of the hardware itself.
The company's dilemma will one day be a classic case study of the effect of unrelenting digital disruption, both how a traditional company can innovate under digital pressure as well as how hard it is to steer such a traditional ship in a digital direction. At this point, no single recommendation, no matter how digitally disruptive, will fix the company's problems. But once the company gets through the widely discussed option of splitting the company into two units -- the retail arm (with website) that company chairman Riggio wants to buy and the Nook unit (with college business) that Microsoft and academic publisher Pearson are already invested in -- there will be a chance on both sides to practice a fundamental tenet of digital disruption: openness.
Oreo’s recent quick-thinking “Dunk In the Dark” response to the power outage at this year’s Super Bowl put the spotlight on real-time branded content and reinvigorated the discussion about how brands need to become not just publishers but newsrooms. What’s driving this need? Today’s perpetually-connected consumers — 42% of US online adults and 37% in Europe — can engage brands at any place, any time, and at any velocity. Because of this, the sheer volume of creative content that brands must now churn out is forcing marketers and agencies to reexamine how they think about — and how they resource for — content. This challenge is not to be underestimated. But before you think about scale and real-time response, think about the story you want to tell to create brand advantage. To do this well, you need to first be true to yourself, second know your audience, and then engage your customers with a good story:
Know who you are. There’s a lot of content out there you can develop or share. So where do you start? Start with your brand. Guide your content development by your brand’s North Star, and make sure there is a logical connection between the content and your brand.
Yesterday The New York Times picked up the hopeful news from the global music business that the revenue free-fall from $38 billion a year more than a decade ago appears to have stopped at $16.5 billion, leaving the industry at less than half its pre-digital size. This bottoming out of the revenues will come as some relief to industry executives who have wished and prayed for this day because, until it actually arrived, nobody knew for sure what type of revenues to expect in the future. That can make running a business pretty tough.
The music industry is everybody's favorite example of digital disruption done wrong -- including mine, since I covered music for Forrester several times. I have some classic stories I could tell to illustrate the point about executives who believed that suing customers was the path to profitability and so on, but I'll spare you those. However, as the author of a book called Digital Disruption, I actually owe it to the music industry for teaching me a few key principles of how to manage digital disruption:
At first impression it may feel a bit wrong to publish a book called Digital Disruption in a form as old-school as a hardcover book. In fact, as I’ve traveled around talking about the book, several people have half-jokingly suggested it was hypocritical to do so. I have taken the ribbing with a smile, but when people have the time and interest, I explain to them that publishing in both eBook and hardcover is exactly what digital disruption requires.
Some erroneously assume that digital disruption only applies to cases where digital products replace physical ones. It’s true that when mobile banking replaces teller banking or digital music wipes out CDs, we call this digital disruption. But as I show in my book, there are many more ways that digital disrupts, ultimately creating more disruptions, more rapidly, in more industries, including – as I write in the book – industries as analog as pharmaceuticals and military camouflage.
The travel poster might read something like this: “Satisfy your thirst for adventure on the newest frontier with a luxury, guided expedition to the latest exoplanet.” Like just about everyone else on this planet, you’ve probably seen, heard, or know something about the film Avatar. What you may not know is that Pandora is based on a very real and recently discovered solar system — Alpha Centauri.
It has about the same mass as Earth. Like Earth, it circles a star. And at a mere 4.4 light years away (just a hop, skip, and a jump in astronomical terms), it’s close enough to make an interstellar journey feasible. While Alpha Centauri isn’t habitable (minor detail), some of its neighbors might be. As intriguing as such a journey would be, it would also be daunting. It would require an in-depth analysis of a constellation of factors. And it would mean asking and answering a litany of questions. What would a successful journey look like? What would it take to reach the destination in terms of technology? What kind of budget would be required? How do you convince early voyagers that a trip to Alpha Centauri would be the best journey of their lives and answer their WIIFM (what’s in it for me) questions?
Wednesday night, Sony hosted what was reported to be a crowd of more than a thousand people at a rare, Applesque new-product demo. There it debuted the next-generation Playstation, officially dubbed the PS4. The event lasted two hours and featured some of the most accomplished game developers in the world, all on stage to promise that the PS4 was going to make gaming even more lifelike, more responsive, and more addicting than it already is.
I could have saved the company the two hours and the cost of hosting the event. Because boil Sony's announcement down to its essence, and you get these simple words: Sony believes the future will be like the past and has built the game console to prove it.
Don't get me wrong; the console is definitely next-generation (or at least, the specs are next-generation, since the console itself did not make an appearance at the event). It has stunning graphics and the kind of processing power necessary to create lifelike movement and even give game characters artificial-intelligence capabilities that should make hardcore gamers hungry with anticipation for the end of the year (the most specific Sony got about the release timeframe).
I am excited to announce that after more than two decades as an executive and leader in digital marketing, eCommerce, social media marketing, and business technology, I have joined Forrester as a Vice President, Principal Analyst serving CMOs. One of the main reasons I decided to join Forrester was that I had been a client for more than nine years and had great experiences using Forrester reports and analyst interactions to achieve my business goals and objectives at Newell Rubbermaid and US Department of the Treasury, IRS. My relationship with Forrester goes even further back, as I briefed Forrester on my Intel and Dell products and technologies back in the 1990s. Also, it turned out that I knew more people at Forrester than any other firm . . . so as the old saying goes, I liked and respected the company so much as a client that I decided to join.
Another reason I joined Forrester, and the most important one, is to help CMOs and senior marketing executives solve problems in marketing to today’s consumers. In a world of digital disruption, ultra-connected consumers, and an ever-evolving customer life cycle, the challenge and complexity of marketing to consumers has never been greater. I believe that to overcome these challenges, CMOs are going to have to accelerate their innovation efforts and become digital disruptors in their target markets to succeed.
With that in mind, here are some questions I will be working on as I research CMO-led marketing innovation:
How do CMOs define marketing innovation, and what role are they playing in driving it?
How do CMOs drive innovation in different organizational cultures, ranging from experimental to risk-averse?
What models, processes, and frameworks are CMOs using to drive marketing innovation?
What are CMOs budgeting for innovation now, and how much do they expect to grow their innovation budget in the future?
When companies adopt digital, they do old things in new ways. When companies internalize digital — make it part of their mindset — they find entirely new things to do and new ways to do them. They become digital disruptors, and they swiftly go on to take over the markets they set their sights on.
The best proof I have of the power of mindset to put a company ahead during an era of transition has nothing to do with digital or even business. The evidence comes from the Comanche Indians, who dominated the American Southwest through the 1700s and most of the 1800s because of a spectacular new technology they not only adopted, but internalized: the horse. As perfectly described by S.C. Gwynne in his bestselling book, Empire of the Summer Moon, dozens of tribes across the Great Plains had horses. But most of these tribes saw the horse as a new way to do an old thing: to get from point A to point B. Just faster and with more things in tow.
Comanches, on the other hand, internalized the possibilities of the horse, aligning their entire “business” around them. That mindset opened them to new possibilities that others missed. They became skilled breeders, they rethought their cultural practices and values, and they tested the limits of horses to see just how far this enabling technology could take them. For most of the 1800s, Texas Rangers and US Army majors struggled in vain to subdue the Comanches.
I love the Oscars with all of its glitz and glamour, celebrating the year’s best films. And while this year’s crop of Lincoln, Argo, and The Silver Linings Playbookare all great films, one of my all-time favorites is still Moneyball. Although the discussion about the Moneyballstory isn’t new, it’s still a great lesson of what we can learn about using data and insights in new ways to change the game. Billy Beane harnessed the power of data based insights to assemble a winning team. He ignored the conventional measures of success — batting averages and stolen bases — and hired a number cruncher to rewrite the rules of the game. By applying data-based insights to day-to-day decisions, Beane stacked up win after win, ultimately challenging the American League record for consecutive wins.