We’re at the dawn of a new industrial revolution. And just as the steam engine and the spinning jenny transformed the world in the first industrial revolution, the new technology of this new industrial revolution will transform our world as we know it.
The seeds of revolution are all around us: More compute power now resides in each of our pockets than in the supercomputers of the eighties; we are rapidly approaching a point where each person on the planet is interconnected through a web of digital channels; billions of devices are capable of instantly uploading data about the device and its environment as an the internet of things; highly automated manufacturing plants will soon intelligently assemble custom products; and instant video communications now take place regularly around the world. All of these changes are already here.
Apple just announced that it has cumulatively sold more than 170 million iPads since the product first debuted in 2010. For context, if iPad Nation were a country, it would be roughly tied at No. 7 with Nigeria, set to eclipse Pakistan next quarter and Brazil the quarter after that.
This boldfaced proof of digital disruption’s power to upset markets has left companies in every industry struggling to keep up with a consumer population that is happily disrupting itself. For someone who spends his days researching digital disruption and modeling its effects, on the one hand, this is good news: Everybody believes in digital disruption. On the other hand, it raises a very real problem: Nobody knows what to do about it.
Today when I meet with companies bent on becoming digital disruptors, one of their first questions is no longer, "How much time do we have until we have to respond?" but rather, "How do we get started right now?"
There is no single answer to this. Some companies are best served by locating their disruption initiative outside the company in an innovation lab where it can quickly generate disruptive momentum. Others can get a boost of internal support by building an internal innovation team and drawing resources from a supportive corporate structure. And some companies can launch multiple focused disruptive initiatives across many different groups in the organization, each one tasked with a specific disruptive goal, as long as the culture of the company is ready to incubate the efforts.
Last week I was thrilled to attend and present at the annual Shop.org event in the great city of Chicago. I attended many great presentations, talked at length with the vendor community, and broke bread with some of my old eComm friends. One observation that was more apparent to me this year is the massive transformation happening in retail. It feels more dynamic than it did at the peak of the dot com boom of the late 90’s. For me there were clear trends emerging:
There is a palpable divide between forward looking retailers and those stuck in second gear. Going after incremental improvements such as checkout funnel analysis and improving page load speeds are still important functions, but these are now table stakes that most digital businesses employ. Forward looking retailers go beyond site optimization and look at advanced analytics, leverage social graph data to better understand their customers, and employ mobile strategies that add contextual relevance rather than simply emulate the website.
Omnichannel is the hottest topic, but it means different things to different people. The reality is most retailers fail to understand the complexity around creating a seamless experience for customers, and often fall back on defining their omnichannel initiatives as simply creating a singular presentation across all touch points. For organizations to truly support the needs of the customer, they need to focus on aligning supply chain, fulfillment, customer service, and operations around the specific needs of the customer. For instance, enabling the store associate to engage digitally-savvy customers requires new training, new technologies that facilitate assisted selling, and new compensation paradigms that reward the associate for driving sales in any touch point.
Watching Amazon.com cut the prices of last year’s Kindle Fire devices shortly after they debuted, you may have concluded that Amazon’s tablets weren’t performing well. You may have further speculated, as I did earlier this year, that maybe Amazon didn’t need to commit to the tablet strategy. After all, Amazon has a great relationship with its customers whether they’re on PCs, mobile devices, or iPads. You (and I) would be wrong. Today Amazon doubled down on a tablet strategy, announcing three new devices for sale later this year. A new 7-inch Kindle Fire HD (starting at $139), a 7-inch Kindle Fire HDX (from $229), and an ultra-skinny 8.9-inch Kindle Fire HDX (from $379). In one fell swoop, Amazon:
Commits to tablets as a way of committing to customers. Yes, tens of millions of people already have iPads, but another 40 million people in the US will get their first tablet between now and the end of 2016. And chances are very, very good that Amazon has a credit card on file with most all of them.
Summer's winding down and it's time for people to get serious about closing out the year and looking forward to a digitally disruptive 2014. I can tell because the phone is ringing off the hook these days and nearly every call has the same focus: What steps can we take now to get the jump on digital disruption?
First, I'm thrilled to get these calls because implicit in the question is the belief that digital disruption is real. I've found that to be the case in the many months I've been on the road speaking about my book Digital Disruption and calling people to adopt the digital disruptor's mindset. Very few people doubt the unique power of digital disruption, in fact, they often have better examples of disruption to offer me than the ones I came prepared to talk about.
But after the mutual thrill of excitedly comparing case studies, these conversations have rapidly settled down to the same question: What can we do about it? It's precisely in that spirit that Tom Pohlmann, Forrester's Chief Marketing & Strategy Officer, sat down with me to get the straight scoop on what companies can do right away to understand and act on digital disruption. The result is an 18-minute interview that we're serving up as a podcast under the Forrester Talks Podcast. You can either listen to the whole thing in one shot (episode 1) or consume it in bite-size, topic-focused chunks under episodes 2, 3, and 4.
I had the privilege of watching the recent NSA surveillance story unfold from my hotel room in London this June. Seeing the story from a decidedly non-American viewpoint got me thinking a bit differently about the implications for our society. From my point of view — no matter how you define the squishy and now beat-to-death “big data” concept — the NSA story has moved it from something “they use” to something that is uncomfortably close to where we live our lives. In other words, big data just moved in next door and is peeking over our fences into our living rooms. Eeek.
There are lots of socio-political issues with this, and I’m not even going to go there. However, the way that I see it, this incident will ultimately create a lot of opportunity for businesses savvy enough to get ahead of it the can of worms now squirming in our laps.
I think one of two things is going to happen. Either: 1) the US general public will shrug and go back to business as usual and this story will die, or 2) the public outrage will demand governmental oversight and accountability resulting in a tightening of our legal system. The latter case would be an example of how digital disruption, a topic we have written and blogged about for a while, is not just a business thing. It’s a cultural phenomenon that will rock our society for a long time.
For the history of humanity, for one person to make a difference, the individual had to convince many others to join the pursuit. And the convincing part was tough — whether you were Martin Luther or Martin Luther King, Jr., the amount of effort was high, and the probability of success was low. (Certainly the list of people who tried to change the world and failed is long; it’s just that we won’t know their names, which itself is part of my point.) From Christopher Columbus to Steve Jobs, individual power has really only amounted to much infrequently, and only when backed by very large and wealthy entities. Kings and queens financed the discovery of the Americas; Wall Street and venture capital bankrolled Silicon Valley.
I recently heard my all-time favorite excuse for why you can't disrupt yourself. It was in a session with 40 senior IT leaders of a Fortune 500 company including the CIO. Somebody brought up Uber and Airbnb, and most in the room nodded in agreement that a big company could learn a thing or two from these disruptors. That's when someone dropped my new favorite excuse: "But we can't imitate Uber and Airbnb because what they're doing is illegal."
Sure, it would be nice to just avoid taking the fast and bumpy road of disruption in favor of staying in the smooth parking lot of denial. But that's not really an option because the lessons of Uber, Airbnb, and other disruptors apply to everyone in every industry.
I don't mean to sidestep the legal question, but I do mean to point out that it's hardly the issue here. Uber and Airbnb are coming under fire because they're using cheap technology and existing resources to make their customer's lives dramatically better, one positive experience at a time. That's the real issue here, and it's the one companies of any size should focus on.
Welcome, graduates of the class of 2013, and congratulations. You are some of the finest students our system of education — no, our society — has ever produced. Rather than stand here and occupy your time with random inspirational thoughts, I would prefer to stand back and let you rush out there to disrupt the world into which you were born.
Unfortunately, you probably won’t. And that’s too bad because those of us who have gone before you really need you to disrupt things — which is ironic to say because we are actually the reason you won’t live up to your potential.
Now that I have your attention (and perhaps have primed the urge for an antidepressant), let me tell you why your future is likely so bleak.
You are among the world’s first fully digital citizens. You were born after the Macintosh IIx, Windows 3.0, and the launch of AOL. We now have the iPad, Windows 8, and Google Fiber. When you entered kindergarten, already 20 million US households were connected to the Internet, and by the time you started high school, that number had quadrupled to approximately 80 million. Oh, and in that year of high school, YouTube posted its first video and Facebook opened its social network to anyone with an email address; today, YouTube shows 4 billion hours of videos each month, and Facebook has more than 1 billion friends.
At Google I/O, the company managed to impress on a lot of fronts, enough that its stock began to climb as investors realized that Google is keeping up with — and in some cases, staying in front of — its digital platform competitors Apple, Facebook, and Microsoft. The new developer tools and resources announced will certainly lead to better apps, be developed more quickly, and be capable of generating more revenue. And consumer experiences in mobile, Google Maps, and the browser are about to get significantly more useful and elegant.
But one announcement debuted at I/O that doesn’t move the needle for Google — at least not as much as it could have — is the Google Play Music All Access pass. Despite the convoluted moniker, the service is straightforward: Pay $9.99 a month (in the US for now, more countries to come), and you’ll have unlimited access to a cloud-based music library with intuitive features that allow elegant discovery, consumption, and sharing of music.
If it sounds familiar, it’s because it is. The service can’t differentiate on its music library because the best it can do is license the same library that Spotify and Rdio already offer. All Access also creates playlists for you based on your music tastes as expressed by you directly or learned from your listening patterns and friends. That should also sound familiar because the same value is contained to various degrees in Pandora, iTunes, and Amazon Cloud Player.
Bottom line: Despite working really hard, the best that Google can do in music is to catch up to everybody else in the field. And that’s precisely what the company has done.