Monday’s The New York Times offers a defense of authors’ rights from bestselling author and head of the Authors Guild, Scott Turow. In the piece, Turow interprets a Supreme Court decision that allows the importation of books purchased abroad for resell in the US, making it seem like all of Western culture would henceforth be at risk. Later the same day, I read a brief statement from News Corp in which the company threatened to make the FOX broadcast network a premium pay channel in order to get its just compensation for its creative works ahead of the likely decision that Aereo is not illegally capturing and restreaming broadcast content.
These individuals and organizations have the right to do what they feel they must as they pass through the phase known as denial. But may I offer this one small suggestion to help them through the stages of grief yet to come: Stop pretending that the foe you face won’t eventually win because it will. That goes for all of you. Digital disruption will eliminate your structural advantages someday, too.
We’ve been through this before, dating back to the first time the music industry sued someone to prevent the future. No, it wasn’t Napster or the users of BitTorrent in the 2000s. It was actually Diamond Multimedia, makers of the new PMP300 MP3 players, and the year was 1998. The argument then was the same as it is today: We, the people who currently benefit from an artificial monopoly in either the creation or distribution of value, don’t want that monopoly to end.
After traveling 5,000 miles in three days to speak about digital disruption (I know, it's odd that my physical body has to go somewhere to talk about being more digitally disruptive), I fell asleep on a train yesterday and missed one of the most noteworthy events of the week: Amazon acquired Goodreads.
Full disclosure on this one up front: Amazon published my recent book, Digital Disruption. At the same time, I am a Goodreads member for more than five years; in fact, if you have read any of the most-liked reviews of the Twilight books on Amazon, chances are good you've read mine. That is to say that I am not exactly neutral on this one. But I'll do my best to be objective in answering all the anger being expressed on Twitter and in the trades when I point out that Goodreads was not saving itself for Amazon like some virginal tribute. It has been sitting there, all along, waiting for the right offer to come along. That's how venture capital works, people.
That's not to dismiss altogether the reactions I'm seeing, which range from Amazon wants to own the whole world (and to be fair, maybe it does) to How could Goodreads do this to us. But among all the hurt feelings and handwringing about the fall of publishing and the eventual reign of cohabitating cats and dogs (oh, I do hope you get that reference), I have an important question to ask, one that I am stealing from author Nick Harkaway (@Harkaway) who wrote this on Twitter the morning after:
I recently completed James L. McQuivey's Digital Disruption, which is well worth the read if you have not yet gotten your hands on a copy. The book analyzes factors that allow for the emergence of digital disruptors — individuals who are pushing the envelope of product efficiency by harnessing available digital capabilities. In the book, James mentions that most digital disruptors are under age 35 because these individuals were “the first to grow up in a consumer economy where free things were not simply promotional tools . . . [they] internalized the idea of free from the consumer side, which led to the kinds of rapid digital adoption curves that run through the body of digital disruption like arterial supply lines.”
This is an intriguing point because it hints at young consumers’ evolving expectations of free tools and content. For the upcoming generation, the capacity for digital productivity and entertainment free of charge is less of a privilege and more of a norm. Today, consumers can get what they want quickly and cheaply; therefore, they expect that their needs will be met faster and more frequently than ever before.
This idea is particularly relevant when it comes to mobile interaction. The overwhelming majority of consumers say they only access mobile application content for free. Analysis of Forrester’s Consumer Technographics® data reflects this sentiment: While some consumers state they may pay a one-time download fee for gaming or music apps, most would exclusively choose free media:
Mobile has gotten a lot of attention at banks recently. In fact, other teams in a firm’s organization are starting to feel like Jan Brady, the voices in their heads chanting “Mobile Mobile Mobile!”
But there’s good reason for the increased focus on mobile banking efforts: mobile is the most important strategic change in retail banking in over a decade. It is shifting your customers’ behavior, raising customers’ expectations, and opening up new opportunities for banks, their competitors, and new disruptors.
So how can strategists at banks assess the current and future state of the mobile banking market? How can they plan their own mobile banking roadmap? What do they need to successfully execute these plans? And how will they continue to improve and enhance their mobile offerings going forward?
Forrester’s new Mobile Banking Strategy Playbook seeks to answer all of these questions, drawing on mountains of research and deep dives into data in order to give eBusiness teams at banks a complete framework for building and maintaining a world-class mobile banking strategy. The playbook will include 12 chapters (plus an Executive Summary) that cover different aspects of mobile banking – and many of those chapters are already live. These chapters outline how to develop a successful mobile banking strategy. Specifically, we recommend that mobile strategists at banks:
Leading-edge executives at organizations drive growth, innovate, and disrupt industries through emerging technologies: social, mobile, cloud, analytics, sensors, GIS and others. 85% of executives in a recent survey shared that “the need to drive innovation and growth” would have a moderate or high impact on IT services spending. But, today’s technology buyers face a fragmented, fast-moving landscape of niche technology and services providers in newer spaces (social, mobile, cloud) as well as new offerings from their largest global partners.
Often the leading- and bleeding-edge disruption comes from business stakeholders, rather than IT or sourcing executives; sourcing executives struggle to keep up with the fast pace of change that business demands. Our research shows that this fragmented, divisional, silo approach to buying (often under the radar screen) can create risk and go against enterprise IT strategy decisions.
To help their organizations navigate through these emerging options, we have identified three key principles of IT sourcing strategy:
Change the rules for working with vendors and partners. To thrive in the world of digital disruption and to enable sourcing of emerging technologies and services that drive digital disruption, sourcing strategists must create new rules for working with technology partners. They must increase the emphasis on innovation and differentiation and treat partners who excel in these dimensions differently from other tiered suppliers.
In years past, technology trade shows like CeBIT or its cousin in the US, CES, have been a place for the introduction of new devices. Whether it was Nokia introducing its comeback phone or Sony pushing 3D displays, computing technology and consumer electronics companies have used these shows to introduce the next big thing.
But what happens when the next big thing isn’t actually a thing but is, instead, the arrival of platforms that enable a more effective marketplace? That’s the shift that’s occurring in the world, thanks to digital disruption. Under digital disruption, companies innovate by using cheap (sometimes free) digital tools and exploiting digital platforms to change products as low-tech as the toothbrush or waterless hand soap. They also use those digital tools to alter the way they make and deliver their products and services, including things as analog as fingernail polish, something I heard about today and will blog more on in coming weeks. As a result, every company is now digital, no matter how physical their processes and outputs.
Digital disruption means that the technology companies that provide these digital tools and platforms have more opportunity than ever. Their devices and systems will be necessary in the lives of every consumer as well as every enterprise. Witness the amazing growth of Amazon Web Services as it enables businesses across the gamut with its cheap access to storage and delivery tools.
Once upon a time, you could trust that your business was insulated from disruptive innovation because only people already in your industry had the skills and the tools to try to change your industry. Thus, McDonald's competed with Burger King, Crest competed with Colgate, and Dell competed with HP. When innovation did arise, it came from companies that had similar economics and were evaluated by Wall Street using the same criteria. That meant that competition, although fierce, stayed within fairly defined boundaries and real surprises were few.
Digital disruption will change that -- or already has, depending on your industry. Under digital disruption, any company of any size can make a play for your business. That's how the Zeo sleep monitor, a $100 device that can monitor your sleep nearly as effectively as a $3,000 sleep lab visit can, potentially disrupts research hospitals, the makers of sleep meds like Ambien and Lunesta, and eventually the insurance companies that have an interested in promoting your health. That's how Amazon is now a major competitor for TV show pilots, using its vastly different economics to justify buying shows that would normally have a narrow set of bidders among broadcast and cable networks. That's how startup software companies are building apps to insert themselves into consumers' lives in ways that bigger companies should have done first by offering menstrual cycle tracking, DIY home improvement cost estimating, and weight loss monitoring.
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.
It’s that time of the year: the pilgrimage to the Mobile Mecca, Mobile World Congress (MWC), in Barcelona. This is my 10th pilgrimage in a row and, needless to say, the event has changed tremendously over the past few years – from 3GSM in Cannes to the new venue in Barcelona this year. While CTIA is still very US-centric and CES is still a lot about TVs, MWC is really the only global mobile event with a strong presence of operators and handset manufacturers from all over the world. Every year the show becomes not only more global, but also more open to new categories of players — such as advertisers and developers — willing to make the most of mobile technologies, and more open to connected devices that go far beyond the traditional definition of a mobile phone. Markets are colliding and mobile innovation is at the center of these upheavals. MWC used to be a telecom show focusing mainly on mobile technologies, but the event is now bringing together people from every industry.
In the light of today’s first announcements, here is my take on how to put in perspective the announcements to be made at MWC 2013 in the coming days: