The Digital Transformation Series – Part 2 – Technology-Led Disruption

A transcript of part 2 of 6, from the Digital Transformation series, produced in partnership with the Business Transformation Network. Video: https://www.thebtn.tv/exclusive-content/video/technology-led-disruption-chris-micklethwaite

[TRANSCRIPT]

Introduction

Hello I’m Chris Micklethwaite, I’m founder and principal consultant at 3pointsDIGITAL. I’ve spent my career in technology, working with web and customer-facing technologies, and using technology to help find efficiencies in business, and that help people collaborate and work better together.

What I’ve learnt from the businesses I’ve worked with is that technology alone can’t make a change in an organisation; to use technology effectively to help people to become more productive, and for an organisation to better connect with the customer requires fundamental changes in people, skills, structure, approach and culture. I founded 3pointsDIGITAL to help businesses of all types tackle these challenges, and the challenges and opportunities from balancing three points of a triangle: Customer, Business and Technology.

In this series of videos we will to explore this type of technology and the permanent changes required in an organisation to adopt, use and generate benefit from it, which in short is called digital transformation.

We’re going to talk about digital disruption, what characterises digital native businesses and what we can learn from them, and how to create a digital strategy and embed change in your business.

What is driving disruption?

In the first part of this video series we talked about digital transformation, and the need for businesses to change how they operate, and how they should adopt technology. That need has come from the rise in technology-led disruption across industries since the early- and mid-nineties.

What’s really driving that? Well, if you look at the world’s most valuable companies today, 6 of the top 10 are technology businesses, and there are a few related factors and trends that have emerged with them in the last 15 years; One is of course the internet, and the other is the relative power and cost of technology. For example, in 1980 the cost of a gigabyte of storage was $1m, and now it’s 2 cents. This is an exponential change; you may be familiar with Moore’s law which basically states that processing power and capability of computing doubles every year for the same relative cost. Think about the Apple watch for example – there are 3.2 billion transistors in the Apple watch 3 – and we can now carry that immense computing power around with us at all times.

So the internet, computing power, relative cost and consumerisation of technology, especially the growth of mobile, has been fuel to the fire in the growth of digital.

What it *really means* is that digital products and services – and when I say digital product and services I think of something like Spotify or Uber – can scale in ways that was unheard in the industrial era. Companies like airBnB have been able to scale globally in the space of the few years, because their product is based on a digital platform. And not only do they have the ability to scale a digital platform at speed, and add new customers for marginal cost (close to zero), they can also quickly develop entirely new products and services in the digital domain.

So *that* means there are new business models, and we call them platform business models – and usually they feature two-sided networks. Let’s take the example of Uber. Uber provides an app to drivers who want to provide a taxi service – the drivers provide manpower and a car – and they let Uber know when they’re available to take a passenger through the app. Then Uber, at the other side of the two-sided network, provide an app to consumers, [in this case] people that want to make a journey. They can locate a taxi, and as the app knows where they are, they can look for the nearest taxi and book it quickly and easily. Revenue flows on both sides of that network, and because it’s a purely digital platform it can scale, and scale, and scale….

What does disruption mean for businesses?

For all businesses we have to start thinking about how customer expectations have changed. This explosion of technology – the consumerisation of technology, mobile, the convenience, these new digital products and services, are constantly raising expectations. We have to think about the opportunities to augment traditional products and services with those kinds of experiences. Digital allows us to do this, to be closer to our customer, to know our customer and to ultimately connect better with each and every customer, and make the most of the power of their network as well.

So, some good examples? One is Starbucks order and pay; A traditional coffee shop now has an app where you can locate your nearest Starbucks, order your drink ahead of time, it’ll be waiting for you when you arrive, you pay on your app… all fantastically convenient. You get a good quality product at a time that you expect it, and also Starbucks is building loyalty through their app and through all the customer data that they’re collecting (with your consent of course). Another good example; Amazon perhaps an obvious one (as the rise of Amazon is relentless and is disrupting industries everywhere) but even Amazon B2B has grown from 200,000 customers to a million customers in Europe in less than a year. And that platform, the B2B platform, takes all of those customer expectations that were set and developed on the *consumer* platform, from one click ordering in 1999, through their ‘Fulfilled by Amazon’ service, through to prime delivery. All of those customer promises that were made and delivered upon… all those expectations of how you receive product and service from Amazon…. only serve to raise the bar for everyone else.

So we have to find a way to respond to those kinds of challenges, and tackle the digital opportunity, and that’s really important for businesses in todays world.