By the end of 2013, those who have grown up with digital started to outnumber those who’ve had to adapt to it. They’re running their lives on smart devices, on the move, and connecting in real time, and they expect the organisations they work for, buy from, and interact with to be able do the same.
The complex algorithms and ultra-high broadband speeds that make this possible are putting an unprecedented amount of technology in the hands of the customer, and with that technology comes a new power, and the ability and willingness to use it – posting on review sites, and exploiting the visibility of social media to demand better service (and getting it) is really only the beginning.
On the flip side, the same new technology is also enabling companies, governments and other organisations to process and exploit extraordinary amounts of data almost instantaneously. Add to that the sheer capacity of cloud computing, and the opportunities for profitable growth and game-changing innovations are almost limitless.
Who knows, digital may even help us solve some of the planet’s most intractable challenges. It increases the number of voices informing the decisions, as social media allows companies to harness the ideas and opinions of an entire organization of people. This in turn changes the very structure of how people are managed, how their expertise is used and enables organisations to have a workforce as agile as their customer base.
Until now, the approach many businesses have taken to digital has been largely short-term and tactical - the development of new e-commerce sites being the most obvious example. And yes, running an efficient e-commerce operation is important, but it’s only the first in what we believe will be three distinct waves of digital transformation.
In the second wave, digital will no longer be just another channel for the existing ‘economy of products and services’. We’ll see the wholesale digitisation of some markets – as is already happening in books and music – and the development of completely new offerings driven by the enormous potential for personalisation which ‘big data’ provides. Companies will be able to tailor what they offer to match what their customers want to achieve – whether an experience, a goal, or a personal change.
We call this the ‘economy of outcomes’. One of the key things to remember about an economy organised this way is that any particular ‘outcome’ might span a number of different suppliers, or even entirely different sectors. So those businesses that have the imagination, the reach, and the network to do this for their customers will gain enormous advantage. As the economists would say, it’s not just the supply side that’s being revolutionised by digital; demand is re-booting too.
This is what we’ll see in the third wave, as customers start to manage and exploit their own digital identities, and not just individuals, but businesses and organisations as well. This will drive enormous change across all sectors such as: Automotive, Banking, Entertainment, Hospitality and Retail. In other words, it will fundamentally challenge the business model of almost every organisation.