3 major aspects of digitisation we always overlook

We all know that, as businesses, digitisation has been saving us all a lot of money for over two decades now. The main reason for that is pretty simple, it has allowed us to share information (between clients and co-workers alike) without the messenger and the recipient needing to interact in person. This was the result of the first decade of digitisation – a real ‘liquid content’ effect. Basically, it was great.

Our habits didn’t change all at once, but gradually, whole organisations began to change the way that they operated. However, it’s not all good news – especially if those managing the digitisation of an organisation don’t fully understand the process.

The economy of attention

Digitisation made it cheap to generate, publish and share ideas and content – it changed the world. Famously, Kleiner Perkins once predicted that the human brain – programmed to develop opinions and make decisions based on those opinions very quickly – is now tasked with deciding which of the many thousands of pieces of content they’re presented with daily is worth a closer look. Modern users are bombarded with so much content, they’ve developed a limited attention span. This just makes it harder to target the right audiences and provide content that is relevant and timely. From an organisational perspective, this applies not only to external advertising but internal communications as well.

We – CEOs, marketing executives, co-workers in comms, and people management professionals – spend a lot of our time working on product launches, advertising campaigns, internal communication and international expansion. Eventually, we begin to strongly believe that our message is an important one – whether it is or it isn’t. In most cases, our message will be ignored or skimmed over by the people we’re targeting.

And the man in the rain picked up his bag of secrets, and journeyed up the mountainside far above the clouds.

Those were lyrics to one of my favourite songs. Statistically, 70% of people reading this article will only skim read it anyway, so I can basically write what I like. That’s the point – most messages will go ignored.

Equal access to information

With access to so much information, consumers are now on a much more equal footing with organisations. As a consequence, organisations are having to invest more effort and more money into the development of better products, services and content. You can’t just plaster ‘best burgers in town’ on the side of your restaurant – any potential customer can just look you up on TripAdvisor and find out for themselves. This economic pressure to better their products and services has forced organisations, as a result, to be a little more creative.

• The problem: this is bad news for your average organisation. They end falling behind while their competitors work on creative solutions to solve the same business challenges they’re failing to face up to. Ultimately, they end up suffering from creative destruction.
• How to fix it: we need to focus on identifying how it is, exactly, our organisation, our message, our product or our service is solving a problem present in society, or concerning an individual. Organisations need to better understand what Google calls ‘micromoments’ – those moments in which a consumer makes a decision either to interact with or stay away from their brand.

The long tail economy

We’ve already talked about how organisations should be focused on developing creative and intelligent solutions to solve the ‘access to information’ issue. As a result, investments will become less effective – and organisations will need to expand their client base in order to remedy this. For example, Netflix makes just $10 per user per year, but yet they continue to make millions. A conventional movie rental business would probably make more money per user, but they’ll have fewer users. For many organisations, a long tail approach may be their only chance at success.

What is a long tail economy? It was a term coined by Chris Anderson, editor of WIRED, 15 years ago, at about the same time O’Reilly coined the term Web 2.0. It’s a strategy that involves targeting a large number of niche groups with your product or service. If we have to focus on one single aspect of digitisation, this is the one to focus on. Social media itself is an industry designed to allow us to capture the ‘long tail’ of users. Employee advocacy programmes allow us to engage with the ‘long tail’ of users who don’t trust traditional advertising. Everywhere you look – the long tail economy surrounds us.

• The problem: revenue per client is going to continue to drop. Digitisation erodes margins; to find success you need a strong economy behind you, or you need to become really, really efficient.
• How to fix it: by developing a more creative business model; looking beyond the short term and investing in new tools.

Expectation of personalisation

Digitisation has massively increased our expectations. We expect personalisation – not in all situations, but in most. We might not expect a personalised service at the cinema, for instance, but we’d certainly expect a more tailored approach from a streaming service. Fuzzy algebra (think ‘because you watched X, you’re 78% likely to enjoy Y’) has completely changed the way we consume media, buy products and choose service providers.

Those increased expectations have made it more expensive to sell to consumers in general. At one point in time, it was pretty cheap to make suggestions to consumers and adapt our value proposition based on their profile. Now, expectations have risen so high that this cheaper approach is no longer cost-effective.

The other side effect is that leaders within the consumer personalisation sector are influencing all sectors. Consumers wanting to invest in some insurance, for example, are comparing the personalisation experience offered by different providers, not with their direct competitors within the insurance sector, but with Google, Amazon and Apple.  

• The problem: selling the same, basic product or service without offering any personalisation, has become an almost impossible task.
• How to fix it: good personalisation requires a smart technological solution. It requires strategy and creativity. Organisations must focus more on product development and consumer experience, and less on sales.

The winner takes all effect

For many years now, I’ve been telling everyone I can find – at meetings, events, at home (yes, my family is very patient) – that digitisation has caused fragmentation across our audiences, channels, educational resources and interests. For many organisations, this fragmentation presented a new business opportunity – however, it’s an opportunity that won’t last.

In order to stay relevant and profitable in such a fragmented environment, you need to be both big and efficient – you need to aggregate a number of different fragmented services into your platform. FAMGA (Facebook, Apple, Microsoft, Google and Amazon) have made their mark on nearly every sector: FMCG, payments, hospitality, transport, advertising, entertainment, health, insurance, utilities…do I need to continue?

But the situation isn’t hopeless. It’s all just a matter of focusing on consumer needs and preferences, and ensuring that we have the data to back up our assumptions.

A solution to this problem is not easy to identify, and for that reason, we also need to invest more time into our employees – allowing them the opportunity to solve business needs and challenges in a more agile and creative way. The citizen journey should also be on our mind – organisations who develop products and services that contribute shared value, are guaranteed some level of success.

We call these kinds of organisations human-centred organisations. Becoming one is no easy undertaking, but we’ve developed a roadmap to help you get there.
Read more about human-centred organisations here.