How global brands are impacted by digital disruption
In his new book, Digital Darwinism, Tom Goodwin identifies the typical patterns that businesses go through when new technology emerges. He sets out a challenging vision for change to help existing companies understand, adopt and work with digital transformation.
Where should major brands make a start in changing their thinking and embracing real digital transformation?
We may need to accept that more radical solutions are a more likely way to find success than we currently think. Companies need to look at all their attributes, the good the things that are useful about their past, brand and assets, and then identify all the things that they wished they had. Then, and this sounds quite simplistic, try to create a best-of-both approach.
BMW is an interesting example: with the I-Series they were able to combine a lot of engineering talent from one world with the working culture from the new one. When you look at what Netflix did in self-cannibalizing its own business to build for the future, I think that more aggressive, existential and almost violent, risky approach is going to be the way for many companies to build forwards.
There's an idea you’ve referred to previously that it’s not necessarily pursuing shiny, new technologies that unlocks most potential, but instead we need to derive more benefit from existing technology. Do people hear the word innovation and immediately think ‘new’ rather than ‘change’?
There's a lot more potential to realise in existing technologies. One of my favourite diagrams in the book is a quadrant of Profound vs Gimmicky and Easy vs Hard activities.
We tend to do things that are profound and easy first, which makes sense. We then go to gimmicky and easy rather than profound and hard, and that makes sense again. There's no blame attached to this. If I was the CMO and I could get a bit famous spending $25,000 creating a vending machine that gives you a can of Coke if you smile, then I'd probably do that.
Actually going to the factories and changing the way the sensors operate so that you can make 10% more Coca-Cola per hour, that's going to cost way more money.
We tend to focus on change we can bring about more quickly rather than change that matters, or get to grips with technology that’s already here. The Gartner Hype Cycle is one of the worst things I've seen because it means everyone says: “Right, what are we doing about drones?” when for most companies that’s irrelevant. We plot far-away technologies and lose sight of important or useful things: I should be able to change my flight on my phone with two clicks, and I should be able to take out a mortgage with three clicks.
We’re nowhere near understanding the potential of the technology we have already.
Speak to customers to ask what would they’d really like. Train passengers would probably want power sockets and good wifi on trains, but if you asked a train company about technology, they'd probably be doing something unnecessary like virtual reality headsets to train engineers.
New technology often gets absorbed into old ways of doing things, which seems to lessen its impact. Why are we so bad at changing in a meaningful way?
Media is a good example of this. The very first radio stations were just people reading the newspaper on air. The very first TV shows were just theatrical plays with a camera in front of them. I get pitched pretty much every week by virtual reality shopping companies where you go into a virtual shopping mall in a virtual reality headset. We need to get away from this idea of making a digital equivalent. Are there going to be crying babies in the virtual environment? That's how human nature works - every time new technology comes along, in our rush to try to understand it, we fit it into the containers that we’re used to.
Does our traditional approach to solving problems also inhibit our ability to find new solutions?
We live in a world of specialists, which impacts our approach to solving problems. I work for a media agency: our job is to buy media. There's a mobile agency, so it's their job to make mobile solutions. There are management consultants and it's their job to look at processes. By the time we ask a question and talk to someone about it, we've already decided how that question should be answered.
In trying to adopt new ways of thinking, some established brands are buying or hiring in innovation (Unilever & Dollar Shave Club, adidas & Carbon). Can that work or will they end up killing off the spirit of innovation?
It depends how they do it. Normally when they buy these things and leave them alone, they do quite well. But that’s like me buying shares in Amazon in the knowledge that that business is going to do well. If you leave them alone, there's a degree to which it’s just a financial vehicle.
Generally speaking, I'm surprised how small most of these projects are. They tend to be in the quadrant of easy and not particularly profound. They always feel quite small and quite gestural, but there needs to be more of a culture where companies want to invest more, make bigger bets and really nurture these ideas themselves.
There's an interesting job to be done in genuinely listening and asking: “What do people really want, what things do people need in their lives?” I love the idea of companies thinking about the role they play in our lives. If you think of a bank’s role as providing credit cards for people to buy things, that's not that exciting. If you think of them as being your partner in financial health, that then allows them to do more.
If you go through the process of asking “Why does this company exist?”, it’s empowering because it makes you realize what you have a right to do and what you don't have a right to do. So does AirBnB have a right to be an employment agency? Probably not, but does it have a right to provide amazing gastro tours? Probably.
In some companies, do you feel there are structural or institutional factors that inhibit change, whether that’s investor pressures, senior management with share options, or certain corporate targets…
I don't think anyone can really criticize the people that lead these large companies, because huge change may not be good for them personally, and also probably wouldn't be good for shareholders.
If you’re in a very big company, there's a mentality of trying to hold on for a long time. It’s not that these people are doing the wrong thing, but it would be nice to give them a toolkit to be able to provide more positivity. SoftBank is a good example of this. They use their assets, experience and wealth to create new entities that become the growth engine. If you are a car company, could you be investing in battery technology that might actually go beyond cars to power homes? They need to get a bit more imaginative about how they create growth.
Where are the big opportunities for companies to use technology in the future?
They're going about it the wrong way if they focus on a specific technology. If the challenge is “how do we create a more secure data structure”, that's a great question to ask. There are lots of solutions to that problem, one of which may be Blockchain, but the moment you start thinking “What do we do with Blockchain?” you're going about things the wrong way.
Oddly, I don't think that Blockchain itself will be particularly profound for companies, but the way that it's become a big brand creates an environment where CIOs suddenly have permission to get $20m worth of CapEx to do something new.
If you were speaking to CEOs now, where would you tell them to start?
The first step is to create a culture of honesty where people accurately assess the situation they’re in. I sit in a lot of meetings and see how corporate culture rewards people who say ‘yes’ and are compliant. You can frame data in any way you want. I’m sure there were people at Blockbuster who were saying, a week before it went bust: “Everything’s fine, look at our Diet Coke sales going up.”
It’s important to keep the digital transformation idea in context. You’ve said a few times that despite the general perception of the world changing faster and faster, for many people, their lives feel the same as they did a few years ago. Is that paradox something we need to be mindful of?
I’ve realized that most of the things that matter in life are not really changing on a monthly basis. The world is not that different from the moment I started writing a book to the moment I stopped. If I compare the way I live my life today compared to four years ago, I can’t think of a single app I’ve downloaded that changed things that much.
There was an amazing period between 2006 and 2010 when a lot of things changed. What was significant was the smartphone arrived: Venmo, mobile banking, Uber, AirBnB, Facebook, Skype and Tinder all came along. A lot of the things that have genuinely had a profound impact on people came along over that period. We need to be careful and aware that actually we haven’t seen that much change in the last five years.
There are some powerful forces for good with new technology, but we also have to be very careful how we use the ones that could be quite destructive. It feels like we're in one of those adventure games where we've collected all the tools to do well, but that we might make some bad decisions before we get it right.
Tom Goodwin is the Executive Vice President and Head of Innovation at Zenith Media. He is the #1 "Voice in Marketing" on LinkedIn, and has been named one of 30 people to follow on Twitter by Business Insider, and a "must follow" by Fast Company. An industry provocateur, keynote speaker, and commentator on the future of advertising, marketing and business.
His book, Digital Darwinism is out now, published by Kogan Page.