4 things CxOs must do to defy digital disruption
There’s no doubt that the pace of digital disruption is only accelerating. Companies that are not already making aggressive moves to keep up are at risk of being left behind by competitors. But, these digital innovations themselves are not enough. Companies also need to look at reimagining their customer experiences to fully take advantage of their digital investments.
We’ve seen these scenarios play out before; Netflix delivering a better entertainment experience that eventually drove Blockbuster out of business; Skype reinventing long distance; and of course, Uber offering customers a better transportation experience than many incumbent taxi companies.
The recent announcement of Amazon Go carries huge implications not just for retail, but for all industries. Amazon Go is a brick-and-mortar grocery concept designed to enable customers to shop and exit without ever having to engage with cashiers or self-service payment kiosks. By using the Amazon Go app when you enter the store, you can take goods off the shelf, keep them in your cart or put them back. When done, you simply walk out the door with your items, at which point Amazon calculates your total and charges your Amazon account – all automatically and without human intervention. Amazon has already opened the first store in Seattle in beta mode for employees only.
What’s most fascinating is how disruptive companies fundamentally reimagine their customers’ experiences end-to-end to eliminate unenjoyable parts of experiences and improve customer outcomes.
So, why didn’t incumbent supermarkets come up with Amazon Go?
Grocers, as well as other types of retailers, have been striving to deliver better customer experiences in a myriad of ways. Some retailers have sensors in the floor alerting store managers when wait times exceed a threshold so they know to open up new check-out lanes.
Other retailers have introduced mobile apps to help customers locate merchandise and use electronic coupons. A recent study by IBM’s Institute for Business Value, The experience revolution – The game is on, more than 80 percent of companies surveyed across all industries are planning to implement mobile apps that customers can use in their stores or locations, as well as mobile payment options.
But by themselves, these digital innovations may not be enough because they do not fundamentally reimagine the customer experience.
What do incumbents need to do? Four things:
1. Recognize that digital disruption is a real possibility.
The threat may very well come from outside your own industry and that it might come suddenly and quickly. Remember how quickly Blackberry and Nokia struggled after the launch of the iPhone.
2. Treat the threat as an opportunity.
It’s a provocation for action and an opportunity to galvanize your team to think bigger and move faster. Some companies have hired Chief Digital Officers to spearhead innovation and customer-centricity efforts, but ownership for reacting to the threat of digital disruption requires a shared approach across the C-suite.
3. Recognize that you don’t have to solve the problem on your own.
We see companies forming ecosystems of partners and learning to leverage others’ assets. For example, Alibaba, China’s largest e-commerce player, operates a merchant marketplace and owns no inventory. We also see some companies embracing the start-up mentality by opening offices in Silicon Valley, working with incubators and creating venture funds.
4. Most importantly – impose a customer-centric lens on all your activity.
Ask: Are we solving the real customer problems at the heart of our business? Doing so often requires companies to think about and reinvent the customer journey end to end. What we see from Amazon is a far-reaching attempt to eradicate key friction points by completely redesigning the customer experience from the customers’ perspective. While incumbents often aspire to do the same, their efforts can become bogged down with legacy considerations that they feel limit how much they can change.
However, to stay competitive and thrive in the years to come, we believe these companies need a fundamental customer experience re-think, or they too may fall victim to disrupters.