The world’s largest Digital Marketing Conference, &THEN, has just taken place in Vegas. Among the hundreds of keynotes and seminars, there was one in particular that stood out. Warren Kornblum, the former CMO of Toys “R” Us, shared his learnings from the disappearance of a global brand.
Kornblum highlighted a number of early warning signs:
Losing sight of and touch with your customer
Refusing to accept change
Refusing to embrace technology
Assuming that past greatness will guide you into the future
Falling in love with your product or service - not your customer
Only managing the business you are, not the business you’ll become
When leadership thinks you’re too big to fail
Each one of these points is interesting enough for their own article, but we’re going to start with the one that’s closest to our hearts and a frequent reason to frustration; company’s refusal to embrace technology.
Among the companies we’ve worked with, we’ve noticed that new technologies rarely get examined with the same level of scrutiny as other high impact trends. When it comes to regulations, consumer behaviours, market trends and other areas that give us good predictions for the future, companies tend to follow a strict process to evaluate their impact and likelihood. When it comes to new technologies, it appears that much less due diligence is applied. Even though digitalisation has been top priority in every business strategy for the past decade, the level of research for suitable technology solutions still seems to be on a basic level. If research has been carried out it’s often enough for someone to have read about a technology on the latest Gartner Hype Cycle, or have a strong gut feeling, or even just “this seems like a cool solution”. You might think we’re exaggerating, but we’ve actually seen these situations play out.
Why does this happen? Well, there are probably a number of reasons. And that’s not what we think is most interesting to focus on. Instead we want to shed some light on a better way to structure your technology selection process.
We recommend that new technologies should be evaluated from three different perspectives. None of which require huge amounts of effort, or high levels of expertise to carry out - but we promise that they will give you a stronger connection between technology investments and business results.
So let’s go!
1) Likelihood - and how to predict it
How likely is a particular technology to survive the Hype Cycle and become a game changer for your industry? In some industries, that can be a “billion dollar question”. When the stakes are that high, it’s paramount that our strategic business- and technology decisions are based on more than just our gut feelings.
Luckily, there is a way to significantly increase the accuracy of our predictions. It’s called Bayes’ Theorem. In a nutshell, Bayes’ Theorem helps us to balance new information with prior knowledge.
As an example, only 15% of doctors could correctly predict the likelihood of cancer in a patient who had a positive mammogram result. The doctors fell into a common trap; they overvalued new information (the positive mammogram), over crucial prior knowledge (that only a small percentage of women actually get breast cancer). Bayes’ can help us to avoid similar mistakes in business.
However, to accurately align our strategies with upcoming technology trends, we can’t just rely on predicting the likelihood of a technology’s Hype Cycle survival. We also have to assess its potential impact on our market.
For example, it’s becoming more and more likely that VR will survive the Hype Cycle and become a mainstream technology. When applied to entertainment and education, there’s little doubt about VR’s potential impact. However, when applied to banking, VR’s potential impact is less evident. You could argue that a banker will have client meetings in VR, but we think it’s more likely that client meetings in the future will be bot-to-bot conversations. That’s why it’s important to predict both likelihood and impact.
2) Transformation not reinvention
You rarely throw away all your furniture when you move to a new home. Perhaps an odd comparison, but let’s explain what we mean. When transforming your tech stack you should start with a inventory of your current solution. Your existing architecture should be a guide on how to design your new house.
In addition to functionality you also need to understand the competence and culture of your constructors/developers. Choosing a solution that is not in-line with that culture may lead to disappointment and even defection amongst your team, giving you another huge problem to solve. So before deciding for a complete makeover - make an analysis on your internal competences and preferences. In our experience, this will make your technology transformation faster, cheaper, and smoother.
3) Product/market fit
Product/market fit is the concept of assessing a company's value proposition, customer segment, relationships, and distribution channels. Historically, it’s been connected with startups and launch strategies. However, the velocity of technological change is accelerating, which we think has changed the rules of the game. Now we think that even established businesses should be continually assessing their own product/market fit, as new technologies can completely change all aspects of that equation.
Let’s return to the Toys “R” Us example. All parents know that toys are still in high demand, so why wasn’t that enough to save one of the world’s largest toy stores? If we look at it from the perspective of product/market fit, then we start to see something interesting. Toy “R” Us didn’t get caught off-guard by a new customer segment or changing relationships, they got caught off-guard by the same situation that sank Blockbuster, and almost sank Kodak: a technology shift that affected distribution channels, and greatly affected their customer value proposition. Put simply, Toys “R” Us didn’t react fast enough to Amazon, in the same way that Blockbuster didn’t react fast enough to Netflix, and Kodak didn’t react fast enough to digital cameras.
How can your company avoid making a similar mistake? One approach is to keep a close eye on the Hype Cycle, to create a culture of transformation, and to continually check your product/market fit. If you have any questions on these topics, or feel like you need some assistance then feel free to get in touch with us.
About us - T(w)o digital immigrants figuring out how to thrive in an accelerating world
We met less than a year ago, and realised the potential synergies from our different, but overlapping, backgrounds. We’re both independent business advisors, who help companies to align and implement their technology strategies. We have both driven business change at the highest level, and share a passion for technology, agility, transformation, and sustainability.
Recently we’ve been growing concerned about many big European companies falling behind in digitalisation. Connected with that, we’ve noticed several companies falling to spot threats to their customer value proposition. This blog is the result of our discussions on these topics, and is our attempt to help companies realise and react to the threat and potential of an accelerated future.
Swedish entrepreneur and co-founder of CMO goes Tech, an international network for the CMOs of the future. With almost 20 years of extensive experience within digitalization, Cecilia serves as board member and senior business advisor to a number of large companies in their digital transformation. Cecilia is a frequent keynote speaker on marketing innovation and consumer trends, in international leading forums, and co-author to a book about the Gig Economy. Cecilia’s past experiences include working in leading marketing positions, as well as co-founding a successful Martech Management Agency.
An immigrant from the UK, who’s now a Swedish citizen. James is a technology advisor, with almost 20 years of experience building successful digital products and high performing teams. James started his career as a software developer and eventually became a CTO. Now he works with investment banking, where he helps companies to align their business and technology strategies, and secure funding to optimise their growth. James recently co-developed an exciting new approach to software architecture called Polylith, and occasionally finds the time to teach programming on YouTube.