As we fast approach the era of low friction and personalized customer interactions, businesses are facing shifts that have dramatic impact on their operational models. The sweet collision of user expectations and technology doesn’t allow us to categorically blame a generation any more than a cloud service. Software makes it available and the generation drives the desirability. And caught in the middle are businesses trying to make sense of it. You have to invent a wingsuit for those using parachutes and bungie cords.
When you think about it, Uber wasn’t as innovative as Airbnb. Uber used software to reduce the friction of a service we already used. While Airbnb used software for something we didn’t do before. For years, we all knew the frustration with finding cash, or the frustrating delay of credit card transactions with yellow cabs. Software solved that problem brilliantly (and created a new class of jobs/bad drivers at the same time).
Businesses are going to crop up that reduced friction, and importantly, allow customers to be continuously serviced in a way that your business doesn’t offer today. This is really a call for your service business to not be afraid of new market creators like Airbnb, but to get ahead of the sneaky disruptors that see a current problem (Taxis) and simplify the answer (Uber). This blindness is why only 60 of Fortune 500 firms in 1955 remain today. Those off the list were resistant to innovation, thinking it unnecessary. But staying relevant is a connected strategy, where the business improves when customer experience improves. Innovation is paramount if you want to be in business tomorrow.
We are seeing unnecessary innovation (done by outsiders) in Financial services. Companies like Wealthfront and SoFi virtually eliminated advisor fees and shitty digital experiences of your grandpa’s banks, making the grizzled mainstays play catch up. But if those old banks simply listened continually to their customers, they would have seen the opportunity, not the need, to change the experience, and build a wider moat for competitors.
And don’t forget, the lead dogs of today that broke established companies will soon have to reinvent and out-innovate, or the cycle of Kodak level disaster continues. In short, today’s business model is not about optimizing operations or expanding into ancillary markets (there can only be so many Jeff Bezos styled CEOs) as much as continually keeping a pulse on customer experience and improving it. Listen with intent and then build that wingsuit.
– James Rice, Digital Experience