Tuesday, 12 March 2013
Digital channel shift vs. digital paradigm shift
I had the pleasure of speaking with Bill Hutchison a couple of weeks ago. Bill is a pioneer in smart cities, working in Canada, Russia and Asia to evangelise the concept of the hyper-connected city and the potential for paradigm-shift thinking that hyper-connectivity presents. Bill chaired the Toronto Waterfront development, one of the largest urban regeneration and connected community projects in the world. One thing he said to me which resonated was that the last 20 years of digital innovation and disruption have simply set the foundation for even greater change to come. One of the opportunities of digital disruption is the potential it offers to think about paradigm shifts.
Many clients I have worked with over the years have approached digital as a channel-shift project - "if we could shift 10% of calls from our call centre to our smartphone app we would save x%", "if we could switch x% of loan applications to online we would save y% and acquire z% more clients". There's nothing necessarily wrong with that approach but the history of new technology adoption is littered with examples of people using a new technology to enable an old process or an old way of working. Putting a loan application online is not necessarily going to change the game or protect against a future industry disruptor.
10 years ago Nike has very little idea who purchased their trainers and how they used them. Consumers made anonymous purchases in sports shops and department stores and rarely bothered to fill in a registration card to tell Nike about themselves, let alone how they used their trainers. Nike could have adopted a channel shift mindset and approach to digital, creating an online portal for people to register their purchases and upload information about their training regimes. They could have done that but they chose a paradigm shift strategy. By embedding software into trainers via Nike+ and building a gamified community where users set their training goals or participate in virtual / physical games of "tag", Nike has transformed the information and insight that it has about it's consumers. At the point of writing a staggering 2,146,741,969 miles have been run by the community and automatically uploaded to Nike.
GiffGaff could have launched an MVNO with a channel shift strategy. Instead they chose a paradigm shift by creating a peer to peer business model where customer word of mouth drives acquisition and members fix over 90% of service requests for other members in the support forum with an average time to fix a problem of under 3 minutes.
Zopa could have followed a channel shift approach and launched an online only business selling loans, but they chose a paradigm shift model by creating a peer to peer lending forum.
Threadless, Zappos, Kickstarter, eBay, ZipCar, Nabbesh (client), Netflix, Salesforce.com, Amazon, NowTV (client), CDBaby, Spotify, Lastminute.com and many others all could have pursued channel shift strategies in their respective industries... but they didn't.