What happens when atoms are turned into bits?

Hurricane Dorian is looking increasingly dangerous and could impact the northern Bahamas or Florida as a Major Hurricane (Category 3+) as early as this weekend. My thoughts to my friends in those areas. Get your preparations finalised today!

On to the update:

After the announcement that the long-standing newspaper of the FWI was in real financial difficulty, I thought I’d take a look at the business model and why it failed, what can be done and how it should be a cautionary tale for newspapers throughout the Caribbean. As ever, this is my opinion and you’re more than welcome to challenge and discuss directly with me. Join me on the Slack discussion group.

France-Antilles in serious trouble

From the Martinique site of franceinfo.tv (the national television news chain) dated the 12/08/2019:

L’équilibre financier misé sur 3 ans lors de la reprise du groupe en juin 2017, n’est donc pas à l’ordre du jour. La nouvelle propriétaire du journal, Aude-Jacques Ruettard (patronne de la holding AJR Participations et petite-fille par alliance du défunt magnat de la presse Robert Hersant), s'était aussi engagée à maintenir l'emploi de tous les salariés "au moins durant deux ans".

Translated:

The financial bet over 3 years, when the group was taken over in June 2017, is therefore not on the agenda. The newspaper's new owner, Aude-Jacques Ruettard (patron of the holding company AJR Participations and granddaughter by marriage of the late media mogul Robert Hersant), had also pledged to keep the employment of all employees “for at least two years."

The reality is, however, far from that, and sadly, there are currently 282 employees that are set to lose their jobs throughout France’s three Départements in the Caribbean, Guadeloupe, Guyane and Martinique.

On the 2nd of August a tender was issued to find a buyer for the failing media business, and its close date is in less than two weeks. Currently there are no offers on the table and there may not be any serious long-term buyers either. For what its worth, I think they’ll find a buyer, but it’ll be a short-term, utterly-ignorant-of-the-reality-in-the-digital-world benefactor that will continue to (try to) sell what is essentially free information printed on dead trees.

What got France-Antilles here

Three major factors have led to the current situation; ads have become easy and cheap to set up using the online platforms — with feedback obtained from the online platforms out-manoeuvring what a static mass-market ads could ever achieve —, the distribution of bits rather than atoms became essentially free and the targeting and the quality of information naturally decreases with abundance.

Easier, better and cheaper will always win out over difficult, inferior and expensive. The ad market for newspapers was completely disrupted and was only noticed by the industry when it was too late.

These two images tell us everything we need to know:

Source: mondaynote.com

Throughout the Caribbean, this scenario is likely to play out many times in many territories, if it's not already happening, and the experience in the FWI should be a warning sign to those not yet affected.

Unnecessary Costs

In printed newspapers, there are many fixed costs that render the finances difficult to balance. Printing presses cost phenomenal amounts of money and require trained and dedicated staff to operate them. When you are competing against virtually free digital distribution to get the same information out to your audience, these extra costs are a major burden, and I would suggest, unnecessary now.

Not only that, but the costs of the raw materials required to physically print — i.e., paper and ink — add to the operating budget in a non-inconsequential way. Paper, by the way, is not getting cheaper either due to environmental concerns. Ink is expensive and it is also toxic. Atmospheric fumes from inks are noxious and large costs associated with the handling, processing, usage and disposal of ink are apparent. 

Then there is distribution. Without going into any detail, it’s obvious to conclude that distribution of reams of paper has associated costs. Those costs being elevated by the fact that, as a newspaper and the importance on getting to the outlet early in the morning, entails higher-than-standard-hours wages.

I was astounded when I learnt that France-Antilles invested in a brand new, huge printing press, at a cost of multiple millions — money better spent on restructuring (see below) and building out digital-first products (see below). Not only did they encumber their financials with this burden, but France-Antilles decided to redesign the layout of the physical newspaper and massively advertise it over several weeks, with “sneak preview” adverts that hinted at big changes a coming. Rearranging the deck chairs on the Titanic in my view.

The Flawed Business Model

“Information wants to be free” a phrase attributed to Stewart Brand who founded the Whole Earth Catalog in the 1960’s. He argues that technology could be liberating instead of oppressing and at the first Hackers Conference in 1984, he apparently told Steve Wozniak (one of the three co-founders of Apple):

On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.

The prescient point of his argument was that information’s cost was getting “lower and lower” and that is the situation most publications find themselves in today. Much of the information provided in newspapers today is widely available online from multiple services, and here’s the sting in the tail, for free in many cases.

But what is most important in the statement above, is the fact that he identifies that information has value and is hence, “expensive”, and it is precisely here that most newspapers fail in their strategy. Much of the information is provided in “filler” articles that have been scraped up from wire services such as AP (Associated Press). These articles have literally no value virtue of the fact that every news outlet prints what is, for all intents and purposes, the same article.

Newspapers are a business built on assumptions from a bygone era. Firstly, the sales and advertising arms of the newspapers require a lot of staff. There is Sales, there’s Account Management, there’s Graphic Design and of course Operations Management. Those are huge fixed cost to deal with for just a pretty advertisement, and only profitable for premium advertising (of which there is less and less as outlined above). Newspapers also operate on the assumption that the bundle of services, is in and of itself, valuable. That was true, but is no longer relevant for readers.

Couple this with the very real fact that the Business Model of the newspaper business took a serious hit when Facebook and Google cornered the market for advertising, with very grave effects on the price and availability of advertisers willing to spend on printed ads. The protected environmental factors have prevented newspapers from listening to reality. I find it all the more surprising given that here, in the FWI, there is no real competition, which proves the point about external factors playing the central role in killing these businesses.

What would be a more appropriate Business Model?

It’s true that I am writing this from the point of view of a concerned party, but I believe that there is scope for local newspapers in the Caribbean to develop sustainable and profitable businesses, but the change in mindset is stopping them from seeing this. The successful publication and business model should address the flaws I’ve outlined above; reduce unnecessary costs and provide information that is valuable.

Firstly, today’s technologies allow publications to remove and reduce much of the fixed costs associated with sale and distribution (digital). Wordpress with a Memberful and Stripe integration is enough for all but the biggest of publications. Tag on Social Media Managers such as Buffer, and the job to be done (promotion) is made that much easier.

In order to provide valuable information, newspapers need to stop publishing widely available drivel they scraped from the wire. In practice that means no international news, virtually no national news and god forbid, lifestyle and fluff articles. They have their place, but it is not in newspapers. Writers and editors need to be set free to write in-depth and interesting articles with a local impact, and impact that is felt by the readers. That is, the readers need to feel a sense of connection and sharing of feelings with the newspaper. Focusing on the feelings generated by users and not filling pages with regurgitated wire articles would go a long way in developing this relationship.

This is not a traditional newspaper business model. That is because the traditional business model is dead, or at the very least, dying.

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Digital Transformation and natural disasters

Customers 2.0 and the importance of word of mouth

In trying to be brief and to simplify the customer’s journey to buying products in modern times, I think I may have not been as clear as I could have, which led to some confusion:

This affects how customers behave in their consumption and how they discover new things. Here in the Caribbean, word of mouth is still a strong discovery tool, but it is becoming less and less relevant when we’re consuming more products and services online. The search engine has rendered word of mouth a secondary validation tool. Today, customers search first, then ask peers and online forums for recommendations.

In this badly worded paragraph, I was trying to put forward the idea that, as the internet takes a more central role in the research and decision-making process to buying products and services, the order in which people are using tools is changing.

Word of mouth is an extremely important tool in the Caribbean, and one could argue that it is the most valuable tool to help people make up their minds. Communities here, are very close and much value is placed upon the sharing of information about purchases and experience. But that doesn’t mean it is the first port of call either.

Source: datareportal.com

In my research over the last few years, most businesses and business owners I have talked to have stated that their business grew from word of mouth more than marketing. Obviously anecdotal and unquantified, but it’s at least the impression and that is an important data point in and of its own. But discovery is being done online, that’s the key message.

So to clarify, I’m seeing people in the Caribbean researching online for products and services more frequently through forums like Reddit and Facebook (1) — remember that in the Caribbean the average time spent on a Reddit page after being opened is 10 minutes, just behind Facebook with 15 minutes— then talking to peers to get a more “valuable” review of the product or service. Certainly, some of this is done face-to-face as you would expect, but the relatively new an interesting extra dynamic, is that an increasingly larger amount of word-of-mouth is being done using digital platforms too!

Why is this? Two main factors seem to be in play here; we’re more physically separated and we request answers fast and at any time of the day.

Digital Transformation and natural disasters

Writing this as Tropical Storm Dorian is about to pass over the Lesser Antilles, somewhere south of St Lucia, I got thinking about how a coordinated effort by all stakeholders could help with preparing, living through and the aftermath of natural disasters like hurricanes and earthquakes that are so prevalent here in the Caribbean.

The states, the insurance companies, the retailers and the population, if coupled together well, could provide and use services that would make everyone’s job just that much easier, reducing time to get claims acted up, get money out there immediately and reduce costs for everyone involved.

Like me (yeah right!), I’m sure you’re diligently documented all your items of value that would need to be replaced in the event of a major storm, or that you even know where everything is and how much it cost, its insurance value, etc, etc.

There is opportunity to build out systems that allow — from the point of sale — relevant information to flow to a secure vault in the cloud that you can use for claims. You buy a new fridge-freezer, its model number, serial number, sale price, are all pushed from the retailer to the vault. You allow your insurer to have access to this to insure you correctly. A simple app on a smartphone could start the claim process immediately as virtually no information gathering would need to be done (something that can take a long time whilst living through the disaster).

Having more detailed information could allow insurance companies to better estimate their liabilities and free up money when and where its most needed immediately following the hurricane.

This is, of course, the dream and like we’ve seen with all positive initiatives, there are negatives to consider too, but even half of this wish cast Would be a great help to individuals in our region.

If you haven’t read the earlier articles in the series, I encourage you to do so to get a better overall picture of the methodology. I’ve included an index here for you convenience:

Part 1 - Auditing your current state

Part 2 - The Value Chain

Part 3 - Porter’s Five Forces

Part 4 - Data, and its value

Part 5 - Turning data into business value

Part 6 - The 5 step Digital Transformation methodology

Part 7 - Segmentation and targeting

Part 8 - The Value Proposition

Part 9 - Customers 2.0

Admittedly, Part 6 should have been Part 1 in hindsight … You live and learn :-)

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––––––––––––––––––––––––––––––––

1 From Hootsuite/wearesocial report Digital in 2018

Customers 2.0, Networked, Connected and Interactive

I’m back after a short and very unconnected holiday in St Lucia, an island I am very fond of for many reasons. I’m looking forward to getting back into the swing of writing more frequently and developing the other project I hinted about in a previous post. Stay tuned.

Lastly, I hope the title renaming doesn’t throw you off guard too much. To keep some consistency, I’ve titled this issue as planned with “Issue XX” removed. 

This week is all about the customer and their impact on our Digital Transformation. Today’s customer has changed and is changing, and you need to me mindful of this and adapt. Let’s get in to it.

Onwards to the issue.

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Source: Merriam-Webster

Continuing the series and picking up from where I left off, the next lever for Digital Transformation is a laser sharp focus on your customers. Customers are the make or break part of any enterprise, ask any business leader. Don’t get this confused with the oft repeated mantra that the “client is king”, this may have been true some time ago, but it is not entirely relevant today. The best way to think about your clients today is to remember that your clients have a choice. 

Wealth is not about having a lot of money; it's about having a lot of options. - Chris Rock

I don’t know when Chris Rock made this insightful comment, but in today’s increasingly digital world, customers are exposed to more choice than ever before, and it is up to you to entice them to use your products and services. This exposure changes the way in which your potential customers act when making buying decisions, and how they go about “hiring” something to allow them to do the job to be done (JTBD).

Customer 2.0

Aside from the important generational differences, there is now a common set of attributes to today’s customers that affects all types, generations and segments. It is precisely because digital and digital services are so ubiquitous that this is true. In all but the most underdeveloped nations in the world most of the population own a smartphone with — and most importantly — a reasonable data plan. Which explains why the first attribute is so true.

Today’s customers are networked and this is the first attribute! They are permanently connected to their cell phones using them multiple hours per day (see graph below), and when they’re not using their phones, their computers or tablet computers are connected to the Internet as well. This is a fundamental shift in behaviour and the last 5 years or so, and has had an enormous impact on their behaviour. Customers are literally a less-than-one-second-search away from getting the information they want. I recently found an object I’d never seen before in the washing machine — it had come out of one the pockets of my son’s clothes — and the name on the item didn’t give me much of a clue. I searched it, and within less than 10 seconds I knew exactly what it was, what it was for, how much it cost, where to get one and plenty of other (mostly marketing) details about why its the best at what it does. The same will be true for your products and services.

This affects how customers behave in their consumption and how they discover new things. Here in the Caribbean, word of mouth is still a strong discovery tool, but it is becoming less and less relevant when we’re consuming more products and services online. The search engine has rendered word of mouth a secondary validation tool. Today, customers search first, then ask peers and online forums for recommendations. They leverage the network they have, which in many cases spans to many hundreds of people and in some cases many hundreds of thousands. Formerly, it was your immediate entourage of a few tens of friends and family, most of whom had no idea on the subject you were researching. And so, communication itself has fundamentally changed not only in type, but in scope.

Source: https://www.statista.com/statistics/319732/daily-time-spent-online-device/

Another attribute of Customer 2.0, is that they are incredibly connected. The paradigm shift that the network brought to discovery, expanded to all users of the network, making them link together to create huge dynamically connected groups where information and experience is there for all. They no longer live individual experiences; they share their experiences with anyone and everyone. They create new networks with the explicit purpose of sharing information and experience down to the minute details using todays platforms like Twitter, and in some cases they build new platforms solely to partage this knowledge with others. You’ve no doubt noticed the abundance and impact “Influencers” are having on brand awareness. Some brands have chosen to ditch lucrative contracts with celebrities, and have substantially reduced costs and increased control by using Instagrammers to get their message across. They have understood that modern marketing is not about persuading their potential customers, it’s about inspiring purchase through association to a better lifestyle. The customer has the control and sway, it is no longer you or your business.

Shared experiences, although being available to all, are consumed at different times or in different contexts, giving the impression that we are unique. Previously, we would all watch or listen to the same film or series the day it was diffused to the mass market via the established media networks. We would then all talk about it the next day at school or in the office, the spoiler alert was virtually non-existent. Nowadays, we consume not only at the time or in the context we choose, but we consume at the pace we desire. Netflix started releasing all episodes of their exclusive series on the same day, changing consumption habits of those that would like to watch several episodes in one sitting instead of waiting for next weeks’ diffusion.

This connection additionally gives rise to the creation and sharing of niche information on a much larger scale than was previously possible. You can look for the most obscure topic using today’s search tools, and you’ll almost certainly come across a YouTube video about it or a huge Reddit thread of enthusiasts pouring over minutiae. Places like the Caribbean were previously shut off from participating in “fan” groups, through very real world hinderances such as distance, time zone and sheer expense. This is no longer the case.

Which leads me to the third and final attribute of Customer 2.0. They are interactive in a way that we have never seen before. We’ve all seen the freephone numbers on the biscuit packet asking for feedback if something is displeasing, these were however, rarely or if ever used. The reason, friction! Remember when I talked about the JTBD, I mentioned that an important aspect to not lose sight of, was the amount of friction not takes a customer to get the JTBD finished. If your solution involves more friction, customers are likely to look elsewhere, even if it is more expensive. This is because today’s digital society has spent much time reducing the friction at each step in the customer journey. Customers today have very little friction to contact you directly using Twitter, and they use it liberally too. Not only do they use it, but they expect a rapid response and a rapid resolution to their query. I’ve had interactions with companies that were resolved quicker and more accurately than by plodding through traditional “support” channels.

I was recently on a trip and had phone issues meaning I couldn’t use the phone apart from when connected to Wi-Fi for messaging through WhatsApp or iMessage. Using the browser on the phone I requested help through their support page, a mistake. I received a response two days after coming back, by email, terribly worded and incomprehensible in terms of resolving my actual problem! I’m looking to move operators in the next few months.

Strategies in a digital world

When looking at how we can reach our potential customers and we look at how the world used to be compared to today’s landscape, we see that customers are no longer a mass-market segment and they are part of an ever-changing network. They no longer are susceptible to mass-market communications over mediums like television and radio (or at least not in the same way as before). Today’s customers want to be part of the experience, but more importantly have direct influence on the process. We see this in some of the more progressive brands today, employing Instagrammers to participate in the prototyping stage, allowing both the brand to benefit and the influencer to expand their reach.

Perceived value is another important factor that the modern customer innately thinks about, and more importantly, judges your products and services. I recently listened to a podcast where the topic of discussion centred around VR and AR. One of the guests had conducted a study — being the lead researcher for his company — and he noted that currently, commercial AR applications like Microsoft’s Hololens are used on average around 40 minutes per day. Businesses and users are evaluating the value of the product, calculating that several thousand dollars of investment are only providing a couple of tens of minutes of use. So you need to be mindful of not only the JTBD, how you can make that frictionless to “hire”, but also, once hired does real-world use provide perceived value?

It’s a lot to think about, and a lot to measure and analyse!

The strategies you need to develop must address all these points and try to answeer basic questions like these:

• What are the types of information that my potential customers are looking for related to my products and services?

• How do they discover this information and though what mediums?

• What are the JTBD?

• What attributes are they looking for to solve their JTBD?

• What do they not like and why?

• How could we include potential customers early in the cycle?

• What would customisation of our products and services look like?

As you can see your customers or potential customers are a big part of the Digital Transformation process and one of the most important (of not the most important) lever to tackle when developing your Digital Transformation strategies.

I haven’t finished developing the ‘how’ of the strategies required in this article and it is already very long! Next instalment will discuss in detail some of the things you can do to build out those strategies. Look forward to seeing you next time.

I hope this helps you with your own Digital Transformation process. If you have any questions or want to discuss your own projects, please let me know, I’d be only too happy to help out, click to email me at info@dgtlfutures.com.

Reading List

Le quotidien France-Antilles menacé de disparition ? - Martinique la 1ère

For the non-French speakers amongst my audience, the local and highly regarded newspaper for the FWI, France-Antilles, is in severe financial trouble. They recently redesigned the paper and heavily invested in a new printing press in a move that can only be described as rearranging the deck chairs on the Titanic. This is almost certainly not the only example around the Caribbean, and it is a topic I’d like to address in a future article, but one I haven’t quite found the angle as of yet. Suffice to say however, that the old media business model of advertising, once lucrative and a competitive advantage, is now a competitive liability… Disruption Theory and Aggregation Theory.

Annual Conferences | CANTO

This is a good resource for researchers like me to get a feel for Digital Transformation throughout the Caribbean and further afield. You’re welcome.

Older People Need Rides. Why Aren’t They Using Uber and Lyft?

One of my pet subjects — ride-hailing services and public transport — this NYT article looks at the older generations’ use and how other services like health and occupational therapy are linking up with Uber and Lyft to provide better services to those in need. A clear opportunity for the Caribbean if we could just unlock the potential, come on banks, give us a bone!

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Digitally transforming digital organisations | Autonomous vehicles and the Caribbean

To start, some housekeeping. I’ll not publish this Friday as I’ll be taking a last-minute vacation for a few days this week. I’ll mostly be offline for well-deserved rest. Back to a normal schedule next week. Lastly, I’ve decided to ditch the issue number system before it becomes too unwieldy. Imagine Issue No. 14159265: ... Not good! It is for a good cause, however. I have something new I want to test over the coming weeks/months. I’ll let you know soon.

On to the quick update.

Can digitally native organisations transform, digitally?

Source: Evening Standard, UK

This is a topic that has been on my list of things to write about for a long time. I have some initial thoughts and I would like to share them with you here.

If you remember, in Issue 5: Why Digital Transformation is different from standard IT, I said that Digital Transformation is really about change management:

As you’ve no doubt spotted the biggest difficulty for an organisation is the resistance to change, which is why I personally believe that Digital Transformation is essentially one big change management exercise. Bringing people with change management skills in to the organisation — even if on a temporary basis — is key to succeeding in Digital Transformation.

I think we’re witnessing a company that is currently grappling with this in a very public way. To be fair the company involved could not be more public. Apple Inc.

What lead me to this ? The recent announcement that Jony Ive was leaving Apple to focus on his own projects, and has setup his own design company called With Love From got me thinking. I couldn’t stop wondering about the “why?”. I read many articles from journalists and bloggers alike. Some with great insight and some with links within Apple, but I’m not convinced anyone has hit the nail on the head yet.

So to try to do this, I’ve thought about it from a Digital Transformation and change management perspective. Let’s look back at Apple’s track record in change management. The upcoming departure of Steve Jobs through illness back in 2010 necessitated a succession plan to ensure that — unlike many companies run by strong leaders — Apple would not face insurmountable difficulties. Disney was probably its model at that point having had its own transition by the icon Walt to todays’ management, Apple put in place a smooth transition plan that has sent Apple further and further up the corporate charts, with Tim Cook driving this forward.

Jony Ive’s leaving was planned and implemented long before anyone got wind of it, both inside and outside. Yes, there had been rumours for a while, but this plan was almost certainly instigated before that.

So why did Jony Ive leave then?

Apple has slowly been turning the ship towards services and pinning future growth and revenue on them, in lieu of more iPhones. Remember, iPhone revenue has been the driver of revenue for many years. To design and build an iPhone takes a very special set of skills, skills that Jony Ive was/is exceptional at. However, to be blunt, those skills are useless when it comes to designing and building software services. It’s just not the same skill set.

I suspect that when Jony Ive took over all design in Apple, which ended in the leaving of Scott Forstall (an incredible software designer), there was a hope that Ive’s sensibilities would produce excellent software and services, the new place the puck was supposed to be. That didn’t happen quite as well as Apple had hoped. I’m not going to list all the areas that software got a little worse, but there was an overall feeling that things got worse, and the commentators were vocal about it over the years.

So to me, what this is, is a change management situation where a resource that is no longer suited will need to move on or do something else within the company. This is not a judgement on that resource and should never ever be viewed in that way. It is simply a strategic choice from Apple to move away from hardware towards software.

They are doing Digital Transformation of their products and services. Hardware will not go away, I don’t think that for a minute, but evidence shows us they are moving in that direction for the foreseeable future. This is why I think Jony Ive’s agency is a strategy to keep Jony Ive included where it is still needed without him getting in the way of software design. Time will tell if this works, but I think it’s very intelligent and could be the basis of new growth impetus within Apple.

You may find in your own transformation that current key ressources will either want to or will need to move on to other things. Plan your change management for this eventuality.

Autonomous Vehicles and the Caribbean

Source: Uber

Another topic that is of much interest to me is vehicle autonomy. Like almost everyone, I can’t wait for the day I can ride (safely) in a car whisking me to my destination, whilst I can get on with other things and paying zero attention to the road, traffic etc,.

I am however, realistic about its eventual implementation in the Caribbean. Like may things, the Caribbean is a pretty (very pretty) special place, but its road infrastructure is not on the postcards.

There’s reason, and it’s not just underinvestment and neglect, there are very real environmental conditions that render the concrete and tarmac fragile. Hot and humid conditions with the sun beating down all day then being deluged by rain (cooling it somewhat) then heating up again, sometimes several times a day cause these materials to become fragile. Add to this the near constant moving of the earth, through tectonic movement that sometimes results in earthquakes (hundreds a year in some islands) and simple land movement from, what are young land masses built from volcanic activity, Barbados excluded, this alone hinders current technology from fully “understanding” the road it is on.

If you’ve lived or visited us here, you’ll also note that there are some periods in the year the sun is low in the sky but blindingly bright. In those circumstances, even humans have real difficulties seeing enough of the road, often leading to less than optimal conditions for driving, and in some cases causing fatal accidents.

Let the technology cut its teeth on the easy, straight and sell-maintained roads of Las Vegas first. I’m guessing we’re probably around 15 to 20 away from Level 5.

I'll write about the autonomous levels sometime soon as a complement and follow-up to this article.

Reading List

Source: wikipedia

 A history of humankind’s enemy number one 

This is a book recommendation from the Economist. I’ve not read it, but it’s on the wish list. Living in the tropics this little pest is a constant source of frustration. I’ve had dengue fever — it’s called break bone fever here in the Caribbean not incorrectly — and a couple of the other mosquito-borne pleasantries. But like so much in nature there seems to be a positive too. From the digital angle, technology is working to curb the mosquitoes’ deadly impact whilst preserving its role in nature. Time will tell.

“They will fight well at first, but soon they will fall sick and die like flies,” predicted Toussaint Louverture of the Frenchmen sent to end his slave revolution in Haiti. He was right. About 85% of the 65,000 soldiers deployed to the colony died of mosquito-borne illnesses, and Haiti won its independence.

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Democratising and demystifying how to do it: Value Proposition Design

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In trying to explain Digital Transformation to organisations that are interested in it, we technical people tend to lose sight of the big picture and confuse business leaders by burying the discussion in technical jargon, this is direct feedback I’ve received recently. In order to deal with this, I thought I’d try to demystify the subject, this is my first attempt.

On to the issue.

In the previous issue, Issue 24: Part 7 …, I continued outlining the Digital Transformation methodology I use to help my clients structure their strategies for Digital Transformation. I hope this gives you insight for your own journey. Let me know if I've missed something or you would like me to discuss your own projects.

In issue 24, having exposed the staged methodology, I contextualised the segmentation and targeting process that is really about trying to understand your customers better in order to identify opportunities for Digital Transformation looking at it from their point of view. This is important in the sense that it approaches the problem from the opposite end of traditional product/service design — remember products and services can be internal projects in their scope. Too often we think of the buying customer and not the internal customer who is, in my mind, crucial to a well-functioning business — by investigating ideas for improvement that would illicit interest from them. We do this by identifying the JTBD (Jobs To Be Done) and testing where digital technologies can improve, speed up or lower the cost of “hiring” your product or service.

The issue then introduced the 5 levers of Digital Transformation and introduced the innovation process. Innovation goes hand in hand with the segmentation and targeting stage and is in fact a continuation of essentially the same process. I separated it out in its own section to emphasise the importance and outline the step-by-step process, points 1 to 11.

This is all hard work. It is slow, and it takes a lot of effort to get to the innovation stage. Don’t be discouraged though, starting the process and revisiting it after a short pause almost always produces new ideas for exploration. Take extra care in the data collection process though. I recently came across a case that I’ll write about in the future, but suffice to say that, decisions on data collection and rationalisation now can have profound impacts in how you can later exploit that data. As one of the levers is all about data, I'll go in to it in more detail at that point.

This issue continues from where I left off discussing the next lever to Digital Transformation, the Value Proposition.

Source: visionedgemarketing

Value Proposition

Hopefully you’ll note that this lever is again, a continuation of the previous one, that’s deliberate. Your value proposition is there to make your clients understand quickly and simply why they should use your products or services as opposed to your competitions’.

In dealing with companies over the last few years, a businesses or products’ value proposition is not always well defined or well-articulated. Often, the value proposition is simply a bullet list of why our product is cheaper than someone else’s. I hate to pop the balloon, but this is not a value proposition.

There are a number of things that a value proposition should be, but to get a better hone on that it’s important to understand what it is not. I’ll outline a few examples here to get a feel for where I'm headed.

The VP should not, under any circumstances, be a list of how much better than the competition you are. Sure, it’s ok to point out differences and point out that you are in fact better than the competing product. It should be done by highlighting the real advantages of your product or service, full stop. For example, don’t say that your product is cheaper or faster than a competing product, highlight where your product will enable the client to get a JTBD faster and more efficiently. Saying you’re cheaper only tells your clients you are, well, … cheap. Ugh!

Avoid listing technical jargon where it concerns your products. That’s so 1990’s (/sarcasm). It's true that to sell a PC in the 90’s, it was important to list the processor type, model number and clock speed to differentiate yourself from the competing builders. But as we saw back then, this only has limited impact, because before long, a competitor can list the same things and possibly even better specifications than you. This is a zero-sum game.

Additionally, don’t list your honesty and integrity as a selling point, no one cares when it comes to digital transactions. A slogan is a slogan, not a value proposition. And lastly, don’t write your CV. You’d be surprised!

This of course, begs the question “What is a Value Proposition?”

Putting it simply, it should intrinsically detail the value you propose to deliver to your potential clients. The value being the effect your product or service has on the clients’ ability to get his or her JTBD faster, easier, cheaper, more elegantly etc. It should additionally explain in simple terms how using your product/service it solves their specific problem. Lastly, it details how you deliver those specific benefits and it explains to your customers why they should use your services.

A good example of this is the privacy-oriented search engine DuckDuckGo. DuckDuckGo highlighted a number of years back that the incumbent search engines were using the fact that discovery is central to Digital Transformation to track your internet usage in order to either sell ads against that collected knowledge or sell that information to those that would attach ads. The result of their engineering and value proposition design, resulted in the following value proposition:

DuckDuckGo. The search engine that doesn’t track you. Switch to DuckDuckGo and take back your privacy. We don’t store personal info about you. We don’t follow you around with ads. We don’t track you. Ever.

The value proposition is targeted (segmentation) at an audience sensitive to the fact that they were being tracked and targeted by ads based on what they’d searched for. Their promise, no ads, no tracking and good search results. That’s it, simple, concise, and accurate. This VP is simply a statement of what, how and what value the offering is, behind it a team of designers and engineers built a product that respected these values to the letter. That’s the lesson from developing your own VP. Design it to address the needs identified — A problem looking for a solution if you will, rather than a solution looking for a problem!

Developing your own VP is, like the other steps, a continuation of all the work you’ve done up until now. You’ve understood your potential customers through the empathy map, you’ve selected a segment that aligns with them and you’ve extracted the JTBD and classified them according to importance. The value proposition design is largely a brainstorming exercise in ideating what products and services could fulfil the requirements of the JTBD to provide value to them.

After proceeding through the earlier stages in the Digital Transformation methodology, you should have identified a number of areas in which either your current products and services can be bettered digitally or identified entirely new opportunities for business. Once you have this classified (by importance) list of products or services ideas that address the JTBD model, you then need to test them. I briefly talked about prototyping in issue 24, but here it is more critical in determining the next steps.

The first step is selecting one of either the pain points or the gain creators identified and prototyping that solution with your intended target. A very rough cut which addresses that need is all that is required. This will not be the complete value proposition, as it only addresses one of the areas in which your new offering can help. This process is repeated over and over to build up a more complete solution with each iteration being tested.

Testing can take multiple forms and it doesn’t have to be an actual development of an application or the build of a basic prototype, you can rely on today’s digital services that are both easy and relatively cheap to use. For an application, several app building websites exist that throw up a convincing mock-up very quickly allowing you to get it into the hands of your target audience for direct feedback. As mentioned previously, access to 3D printers has been completely democratised, again, allowing you to build a rough model to touch and feel, inciting physical feedback responses from your testers. It doesn’t stop there either. Recent advances in Augmented Reality provide an excellent platform for designing and building test model and placing them in the “real world” for manipulation.

This feedback should be noted, analysed and assessed. It is important data that will need to be revisited both immediately, and in the future, when you go through this cycle again — historical data generated helps understand current trends and helps avoid old mistakes.

At this stage you have enough data and feedback to make a decision on what to keep, what to put aside (perhaps because its needs maturing) and what you should outright reject. Which leads us to the last step which is to write down in unambiguous terms — like we’ve seen in the DuckDuckGo example — an expression of your value proposition. It is really important to keep in mind that we develop this from first principles looking at the Jobs To Be Done from the clients’ perspective and not your own, and we gradually build up one, two, then more “solutions” to these identified pains and gains your potential clients a looking to alleviate and benefit from.

You can either use a value proposition template, you’ll find thousands of them online, or simply get right to the point like DuckDuckGo. Here’s a couple of other examples.

Evernote (Note taking applications and cloud services)

Remember Everything. Capture Anything. Access Anywhere. Find Things Fast.

Square (Online payments)

Start accepting Credit Cards today. Sign up and we’ll mail you a free card reader.

One last point before I leave you, your Value Proposition will ultimately become old and stale as both your product or service matures and changes and when your competition evolves possibly catching up or surpassing your offering, so Value Proposition Design is an ongoing process that needs to be done regularly, from a fresh perspective each time. Remember, nothing exists in a vacuum.

Get in touch. I can help you through this process painlessly and enjoyably.

I hope this puts in to perspective and helps you start your own process. If you have any questions or want to discuss your own projects, please let me know, I’d be only too happy to see how I can help out.

Reading List

Photo by Jonas Jacobsson on Unsplash

The Radical Transformation of the Textbook

FOR SEVERAL DECADES, textbook publishers followed the same basic model: Pitch a hefty tome of knowledge to faculty for inclusion in lesson plans; charge students an equally hefty sum; revise and update its content as needed every few years. Repeat. But the last several years have seen a shift at colleges and universities—one that has more recently turned tectonic.

Nice article from Wired about the Digital Transformation of textbooks and the opportunities and downsides.

Microsoft catches Russian state hackers using IoT devices to breach networks

Microsoft researchers discovered the attacks in April, when a voice-over-IP phone, an office printer, and a video decoder in multiple customer locations were communicating with servers belonging to “Strontium,” a Russian government hacking group better known as Fancy Bear or APT28.

I’ve not yet discussed IoT (Internet of Things) and the role of the technology in Digital Transformation, but its on my list. This is a sobering example of the dangers, however. Enjoy.

We've had Generations X, Y and Z: Meet Generation Alpha

I love this article and articles like these. Whilst not strictly Digital Transformation, they are very informative of the next wave to come and should provide insight when you are doing what I’ve discussed in this issue and the previous ones in the series.

The Future is Digital Newsletter is intended for anyone interesting in learning about Digital Transformation and how it affects their business. I strongly encourage you to forward it to people you feel may be interested.

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