As I have stated previously, consumer attitudes and expectations have changed dramatically over the past decade and they continue to morph at an accelerated pace. In this environment, one of the critical issues facing CEO's is how to develop the right strategies to guide the efforts of their organisation to meet these new expectations and exploit its opportunities.
In order to help explain these and other changes, we developed an ongoing research program called Digital Foresight™ and although our focus has been primarily on digital entertainment convergence you will note that its relevance goes beyond this. The slide below is extracted from this program and illustrates in simple terms the changing communication dynamics between companies and their customers.
Traditionally in a consumer environment, companies have structured themselves so as to 'push' as many products or services out of the door as possible. Companies are essentially telling customers: "We have a million products/services." which in times past would probably have sounded mighty impressive but in the cacophony of messages today it becomes fairly meaningless. Confronted with this message a customer would attempt to ask: "Which one of your million products is right for me?" but unfortunately have no means to convey this message back to the company. So in the 'product centric' case, the company pushes products and there is no direct customer communication.
Today the technology exists to cost-effectively permit a communication between customers and the recipient organisation. Customers can then begin their search for a product or service by asking a question: "I am looking for a product with these characteristics" and the company can in turn respond by presenting the products that best match the stated customer criteria. Together they can further refine the search. So in the 'customer centric' case, the company responds proactively to a customer need by pulling information from him/her in order to develop a dialogue - thus creating an ongoing feedback loop.
I am always reminded of the title of one of Regis McKenna's chapters in his book "Relationship Marketing":
A product is a service and a service is a product.
Having had a good ten years to mull over this, another good way to discern the attitudinal differences between a product and customer centric organisation is to look at their sales mentality. Why? Because a product sales process ends when the product is purchased while a service sales process only begins when the product is purchased.
A good example to help illustrate the 'product centric' mindset that still plagues many organisations comes from my experience working on a large online banking project a few years ago - we'll call it MegaBank Online.
Like most banking organisations MegaBank had a number of independent business units [the 'products'] (checking accounts, credit cards, mortgages, personal banking, loans, etc.) all operating under one common branded umbrella. As the project got underway each unit began to convey its view of what its own independent online offering should look like. Each business unit was thinking about its own unique needs without much consideration for the other units and communication and coordination among these was minimal. The net effect of these early discussions was that we were asked to develop one credit card website, one mortgage website, one loans website and so on.
One of the issues that surfaced early was that nobody had taken the trouble to ask MegaBank's clients what they might be looking for in an online offering from their bank. As it turned out, our early client research quickly revealed that clients who had a number of MegaBank's 'products' did not particularly warm to the idea (an understatement) of having to, for example, repeatedly login online across the many proposed websites that they would have to use for each of the products that they 'owned'.
Quite rightly, the customer perspective was that they had 'one' relationship with 'one' bank and not multiple ones with a credit card provider, mortgage provider, etc. The customer essentially could not have cared less that what he/she perceived as one business entity - MegaBank - was in fact a multitude of independent business units. Clients demanded a seamless solution from MegaBank - one that would take a holistic view of their relationship with all the products that the bank offered.
With this customer feedback, MegaBank Online was eventually developed as a 'portal' of sorts (the umbrella) for all its banking offerings and it proved to be extremely successful.
So what, if anything, does this MegaBank example have to do with digital convergence? It has everything to do with digital convergence.
I don't want to waste time defining what digital convergence is or is not but in the most simple terms it could be stated that:
Digital Entertainment Convergence is the result of an integrated provision of hardware, software, content, services and connectivity that facilitates consumers' enjoyment of digital media.
As I stress above, the key issues are 'integration' without which digital entertainment convergence simply has no place to 'converge' on and 'facilitation' without which the entire convergence experience will remain too complex to appeal to a mass audience.
In this respect, the MegaBank Online example serves us well because of how it managed to bring together 'divergent' business units. By using a 'virtual integration' model where only the backend systems were brought together MegaBank was able to leave the independent business units to operate as they had previously. In the end, this delivered a win-win proposition for MegaBank and its clients.
Within the context of digital entertainment convergence however, we could at present not be further away from achieving a win-win proposition. In fact, many of the players in the industry are currently engaged in an all-out internal war, a war among themselves (Apple & RealNetworks but the latest salvo) or worse against their customers (RIAA rings a bell...). With the notion of integration, harmonisation and standards so anathema to the actual debate - a few but not very serious exceptions notwithstanding - one is left to wonder yet again if the entire discussion of digital convergence is nothing more than the flavour of the moment and if it will really ever come to see the light of day.
Furthermore, many people have confused the debate by promoting the notion that 'convergence devices' - devices that can play or manage multiple forms of digital content - is equivalent to digital convergence. It is not and should not be labeled as such. For example, the personal computer has been a convergence device for decades but it is clear that it has not delivered digital convergence as per our definition.
Until many of the players can work together to deliver an end-to-end customer solution there's little more than zero chance that digital entertainment convergence will ever take off. To deliver the required integration, I predict that we'll either see an absolutely massive amount of consolidation across industry players or a real entente developing to promote a faster customer adoption. Hang on tight to your seats, this one promises to be a wild ride...
Please contact me if you would like to learn more about our Digital Foresight™ program and how we can adapt its learnings to your organisation's particular requirements.