As digital innovators upend established business models across industries — and more products and services are commoditized — enterprises must transform not only themselves but also the experience they deliver to users.
This existential challenge is hitting multiple industries, driven by a convergence of new technologies and societal changes. Mobile technology, big data and cloud computing have already created new industries with ride-hailing apps such as Uber and Lyft. Autonomous vehicles, augmented reality and blockchain’s distributed ledger technologyare challenging businesses across industries to rethink what they offer consumers and how they offer it.
How, for example, does an auto manufacturer keep its customers when ride-hailing services and autonomous cars make private vehicle ownership less important? How does a communication services provider prevent customer churn and ruinous price wars when phone, Internet and cable TV service become commodities? And how does a bank differentiate itself when its competitors offer much the same rates, fees and online banking options?
The answer is to deliver ever more compelling digital services and experiences. The need is clear, with market researcher IDC predicting that by 2020, 50% of global 2000 companies will see most of their business depend on how well they can create digitally enhanced products, services and experiences. Even today, 40 of the top 100 product-based organizations are dependent on software to drive their business, says consulting firm McKinsey & Co.
But being first to market with ground-breaking and market-shaping applications is not so easy, especially for organizations locked into traditional application development methodologies.
Start with the Human Consumer
For us, “digital” means using technical and societal changes as opportunities to create new products and services, and deliver them in new and compelling ways. It requires reimagining everyday interactions from the perspective of the consumer, not through the constraints of legacy technology platforms. And it requires designing every offering from a cloud-first and mobile-first perspective, and quickly fine-tuning every feature or function so that it meets a real human need that your competitors aren’t addressing.
In reaching for digital, it’s actually a mistake to start with the latest, shiniest new technology. Focus instead on the human aspect by getting a deeper understanding than ever before of your customers, your interactions with them and the hidden needs that new technology could meet.
The road to digital success does not begin with the conventional, internal process of theorizing how, say, a voice-activated personal assistant or a 3-D interactive kiosk in a store might drive more revenue. Instead, it starts by tapping skills from the social sciences, such as anthropology, sociology and behavioral science, to engage in open-ended, on-site observations of how your customers actually work, live and play to uncover what you didn’t already know about them.
Doing this before coding saves enormous wasted effort. More importantly, it helps ensure that development budgets are actually applied to products or services that will make a difference. This essential research is the “insight” phase of what we call “Insight to Code.”
On to Code
Once the critical consumer needs are identified, your organization needs to quickly produce production-ready code, review consumers’ reactions to it, and iteratively tweak the code to ensure every feature meets a critical consumer need.
The result should be apps that are:
Cloud-native to reduce costs, speed time to market and enable the scalability required to serve today’s and tomorrow’s digital customers.
Our own work has identified several examples of how human-oriented insights, combined with the latest development techniques, can deliver innovative competitive advantage. They include:
An adventure-planning app for owners of sport utility vehicles. Beyond increasing product satisfaction (and future sales), an SUV manufacturer could receive commissions from trip-related purchases (such as campsites and equipment rentals,) location-based advertising, app subscription fees and sales of data-driven insights about consumer travel patterns.
A service that remotely links “smart home” devices to each other and to third-party services such as entertainment or shopping. Beyond higher customer satisfaction and retention, a communication services provider could receive fees from sales of such services, increased sales of the devices themselves and data-driven insights based on consumers’ use of the devices and services.
An AI-guided mobile app that helps consumers track spending and investments to make financial decisions based on their actual spending. Beyond increased customer satisfaction and loyalty, a bank could receive referral fees for mortgages and related financial services, sales of location and activity-based advertising, subscription fees and the sale of insights into consumers’ behavior and needs.
In each of these cases, the ideas for these applications were not derived from speculation on what consumers might need. They instead came from direct, on-site observations of what consumers actually need and weren’t getting.
The Road Forward
The future is being shaped by still-emerging technologies such as self-driving cars, blockchain and virtual reality. Rather than guessing how customers will use such capabilities, companies that combine in-depth ethnographic research with ultra-agile development can understand people's needs and deliver applications focused on those needs before their competitors.
As a result, they will:
Invest more confidently by validatingnew ideas with human insights.
Eliminate waste by prioritizing development on actual customer needs, and using cloud-native technologies that let them buy only the capacity they need while automating costly IT management.
Compete more effectively by bringing the right applications to market more quickly, creating not only sustainable short-term advantage but also entire new markets and business models.