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Perspectives

Digital Success: How to Avoid the FANG Trap

2016-10-26


Blindly following Facebook, Amazon, Netflix and Google won’t quickly transform your organization into a digital powerhouse. Learning how these companies distill and make meaning from big data and thick data, however, is a great starting point for winning with digital.

Facebook, Amazon, Netflix and Google (aka FANG) are among the best-performing digital native companies of the century. Because of this, many industrial and less tech-savvy companies wrongly believe they can find business success by cloning or doing what these digital darlings are doing. (See our video that explains why established companies are so enamored with digital natives.)

How to Join the Trillion Dollar Club?

This is a mistake. Or as Admiral Ackbar from the Star Wars saga famously quipped, "It's a trap!" We refer to this tempting, accepted but errant behavior as the FANG Trap. 

As an example, consider John Lewis, the UK’s number-one luxury home, fashion and electronics retailer. Like all retailers, the department store recently found itself in a state of digital upheaval. But instead of doubling down on retail-only or trying to directly compete with Amazon’s superior distribution, the company set out to become the leading omni-channel retailer in the region. 

John Lewis accomplished this by consolidating its physical, Web and mobile channels into a single order management system, which gave the company a 360-degree view of customer, product, orders, returns, inventory and pricing across touchpoints. The company furthered this spirit of innovation by embracing “smart” showrooming and launching JLabs, an internal incubator to help it foster and pilot new retail ideas. 

Admittedly, these are small victories, and the company’s digital transformation is still a work in progress. But by avoiding the FANG Trap, the retailer was named “omni-channel retailer of the year” in 2015, its custom satisfaction has risen every year since transitioning, and it was the only top retailer whose website didn’t crash during the UK’s first official Black Friday last year. 

Your organization shouldn't fall into the FANG trap either, particularly if it wasn’t born as a digital native: built from the ground up to offer a digitally enabled customer experience on a foundation based on the SMAC Stack

The above is a dramatic example, obviously. Here’s a more subtle one. A lot of legacy brands or physical stores are trying to overcome their competitive challenges by throwing technology at the problem, thinking that more technology equates to greater sales. I’m talking about tablets along the factory line, if you will, or touchscreen kiosks near aisle end-caps. One large restaurant chain we are now working with learned this lesson the hard way after discovering a previous million-dollar investment in tabletop devices was only being used by 1% of its customers. 

Another leading nationwide retailer client of ours was previously considering digitally-enabled (and expensive) shopping carts before our research revealed that customers had no interest in using them. Instead, we began asking why consumers still enjoy physical stores, even though a sizable amount of their purchases had moved online. Afterwards, we helped our client envision a concept for the future that nearly eliminates customer waiting times altogether, whether in checkout lines, pulling products or loading their vehicles. Doing so reduced the No. 1 reason customers don’t like shopping in a store: waiting.

Of course, the opposite strategy doesn’t work either – doubling down on what your organization has always done and hoping for the best (R.I.P. Blockbuster). Finding your own digital success, then, lies somewhere in between doing nothing and falling for the FANG Trap. More specifically, it always involves the following three things:

Don’t completely change identity because it’s the sexy thing to do.

Don’t just rip and replace existing infrastructure, systems and software to match the model of your primary competitor. Examine your key physical and digital assets. Although tarnished, they may contain more value than you give them credit for. Then make calculated decisions that enhance, polish or improve them in a way that speaks to modern demand. 

Implement social science before technology.

To avoid throwing fancy but futile technology at your organization’s business model problems, understand why customers behave the way they do. Ask why they do what they do, when, how and where (i.e., you can start by exploring thick data). Using big data, you can then apply human emotion and social science to qualify otherwise meaningless data.

Bide your time with a focus on efficiency and effectiveness.

Changing the direction of your organization usually requires bravery, risk, new skills and patience. To help withstand the test of fast-moving technological time, focus on first improving business efficiency and effectiveness as you consider your reinvented model or next strategic move. This will buy you time so you can ultimately build experiences that are hyper-personalized and increasingly digital. 

Big companies are big for a reason. These companies should leverage the assets they own: tons of customers, established infrastructure and volumes of data on their customers, brokers, vendors, processes, transactions – all stuff that start-ups couldn’t possibly have.

Although we’re quickly moving from the industrial to the information age, that doesn’t mean once-leading or otherwise traditional companies can't become digital. But they must do so with purpose, boldness and a willingness to stay true to their own DNA while evolving with the help of naturally selecting traits. 

This piece was written by Lester Lam, a Vice-President of Strategy Consulting with Cognizant Digital Works. To learn more, please read Being Digital Means Being More Human or visit our Digital Works practice

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Digital Success: How to Avoid the FANG Trap