digital mindset 1/2 Behaviour & transformation

When I entered the sector, operating an ISP (Singapore, 1991) - looking back ISPs were the first disruptor (telcos) - I got to interact with the early global internet industry and user community.  I found the participants atypical, strange even, the way they got things done, interact…remarkably open, social, highly collaborative, participative, unusually transparent.  And oddly after paying for internet access, everything else appears to be free!  It seems at once contrarian yet effective, not a combination we are used to.  Piqued, I have been tracking its effects since. 

That behaviour is no more strange.

This is my take on a digital mindset.

I’ll look at three of its characteristics; openness, customer-centricity and data-consciousness.  And begin with culture.

Culture begets behaviour; collective behaviour governs the organisation

Some 18 years later when I began deliberately to look at the changes being wrought by the internet, of which the internet startups were in the front seat, the first thing I noticed was that the startups operate differently.

What struck me is that they have similarities of behaviour that I encountered back in the early 90’s.

“Free and open’ was what made the internet work then, and it’s a critical principle now. I didn’t have to ask permission to build my first websites.  I had unfettered access to material that helped me teach myself how to code. As I learned more, I quickly came to understand that the internet was so much more than a network of cables and wires that connected computers around the world. It was a platform for the purest expression of freedom, openness and possibility that I had experienced in my life”  – Chad Dickerson, founder of Etsy

“The Internet is characterized by openness and collaboration.” - Pony Ma, CEO of TenCent quoted in the China Daily, 18 Dec 2015

“…transforming this 146-year-old institution will take more than just talk. And so to win its place, Goldman Sachs is starting to open itself up in ways that once would have been unimaginable. It’s letting in outsiders, forging new partnerships, and showing its vulnerabilities—even learning to become less secretive.” – ‘What does it mean for Wall Street that a rising number of tech companies have no plans to go public?’, Bloomberg, 18 Mar 2016

Openness was a common theme as I waded through the cases.

Closed vs open

A true short story….

In the early 1990’s we, operators of ISPs, then the only visible internet industry participant, attends annually a conference, INET.  During evening drinks, a ritual was to share statistics on the growth of data traffic out of a country among a group of regulars from different nations.  It increased yearly relative to telephony traffic.  We knew change was coming but the telco executives I spoke to merely swept that aside.

The early participants – the ISPs were, in fact, the first disruptor, of the telco space.  Today telco infrastructure is essentially IP (same technology as ISPs) including fibre/4G/5G/6G.  Their main source of revenue is broadband (data plans in celco-speak), not telephony.  The transformation is ongoing and at this point, many still cannot quite figure out the digital economy - how they can work within it - stuck in the old ways.

‘Convergence went through a mini-5G hype in the ’90s.  But it struggled.  Until the internet.  Isn’t broadband a converged ‘telco’ pipe for text, voice, video?  The difference is that the telco does not control the services around it.  And to think triple-play was and is still a key telco strategy when consumers prefer the flexibility to mix and match what they like, when they like through the internet. [With triple-play,  a telco offers converged bundle of services - telephony, text and video (cable tv) delivered through the telco cable in your home.]

Old telco is classically top-down.  They controlled the entire ecosystem that offered telephony++, the rationale for triple-play.  Partners were few and they had to adhere to strict rules.  They command-controlled everything.  They are a closed system.

In contrast, the ISP ecosystem is different, opposite actually.  ISPs rely on partners by definition (internet = internet of networks) ie. other ISPs in order to function.  The interconnection model of old telco (the reason international calls are costly) does not apply as the ISP model is based on cooperation.  If an ISP is roughly of the same size, the partner ISP would interconnect at no cost, this in contrast to the telco model where payment is in the algorithm.  They are a more open system.

Telcos would adjust better to become a serious player in the digital space if they think open, and act it and play by the rules of the digital economy.  After all, the ISP is really the foundation of the new ‘telco’ (re-read para. 3).  Triple-play, I’ll wager will lose major telcos a bundle, a costly experiment in the wrong era.

Open models lead to collaborative ecosystems & new ways of getting things done

Banks are going through the same journey.  Like telcos they are famously closed.  Fintech is forcing a more partner-centric model, directly or being prodded to by progressive regulators.  Thus we have banks working with fintech and banks adopting open API.  I’m not sure how many banks realise the future of banking is cooperation but regulators seem to.

If you think through these two examples, you’ll find similarities of old vs new in your industry.  The way the internet transformed the telco industry is modernising banking and other sectors now.

Back to my short story…in those early days, the command-control mode was still there but watered down.  I sense it was peer-levelling.  When we needed help, there was then zero internet expertise in Singapore, they readily offered, gratis, whilst the norm was to pay for it.  The team developed the skills required to operate an ISP through the ISP community treated as one peer to another.

Openness is the operative trait of new (digital) culture.  It leads to new ways of getting things done.

Perhaps triggering a shift in thinking …..

Internalisation vs externalisation

Along with a closed (‘er) culture, organisations are traditionally tasked internally.  It’s changing gradually.  This may be one reason.

“No matter who you are, most of the smartest people work for someone else”

                                                         Bill Joy, co-founder of Sun Microsystems

The internet connects, with massive reach, to information and resources that were once nigh impossible to locate.  A partner, an expert or …. a community may be less expensive and better for a specific task than an internal resource.  The community-driven approach, a crowdsourcing method can even be more impactful.

Take software, the second sector after telcos to be disrupted.  Open source software power just about the entire global internet and are used by most of the startups including the largest.  It is orders of magnitude cheaper than traditional software, in part because they are community developed.  To a user, this is good software at low costs.  But unconventional!  

Having an open mind helps.

‘John Fluevog, a designer of high-end shoes created open source footwear by allowing customers to submit designs. They get to put their names on the shoes.  The best ones get put into production’

To a brand like Mr Fluevog, crowdsourcing is an effective technique.  With the ‘crowd’ participating by co-designing the shoes, he gains fresh ideas, knows what customer wants (instead of best guess), gets plugged in to the latest trends.  And it doesn’t cost him extra designers.

Print media, classically internalised can benefit from without.  Traditionally articles are written internally.  They are top-down, command-controlled operators.  Editors decide what readers should read.  Until the internet, they were in the best position.  Reddit, where it is the readers, shows an alternative way forward.  New media like Medium, Quora and YouTube practice Bill Joy’s principle.  Indeed their business models are built out of externalisation (next para.).  But as with anything, it should be a mix and I note, until the industry finds a fix for fake news like they did for spam years back, the pendulum has swung a degree back towards traditional print media.

I call all these ‘externalisation’, use of external resources that includes open API to engage partners, crowdsourcing to encourage customers and the public to partake in aspects of day-to-day operations.  And an externalised (vs internalised) culture for those that can both see the benefit and practice it for suitable tasks.  Such as practitioners of the sharing economy with a business model that is largely based on the crowd. 

Most of us will readily agree with Bill Joy but how many will practice what he’s suggesting?  It’s a mindset thing, difficult for habits to change.  Which is too bad for some!

‘While Facebook focused on creating a robust platform that allowed third-party developers to build new applications, MySpace did everything itself. MySpace cofounder DeWolfe later acknowledged that its decision to keep all development in-house was ill-advised at best’

  - “Innovation, Openness & Platform Control”, Geoffrey Parker, 3 Dec 2013, IDE/MIT

An open, externalised strategy it seems worked for Facebook.

It also worked for Google.

Google’s PageRank mirrors the internal versus external argument.  Instead of a committee categorising content (internally, like Yahoo originally did), PageRank hands the role to algorithms and websites (outsiders) - websites will only link to another if the content is good ie. by linking to one another, websites rank each other and those with more links equates to better content, thus the superior results of Google search - winning the search engine war.

It’s a challenge for traditional firms to think up something like this, what more, use of unconventional (for now) ways....but have the mind set along the lines of peer-to-peer (model, vs centralised) and externalisation.  Cultivate an open outlook!  Imagine the number of internal staff required to categorise the world’s websites ie. savings through externalisation! 

Allied to externalisation is new respect for partners, customers and the public.

In the next post, we’ll discuss customer-centricity, an important strategy for firms battling it out in the digital era.

digital mindset 2/2 Customer-centricity

This is the 2^nd of two posts.  The first post (here) raised  the idea that culture is changing in the digitising economy, in part driven by the competitive environment, ‘customers are a click away, so are competitors’.  This levitated the once less important priority of firms, customer service, to significance.

Customer-centricity

With heightened competition, new respect is natural but that’s only part of the trend.

“From the outset, the key to Jeff Bezos’ success has been his intense and unwavering focus on customer satisfaction and on his audience: the end user.  He refined and perfected this model in books, and then scaled and expanded it while always keeping consumers front and center, often anticipating their needs before they realised them”

                 – Jamie Dimon, CEO JP Morgan Chase on Amazon, Time, 30 April ’18

An aside - I consider Amazon a prime example of a traditional business, remade brilliantly for the digital era, applying the new rules and methods, with the right ethos.

It can also lead to a new sales funnel.  Traditionally marketing develops would-be customers.  Today, it can be customer-led.

‘OnePlus, which sells about 70 per cent of its phones outside China, has become a must-have phone for techies who appreciate its clean build and fast performance, according to analysts. Like Xiaomi, the company has built up a dedicated following through user engagement forums and events and it uses that feedback to develop new products.’

– How popular phone brands Oppo and Vivo win without celebrity executives, South China Morning Post, 30 Sept 2019

Even more impactful are comments left on products and services online. Good remarks lead to more sales, conversely for adverse customer experiences.

As the economy digitise, customer service cannot now remain a marketing line.  It is no more a cost centre.  It boosts revenue.

Some personal experiences....

I don’t know if it’s only me but many organisations I interact with seem to priorities internally, making things simpler for the staff.  And if it makes it easier internally, it makes it less convenient for those they serve, like filling multiple forms and in full when the first form has 90% of the details, like asking me to call back instead of leaving my number, filling in full details for an auxiliary service when they already have 95% of the data, ......... long list!

Such broken processes lose a percentage of customers, particularly online.  Curious consumers included.

It could be the lack of manpower but if the manager is endowed with a digital mindset, he would not stop there but ponder alternatives, perhaps taking a leaf from Omidyar who demonstrates externalised thinking.

‘Omidyar had built eBay to be not just a shipping site but a community…for practical reasons.  As eBay gained popularity, so many buyers & sellers came that he could not possibly answer all of their questions about how to use the site.  By including their email, Omidyar allowed users to communicate directly among themselves to solve each others’ problems.  And Omidyar created a message board that allowed users to share information with the entire community without routing it through him.  The more self-sufficient the users became, the fewer demands they put on his limited time.’

– The Perfect Store…This book is about Amazon; the first two chapters
               show how the community can be engaged and how important that is

The manager would likewise iron out kinks in the end-to-end customer processes over time in a deliberate manner.

Customer-centricity is the act of putting the customer centre in a company’s strategy, and meaning it…. and in decision making, with the aim, always, of seeking to make things easier/faster/convenient, continuously, for customers and treating it as a relationship.  The organisation innately believes this is the best way forward and for it to profit.

In the digital economy, it is about end-to-end experiences, more respect for customers and if possible inclusion of customer/consumer in the processes.  Being involved may please them.  Humans are social creatures. But a business may want to do that not because more sales can then be pushed to them but because their satisfaction brings more sales, directly and indirectly, like leaving good comments.  These days, online feedback is as impactful, if not more, than brands.

As the processes are end-to-end, a customer-centric mindset should permeate all levels of the organisation, not left to customer service.  Perhaps even to the extent of framing goals in terms of customers.  So applying tech is to make it easier for customers, creating a community to empower customers is to assist other customers and so on.

We’ve heard this “customers are the sole reason why companies exist” so is it not time we mean it?

With that, a final point.  To deliver the best possible service, personalisation is likely the most impactful where the idea is to know each customer well enough so that personal experiences can be tailored.  That’s where data comes in.

Data-conscious

Data supports the customer process.  And in turn the business, like improving loan loss ratio for a bank.

Okay, data privacy is a major issue but who says it can’t be used legitimately for the benefit of customers, like for car or health insurance that incentivises consumers to be more careful.  I actually like it if an ad pops up as though it knows I am looking intently to buy a door knob, rather than hoping because I viewed an eCommerce site.

There is already an overdose on this subject and what with The Economist hailing it, placing it squarely upfront and into our nomenclature.

Here I would just like to suggest that like customer-centricity, data awareness should be nurtured into every nook of the organisation, all, cognisant on the role of data.  Data-driven decisions cannot be made only at the strategic levels.  Data possibilities are best recognised at the point of origin, whether from the marketing personnel manning event registration, technicians fixing problems or the sales folks.  Organisations have internal suggestion boxes to make an improvement to the organisation, perhaps this should be extended to data. 

Lastly businesses may want a thought through plan, less they regret specific data in the future that they can’t now have to make a critical decision.  That’s the data plan.

Digital-mindset

It is a people issue.  To transform, carry out digitisation or adjust to the digitising economy requires a slight shift in thinking.

Be open!

What do you think?  Input, comments appreciated.