Strategy. Innovation. Brand.


Let’s Get Digical

I’m becoming a digical life form. Here’s the evidence:

  • I wear an electronic bracelet that keeps track of all the calories I burn. It even beeps to remind me when I sit still for too long.
  • An app on my smartphone keeps track of the calories I consume. In theory, I should be able to keep my calories-in lower than my calories-out.
  • We were in Berlin recently and were very impressed – but somewhat confused – by the extensive public transportation system. The solution? A digital mapping app on my smartphone. We could get from anywhere to anywhere quickly and easily (and drink beer along the way).
  • My smartphone also controls my new digital hearing aids. Among other things, I can program my earbuds to a given location, like a conference room. Whenever I return to that conference room, my smartphone senses where I am and sets the parameters automatically. In some cases, I can hear better than my colleagues with “normal” hearing.
  • All of the devices I use today are external. If I live for another 20 years or so, I’m sure that some of the devices will be implanted in my body.

Digical is a blend of the physical and the digital. I think of it as adding digital extensions to humans (or other animals). But Bain & Company actually coined the term (in a recent white paper) and they think of it as business, not biology.

Let's get digical.

Let’s get digical.

In Bain’s usage, digical refers to the merger of a company’s physical and online operations. When e-commerce took off back in the 90s, some wild-eyed analysts predicted that it would spell the end of brick-and-mortar stores. As Bain (and many others) have pointed out, nothing could be farther from the truth.

As we all know (but sometimes forget) humans are social animals. We like to be around other people. We generally thrive in society and wither in isolation. (It’s why tall buildings make you crazy). For this very reason, Bain suggests that the future of retailing will be the digical world. Retailers will increasingly merge physical stores and online operations into “omnichannel” solutions.

Other industries – especially entertainment and technology – will go digical quickly. Even industries like construction, which might not seem like digical leaders, are getting digital tools to dig better holes and build smarter buildings. Smart tractors use GPS and a databank of seed information to help farmers plant smarter, conserve resources, and increase yields.

In reading Bain’s white paper, three things stood out for me:

  • The biggest change is yet to come – Yikes! We’ve seen a lot in the past two decades. But Bain says the near future “…will bring far more innovation to most industries than they have seen in the past.”
  • Silos are major impediments – siloed organizations will be followers at best, never leaders. Perhaps the first step to becoming digical is to break down silos and…
  • …build a cohesive culture – The Bain authors never actually use Peter Drucker’s famous quote – Culture eats strategy for breakfast – but they certainly imply it. To become digical leaders, focus on culture first.

I like the term digical; I hope it becomes the word of the year in 2014. Bain has a very clear definition and useful advice for businesses. Personally, I’d like to see the definition expanded to include biology as well as business. After all, we’re all going digical.

(Digical is a sales mark of Bain and Company).

Local, Personal, Social, and Always On

social mediaThe Boston Consulting Group (BCG) just published a new study that compares 16 industries in their ability to deliver digital satisfaction to American consumers. What’s the worst industry? The telco/cable industry is at the bottom of the heap. What’s the best industry? Surprise … it’s personal banking.

BCG surveyed 3,135 consumers in March 2013 and measured satisfaction with 17 different digital “interactions”. These were grouped into four broad categories:

  1. Research – interactions include the ability to find information quickly and easily, the ability to find better prices, etc.
  2. Transactions – the ease of making the transaction, the ability to buy what I need, etc.
  3. Post-transaction activities – including social features, customized communication, and mobile access.
  4. Other – including quick access to help and the degree to which I trust this transaction.

The researchers asked consumers to rate each interaction in two ways: 1) how important is it?; 2) how satisfied are you with it? With these data, we can compare expectations and how well those expectations are met.

The researchers crunched all the data and compiled the 16 industries into four categories:

Leaders – consumers had high expectations of leaders and, by and large, their expectations were met. In general, the leaders scored well across all four interaction categories, from beginning to end. (Actually, the process never really ends). The four leading industries are (in order) personal banking, online merchants, media retail, and electronics retail. Personal banking leads by a wide margin, with a total satisfaction score of 15.2, compared to 11.8 for online merchants, the second ranking industry.

Aspirants – these industries do well on the research interactions but lag on the transaction and post-transaction categories. In other words, they get off to a good start but don’t follow through well. Consumers are not displeased with aspirant performance but think it could be improved. Industries in this category are: apparel retail, airlines, investments, and hotels.

Sleepers – consumers have low (digital) expectations of sleeper industries … and those expectations were fulfilled. Sleeper industries are: supermarkets, automobiles, and real estate.

Laggards – consumers have higher expectations of laggards (than of sleepers) but low satisfaction. Laggards fall behind in all interaction categories, from research to post-transaction. Laggards include: utilities, government services, health care providers, insurance, and (worst of the worst) telco and cable

Consumers want the digital experience to offer more than the physical experience. Digital might offer more options, more information, better prices, or more convenience. It might even be fun. Generally, consumers “expect the digital experience to be local (recognizing where they are), personal (tailored to their individual needs and preferences), social (shared with their friends) – and always on.”

The study also points to the growing importance of mobile access. Roughly half of Millennials (born 1980 – 2000) use mobile devices while shopping. For older consumers, the rate is approximately one-fifth. Mobile access enables two key trends:

Showrooming – check out the merchandise in a brick-and-mortar retail outlet, then compare prices and buy online.

Omnichannel – use the entire array of online, mobile, virtual, social, and real world channels to make a buying decision.

As the authors point out, the purchasing process is no longer linear; it’s now fluid and dynamic. To succeed, companies will need to enhance satisfaction through the entire range of interactions and do it through all channels. It’s a daunting challenge. The reward, however, is a slice of the $450 billion e-commerce market that BCG projects by 2016.

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