How disruptors use digital transformation to gain sustainable competitive advantage

Digital disruptors like Uber, Airbnb and TaskRabbit are using digital ways of working and technology to aggressively take B2C market share from both big and small companies alike.

Right now they look unstoppable – but how did they did achieve such a feat and what can other sectors (especially those in the B2B space) learn from this experience?

One way to understand their success is to consider how they challenged – and then used – “Porter’s Five Forces” to gain competitive advantage…

(It’s also worth noting that the “Five Forces Model” was developed by Michael Porter in the late Seventies – digital and business Strategy are two sides of the same coin)

1. Threat of new entrants:  Digital disruptors have arguably penetrated markets where barriers of entry are relatively low for smaller companies (e.g. taxi hire, rental accommodation, home repairs, etc) but industrialisation of such services at a global level was previously thought unfeasible.

Yet these disruptors have succeeded at this level not by overcoming such barriers (like start-up/sunk costs, licences/rights acquisition and customer loyalty) but by mostly “subverting” them to deliver services at competitive prices.

For example; Uber provides a platform for customers to contact directly a driver located nearby – effectively eliminating (or replacing?) the established “middleman” taxi firm or other service provider competing in that area.

Uber doesn’t have to carry the costs of running a fleet of taxis, the majority of any local laws or regulations remain the risk of the driver/supplier, and switching costs for customers to use its service are virtually nil.  These barriers of entry have now become a threat to existing taxi firms because they impact their ability to compete with Uber on price and customer convenience.

2. Threat of substitute products or services: A challenge levelled at disruptors is that their commercial model could be easily imitated by other digital service providers.  But this is where they exploit first-mover advantage – they have already created large scale services used by millions of people; a customer could find rental accommodation using a new, different service for their long trip away to an unknown place but why bother when Airbnb is an existing reliable brand they trust?

3 & 4. Bargaining power of customers/buyers and suppliers: The disruptor’s role is to provide a digital service that brings buyers and suppliers together at the right price – TaskRabbit is a marketplace that gives customers and contractors access to the same information (including requested service, desired price and ranked supplier performance) to enable an informed purchasing decision for trade services. TaskRabbit’s success comes from effectively using buyer and supplier bargaining power to drive better collaboration between customers and contractors rather than itself being challenged by such competitive forces.

5. Intensity of competitive rivalry:  A digital disruptor turns competitive rivalry on its head by making it a lot harder for incumbent players to strategically identify, assess and respond to the threats they pose.  Uber, Airbnb and TaskRabbit don’t buy or supply the services in the sectors they compete in – they are not direct competitors in a traditional sense.  Rather, they are convenient intermediaries that offer customers faster, smarter ways to buy from suppliers.  Their strength also comes from them using their established global brands at a local level in markets where switching costs are low for customers.

What could this mean for B2B service providers?  It should be noted that the disruptors explored here compete in providing B2C high volume, low risk “simple” services. Conversely B2B providers supply high volume, high risk “complex” services requiring them to have a deep historical understanding of the sectors they serve. Such entrenched capabilities give these existing players the strategic opportunity to combine their skills and experience with digital to create new services disruptors can’t imitate.

What strategic risks and opportunities do you think organisations face as digital continues to penetrate all sectors? Please share your feedback below.

For more information about digital transformation please contact the Sopra Steria Digital Practice.

Mind the GaaP – shared technology platforms and data analytics

The outcome of the government’s digital strategy has been higher adoption of on-line services and the introduction of new technologies – including social media, mobility, analytics and cloud computing. But as government delivers services that are simpler, clearer and faster to use it also creates increased expectations.

First, citizens demand services that are often universal but also reflect the levels of personalisation they get as private consumers. But government operates as a series of silos. Services, processes and technology reflect inward-looking departmental needs.

Second, the public finances demand that government boost productivity using innovative digital technologies. The government saved £18.6 billion in 2014-15 through various reform projects. But the savings attributable to digital transformation are significant but relatively small (£391m).

In an environment of increasing citizen demands and top-down cost reductions, how can technology help government be more responsive but at least cost?

Government as a Platform might reduce unnecessary bureaucracy and costs

Two years ago the Government Digital Service (GDS) set out to transform twenty-five major public services. Twenty digital ‘exemplars’ are now publicly accessible. GDS continues to work with departments to build these and other services in agile and iterative ways.

The next phase of the government’s strategy is ‘Government as a Platform’ (GaaP). This is the sharing of the core infrastructure of systems, technology and processes across departments. GOV.UK Verify is a good example. Rather than having to prove who you are to every government department, Verify uses certified companies (and public and private sector data) to confirm a person’s identify once and for all. Other potential platforms are payment processing, case management and appointment bookings – common services used all around government.

GaaP offers a number of potential benefits. First, enhanced user satisfaction by eliminating the need for a citizen to input unnecessary data and information. Second, cost savings by eliminating administrative procedures and processes (and associated transactions) that are not needed. Third, wider economic benefits by making the data open, as others who are unrelated to government can create new businesses that complement public services. Forth, citizens or community groups might also use this data to hold government to account.

Tailored and automated services offer even greatest benefits

In the private sector an ability to share systems and data through technology is leading to a more personalised service. A user is in full control of navigating, choosing and terminating a set of offers. Back-office integration enables the private sector to offer proactive, enhanced and efficient services.

How might this approach be applied in the public sector? At its most simple, the government might pre-fill data in an application form that it already possesses, based on taxation or benefit entitlements, and notify the citizen via email or text of any changes. But more significant improvements to the quality and cost of public services are available through the analysis of this data (a data platform), leading to earlier and more focused interventions.

For example, approximately 40% of hospital admissions in England are unplanned admissions. They are a problem for hospitals because they are costly and disruptive and increase waiting times. Vulnerable patients with complex physical or mental health needs tend to be the biggest problem.

The detailed analysis of historic patient level data, identification of patterns and predictive risk modelling can predict and identify ‘at risk’ individuals. Unplanned admissions can then be avoided through changes to the hospital discharge process and better co-ordination of care.

Taking it to the next level, ICT-enabled simulation and decision-support tools are also able to analyse large and complex socio-economic data sets on deprivation, crime, health, education, etc. This deeper analysis can inform early intervention and screening programmes, with resources focused on communities and individuals who most need them.

Costs can be avoided by highlighting incidences of unnecessary care or delays in treatment. And by making evidence-based information about options, outcomes and uncertainties available, patients are also in a better position to make informed choices about the treatments available to them.

This proactive approach may not be appropriate for all types of service. It will, for example, depend on access to necessary data and protection and legal access. But, when applied to high-risk and often disproportionately high cost individuals, the savings potentially far outweigh the up-front costs of investment.

What do you think? Leave a reply below or contact me by email.

Broaching the final frontier of unstructured data – the contents of our heads

When asked what we want, most of us struggle to break free from the chains of practicality. This default mental setting provides a defence against disappointment, but also a limit to progress.

For example, if you ask marketers what customer insights they would like, the likely response is a better version – more complete, accurate, timely, granular – of what they already have. But if asked for an idealised list – no constraints – then the list would look very different. The dream for any marketer would be to know at any given moment what each customer wants to feel or be, what they think they need to do or own to achieve that objective, how they plan to act so as to make it happen, how much they are prepared to spend, how far are they prepared to search or travel, etc. Think of the type of insights you would get if you had sensors reading the thoughts, perceptions, hopes, fears, ideals and ideas in every potential customer’s head.

Far fetched? Less than you might think thanks to digital technology.

We already have a sensor semi-permanently attached to our fingertips in the form of a smartphone; and increasingly ones attached to our wrists or faces in the form of smart watches and smart glasses.  (As a result mobile operators will take an increasing share of the customer insight value chain from traditional market research techniques, possibly even creating the next giant of the analytics industry in the process if one of the leaders successfully emulates what Tesco achieved.)

Equally, via social media people have the opportunity to express their happiness and frustration (and other emotions) as they are experiencing them while sharing what they are experiencing via photos or live streaming.

Finally, there is gamification.  Social gaming sites provide a real live environment for testing ideas with target customer groups to yield instinctive responses (those that dictate purchase behaviour for many products) rather than the considered responses that survey-based research typically yields.  Gamification techniques can also be used within surveys to increase both response levels and quality.

How gamification can help businesses glean insights from the final frontier of unstructured data – the contents of our heads – is the subject of a further article on insight advantage… coming soon.

What do you think? Leave a reply below or contact me by email.

Digital transformation in healthcare

Early adoption attempts at integrated care

A health and social care system should be truly seamless so that people receive the right care and support at the right time, in the right place. Services are under intense and growing pressure due to limited funding and to succeed, radical transformation is required.

We need to embrace and develop innovative solutions and truly integrated multi-agency working so that local health and social care systems work as a whole to respond to and meet the needs of people who use health and care services. In an ever increasing older population who are most likely to suffer problems with co-ordination of care and delays in transition to services, it’s essential that we transform the way care is provided with the ultimate aim being better outcomes of care in a holistic approach.

It was about five years ago when, as the Trust Integration Lead in a hospital setting I first had an insight into what we now commonly refer as Integrated Care.

The Nuffield Trust published a report back in June 2011, defining what I think is still relevant today:

‘Integrated care’ is a term that reflects a concern to improve patient experience and achieve greater efficiency and value from health delivery systems. The aim is to address fragmentation in patient services, and enable better coordinated and more continuous care, frequently for an ageing population which has increasing incidence of chronic disease.

At an event that brought together large and SME organisations across public and private sector based in and around the area, I happened to meet someone from Social Care representing the Local Authority. After the introductions we discussed and shared our mutual concerns, benefits and outcomes of collaboration across the Health and Social Care. We identified a project for sharing of information with Child Protection in mind. I had also produced a feasibility study for a simple role-based user access for

  • Mental health nurses to have access to the Acute hospital system
  • Acute clinical staff to have access to primary care systems
  • Acute clinical staff to have access to social care systems

At the time it was a difficult to progress any further due to a multitude of reasons; costs, who would fund the project, buy-in from stakeholders and resource availability. The project set out to foster a better culture of information sharing across care settings thus reducing delays at the point of need and overcoming some of the obstacles to authorised access.

So what has changed and why is it now right for progress to be made in the “Integrated Digital Care” revolution?

Some of the drivers forcing change now are down to:

  • Chronic Diseases, including an increase in diabetes, heart disease, stroke and cancer
  • Public sector savings
  • Healthy Child Programme
  • Reducing “length of stay” and repeat visits to hospital
  • The Care Act 2014

The NHS is looking to improve quality of service, provide a better patient centric user experience by providing the “right care” at the “right time” and “right place”. We should also not forget that staff in these new integrated multi-disciplinary teams must have access to accurate real-time or near real-time information. By taking full advantage of the information revolution we can meet these targets of:

  • Ensuring clinical staff across care settings no longer have to depend on or complete paper records by 2018
  • Care records being digitised, instantaneous and interoperable by 2020

To support these aims the NHS now has an Integrated Digital Care Technology Fund, an Integrated Digital Care programme in place and data sharing projects.

Healthcare and Social Care professionals face challenges in the current working environment and would be more effective if they could:

  • make informed decisions based on better access to information about a range of services
  • avoid the need for ringing around multiple agencies to identify the right service
  • avoid keying in the same information on more than one system by staff in integrated teams
  • do away with multiple computers to access health or social care systems and reduce IT assets
  • reduce the need for completing documentation to share information across services
  • streamline associated paper processes helping to improve on time delays and quality issues

I’ve only focused on one element of the integrated care lifecycle here, but the benefits are significant.

How do you see the Integrated Digital Care revolution adoption as it gathers pace? Leave a reply below or contact me by email.

How to design digital services: imagine talking to your customers face to face?

Your customers have their own personal relationships with your organisation’s products or services. So how can you design the right digital services to deliver this personalised customer experience?

Although the hype of digital talks a lot about such personalisation, it is perhaps ironic that it encourages the use of such ways of working and technology to keep customers’ and employees’ physical interactions to a minimum.

But imagine if you were actually facing one of your customers right now; what questions would you ask them directly to help you deliver a delightful, memorable customer experience? And how could you use digital to respond to their answers?  Here are some indicative examples…

How do you feel about my brand?

How much does your customer actually like your brand? What are the reasons they selected to buy from you? Do their feelings, emotions about your brand align to you own and employees’ views? Such insight can help you assess the effectiveness of your social media strategy and engagement approach – is it effectively building, managing the right kind of relationship you personally want with your customers?

What things should I know about you before I serve you?

What information should an employee intuitively, instinctively know about an individual customer before they start serving them? What things shouldn’t they know or ask about? How can an employee genuinely surprise and delight a customer every time? This is an opportunity to consider how big data and analytics could be used by your employees to better understand your customers – how can you proactively, directly respond to an individual customer’s wants and needs without being intrusive?

How can I better serve you my products or services?

What way is easiest, quickest to satisfy your customer’s requirements? How confident are they that your employees are serving them in a safe, secure way? Does your customer feel special, unique or “just another transaction”? Understanding how and why your customers want to be served can drive effective user experience design – are you making your customers feel like they are valuable to you short and long term?

What other direct questions would you like to ask your customers to help realise effective digital services?  

For more information about Digital Service Design please contact the Sopra Steria Digital Practice.

The Magpie mindset of being digital

I have an issue with the word ‘digital’. It’s innately technical. It makes you think 1s and 0s. Bits and Bytes. Computers.

The issue is that it has become to mean so much more than that. As with much of our professional lexicon, careless usage has led to the term morphing into a description of an ethos, an ideology. It defines the way we work just as much as the tools we use. And that’s a good thing. You see, my problem isn’t with the fact that ‘digital’ has been corrupted beyond its immaculate technology origins. Personally,  I’m more than happy to play fast and loose with the rules of grammar if it helps get the message across. Rather, my worry is that it’s the technological heritage that is holding back the term ‘digital’.

Too often – in my humble opinion – organisations think that becoming ‘digital’ is about the adoption of a specific technology. You know, “If we move our pre-historic CRM database onto some cloud-based, mobile-friendly platform, we’ll be digital, right?” Well – and I salute your endeavour – not quite.  That’ll get you some way towards it, but that alone probably won’t change the way you work.

And that’s the point with ‘being digital’. It is about changing the way you work. The challenge (and the opportunity) with digital is that it’s all or nothing. You can’t just tinker around the edges, replacing a bit of your technology and hoping it’ll fit in with the rest of your operational environment. Being digital is more than just ‘change management’; it’s re-invention. Being digital is not about defining new processes; it’s a fundamental rethink in the way you and your organisation approach problems.

People in digital organisations are like magpies

Magpies pick up, borrow and make use of whatever toolset, methodology or technology that is going to achieve a result. That’s not to say that they treat these tools lightly – they are often experts in each. It’s just that their digital nature makes them distinctively quick at assimilating and deploying them. And if they don’t work? Well, they move on and use something else.

This is why focusing simply on the technology side of digital can be so limiting. At the end of the day, a specific technology in a digital project may end up being disposable. Achieving the result is everything in digital not how you get there. Don’t worry about the technology. It’s the magpie mindset that’s key.

What do you think? Leave a reply below or contact me by email.

Is your jar full yet?

If you’ve never read the “Is your jar full?” story that describes a philosophy lecture a professor delivers to his students, then do take two minutes to read it…  otherwise I may lose you.

It’s an interesting take on fitting the important things into your life but I’d like to turn it on it’s head and re-use the story for another purpose; to describe how to ensure your business transformation programme delivers value.

Let’s think of the planned jar contents as follows (MoSCoW method):

Golf balls – must have deliverables
Pebbles – should have deliverables
Sand – could have deliverables

Our vision statement being “We will fill the jar.”

The students would argue that when you can’t fit in any more golf balls the jar is full and therefore the project vision has been met.

We know this is not the case and that the reality is that it will be a combination of all three BUT when delivering any business transformation project it’s important to not lose sight of what you’re aiming to achieve. I see clients get lost in the detail and, as a colleague puts it, they “look at the bonnet, not at the road ahead”. Some start-ups are a good example of getting stuck tweaking and tailoring until they find they’ve either

a) missed their market time window
b) “perfected” a product that no-one actually needs or wants

Both can be a death knell.

If you’re not careful the same can happen within the scope of your programme.

Trying to fill the jar with sand could be an endeavour that takes you past the point of delivering your vision when all you needed to do was get to the golf ball or pebble stage.

This highlights a key stage in planning which is to determine how to measure success before, or at least early, in the programme.

Including checkpoint reviews against your success measures will mean that you’ll be clear when you’ve reached the “good enough”stage at which point any changes must be considered for the business value they deliver.

I’m not saying you don’t want some sand in your jar but it’s important to understand the value it will deliver.

So what about the beer? I agree with the professor, there’s always time for a couple of beers and what better way to celebrate the delivery of your vision?

What do you think? Leave a reply below or contact me by email.