Disrupting Digital Business: Create an Authentic Experience in the Peer-to-Peer Economy

"Disrupting Digital Business" is going to be most relevant for leaders and executives who want to change their business strategy to reflect the changes happening today. But be warned. There isn't a lot to this book. It's a short primer that just touches on the key points. So it's great if you're looking for an overview, but not so good if you want to dig deeper.

R. "Ray" Wang is the principal analyst and CEO at Constellation Research, a Silicon Valley research firm that advises companies on the future of business strategy and disruptive technology adoption. He's worked with major brands such as Oracle, Ernst and Young, and PeopleSoft.

So, keep listening to find out the three elements you need in place to build a transformational culture, how to develop context when you're swimming in customer data, and the essential elements your product or service needs in order to build trust with your customers.

"Disrupting Digital Business" has seven chapters, with 150 pages, so it's a really quick read. Perhaps a little too quick, as you heard earlier. But if you're only looking for a cursory sweep, this may not bother you.

The book opens by looking at your brand promise, and how important that's become in the digital age.

Most of us understand that, today, organizations don't just sell a product or service. They sell an experience. Your own company's marketing probably reflects this change in focus. But, that's only the tip of the iceberg.

Your brand mythology is also really important. Your company has to stand for something, and today's customers want to know what that is.

This goes deeper than just telling your company story. Every interaction you have with people, at every level, has to reflect this deeper mission. This is your brand's promise to your customers. And when you consistently keep that promise, people learn they can trust your organization.

Trust and transparency are both essential in the digital age. Sometimes, they're more important than the products or services you sell.

For instance, just a few decades ago businesses had brick-and-mortar stores, with shopkeepers that knew their customers. Relationships were established with face-to-face interactions. The shopkeeper knew the individual preferences of his or her customers.

Today, many organizations exist only in the digital world, at least to their customers. You can't shop at a bricks-and-mortar Amazon or Zappos. You can only visit their website.

This is why trust and transparency are so essential. It's incredibly easy for customers to turn to an online competitor if they're dissatisfied or trust is broken. These relationships are fragile, and they have to be reinforced with every interaction.

Chapter two looks at how to transform your business model so that it embraces innovation and technological change.

Wang states that there are two types of innovation: incremental innovation and transformational innovation.

Incremental innovation is slow and steady. It used to be seen as the key to long-term success. But now, it's the norm. Most organizations do it but it's not nearly enough to stay competitive.

Transformational innovation doesn't improve on the current business model. It creates breakthroughs and turns companies and industries on their heads. According to Wang these are the kinds of breakthroughs your organization needs to focus on, in order to stay competitive.

Here's an example. In the 1980s, Sony came out with a double-cassette Walkman, which was an improvement on the single-cassette Walkman they'd developed a few years earlier. This was an incremental innovation.

A transformational innovation was the iPod. The iPod completely changed the industry, and made all other portable listening devices obsolete.

Transformational innovations don't come easy. And, they won't happen at all unless you have a culture in place that supports this kind of change.

You have to ask yourself, "How ready is my organization for change?" If you think your company is truly ready, you next need to make sure you have three building blocks in place.

First, you have to understand your organizational DNA. This means figuring out where your company falls in one of four categories. These are market leaders, fast followers, cautious adopters, and laggards.

These categories are pretty self-explanatory, but Wang goes into greater detail in the book so you can easily figure out where your own company falls.

The next building block to creating a transformational culture is your reporting structure. This is what drives your metrics.

The last building block is your budget. According to Wang, most organizations' budgets are shaped like a pyramid. They're heavy at the bottom, and very light at the top. The bottom of the pyramid represents activities like regulatory compliance and operational efficiency. At the top of the pyramid is your brand promise, and the innovations that might change that promise or how you deliver it.

If you want to transform your organization's culture, you have to flip this pyramid upside down, and think about your brand promise first. This is where you need to invest.

Market leaders and fast followers understand this. Cautious adopters and laggards don't, Wang says.

Chapter three looks at customer relationships, and how much they've changed with the digital revolution.

In the past, trust grew over time, especially when business owners made an effort to get to know their customers, and their preferences.

Today, most relationships are built digitally. Every online interaction builds a relationship, from a Like on Facebook to a click on a website. All these interactions are tracked in real time. And companies now have an incredible amount of data available to them.

The problem is that we're all suffering from information overload. It's all noise.

Wang says that we need to move from real time to "right time relevancy." We need delivery of the right information, at the right time, in the right mode, for the right situation. And the key driver of this is context.

Context is how you put all of this data together to know each customer on an individual level. You know who they are and, more importantly, what they want.

There are several elements within all this data that can help you develop context, and create right time relevancy in your communications.

One of these elements is a customer's role. Who is this person? What's their identity? Another element is relationship. What is this person's relationship to your company? You also have to consider time and interactions. When are they engaging with your company? Where are they located?

The last elements you'll consider are business process, sentiment and intention.

All of these elements are clues that help you build context. And once you have context, you can communicate with your customer in a more meaningful and authentic way.

Now, all this is well and good. But how do you actually use these elements to communicate more authentically? Wang says there are nine drivers for this, which he calls the Nine Cs. He goes into each of these drivers in a lot of detail in the book.

Chapter four looks at trust and transparency, both of which are essential in today's digital age.

Think about how easy it is to start, and end, a relationship with a digital business. When a company we do business with breaks our trust, it's effortless to turn away and do business with someone else.

Wang says that every interaction your customers have with your business, every click on a website, and every call in to customer service is an opportunity to build trust. But importantly, each of these connection points is also a place where trust can be broken.

Obviously, trust is crucial. And to build it, there are several elements you need to have in place. These include durability. How long has your firm been trusted? The longer your history, the easier it will be for people to trust your brand.

Another element is consistency. Do you deliver the same level of quality with each interaction? The more consistent you are, the more trust you'll build. You also need competency, which means living up to your customers' expectations. Timeliness is important too. You need to be timely in everything, from your communication to your delivery.

Other essential elements for building trust are accountability – you have to do what you say you'll do – and respect for your customers. You need to see them as people, not a potential sale.

It's interesting that Wang also includes meritocracy in this list of essential elements for building trust. Meritocracy means that you give fair rewards for actions. In this context, Wang means that there's a system in place that rewards customers for engaging, or for certain types of actions.

He says companies shouldn't expect customers to participate without being rewarded for that participation, with the greater rewards going to the most engaged customers. This is a rather controversial view, and we think it sounds more like straight-up marketing than relationship building. It's a reminder that this book contains the personal ideas of its author, which may or may not work for you or your organization.

In the last chapter, the author goes over a five-step approach that you should take to be successful in the digital age. Yes, it's another list, which makes the content easy to take in if you're flipping through the book, but it reinforces the sense of superficiality if you're reading from cover to cover.

The first of the five steps is design new experiences and business models that reflect your brand's authenticity. Remember, you're not selling a product or service. You're selling people an experience. What can you do to design a new experience for your customers?

Next, develop and nourish a culture of digital DNA. Do this by finding and nourishing what Wang calls "digital artisans." This is a group of people with the right mix of intelligence and creativity. These people will help push digital innovations through your organization.

You also need to apply new technologies to existing infrastructure. This doesn't mean just digitizing something for the sake of appearing new, and it doesn't mean adding a feature, like a mobile app, to stay current. It means using technology in context. So, what could you change or update to give you data that would, in turn, help you improve your customers' experience?

You also need to go from making gut-based decisions to making data-driven decisions.

Last, you need to co-create and co-innovate with new partners. Your organization exists within an ecosystem. So, you can partner with customers, suppliers, vendors, and other businesses to solve problems in a new way.

So, what's our last word on "Disrupting Digital Business"?

We think the book serves as a useful primer for people who are just starting to think about changing their business strategy to stay competitive.

There is some helpful information in the book. But, most chapters were too short to be really useful, and we were left with more questions than answers. We didn't feel there was enough "how-to," with specific, actionable steps, to guide readers through the large-scale change that the book talks about. There just wasn't enough detail.

This is why we think the book serves as a useful overview to a complex topic. If you're looking for a step-by-step, detailed approach to transforming your organization's business model, you won't find it here. But if you want to better understand how technology is transforming business and customer relationships in general, this is a good place to start.

"Disrupting Digital Business," by R. "Ray" Wang, is published by Harvard Business review.

That's the end of this episode of Book Insights. Thanks for listening.