Remaining relevant in the digital age

December 07, 2016

Head of KPMG Innovate, James Mabbott, uncovers the point of difference between those who remain resilient to change and those who get left behind.

customer-led disruption

Novelist William Gibson is credited with saying “the future is already here – it’s just not very evenly distributed”. 

This in a nutshell epitomises the challenge for mature businesses and industries. 

Their possible futures are being played out by the emerging digital versions of their existing selves. Smaller, more nimble competitors built on the infrastructure of tomorrow’s enterprises are using new tools and methodologies to disrupt established players. And they are able to do so unencumbered by legacy systems and processes of larger players.

For many in established businesses it is not a case of if but when in terms of the threat of digital disruption. But the phrase “digital disruption” hides a subtle nuance when discussing disruption in the context of business: disruption is actually a human story, not a tech one. 

Digital services and enterprises on their own do not disrupt established businesses. Rather digital services, technologies and business models enable your customers to disrupt you.

Take for example the rise of marketplace style businesses such as Uber and their impact on the incumbent taxi services. The simple fact of Uber’s existence did not in itself disrupt the taxi industry. But by offering a better customer experience, a more cost effective service and ease of use to the passenger, customer-led disruption was enabled.

If you were to look at the legacy business model for a taxi company in Australia, it focuses on the regulator, the operator and licence holder, and the driver – rarely does the passenger feature. Today, passengers can actively compare their taxi journey experience with that of the Uber model – and customers are voting with their digital wallets.

The key for incumbent large corporations to stay relevant is customer focus. This is not a new mantra – most of my working career has been spent in or working with organisations trying to achieve customer centricity.  What has changed in the last 10–15 years is the realisation that terms such as “customer ownership” are by and large meaningless. Customers are not owned. They are earned and need to be maintained. 

To do this requires an increasing emphasis on data to better understand customers and their needs. It means the use of customer journey mapping tools alongside this data to really explore the customer experience at every single touch point. It means the analysis of ethnographic studies to see how customers use products and services.

Most importantly, organisations need to bring the customer into every stage of the product development process. Old world, business case-driven product development processes need to be replaced with customer data and hypothesis-driven experiments. The product development process needs to include customer testing at every stage, from idea to prototype to final product. And this process needs to allow for customer feedback and for data to drive decision making and change along the journey.

Consumers’ experiences, and hence their expectations, are increasingly being shaped by the proximity, intimacy and aesthetic provided by their day to day interactions with a range of products and services being delivered digitally. Whether it is the beautiful simplicity of the Google search bar, the elegance of Apple design or the magic of Disneyland – the benchmark on customer experience – attraction and retention is being set globally. As a result, the customer experience needs to be judged not just against best in class for a particular industry or product segment, but against best in class – full stop.

Market leaders today who survive well into the future will look across industries in their response to digital disruption and adapt and change to the new, unevenly distributed future.

James Mabbott

KPMG partner and Head of KPMG Innovate

Read next: PwC’s Technology Innovation Leader, Dr Crighton Nichols, describes the tools that allow forward-thinking organisations to learn faster than their competitors. 

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