The brave, new world
Social media technology has delivered transparency to the marketplace. Economists long referred to this as perfect information—where all producers and consumers share all knowledge of price, utility, quality and production methods. Until the proliferation of accessible information on the web, these data were reserved for those in a privileged position to obtain it through price or position.
Today, besides delivering ubiquitous information needed to make decisions, digital technology serves to facilitate immediate user adoption of strategies often through a single click. This clickstream economy has played out in music, travel, and video. It is a far cry from the traditional consumer behavior model that views consumers moving through stages from awareness to familiarity to consideration to purchase to loyalty. In the brave, new world, technology can have a dramatic effect on strategy as marketers increasingly use it to create value that was until now unthinkable.
We are experiencing what Clay Shirky (2010) dubbed a cognitive surplus, where “previously disconnected islands of time and talent” are using their newfound connectivity to make or mean new statements of value.
Digital technology, coupled with a robust and ever-evolving set of social media platforms, has brought forth new culture of sharing which enables information to blossom into knowledge more rapidly than ever before. Unlike information, knowledge is a human thing. Shirky offered, “some kinds of value can’t be created by markets, only by a set of shared and mutually coordinating assumptions, which is to say culture.”
Evidence of this streamlined model of value creation leading to rapid consumer adoption is found in the meteoric rise of Spotify, Airbnb, and Uber, which have turned existing market harmony in those segments (music, travel, and transportation) upside down both instantly and globally. In the case of Spotify, the music category has evolved from Napster—the illegal yet efficient system of peer-to-peer file sharing—to the revenue capturing iTunes model to the audio streaming service offered by Spotify, and now aped by Apple. Call it the economics of sharing as played out in a technological environment that has Étienne Wenger’s communities of practice on steroids.
Wenger (1998) identified communities of practice as groups of people who share and learn about something they individually do. Social interaction invariably leads to learning, he says. Communities of practice aid in dissemination and interpretation of information, but more importantly, they maintain and preserve knowledge as it is embedded onto the culture. Not only does a community share the knowledge, it shares thoughts on how to improve and use it as well. With these social interactions enhanced through digital communication, connectivity and innovation is greatly expanded.
This new environment and its new sources of innovation create unprecedented challenge to strategic marketers because competitors seemingly spring up out of nowhere from unexpected sources who were not even on the competitive map.
Downes and Nunes (2013) wrote: Innovators “are combining existing technologies that don’t even seem related to your product offerings to achieve a dramatically better value proposition … and they are not sizing up your product line and figuring out ways to offer slightly better price or performance … they are just tossing something shiny in the direction of your customers.”
As if this new kind of market innovation were not enough, many firms suffer from a false sense of complacency: “Just stick to the knitting and all will be well” or “If it ain’t broke, don’t fix it.” Experience suggests that while there is great benefit in keeping the troops focused, capitalism spawns creative destruction as Joseph Schumpeter (1943) predicted, and today, it is operating at breakneck speed.
Even when a firm is able to accurately assess the environment and set course with well-informed strategic thinking, execution is what matters. It is in the implementation and iteration of the strategy that the members of the firm will bring the ideas to life to make the strategy work. Even then, successful implementation is not automatic, and may fail for many reasons. David Maister (2008) suggested strategies fail because they require behavioral change: “The primary reason we do not work at behaviors which we know need to improve is that the rewards (and pleasure) are in the future; the disruption, discomfort and discipline to get there are immediate” (p. 4). For organizations, that means even if we come up with the greatest strategy ever, if we fail to engage the hearts and minds of everyone in the enterprise the strategy may fail to take root with the peeps, and may never find its way to the market.
When we discuss strategy in this book, we never lose sight of the fact that it must serve not only our objective, but also the firm—its people, its customers, its competitive set, and its strengths, weaknesses and market trends. Strategy must be engage the members of the firm, in an alive and interactive manner.
Downes, L., & Nunes, P. (2013, March). Big bang disruption. Harvard Business Review.
Maister, D. (2008). Strategy and the fat smoker. Boston: The Spangle Press.
Shirky, C. (2010). Cognitive surplus: Creativity and generosity in a connected age. New York: The Penguin Press.
Wenger, É. (1998). Communities of practice: Learning, meaning, and identity. Cambridge: Cambridge University Press.