The Thread Briefing: why digital transformation isn't about customers and why the metaverse isn't about place.
The Thread Briefing is back after a short summer hiatus, and this week we’ve got some tasty morsels including the metaverse landgrab, digital transformation, healthcare innovation, and Lizzo selling groceries!
Digital Transformation vs. Business Model Innovation
This was a good read on how the promise of digital transformation has failed to translate into better customer experiences. It makes some great points, especially the idea that the biggest barrier to the transformation required is often the cultural shift and change in behaviour inside the company. We’ve definitely seen this play out first hand: ultimately digital transformation is not about technology as much as it’s about getting a business to work differently, and this often means using new tech, or using existing tech in new ways. Initiatives consistently underestimate the size of the behaviour change necessary among employees and leaders.
However, the article also implicitly (and mistakenly) assumes that the objective of digital transformation is primarily a better experience for the customers. In fact, it’s generally less about creating value for customers, and much more often about reducing costs and extending the lifespan of existing business models. The customer experience is often an afterthought and assumption: if we invest in IT then surely the customer experience will be better, right? “Digital Transformation” is typically code for “let’s drastically reduce cost-to-serve by automating lots of manual/human processes and shift customers off the phones to self-serve via the website, app and chatbots”. There is nothing inherently wrong with this, as it’s often an existential need of incumbents to survive and compete.
Genuinely improving things for the customer, however, requires business model innovation: the creation of new value through new propositions, alongside mutually supportive changes to how value is delivered and captured to ensure value is also created for the business. E.g. Netflix moving from DVDs in the post to streaming, or Apple extending its business from products into services.
Below is a glimpse at part of our Business Model Innovation framework that we use to help our clients identify new propositions, test the biggest assumptions, reduce the cost-per-decision of corporate innovation, and align internal stakeholders around the evidence. If you’d like to find out more, don’t hesitate to drop us a line.
Metaverse Metaphors
While web3 ‘thought leaders’ out-do each other in levels of conviction about what sort of place the metaverse is going to be, very few folks have taken the time to question whether it will be a place at all. 🤔
One of the best things we read recently was this excellent article by Tim O’Reilly (who coined the term Web 2.0 way back when) who introduces another, and in our view more compelling and credible metaphor:
But what if, instead of thinking of the metaverse as a set of interconnected virtual places, we think of it as a communications medium? Using this metaphor, we see the metaverse as a continuation of a line that passes through messaging and email to “rendezvous”-type social apps like Zoom, Google Meet, Microsoft Teams, and, for wide broadcast, Twitch + Discord.
…The interactions are not place based but happening in the ether between two or more connected people. The occasion is more the point than the place.
As an example he cites his daily Peloton workouts he and his wife do, over Zoom, with an instructor.
My personal metaverse prototype moment does not involve VR at all, but Zoom. My wife Jen and I join our friend Sabrina over Zoom each weekday morning to exercise together. Sabrina leads the sessions by sharing her Peloton app, which includes live and recorded exercise videos. Our favorites are the strength training videos with Rad Lopez and the 15-minute abs videos with Robin Arzón. We usually start with Rad and end with Robin, for a vigorous 45-minute workout.
Think about this for a moment: Jen and I are in our home. Sabrina is in hers. Rad and Robin recorded their video tracks from their studios on the other side of the county. Jen and Sabrina and I are there in real time. Rad and Robin are there in stored time. We have joined five people in four different places and three different times into one connected moment and one connected place, “the place between” the participants.
Another provocative framing of what the metaverse might be comes from tech entrepreneur Shaan Puri, who claimed that instead of being a place, it is more likely to be “a moment in time where our digital life is worth more to us than our physical life”.
Both Shaan’s and Tim’s definition are incrementalist in nature, suggesting that the seeds of the metaverse are here already, in places like Zoom meetings, Fortnite games, reddit communities and peloton workouts.
Whisper it quietly, but NO-ONE KNOWS what the metaverse will be. In the same way that back in the mid-2000s when web 2.0 was first muted as being ‘the future’, no-one knew what it would become 10 years later. The only reason we all assume it’s a place, is because that’s been the dominant narrative of companies that desperately want it to be their place.
P.S. for a great example of this failure to foresee the future, check out the last link at the bottom of this newsletter.
Tasty summer bites…
WeWork co-founder Adam Neumann is back with another retail start-up called Flow. They don’t have a product, or a website really, but they have $350 million from VC investment firm Andreesen Horowitz, and a whole lotta chutzpah.
Grocery delivery app instacart rolls out grocery 'collections' (aka playlists but for food) curated by public figures and influencers, including Lizzo and themed around events such as “Game Day” or “Self Care Sunday”. No, we’re not sure either.
There aren’t 200 human biases, there are simply 200 deviations from the wrong model: in this powerful polemic Jason Collins takes a swipe at the lazy way in which lessons from behavioural economics / science are often applied. He argues that we can and should try harder to come up with a better model of decision-making, rather than just explaining everything after the fact with a bias.
Sobering reading by Harvard Business Review on exactly how the Supreme Court’s recent decision to overturn Roe v. Wade will stifle investment in health care innovation and harm female founders and women’s careers.
Off the back of the same legislation, Google will now be labelling health clinics that provide abortions in their Maps and search products.
And finally…
Here are some just wonderful images from the 90s of what people thought the internet - aka information superhighway - would look like. More here. 👨🏻🍳💋
Thanks for stopping by.
If you have comments, feedback or suggestions, please hit reply and let us know.