When Innovations Collide

The future of sustained competitive advantage hinges on the ability to effectively manage the collision of disruptive innovations. The digital disruption driven by Mobile, Social, Big Data, Cloud and the Consumerization of IT is impacting every industry. To date, much has been said about these individual areas of innovation. But the areas of intersection – critical to creating value from these innovations – have mostly been ignored. As innovations collide, the intersection must be effectively managed – or the result is distributed chaos. As the digital disruption takes hold across every company, in every industry, the need to transform becomes a business imperative – and future digital strategies will define success or failure.

Digital strategies to manage the collision of innovation should have Big Data at the center and cloud computing as the backbone. The strategy should then focus on the intersection of Social, Mobile, and traditional channels and provide a blueprint to manage the intersection in the context of the broader business strategy. In parallel, while this collision is unfolding, a larger number of employees will be bringing their devices to work, and shadow IT efforts will be emboldened by cloud applications and a more IT-savvy business user. This will cause many companies to look at new organizational models as part of their strategy.      

Increasingly, digital strategy and business strategy are becoming synonymous. Digital is the core component of business strategy because digital disruption is fundamentally changing industries. Consider what many companies face today: 

  1. Value chain disruption
  2. Business model changes
  3. New organizational models
  4. The unification of business and IT
  5. A portfolio of relationships – and the collaborative strength required to manage them
  6. The need to be prescriptive – and the analytic strength required to get there

Let’s take a look at why the lines between digital strategy and business strategy are blurring. I’ll focus on the digital disruption occurring in some key industries:

The Insurance Industry 

The biggest disruptor in the Insurance industry is the customer. Regulation, competition and technology are all factors, but none more significant than the rising expectations of customers. For years, the industry has taken a product view of the market, looking to design products tailored to a particular demographic. But the customer is more intelligent, driven by a broader use of consumer technology and access to an overwhelming amount of information. These factors combined with experiences in other industries have created rising expectations when interacting with Insurance Carriers.

In effect, elements of the innovation perfect storm created this tech-savvy customer and provided a platform for some in the industry to pursue direct to customer strategies. At a broad level, the industry is embracing the notion of putting the customer at the center of the enterprise and driving major transformation initiatives across the industry. There is a lot of buzz around Social CRM, and though regulatory compliance issues still pose a challenge, Social Media continues to gain traction as a tool for Agents. Social computing is also being considered as an enabler of collaboration and training, and increasingly used as a platform for policyholders to share information and create a community.

In a recent article on Insurance technology, Gartner was said to predict that at least one social network will become an insurance sales channel by the end of 2014. The rationale is linked to Facebook’s timeline feature, which documents all the crucial events in a person’s life from getting married to having a child to retiring. The personal information controlled by players like Facebook and Google could fuel their desire to take on today’s insurance giants. The article describes a scenario where you post news about having a child or buying a vehicle, and then receive discounted offers on life or car insurance. These Internet companies are clearly developing financial services strategies and represent another disruptor for the industry.

The argument in the above article is that the vast majority of insurers have failed to develop an effective social media strategy, and have exposed themselves to competitors like Facebook that have access to data that other insurers just don’t have. Gartner analyst Juergen Weiss says that social media providers could form their own business units or develop partnerships with traditional insurers that white-label their products. “It’s just hard to imagine that one day you could get into a fender-bender and the other driver will hand you his Facebook card”.

In addition, insurers are aggressively going mobile and adding applications to their service offerings. Some of these applications change the claim experience and enable the reporting of claims from the site of loss over a smart phone. Others allow prospects to get quotes, check their coverage, make payments or track claims status. Still others provide guidance to prospects and help determine how much life insurance they might need. Consider that some carriers are experimenting with QR codes in marketing materials, which when scanned provide information or quotes via Web pages. Not all applications are customer facing, as insurers also focus on supporting agents with client discussions and facilitating the work of claims adjusters in the field.

The other major digital disruptor in this industry is “Big Data”. The exploding flow of data from social, mobile, and instrumented channels is driving an aggressive focus on advanced analytics. Leveraging all data – structured and unstructured – is a growing practice in every industry, and the Insurance industry is pursuing value on both the claims and underwriting sides of their business. More insight from social data could add tremendous value to fraud and underwriting analysis, while data from sensors and monitors will enable new pricing scenarios.     

The Retail Industry 

The Retail industry is dealing with a rapid consumer adoption of social and mobile innovation that is driving higher expectations and a shift from a transactional model to an experiential one. The industry has historically been hampered by organizational silos that have prevented the realization of Omni-channel Retailing – the key to a seamless customer experience. In a recent Harvard Business Review article by Darrell Rigby titled The Future of Shopping, he states that customers are out in front of this Omni-channel revolution. He references numbers indicating that by 2014 almost every mobile phone in the United States will be a Smartphone connected to the internet, and an estimated 40% of Americans will use tablets such as the iPad. He makes a very interesting statement: “If you doubt whether consumers are ready for technology-driven retail solutions, find a “dumb” video display in any public location and look for fingerprints on the screen—evidence that people expected it to be an interactive touch-screen experience”. 

However, a recent study indicates the gap between consumer expectations and what Retailers are delivering remains large, making digital a critical component of Retail strategies. Consumers want to check availability and pricing and ultimately place orders on Smartphones. In a recent study, 50% of consumers said they expect to shop via tablet. They want to browse and shop via Social sites, expect to use QR codes to access content on their phones, and want discounts sent to their phones. In the not to distant future, consumers will expect location-specific, and even department-specific offers sent to their phones. 

This change in customer expectations is driving disruption across this industry, as technology is set to impact store operations as well. Experts estimate that digital information already influences about 50% of store sales, and that number is growing rapidly. The innovation collision will occur in-store, as digital is integrated with physical space. Retailers will evaluate mobile point-of-sale (POS), mobile payments, interactive mirrors, social media interaction and Wi-Fi in store. Augmented reality will be used to enhance the customer experience, reducing the number of returns from online purchases by providing consumers a better idea of what they’re buying. One example often used is that of a customer looking to buy a TV online rotating a virtual TV to see the connector points on the back and getting an idea of the actual size. 

There are organizational implications as well, as Retailers will need to assess the role of sales associates and the evolving demands of the technology savvy customer. Increasingly, a store employee will need to be tech-savvy and have specialized product knowledge. At a higher level, organizational structures will be reassessed, as companies develop Omni-channel strategies and wrestle with integrating innovative ideas with the base business. This industry was burned by new business models deployed in the Dot-Com days, and will be cautious as they organize around digital.   

There could be a disruption in physical Space as well, as store footprints may become smaller and store counts reduced. An example of how this may play out is described in The Future of Shopping article referenced above. Mr. Rigby describes a pilot by UK retailer Tesco called Home Plus, which focused on determining how they could increase grocery sales to time-starved Korean consumers. In the pilot program, they covered the walls of Seoul subway stations with remarkably lifelike backlit images of supermarket shelves containing orange juice, fresh vegetables and meat, and hundreds of other items. Consumers could simply scan each product’s Quick Response code into their Smartphones, touch an on-screen button, and thereby assemble a virtual shopping cart. Home Plus then delivered the physical goods to the shopper’s home within a few hours. According to Tesco, more than 10,000 consumers took advantage of the service in the first three months, and online sales increased 130%.

The Publishing Industry 

The Publishing industry is grappling with the eBook phenomena – a disruption that is occurring on a faster timeline than many in the industry predicted. A recent report from Juniper Research projects that eBook sales will triple in 2012 to $9.7 Billion. According to the report, about 30% of e-books will be purchased on tablets, 15% will be purchased on Smartphones and roughly 55% will be purchased on e-readers by 2016. And bookstores in general will be under pressure. “Unless bookstores can marry the digital and the physical, then they’re going to go under,” said Dr. Windsor Holden, research director at Juniper Research and one of the authors of the report. 

Other possible disrupting factors are self publishing, which Dr. Holden believes may have serious implications for traditional publishing houses. He states: “By facilitating publishing, Amazon, Barnes & Noble and others are eroding the position of the publisher in the value chain in much the same way Apple eroded the gate-keeping role of the carriers when it introduced the app store.” 

In his predictions for 2012, Jeremy Greenfield, Editorial Director of Digital Book World, focused on the changing role of publishers in the value chain, and the new positions, shifting roles, and job loss that are likely. Mike Shatzkin, a long-time book-industry expert said “Print sales are going to decline and e-book sales are going to rise and that is going to result in organizational changes”.  

Direct-to-reader models represent another disrupting force in the Industry. Some authors have moved away from the traditional five-step model of author-agent-publisher-distributor-bookstore-reader to a more streamlined 3-step model of author-bookseller-reader. 


The Entertainment Industry is wrestling with the challenge of supporting traditional revenue streams while driving revenue growth from digital channels. The borders between Entertainment, Communication, and Information are blurring, and service innovators like hulu and Sling are establishing their role in the value chain. Television viewing is changing with a clear shift in behavior, especially with the youngest audience – an audience where social media competes for their time. The T.V. however is here to stay and will – in the not to distant future – deliver census-measured metrics which will lead to optimized advertising. 

Future strategies have to include all screens (TV, Computer, Tablet, Smartphone), with seamless experiences and access to content on any device, at any place or time. Smart TVs and multi-screen experiences are driving many strategic discussions, and these conversations increasingly include topics like rights management and monetizing and customizing digital content. New organizational models will be evaluated, as companies look to support digital channels in a consistent and cost effective manner. 

The Telecommunication Industry 

In a recent AT&T Press Release, they announced plans to invest $1 Billion in Cloud services and mobility. They said the proliferation of high-speed wired and wireless networks, along with the massive influx of mobile devices and applications has made a cloud and mobile strategy an important component of their roadmap. Verizon sharpened its strategy with acquisitions in the Cloud space and has made its intentions to define the enterprise Cloud very clear. So one key area of differentiation appears to be cloud-based offerings, as the Industry leverages its managed services strength and network advantages to deliver service offerings. 

But the disruption driven by the perfect storm of innovation has far reaching implications in this Industry. Low-cost, feature-rich alternatives to long standing core services continue to erode voice revenues and SMS revenues are eroded by Internet-based messaging and social networking services. Companies are challenged to make respectable returns on massive investment in network infrastructure and spectrum at a time when investing in the future is critical. Strategies to protect core revenues while enabling expansion into new markets are elusive. Competition from content and “over-the-top” companies (Facebook, Google, Apple, Skype, Amazon, etc.) are taking market share and dismantling long-standing Industry value chains. This industry struggles with organizational change and is slow in adapting to a changing industry landscape. 

As a result, companies are looking to adopt new business models to drive profitable growth. They need a digital strategy that moves them higher up the value chain beyond the provision of basic network services, and away from a future of providing just “dumb pipes”. These strategies are likely to embrace two-sided business models that require multiple relationships and an ability to collaborate with other operators as well as “over-the-top” companies. These relationships will drive a re-positioning within the value chain and address the Internet disruptor’s movement into the Telecommunication market. A strong partner ecosystem is required to support these new value propositions, placing a premium on collaboration excellence. 

Other factors to consider in this industry are location-based services, digital wallets, mobile payments, and mobile commerce. In addition, operators will pay more attention to the business opportunity of machine-to-machine (M2M) connections, driving investment and innovation in M2M (like smart energy meters and fleet trackers for logistics).


A major digital disruption is under way in the Banking industry, as digital innovators are ready to take on the giants of the financial sector. Companies like PayPal, Amazon, Zynga, Google, and Facebook are encroaching on their territory, and payment is the battlefield. Banks will need to experiment with new business models and digital disruptions of their own to fight back. Much like Mobile Carriers, Banks can’t simply be the pipe for financial transactions and must create additional value.

A recent PwC survey projects that Digital banking is set to overtake branch networks as the main way customers interact with their banks by 2015 – driven by the younger generation and their preference for mobile devices and computers. In a recent press release Stephen Whitehouse, retail and commercial banking partner at PwC, said: “The majority of banks still only provide basic mobile and internet banking…Banks are clearly missing a trick if they don’t start to invest in their digital offerings and only see digital as a way to reduce costs services”. He added: “The banks that provide a differentiated digital experience, with advice and relationship management elements tailored to the individual customer will secure deeper engagement and more profitable relationships with their customers”. 

Additionally, the growth of digital has removed key barriers to market entry, and the biggest threat in the payment space is the digital wallet. The balance of power could shift from banks and credit card companies to innovative companies that provide the best digital wallets. Is digital money close behind? Will cash be a thing of the past? Banks are getting the message and the digital transformation agenda is gaining steam. Much like the Telecommunications industry, Banks need to consider strategic acquisitions or partnerships with digital innovators to improve their long-term position. 


I am often asked to define what I mean by digital strategy. There are so many different definitions, and in most cases, they align with marketing. As described above, there are two drivers of digital strategy that make it very different than what we thought back in the Dot-Com days, or what digital marketing thinks today. The first driver is the fallout that occurs when innovations collide – innovations that span every organization and every function within a company. The absence of holistic digital strategies invites chaos and virtually assures that required business outcomes are not met. The second driver – and a point that I hope I made by looking across industries – is the blurring of the lines between business strategy and digital strategy. This second driver would say that business leaders should get much closer to the digital disruption occurring in their industry – or suffer the consequences when innovations collide.

6 thoughts on “When Innovations Collide

  1. Analysis: Zynga needs mobile to move away from Facebook…

    David Ko, Zynga’s chief mobile officer, has one of the most important and pressure-filled at the on-line gaming company — he is charged with figuring out ways to get people to play Zynga’s games on tablets and smartphones. Zynga and Ko wa……


  2. […] Mr. Tieman describes one possible view of the future retail business model: smaller stores selling products that customers want to see and touch and must be sold by experts. In other words, what they sell in their stores and who they employ will have to change – and expertise and related sales skills are critical success factors. I described this scenario in a recent post titled “When Innovations Collide”.  […]


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