Entries in consumer centricity (2)


Move over, big data?

We thought this description by Deloitte of the digitization of industries was interesting, as it looks at the role of the consumer in the ongoing transformation to a more digital economy.

Big Data has been the big buzzword in recent years, but even it is seeing a disruption of sorts, as the focus turns to iData - data related to the individual. Deloitte believes that iData should be at the forefront of business operations. According to the consultancy group, technology adoption has reached a tipping point, where individuals are no longer considered passive spectators, but are becoming increasingly active participants in the industrial process, "becoming inseparable from ‘producers’ of content, data and even physical products." This is driving the personalization and customization of products and manufacturers are altering business models to benefit from the product-as-a-service concept, as is the case with companies like Airbnb and Uber. However, for most companies, the challenge with iData is how to source, organize and present it in a fashion that is acceptable to the individual.

Image source: Deloitte



Power of platform business models

Marshall van Alstyne (MIT) paints a compelling picture of the power of "platform business models" (like iTunes, Nike or Amazon), captured in this presentation from late 2013 (video, slides only). In my opinion, he gives an effective and powerful list of the factors fueling the business success of "platforms":

  • Direct connection to the consumers / users ...
  • ...and therefore an opportunity for data collection (data being the most fundamental asset and currency of the knowledge economy)
  • Network externalities (in simple terms: "more developers unwittingly attract more users, more users unwittingly attract more developers", this is why Google subsidized Android developers until they reached critical mass)
  • Radical consumer centricity
  • Openness to partnership with complementary services / players
  • A radical cultural shift from a product or service mentality to an "ecosystem" mindset, where companies often have to relinquish part of their total control over their products or services to profit from the ecosystem (Google does not control what applications are put in its store by developers, it just takes a cut of the profits)
  • Smart asymmetric pricing strategies based on a good understanding of multi-sided platform economics (e.g. a bar that offers free drinks for girls to attracts more girls and therefore more boys for whom the prices will be much higher).

The video is a bit long but I really recommend it for anyone interested in a thoughtful interpretation of why Apple and Amazon are such successes vs. companies that may have looked similar at some point but clearly did not achieve the same success.

Image source: Redactie Emerce

-- Yassine El Ouarzazi