Digital Darwinism

by Tom Goodwin

  In the post-digital age, maybe we won’t build libraries to access books, maybe we’ll establish that we should ensure everyone has a smartphone. Maybe we’ll vote securely and immediately and for virtually no cost on key issues of governance like welfare payments or health details.

  People will be born truly digitally native. Parents won’t feel as anxious as they currently do about their children using these technologies. Kids will instinctively use them as babies, and continue to develop and nurture them as they grow alongside technology. Perhaps the most blurred line will be that between the real and the virtual. Our sense of reality, of time and place, will be the most complex for us to understand.

  How can businesses leverage the power of the post-digital age?

  Wake up, get excited, change

  Let’s get over ourselves. The internet and the smart are not remotely new. We kid ourselves that we’ve not yet got to grips with them because it’s all happened so fast. Retailers who have yet to embrace PayPal or Apple Pay or Klarna, apps that fail to use Touch ID to log in, companies that don’t use e-mail to allow customers to reach them – come on everyone, hurry up. Nor do I think companies show any sign of being excited about new technology; they drag their feet. I don’t see that companies understand how much this matters. If banks for years were constructed of fine marble and over-engineered with large Doric pillars, how have they not understood that their digital touchpoints reflect their identity in the same way? Most banks’ digital presence offers the same reassurance as a bank operating in a port-a-cabin in a car park in the middle of a wasteland.

  Make things simple

  We often seem drawn to do and want everything that is new. Companies want to show to the world they get virtual reality, so make a VR experience. They need to show trade magazines they are quick to adopt chatbots, they want to have a 3D printer in a store, create dynamically rendered and personalized advertising. But do consumers care? Does it make a difference to them? In complex times people seek simplicity. If your airline app that tells people when the plane is boarding works 90 per cent of the time, knowing you will only miss 1 in 10 flights isn’t comforting; it’s worse than useless. If you are Apple, don’t make a laptop that offers the wonder of a USB-C connection, but won’t somehow let you charge your phone without an expensive dongle. Be considerate. In times of peak complexity, be mindful enough to consider the customer’s viewpoint. Make simple things well. Say no to everything that doesn’t demonstrably help people. Don’t over-promise, manage expectations, make things that just work.

  Build around the possibilities, not around the past

  The main lesson from what we’ve seen is the degree to which our muscle memory relies so heavily on the past. The first steamships had masts for sails because that’s what ships looked like. The first horseless carriages looked the same as horse-drawn carriages because that’s what fabricators knew how to make. The first advertising for digital watches displayed the same time as 10:10 because that’s what looked most attractive on analogue faces and hands. It is amazing how frequently we build on what’s been done before without rethinking.

  Imagine if someone in the 1900s, seeing a horse-drawn carriage and fully aware of motors, transmission systems, combustion engines and more advanced machinery thought there was a better way. Imagine they sought to make a better version with their knowledge, but no imagination. They wouldn’t change the form of the vehicle, they’d forge a hugely advanced form of animatronic horse that pulled the vehicle. It would be a spectacularly stupid way to rethink the car, but it’s pretty much how we’ve gone about most change in the world.

  Our role is to forget everything that went before us – not to apply technology to existing solutions, but to rethink how we’d create businesses today in this context of the post-digital age.

  Build data literacy fast

  The promise of the post-digital age is even more data that we can access faster, process more quickly and learn more from; this is exciting but we need to be careful. The amount of data we now access has grown far faster than the general level of data literacy in companies. Most companies have too much data, it’s stored in too many places, it’s not ‘clean’ and it’s often more confusing than helpful when it comes to what matters – making decisions with it. We need to ensure companies create centralized yet customer-centric data strategies, to find a way to ensure data is accessible to all in a company, useful and ultra secure.

  Yet we also need to focus on using data correctly. The balance has recently swung away from decisions made on feelings, to decisions made with data. This is of concern as data is never objective; it reflects the agenda of those who collected it, filtered it and presented it. Data often presents what is most easy to measure, not what matters most, and then companies tend to optimize against aspects they can change most quickly and see happening fastest, not the things that really count.

  More than anything data doesn’t reflect the nuance and richness of the world. Placed in a spreadsheet, the abject horror of Penn Station in New York and the sublime beauty of Grand Central Terminal are removed. Both as measured by Excel are massive railway stations, in Manhattan, covering several city blocks, with subway and commuter lines. They are similar in every single way, yet feel different. Be careful of assessment by numbers in a world where meaning lives outside such parameters.

  Reference

  Levie, A (2014) The first Internet era: digitizing interfaces that already existed (catalogues newspapers). Now: creating the ones that should have existed, 14 July, available from: Twitter.com [last accessed 7 December 2017]

  04

  Unleashing the power of the paradigm shift

  The best swordsman in the world doesn’t need to fear the second-best swordsman in the world; no, the person for him to be afraid of is some ignorant antagonist who has never had a sword in his hand before; he doesn’t do the thing he ought to do, and so the expert isn’t prepared for him.

  MARK TWAIN, 1889

  It’s fascinating that a quote that best explains the spirit of disruption doesn’t come from a start-up founder at last year’s TechCrunch or from a venture capital expert in Silicon Valley, but from a writer, more than 120 years ago, about medieval conflict. It sometimes seems that leading businesses are ignorant and antagonistic.

  When the iPhone launched in 2007, it was both the best phone the world had ever seen, and Apple’s first-ever phone. Dyson’s first-ever vacuum cleaner was the best vacuum ever made at launch. When Tony Faddell made Nest Lab’s first thermostat, it was clearly the world’s best.

  From Tesla’s first-ever car setting the standard for the entire car industry, to Uber’s first taxi business, to Amazon’s first attempt at retail, it seems that the real step changes in how things are done come from those who’ve never done it before. Facebook is by far the biggest, most profitable media owner the world has ever seen, led by a CEO who never worked a day in his life in a media company. Donald Trump’s first-ever role in politics is being the leader of the free world: he broke all the rules, he didn’t let knowing nothing whatsoever about government or politics or how politicians were supposed to behave get in the way. Far from it: it raises a great question. Have these companies or people succeeded changing the game despite a lack of experience, or because of it?

  Why is Space X doing things that are way beyond what NASA with its long history could do? Why did Sonos make connected speakers before Sony or Bose? Why didn’t a train company invent the Hyperloop, why didn’t a helicopter company invent the first drone that can carry a person, why didn’t a bank or a mobile operator who owns the financial relationship with customers invent Apple Pay? Why did it take Amazon to invent the Echo speaker when Apple had Siri years earlier? The fastest growing ‘TV’ show today is HQ Trivia; it’s not made by a TV company and it’s not on TV, things change.

  It’s easy to think this is survivorship bias, that only the winners get to write history, that luck played a vital role. So in this chapter we’re going to look
at how this has happened. What have these companies done that is so remarkable? Why is expertise seemingly unhelpful? What does disruption mean? Most usefully of all, what can my company do about it today?

  A new theory for disruption

  When we talk of disruption these days, we naturally think back to Clayton Christensen’s globally renowned idea that disruption is about companies who undermine legacy players based on a new technology at a lower price point.

  It’s based on the idea that companies are disrupted because of their success, that they are so invested in a wonderfully profitable way to extract the most money from product, and doing it so well, that they never seek to explore ways to do things differently. It is because of this happy complacency that they become vulnerable.

  Then another company, using a new form of technology, enters what appears to be a different market, at a much lower price point. The new entrant suddenly or slowly expands in quality or role, to undermine the incumbent’s success.

  We can see how, for example, Encyclopædia Britannica’s expensive, yet wonderful leather books, were rapidly undermined by Wikipedia’s web-based and communally resourced product. We can see how Kodak made a bucket-load of cash in the making of film and its processing, and that while they recognized the significance of digital photography, it wasn’t a can of worms they wanted to open.

  Now the spirit of this idea – another company with different expertise and a different way of looking at things – is a key concept, but the idea that the disruption happens from below is massively misleading. I think the idea that disruptors offer initially inferior but cheaper products is absolutely wrong.

  Uber was never a cheaper way to hail a taxi; it was originally a more convenient way to get a far nicer, more expensive method of transport. Tesla’s cars are by no means cheaper to buy or make, but they are changing the entire automotive industry because they have altered everything from how cars are designed and made, to how they are sold and repaired. They are slowly changing the entire automotive industry, not by being cheaper or undermining incumbents in a few ways, but by re-imagining every element in the sector.

  While Airbnb may be altering many aspects of the hotel industry, and being ‘disruptive’, the product is vastly different; it’s for people who want to stay somewhere bigger, more personal, who want to have a genuine experience. In many cases people spend more money on their stay in an Airbnb than on a hotel.

  From Netflix to Facebook to Amazon to Alibaba and most of the world in which we live, the new companies that have developed have largely not been cheaper, but better. They have created better customer experiences, offered faster delivery, allowed people to do more, helped people get what they wanted. Clayton Christensen’s theory does not explain how Nest became a $3.2 billion company making a far more expensive thermostat, or how Dyson was able to charge more than three times the average selling price of vacuums in 2002 and still capture a huge part of the market.

  His theory does not explain how Zipcar ate into car rental markets, or how Virgin America (or Virgin Atlantic) or RedBull or Slack or WhatsApp thrive. Disruption theory does not explain the ascent of Skype, Snapchat or Buzzfeed, DJI drones or WeWork, Vice Media, BlueApron or ZocDocs, Stripe or many other modern phenomena.

  It appears that ‘disruption’ was a theory based on selected data from a narrow window of time, on a linear world of manufacturing physical products, with examples from the world of data storage technology and excavator design around 40 years ago.

  It’s damaging to think of technology in that way. To base business thinking on Clayton Christensen’s theory limits companies’ desire and ability to see and drive more exciting opportunities. It is far more empowering, exciting, and profitable to focus on what technology can now allow us to make or what consumers really dream of having.

  It is much better to focus on doing extra and more, than to be paranoid about companies undercutting you and being cheaper. We need the spirit of disruption to be about optimism and creation, not paranoia and defence.

  Disruption is a rampantly overused word. It’s become filler for press releases, standard issue wording for insane videos about the future and base material for PowerPoint slides. Yet, while I think Clayton Christensen’s definition is no longer useful for the modern world, I do miss the fact that it was a term that meant something.

  The power of the paradigm shift

  How can Tesla, with less than 10 years’ experience in the car industry, make vehicles that accelerate faster than any other road car ever known? Who on earth is Elon Musk to come into this category and do what is widely thought to be impossible? It takes cheek to compete with vast global car companies who employ the best electrical engineers to reinforce those companies’ opinions that what Tesla is now doing isn’t possible. How can the Tesla Model S P100D beat cars that are typically more than 10 times the price, with half the capacity, and despite all their competitors having 10 times more experience making cars? How can they make a car that gets better as it ages, improving overnight thanks to software updates? The Tesla Model S looks radically different to cars that are far slower, it carries five adults, it’s not low to the ground. This is a car that breaks virtually all the category rules that have been formed and learned for decades. This chapter explores a totally new way to think about progress and business disruption and creates a new theory for it.

  It was Thomas Kuhn, the US physicist, historian and philosopher of science, who wrote a book in 1962 called The Structure of Scientific Revolutions and in it coined the term ‘paradigm shift’ (Kuhn, 1962).

  Kuhn’s book focuses on the way that scientific knowledge progresses. It discusses the idea that the world comes together and gets aligned in one particular way of seeing the world that becomes fixed. Typically, there is a system of beliefs or viewpoints or universal truths which enable people to make sense of the world. At any one time, these beliefs are based on assumptions that the majority of people are happy to regard as being fixed.

  This viewpoint and mental framework form the basis of other experiments and procedures, and ideally these will continue to build confidence in this viewpoint or paradigm. We are generally sure today that atoms exist, that the earth is not flat and rotates around the sun.

  Yet sometimes, a breakthrough is made that challenges everything we previously thought. At this point it’s clear that everything we think was known, every characteristic or variable we fixed, may no longer be the case. It’s this huge shift from one way of seeing things to another that has been coined the ‘paradigm shift’.

  In the area of cosmology, for example, we had the notion of the earth being at the centre, a Ptolemaic viewpoint of egocentricity that was universally accepted until Copernicus proved that the sun was at the centre of the solar system, aka heliocentrism.

  Poor Ptolemy is often used as an example of poor quality science and the dangers of thinking irrationally. This just isn’t fair. Based on sensible assumptions and access to equipment he had available – no telescopes, limited mathematics and few people with the same level of knowledge as him – there was little wrong with his theory or methods. This is the danger of a paradigm: we seek to make sense of it more than we seek to destroy it. Humanity finds comfort in simplifying, we enjoy being right and everything making sense. It’s uncomfortable to accept we may be wrong or there could be a better way. Often in life it’s better to be wrong, but have everyone else be wrong too, than it is to strive for better and to be alone in being right. This is a feeling most companies can relate to.

  Kuhn’s theory of paradigms is generally only ever applied to scientific beliefs, or ways of seeing the world, but there is merit in the idea of tensions between groups of people who, at the time, fix assumptions, before someone smashes them and huge progress is made. I want to apply this type of mechanic to how creativity and design progress. I want to explain how disruption in business is the leap to a new paradigm, much like Kuhn’s theory.

  Design as evolutionary funnels

&
nbsp; If you ask a person to draw anything on any medium with any implement, they freeze. If you ask a graphic designer to design a logo and give them nothing to work on, they can’t do anything. An architect with no brief or budget, a creative in an ad agency with no problem to solve, it’s all the same. Design needs constraints. All design must be shaped by elements.

  Yet if you ask a group of people casually to draw a house, most people will draw something remarkably childlike and remarkably similar. We have inherently fixed in our heads an idea of what a house must be, how it is drawn, how big it will be on the paper, at what viewpoint it should come from. This preconceived idea of what a home should look like is based on how we think things should be done and how things have been done before.

  We make many more assumptions than we realize when we design. They may be based on things we invented, things we remember from the past, groupthink or many other unnecessarily fixed criteria. This is natural. In a massively complex world we have to fight to make sense of, we can’t continually challenge everything. We don’t wake up in the morning unsure if we should accept that gravity exists, or that up isn’t down; it would be exhausting. Nor can you be open to everything. If you’re designing a new sofa, you can’t be an expert in leather tanning and ergonomics, and then also ponder over the implications for your design of new developments in graphene (an incredibly flexible substance 200 times stronger than steel, which is currently impossible to use).

  As a result, any design process follows an iterative process based on a certain set of assumptions. Normally we start with a goal or problem or brief; we then start to explore options based on design criteria; and slowly over time, collectively or individually, we improve and refine the design. Often this process isn’t smooth; often progress grinds to a halt, or reaches a dead end. Generally speaking, progress towards ever better solutions starts fast, with huge initial improvements. Slowly, the process then hits what we commonly refer to as the law of diminishing returns, whereby improvements produce relatively smaller increases in output.