April 6, 2013

Only Information Companies Need Apply

“Today we live in an information age that changes everything.” You’ve heard variations of that phrase so often it’s become a cliché, hasn’t it? For over 20 years companies have been saying it, and yet somehow they fail to realize how fundamentally disruptive the statement can be – should be – to their business model.

Yes, many of us use more powerful tools than ever before, and certain internal processes have become more efficient. But leveraging technology internally was just the first wave, and it isn’t nearly enough. Consider that the first information age, if you will.

Today the true power of information comes from directing it externally, towards your customers. Leveraging information today should mean increased revenue growth and the creation of entirely new business models, not simply more efficient internal processes.

More companies are starting to realize this, and are starting to view information as an asset, not just as a liability reducer. We’re now entering the information age 2.0, and this new age requires you to re-make your company as an information company.

What does this kind of corporate transformation look like? Let’s take Nike as an example. Nike 20 years ago was pretty easy to describe – they made athletic shoes. Nike 10 years ago might have been described as a marketing company at its core.

Today, Nike’s future lies in it being an information company. The company has moved aggressively into the field of biometrics with innovative products like the Fuelband bracelet. Nike is basically collecting information from users and packaging it in a way that delivers an entirely new consumer experience. This is where the growth potential of the company lies.

Simply collecting data isn’t enough – you need to use it to improve the consumer experience. Take as an example the Snapshot service from Progressive Insurance, which provides a customized insurance cost based on your actual driving habits. That’s great, but I hope some smart people at Progressive are studying what other kinds of customer services might be possible using that kind of customized user data.

Those are macro examples, here’s a very micro one. I recently had a pipe burst in my home, resulting in much household disruption. My plumber came out and fixed the pipe. It was a simple transaction, and with any luck it could be years before I need to call him again.

Now what if he offered to attach some kind of sensor to the pipe, one that could monitor the system and ensure that this never happened again? In that case a one-time transaction becomes a service I’d be happy to sign up for on an ongoing basis. The technology needed becomes more manageable and affordable by the day for these kinds of transformations – what’s lacking is the vision.

You might say it’s not surprising that a plumber wouldn’t see these possibilities. But why don’t more executives who are running companies and looking for growth see the opportunities?

The transformation into Information companies is accelerating. The media landscape has been totally disrupted. Education is going through it also, with online learning options forcing traditional institutions to reconsider their economic models. Healthcare is close behind, with regulatory and technological changes forcing a re-evaluation of how information is collected and shared.

There is no more “business as usual” in the information age. If you can’t see how information can improve the experience your company provides customers, your future growth is at risk. Business has changed – you need to think differently or get left behind.