April 16, 2013

The Age of the Super – Connected Consumer

Back in the early 2000s, I worked in various capacities for A.T. Kearney and EDS, focused on the concept of the “seamless enterprise.” Boiled down, this concept looked at breaking down internal barriers to communication and reframing the understanding of the disaggregated value chain.

As the name implies, the focus of the seamless enterprise was internal, looking at how the better use of technology and information could increase operational efficiencies. The rise of the SaaS model meant companies no longer needed to own or operate the entire value chain. The value was in connecting all the pieces together.

By the middle of the last decade, two macro trends turned this inward definition of seamlessness outward facing. The mobility revolution was kicked off by the iPhone, and fueled by the greatly expanded availability of broadband connectivity. Today, rather than the enterprise breaking down silos for a seamless exchange of information, it’s the consumer who is demanding a seamless experience from all their products and services.

I call this the super-connected consumer, and this new breed of consumer demands a richer product experience than ever before in history. And that experience needs to be synchronized across the physical and virtual realms. This heightened requirement for a rich consumer experience is driving great disruption in the business models of B2C companies.

In fact, I argue that in less than five years all products will need to exist in both a physical and virtual sense. Products may still have a physical core, but increasingly it will be software that delivers the required consumer experience. That’s where the value lies, and the path to growth will be the skillful integration of physical and virtual products.

Companies will put themselves at risk if they overestimate how much they can control consumer expectations. The best path to future growth is to monetize a great consumer experience. Look how carriers and ISPs have struggled by trying to monetize the connection, while the Internet giants have prospered by monetizing new and exciting experiences.

Another example would be RIM, which bet on catering to enterprises for growth. Apple and Google went after a transformed user experience with iOS and Android.

The rise of the super-connected consumer has dramatically increased the need for products to deliver superior user experiences. Companies that can break free of their legacy models and respond with virtual products will prosper. Companies that cannot will lose out in the marketplace to more nimble competitors.