Humans have an intense need to control our environment. It’s evolutionary, central to survival even. But it is often the case that one of our greatest strengths can also prove to be one of our greatest weaknesses. It was true in ancient times, and it is no less true in the age of digital transformation, with too many companies and individuals reluctant to share data or transformational capabilities due to a lack of understanding and fear of losing control and position. I call this “digital territorialism.”
If unchecked, such an approach is short-sighted, stifling innovation and advancement, because truly transformative organizations in this era will be those capable of:
• Identifying and breaking down complex industry processes, utilizing a mix of people and technology working together in real time.
• Automating the newly identified processes.
• Eliminating steps in automation, producing better results, more efficiently, more accurately and for a lower cost.
An ecosystem built on strong relationships and mutual benefit, executed smartly, will be required to achieve these objectives and ultimately advance the human experience at the speed of digital. To realize the benefits of transformation, counterparties (i.e., buyers, sellers, servicers), assisted by experienced orchestrators, must share data among one another outside of their walls, because while the first generation of transformation (EDI) endeavored to automate paper transactions, the next generation of transformation holds the promise of eliminating the transactions altogether and connecting organizations in a network platform that unifies the flow of goods, money and data.
That is, if we appropriately adapt our thinking about control and protectionism.
“Coopetition” among companies collaborating for mutual benefit is not a new concept, especially with regard to technology companies. Many other industries participate in an environment of coopetition as well, and studies have demonstrated clear benefits.
There are, of course, risks. We just can’t afford to let their mere existence derail our progress at this time in history. Because this mode of operation, which includes the development of standards and a modicum of trust between potential competitors, is key to digital transformation, it’s important to proceed smartly and perhaps through trusted intermediaries or “orchestrators” with experience in making connections. And once basic ground rules have been established, there is a likelihood that a few of the industry participants join together to act as an industry referee or a traffic cop, sometimes in response to requirements resulting from legislation.
In 2013, for example, the U.S. government passed the Drug Supply Chain Security Act to address the problem of counterfeit and illegitimate pharmaceutical products in the U.S. Healthcare System. This regulation spurred the industry to unlock the data (drug product attributes, serial number expiration date, etc.) from the physical product and pass along the data between buyers and sellers, unlocking new opportunities to not only make U.S. healthcare safer but enable true optimization of a half a trillion-dollar industry. Organically, the industry may not have ever evolved to this point, but the government’s actions acted as the catalyst for change.
Numerous successful examples of coopetition exist, some between highly unlikely pairs, demonstrating the advantages both to companies and people.
• The degree to which scientific, pharmaceutical and biotech companies came together to share information and collaborate, was responsible for the speed at which vaccines for Covid-19 were developed.
• While the Samsung and Apple mobile phones compete, Samsung is an Apple supplier.
• Honest Tea agreed to make a private-label tea for Safeway and was a terrific example of smart coopetition.
Coopetition, existing in a strong ecosystem, works.
The need to participate in ecosystems, particularly in the age of digital transformation is true for virtually every industry, but retail is an excellent example as consumers push its evolution at near lightning speed, increasingly engaging in an omnichannel environment of both in-store and online where traditional methods of engagement don’t work.
While many retailers, by and large, have the in-store experience in hand, the virtual experience is a very different story. Consumers pick up on that and they don’t respond well. Working to address the challenge, many retailers invested to build their own media companies, monetizing the digital shelf and leveraging shopper data for manufacturer-funded onsite and offsite media campaigns.
However, by embarking on a media and ad tech experiment that is not core to their expertise and mission, retailers run the risk of incurring unnecessary tech costs, distracting their teams from the goal of delivering a better omnichannel experience and missing opportunities to truly leverage data to personalize value at every interaction with the shopper. The better approach focuses on retailer strengths, adding efforts in areas like digital merchandising, integrated commercial planning and private label innovation, with tech and service partners filling in the gaps for optimal retail media execution.
A better approach likens to good old-fashioned bartering facilitated by a modern data marketplace. Operating across numerous channels is expensive. In fact, in some retail verticals, five basis points in profitability are lost online vs. in-store. Humans have a unique ability to step back and ask, “What can be done?” Retailers have shopper data. The manufacturers of the products they sell want data to earn shopper loyalty and they are willing to pay for it. Retailers can make audiences available to manufacturers through technology tools...and then use that money to invest in improving their online and in-store shopper experience. The result is a win for retailers, manufacturers and, most importantly, their shared customers who receive the better experience they need to navigate their lives.
Innovation and emerging technologies like blockchain, AI, edge computing, quantum computing and others will be the tools that enable us to unlock the creativity that drives industry transformation. But this will only be if we resist “digital territorialism” and embrace collaboration and mutual benefits. A collaborative ecosystem frees all participants to focus and capitalize on their unique and true value and ultimately serves to improve the human experience. Guided by human ingenuity and sound principles, informed by data and enabled through technology, we can leverage all we are given to do good in the digital age.
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