Companies are getting digital disruption all wrong, according to PictureWealth chairman Neal Cross.
Digital disruption isn’t caused by technology. Rather, it is the effect of unhappy customers needing a solution to their problems.
Speaking at the Yahoo Finance All Markets Summit Australia in Sydney yesterday, Cross said a growing number of companies are putting technology on a pedestal and focusing on the construction materials, rather than the problems they are trying to solve.
He said companies are continuing to talk about “innovation” but aren’t actually doing it. He also made the perhaps controversial statement that “the future isn’t digital and it never was.”
“We think innovation is all about technologies and some blocking chain, but I don’t think technology is going to solve everything,” said Cross.
“For me, innovation is finding the right problem. Not the wrong problem. You’d be surprised how many companies are solving the wrong problem.”
Cross said companies are putting too much emphasis on the tools and technology they’re using, rather than the problems they are trying to solve.
“We’ve gotten to a point where it’s more important to describe our tools than what we actually do. Why is everyone talking really proudly about the tools they use, rather than the problem they’re solving? That’s where we’ve got it wrong; this blind rush into digitization, throwing technology out left, right and centre and spending hundreds of millions of dollars and completely missing the point of what we should be doing, what our strategy should be.”
Cross said everyone believes companies like Netflix and iTunes are successful thanks to their technology innovation when in his opinion, it wasn’t the technology that made them successful but rather two distinct innovations.
Firstly, the distribution model. Netflix allowed consumers to get their movie and TV fix anywhere, and any time, without needing to pick up a DVD from Blockbuster in their lunchtime break, while the creation of iTunes meant consumers didn’t need to go into a CD store, music could be delivered to any device.
The second innovation was the pricing model. Cross said: “I don’t need to buy a single film anymore, I can pay a subscription. I can watch as much as I want on Netflix. With iTunes, I don’t have to buy a whole album, I can buy a single song. And it’s the same price. That’s pricing model innovation.
“So the things that made them successful, was not technology. It was the distribution model and the pricing model innovation. These are way more powerful construction tools, and a lot harder to copy.
“Anyone can get access to any technology today, it’s not a competitive advantage.”
Cross continued by saying too many companies are using technology for technology’s sake, while also saying we have got digital disruption all wrong.
He said: “Digital disruption wasn’t caused by the tech companies. It wasn’t caused by technology. It was caused by people. Unhappy customers. That was it. Companies like Netflix and iTunes found a better way to solve customers’ problems.
“In some cases, whole industries died, but wasn’t to do with technology, they just found a better way.”