Developing a digital mind
Last week I spent three days on the Gold Coast at the 2015 CFO Summit. This annual event gathers senior finance executives and relevant solutions providers together for an intense round of presentations and education. With so many great keynotes and presentations it is too hard to summarise it all in one blog so I am going to be sharing a few blogs based on the overarching themes of the summit.
One of the main keynotes on the Sunday evening, and certainly the one that had the most exclaiming and exalting at dinner and breakfast the following day, was Dr Michael Rosemann from Queensland University of Technology (QUT), “Ensuring Revenue Resilience in a Disruptive World: the potential of a digital mind”.
I wasn’t alone in getting my thinking reframed – “young people texting while driving isn’t actually the problem. The problem is how time wasteful an activity driving is”. Gen Y gets this. Hence Apple and Google cars. Take the human element out of driving and free up all that time to do something useful. This will be the biggest boost to human productivity we have ever seen. How’s that for starters?
Dr Rosemann pointed out that we are coming to the end of the age of automation. This was the period that gave power to the corporation; we drove out inefficiencies in our processes and looked for standardisation and conformity in dealing with our customers. The focus was on the cost per transaction. But a new age is upon us: the age of digitisation. This puts the power in the hands of the people. “If I don’t like the way you engage with me I can pretty easily find someone else who does it better” and this gives rise to app-based companies being the way of the future. Take www.findacarpark.com.au as an example. You don’t have to park in one of the big chain car parks, there might be a private space close by that you can use for a daily or monthly rate – it’s all on the app. No physical assets of their own, just facilitating the interaction between the buyer and seller.
So how does a typical business take advantage of this new world? The first question posed by Dr Rosemann was “what sort of data can you sell?” What information do you currently capture and correlate in your business? Can you reprocess and repurpose it to attract a new community of customers? Who might be interested and how could they use it? At (QUT) they are developing an “eBay for data” as a sales platform.
Having found the data you will need to build a community of consumers, once that community is engaged and you have a high level of their “digital attention” what else can you do to further monetise them?
Another concept introduced was “positive deviancy”. I like this one (and not for the reason you may be thinking!) What do you do hundreds of thousands of times? What are the instances that worked particularly well and why? What and how do you change so that this level of high performance becomes the norm? We have a client in the educational sector that is working on this very concept with us. How do we identify the factors and influences under our control that are adopted or consumed by our best performing students? And how can we introduce these effectively to the broader student cohort to raise the benchmark to a new high?
As a traditional business there are of course some challenges to this. You are not two geeks in a garage somewhere and you have a traditional cost structure and real physical assets to support. Dr Rosemann brought us the concept of “revenue resilience” Indeed if you are not revenue resilient then your cost efficiency is irrelevant, Mr and Ms CFO!
Extreme danger awaits if your product or service can become a “digital public good”. Think hotels and AirBnB. Taxis and Uber. Satnav and Google maps (and now merged with social in Waze). If your customer is conditioned to never pay for something again then you are not revenue resilient. In many examples it is micro revenue straight into an individual’s wallet that is thieving revenue from traditional models.
As a traditional business nowadays, cost resilience can only help you meet expectations of your customers at best. Innovation is required to exceed expectation to the level of delight. In the coming age, revenue is a lag indicator, the lead indicator is digital attention.
Dr Rosemann left us with seven ideas of how to become an “ambidextrous CFO” – I jotted down every one.
What have been your experiences? I’d be interested to get your thoughts on this. Comment here or on the Professional Advantage LinkedIn page.
You can read other blogs for CFOs by Neil Richardson here.