29 Nov 2006

The value chain reversed


The customer has become the main asset of a company since the introduction of interactive technology. How do we activate and manage this asset?

A company or organization can be described as the sum of its assets or as a profit and loss statement. Modern companies can also be described as the sum of its stakeholders. A few companies are already valued as the sum of their customers. These are companies build around interactive participation like audio/video postings, social networks and mobile phone operators. This trend will expand to traditional companies when they create digital customer service environments. Customer participation will increase and therefore has to be taken very seriously.

This book deals with the increasing role of media in customer relationships. The simple fact that customers can talk back revolutionises these B-to-B and B-to-C relationships up to the point that the value of a company will be expressed as the sum of its relationships instead of its products. The value chain reversed.

The basic ingredients of digital relationships are Marketing brought to customers through the use of the appropriate Media using the right infrastructural Means.
I will apply this 3M model when necessary to understand the impact on organisational issues like business processes, change and program management and governance.

In the spring of 1993 I was asked to start a business development unit within a large Dutch based ICT supplier. We found ourselves confronted with many questions we were not able to answer. It was the dawn of open systems standards and the dawn of a new communications phenomenon. It was called the Internet.

We had already implemented a new media knowledge unit dealing with what we then called interactive media Focussed on “Videotext”.

We changed our focus from videotext to the internet in an instant and left videotext for what it was, firmly convinced of the fact that the internet would replace videotext in the blink of an eye.

In retrospect the fun here is that videotext is neither interactive, nor new media. On the other hand videotext applications are still active in large numbers.

Since then I have given a lot of thought to different media types and asked questions like;

o Will new digital media replace the old ones?
o Can different media types reinforce each other or are they just competitors?
o Do media have the same lifecycle as normal products?
o Can people deal with more than one medium at a time?
o How is marketing affected by the introduction off a new medium?
o What values more in media; transaction or attention?
o How will interactivity influence organisations, its processes and its people?

The business development drive calls for two important ingredients. First of all technological knowledge is required. At the same time the knowledge of business processes and relationships between companies and their customers becomes relevant because the automated processes of companies affected the day-to-day life of their customers for the first time.

This may well be the basis for the new media dilemma. Traditional technology experts are basically looking inward and have to change their attitude to more external / commercial thinking.

In the years 1997 until 2000 I focussed on the possible synergy between media. I had the dream of being able to convert audiences from broadcast media towards narrowcast media, in order to be able to influence consumers in their behaviour and create relationships other than just based on pre and horizontally programmed media. I really thought that you could use TV to power up internet initiatives and even create communities.

I found the broadcast television companies and TV production companies interested in the thought, but not in the action. The magazine companies listened to these new insights and stated that digital media could never replace the paper friend function magazines represent.

In a later stage I targeted marketing companies with actually the same results.

They where all proven right when in late 2000 the internet promise collapsed. But…

Right now the early internet adopters have become of age, they have a commercial status, and they have become a market. They don’t read magazines (or only a few), they don’t read magazines (or only free of charge) they spend a lot of time on digital gaming, mobile telephones, iPod’s and what have you.

We see a shift in advertising spending towards digital media. Not on all levels but significant.

The introduction of new entertainment and information devices shows such innovative power that only from that phenomenon you can conclude that they are here to stay, that this is just the beginning.

Recent jobs for publishing companies revitalised my ideas on how media affect people, what role they play in the day to day life and why new and old media have not yet found a good synergy model.

Everything in this book is a sublimation of my own ideas on media and marketing and the technology that enables it. They are based on research, practical experience, discussions, sales pitches, presentations and projects I have done. The ideas like Media Cascades and reversed value chains are my own observations. Ideas like Life Cycle management merely an interpretation of previous studies that I leave unreferenced.

I hope to challenge your thoughts and ideas on the interaction between media and people and that it triggers you to look at your business from a different perspective.

Part I. will focus on the customer side with topics like;

Value chains
Consumer behaviour and media
Changing media landscape
Publishing dilemmas
Building relationships

Part II. deals with technology its possibilities, its usage and its effect on customers;
Technology push
Innovation
Life cycle management

Part III. Puts the different media in perspective.;
Media characteristics
Media cascades
Communities, portals and self organisation
Content production and property rights

Finally I will present you with a number of generic cases to illustrate my reasoning which I hope will challenge you.
o Publishing
o Marketing Agency
o Telecom
o Service Institution
o Logistics

I hope to show you that companies are all facing the same challenge. The use of interaction to their best interest. A lot of change lies ahead.


Three angles to look at companies.

The Means they have. This includes all assets, people, machines, software, everything. The sum off all means appears on the balance sheet that is the basis for the company’s value

The Message they send. This has to do with the image off the companies, how it wants to be recognized. It creates the social context

The Media they use to send the message to their customers

In every chapter I will go into these aspects in a brief summary