Select three companies in different industries – such as banking, retail store, supermarket, airlines, or package delivery – that you do business with. What digital technologies does each company use to engage you, keep you informed, or create a unique customer experience? How effective is each use of digital technology to keeping you a loyal customer?
First, let me start by saying I’ve been in tech for the past 25+ years and the disruption and opportunity that public cloud computing has brought to the market has been incredible. While cloud computing may not be as visible as the transistor to the consumer, the impact of cloud computing on those who understand the industry is very significant. When we look the economics of public cloud, open source, etc… and we think about what it takes to incubate a great idea today vs. what it took twenty years ago we are just scratching the surface of the disruptors we will see emerge in this market.
Online Retailer: Amazon
Amazon does so many things well, everything from customer acquisition, to logistics and scale, but much of what Amazon does has nothing to do with retail and everything to do with big data, analytics, artificial intelligence and machine learning. Amazon knows you better than you know yourself, their storefront product placement on Amazon.com, the emails you get suggesting what you might like is not happenstance. Everything that Amazon is doing is rooted in artificial intelligence and machine learning. Amazon relies on data you willingly volunteer, AI and machine learning for everything from supply chain management, warehouse logistics, Amazon storefront user experience to shipping logistics. Amazon creates a unique customer experience by presenting the customer with things they care about, by delivering value, convenience, and quality which is all possible because of Amazon’s efficiency which is driven by technology.
Amazon has done an incredible job managing customer acquisition, scaling and getting to a place where they are a threat to both traditional retailers (e.g. – Walmart) and traditional online Titans (e.g. – Search giant Google). More and more customers are searching for products directly on Amazon as opposed to Google, this shift is driven by big data and the closed ecosystem which Amazon has built. We are beginning to see the likes of Walmart and Google adopt a “The enemy of my enemy is my friend” strategy to take on Amazon (https://www.nytimes.com/2017/08/23/technology/google-walmart-e-commerce-partnership.html). We’ve also seen Walmart begin to turn the screws on their vendors who are using AWS (Amazon Web Services) (https://www.cnbc.com/2017/06/21/wal-mart-is-reportedly-telling-its-tech-vendors-to-leave-amazons-cloud.html), this market is getting very interesting, and Amazon is at the center of the story.
Financial Services: Capital One
Capital One is arguably one of the most technologically forward thinking banking institutions who went all in on public cloud very early (https://medium.com/aws-enterprise-collection/capital-ones-cloud-journey-through-the-stages-of-adoption-bb0895d7772c). Capital One maintains a few brick and mortar locations but they are sparse, and their focus is on building technology for a set of consumers who prefer mobile banking. Because Capital One is focused online and not on brick and mortar locations, they pay high-interest rates with low fees, their economics weel much different than a traditional commercial bank. Capital One’s focus on technology and big data have made them a leading credit card company. Using big data and analytics Capital One develop new products that appeal to the consumer while managing unsecured credit risk. One of the things I love about
I think the credit industry is one of the more interesting banking sectors to watch. For years credit issuers have used something called the FICO (Fair, Isaac and Company) score to determine credit worthiness but this is an antiquated measure of credit worthiness, and this market is ripe for disruption. IMO startups like Tala (https://tala.co/) represent the future of credit worthiness.
Will also see how online banking goliaths like Capital One fare in the payment and transfer marker competing against the likes of PayPal, Square, Venmo, etc… and also how blockchain impacts the financial services industry.
Advanced Media: MLB Advanced Media (MLBAM) and later BAMTech.
MLB Advanced Media focused on building a media streaming, big data and analytics platform for Major League Baseball. The amount of raw data that MLBAM was capturing and storing forced them to consider not only the economics associated with compute, storage, energy, etc… but more importantly could they be and did they want to be the custodian of the Petabytes of data they would collect, was this their core business. The answer to this and other questions made MLBAM an early cloud adopter leveraging AWS to build content repositories (AWS S3), transcoding services (AWS Elastic Transcoder), content distribution services (AWS CloudFront), Streaming data and analytics (AWS Kinesis & Redshift), etc… etc… On top of these public cloud services, MLBAM delivered platforms MLB At Bat (http://m.mlb.com/apps/atbat), MLB.tv (http://mlb.mlb.com/mlb/subscriptions/index.jsp?c_id=mlb) and MLB Statscast (https://www.mlb.com/video/statcast-blashs-diving-catch/c-1788681583?tid=240568594) which is probably most impressive when you watch this AWS re:Invent keynote (https://youtu.be/847HY-JATrs). MLBAM built a platform that they realized that this platform had mass market appeal, so they spun out BAM Tech which is co-owned by MLB Advanced Media, Walt Disney Co., and the NHL. MLBAM’s platform now powers incredibly popular streaming services like HBO Now (https://play.hbonow.com/). MLBAM change took an already statistics driven game to a new level, leveraging big data and analytics in the public cloud.
I could go on and on here, so much incredible innovation and disruption happening in every industry, driven by cloud computing, big data, machine learning and IoT. The technologies are changing the game for every sector and every industry.
No matter what industry you look at, artificial intelligence and machine learning are a rocket ship, and data is the fuel. The more connected we become, the more data we volunteer, the more fuel we provide. It’s up to industry to convert this potential energy into kinetic energy. Those who can do it will reach new heights and those who can’t will likely fizzle out. The market is moving so fast that the need to maintain a legacy business is rapidly becoming an impediment, new business models unencumbered by legacy revenue models are attacking those looking to protect legacy revenue models. The NetFlix vs. Blockbuster story is one where Blockbuster was addicted to late fees. This addition to a legacy business model prevented them from pivoting. Yes, the road ahead would be harder, yes the road ahead may have required closing brick and mortar and moving to a subscription model (no more late fees), yes this may have impacted revenue and profits, etc… Blockbuster couldn’t identify and admit they had an addiction. Blockbusters dependence on late fees (16% of revenues) and their desire to protect revenues would play a significant role in their inability to pivot and ultimately to their death (dramatic but true). Blockbuster couldn’t make the tough decisions, and even though they had numerous first mover advantages and a loyal customer base, they lost.
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