Digital Darwinism: Why Customer Experience is Your Greatest Asset

As Covid-19 has forced many businesses to digitise their offerings and innovate at new speeds, it’s likely that the pandemic will kickstart tech advancements at scale. But when so many businesses fail to adapt, what’s the secret to a successful digital transformation?

Jo Coombes, Chief Operating Officer at Publicis recently said: “[Covid-19] has been the catalyst for digital transformation at scale”. It’s true, we’re in a concentrated period of adapting to a new normal – one that is labelling technology as a prerequisite for competitive advantage. It’s why we need to embrace ‘digital Darwinism’.

What is digital Darwinism?

Prior to the pandemic, the digital revolution had forced businesses to adapt and embrace technology as a mode of survival. It’s a process that has now become known as ‘digital Darwinism’, a term popularised by Tom Goodwin in his book Digital Darwinism: Survival of the Fittest in the Age of Business Disruption.

As technology has shifted our expectations and behaviours, digital Darwinism is less about bubble-wrapping your business in new technology, and more about how business strategies can look to employ technology at the heart of growth.

Letting go of our assumptions

In an episode of Marketing Week Meets, Goodwin explains that digital Darwinism involves approaching things from an entirely new angle and forgetting our tightly held assumptions. Businesses need to focus on the role they have on the lives of their customers – for example: “If you’re a car company, how can you become about mobility rather than selling people vehicles?”.

When asked to name a well-established business that has adapted in this way, Goodwin lists Netflix as the best example – a business that underwent what he calls “self-disruption”.

According to Goodwin, self-disruption is where you create a strategy that damages your bottom-line in the immediate future in an attempt to redirect your business in the long run: “It’s a bit like pruning a rose back, everyone thinks it’s dead for a few years and then it grows back bigger than ever”, says Goodwin.

Netflix: A self-disruption case study

Netflix was founded in 1997 as an online DVD rental service. It won people over with its vast range of titles, its subscription service that gave you unlimited DVDs and its personalised movie recommendation system. But Netflix didn’t plan to be posting DVDs to people forever.

Goodwin explains: “They realised that they’d need to become a streaming entertainment company and in that environment they realised that they might as well create and produce the content themselves. They went through a massive period where everyone thought they were completely nuts – they lost a third or two thirds of their share price.

“And now they are the company that they are today because of the incredibly difficult decisions that they [made] back then”.

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When consumer values change, businesses must adapt too

Just last month, LinkedIn Editor Kelli Nguyen wrote that the pandemic has already led to shifts in consumer behaviour, which has forced market research company Euromonitor International to adjust its forecast for 2020 consumer trends.

Before Covid-19, we were expected to worry about our privacy and non-reusable products. Now, we are expected to assess how our homes can become a “multifunctional refuge”.

Business leaders were quick to speculate that this would invite technological innovation from companies who are trying to play catch up with consumer psychology.

But the idea that digital transformation should be led by consumer behaviour has been a part of the conversation for years. Writing in Wired in 2014, Digital Analyst Brian Solis explains: “The real threat and opportunity in technology’s disruption lies in the evolution of customer and employee behaviour, values, and expectations”.

He continues: “As such, digital transformation is not specifically about technology, it’s empowered by it. Without an end in mind, digital transformation continually seeks out how to use technology in ways that improve customer experiences and relationships”.

If there’s an industry that got this right, it’s FinTech.

The rise of FinTech and the prioritisation of customer experience

FinTech is a force to be reckoned with – and with digital strength comes immense resilience. In fact, research published by Beauhurst on the Impact of Covid-19 on UK FinTech Businesses finds that 20% of FinTechs are actually reporting a surge in demand, despite global uncertainty.

FinTech entered the antiquated world of finance to make people’s lives easier, from banking and robo-advising through to international money transfers and payment solutions.

Though ‘disruptive’ has become a bit of an overused buzzword, it’s an apt description for challenger banks like Monzo, Revolut and Starling, which have been built upon offering the best banking experience. As referenced on Monzo’s website, it’s “the kind of bank you want to use”.

How challenger banks have mastered the art of customer experience

Peter Ramsey, founder of Built for Mars and former CEO of successfully exited PropTech startup Movem, wanted to test this out for himself. Do they offer the best experience, “or is it all clever marketing?”.

In his study on the user experience of banking, he opened up 12 real bank accounts (challenger and traditional) and logged everything. In his write up, he found: 

• “The challenger banks were significantly quicker (in days) and required less effort (in clicks) to get an active account”.
• “It took 18x longer to open an account with HSBC than it did with Monzo”.
• “It was 3x faster for me to send a payment with Monzo than it was with Nationwide”.
• “The challenger banks were at least 2x faster at displaying the payment in the app. In some instances, they were 100x faster”.

And this is where challenger banks have excelled. Not only have they mastered the art of great customer experience, but they have given consumers a new set of expectations.

Ramsey explains: “Consumers are now aware that it’s possible to get a notification immediately, so anything less than instant—be it 30 seconds or 30 minutes—feels like a step backwards”.

Experiences which do not meet our newly shaped expectations run the very real risk of falling behind.

Today’s leading brands are experience disruptors, not tech disruptors

In the past, the biggest disruptors were underpinned by technological advantages: Google’s search engine, Apple’s iPhone and Tesla’s car. Together, these companies had tens of thousands of patents.

But as Brian Halligan, CEO and founder of HubSpot writes, there’s been a shift: “The companies overthrowing incumbents today do not have deep technological advantages. For the most part, these companies’ competitive advantage isn’t due to technology innovation at all”.

Their competitive advantage is that they don’t just offer a better experience, they change our mind on what we, as customers, expect from businesses – which is exactly what Ramsey’s investigation into challenger banks shed a light on. 

Today’s leading brands “are genetically more similar to a great hospitality company like the Four Seasons or the Ritz-Carlton than to Oracle or Cisco”, writes Halligan.

This focus on experience is in part because their founders started in the hospitality industry. Amazon’s founder Jeff Bezos was a McDonald’s line cook, Lyft’s founder John Zimmer studied hotel administration and Mailchimp’s co-founder Ben Chestnut helped out in his mother’s hair salon.

But it’s also down to business leaders stress-testing their own products. Lyft’s executives sign up as drivers to understand what the process feels like, and Zoom’s CEO Eric Yuan ran his IPO roadshow virtually on Zoom – what better way to test the reliability and seamlessness of your product?

So, while digital Darwinism is fundamentally about technology, its focus should be: “How can I build a better experience for my customers? And how can I surpass their expectations to set a new standard?”. That’s true competitive advantage.