Three Paradoxes of Digitalisation

By Hermawan Kartajaya and Ardhi Ridwansyah

 Management has been inevitably transformed by the digital era. Hermawan Kartajaya and Ardhi Ridwansyah discuss the Three Paradoxes of Digitalisation essential to a company’s success in winning the hearts and minds of its digital consumers.

 

More than 20 years ago, Charles Handy in the book “The Age of Paradox” called many world events, including the development of technology, a paradox. Many of those epiphanies stand true today. Interesting example can be found in Asia’s retail industry: amid the flourishing e-commerce, a contrasting trend is also emerging.

Some e-commerce companies in Asia are beginning to realise the importance of creating offline experience for shoppers. Moving beyond conventional cash-on-delivery model, Zalora, a Singapore-based online fashion retailer, offers a unique payment method. The websites provide a cash-on-collection option, a concept that has already gained popularity in Taiwan and Japan. Collaborating with some convenience store chains, Zalora gives its customers an option of picking up and paying for their items at an outlet of their choice. They have also started erecting “popup” stores across shopping centres to educate shoppers and encourage them to use their apps.

This represents one of the paradoxes occurring as a consequence of digitalisation in Asia. For businesses, in order to win over competition in this new digital era, three paradoxes described below need to be understood and managed appropriately.

 

Three Paradoxes of Digitalisation

 

Online vs Offline

Internet technology does provide convenience and high efficiency. The interaction between the company and the customer can take place anytime and anywhere. This is what is prompting companies in Asia to flock to the online world, building their official websites, nurturing online communities and setting up special social media teams to build relationships with customers. But as a matter of fact, the online world still have limitations which means that conventional approaches of the offline world cannot be completely replaced. Despite growing internet usage and the seemingly improving tech-savviness among Asians, most consumers may not yet be fully familiar with digital services or simply not be sufficiently confident to take jump on to the digital bandwagon. In order for companies to make the most of their ambitions to go digital, there is ostensibly a growing need to put special attention on customer education on the online world and much of it cannot be accomplished only online.

In order for companies to make the most of their ambitions to go digital, there is ostensibly a growing need to put special attention on customer education on the online world and much of it cannot be accomplished only online.

An online retailer like Zalora’s initiative to go offline via cash-on-collection option and popup stores is an example of how businesses are striving to make offline and online shopping work together seamlessly. Neither option is mutually exclusive. In fact, in the near future, perhaps we would stop comparing Zalora and the likes to traditional, brick-and-mortar, offline retailers. There will just be “shopping” and it will be an integrated online and offline experience.

Commenting on this integration of online and offline interaction, Kasireddy from Fonterra in China says: “differentiating online and offline is really a false distinction. It’s much more important to get the offline and the online working together seamlessly” (The Economist Corporate Network, 2015).

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Substance vs Style

The development of internet has also created new patterns of information consumption. If, in the print media, readers have conventionally been familiar with a writing style that’s more elaborate, focusing on features and in-depth stories, readers of online news sites are more accustomed to shorter, crisper write-ups. On the shorter mobile phone screens, where consumers today spend plenty of their time, too much written content is perceived not only as un-user friendly but boring too.

Visual factors – images and illustrations serve to improve the design, frequently used by content providers to develop more engaging online content. Paula Ries (2012) in the book Visual Hammer even stressed the importance of the visual aspect as a verbal positioning booster to inculcate a certain perception in the minds of customers. This is the trend in the digital world that requires producers to include “style” in the content developed.

But of course, the company can not rely solely on style aspects (visuals, audio, design, etc.) to provide information that will touch the customers, both rationally and emotionally. The substance in their digital content should also be weighted. This is what presents the need for content producers to balance both: how to create content that is concise and interesting, yet still does not lose its core substance. For example, the makers of video advertisements  on Youtube must be creative to design a message that attracts the attention of viewers within the first 5 seconds, so that they will not skip the video. It is about style. But a compelling message will still be able to convey information about an advertised product effectively, and that is substance.

But of course, the company can not rely solely on style aspects to provide information that will touch the customers, both rationally and emotionally.

Machine-to-Machine (M2M) vs Human-to-Human (H2H)

Digitalisation has enabled “interaction” between various technology products. Existing data on our handsets could be transferred to other technology products in the form of instructions that produce a specific action or output. This is what is known as the Internet of Things (IOT) Machine-to-Machine (M2M) technology. The consumer space is a significant sector within the M2M universe that a range of players, including mobile operators and hardware manufacturers, are trying to address. There is a particular focus at present on both wearable devices and the potential of “smart homes”.

A range of new wearable devices have been launched over the past years, including the Samsung Gear and the LG Lifeband. Connected devices and sensors allow customers to employ a smarter, more efficient lifestyle, with their personal devices such as smartphones and tablets connected with devices in the home to enable automation. This helps users to remotely control functions, from lighting to basic security systems. Samsung Electronics has announced that 90 percent of its products – including everything from smartphones to refrigerators – would be able to connect to the Web by 2017. And by 2020, all of its products will be internet connected (CNET, 2015).

Technology must be optimised to create a human-to-human interaction that is more flexible (not constrained by space and time), and not quite create a separate space, which ends up replacing the intimate conventional ways of interaction.

But the technology does not make man into a machine without emotions. Instead, digital technology, particularly social media, has turned customers into more emotionally expressive beings. This is why the human-to-human (H2H) touch must not be forgotten. Technology must be optimised to create a human-to-human interaction that is more flexible (not constrained by space and time), and not quite create a separate space, which ends up replacing the intimate conventional ways of interaction.

Zappos, an online retailer Amazon acquired in 2009 with a value of USD1.2 billion, has a unique way to build H2H interaction with its customers. Although Zappos actively uses social media including Twitter, Youtube and Facebook to communicate with customers, the company has not abandoned the use of the phone. Tony Hsieh, CEO of Zappos once said: “We do not really look at Twitter as a marketing vehicle, so we do not look at how it translates into the bottom line. What we care about is being able to connect with our customers on a more personal level. We do that through the telephone as well as through Twitter. Nobody writes about the telephone because it’s not an interesting news story, but we believe it’s actually one of the best branding devices out there.”

Phone allows Zappos call centre staff to be able to establish a very personal (H2H) connection with its customers. As an assessment, their performance is evaluated based on customer satisfaction on the calls they handle, without being limited by time. The longest customer service call took almost six hours. This is what makes Zappos one of the highly recommended brands by its customers.

These are the three paradoxes which can actually be managed simultaneously, without having to negate each other. That requires creativity in order to build an integrated online-offline experience, develop content that has substance with style, as well as machine-to-machine (M2M) technology supported by human-to-human (H2H) touch. The company’s success in managing these three will create a strong competitive advantage in order to win the minds and hearts of digital consumers in Asia.

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About the Authors

Hermawan Kartajaya(left) is Founder & Chairman of MarkPlus, Inc. Ardhi Ridwansyah(left) is Director of Executive MBA in Strategic Marketing, SBM-ITB/MarkPlus Institute