Why Big Industries Need to Learn the Difference Between Being Digital-Capable and Digital-First
Experienced retail business leaders have a lot to learn from millennial and Gen Z startup founders.
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The grocery, banking, and healthcare industries have had a captive market in America for 100 years. These industries operate at a massive scale and have battled through round after round of intense competition. The leadership of the key players in these industries have seen it all and are rock-solid experts.
And yet here I am — a 25-year-old CEO — about to tell you that executives in these industries can learn a lot from young technology startup founders about their organizations' most crucial measure of success in the coming few years. And those leaders would do well to listen to business people of my generation — much like we listen to them.
Younger generations of consumers are "digital-first" consumers (and you should be too).
Lest you think I am unreasonably brash for claiming such a thing, (I am incredibly humbled to share even a tiny corner of the stage with them), I would first remind you that millennials and Zoomers (Gen Z) represent the majority of Americans, and will soon be the principal source of all American consumer spending. Young startup leaders like me and my co-founders were raised in a world where there was always an internet. The way we interact with technology is like no generation before us. And consumers younger than us are even more digitally engaged. Zoomers spend an astonishing 74% of their time online, in fact.
Of course, today's senior leaders do understand this shift in demographics and psychographics. Most American companies are already digitally capable, or intently focused on becoming so, to meet my generation where we are. What I'm here to say is: digital capability isn't nearly enough. Merely adding digital channels and services to satisfy a market segment may feel like a solution, but it is a direct path to economic obsolescence. The leading companies of the near future will be those who regard digital channels as their first and foremost manner of engaging customers. Companies in "legacy" industries like banking, grocery, and healthcare would do well to begin adapting to this mentality from the inside out.
Related: 3 Foolproof Ways to Attract Millennial Customers
Late arrivals to the digital-first party have traveled a rough road.
Take grocery, for instance. When the pandemic hit, grocers were caught completely off guard. Online grocery shopping became an essential service overnight, and so many of these grocers outsourced to third-party providers in order to gain digital capability. This came, however, at the expense of margin, competitive leverage and customer relationships. Of the nearly $100 billion market value of online grocery today, well over half belongs to Amazon and Walmart, who — not coincidentally — lead the field in their digital offerings.
The traditional finance industry is also learning about the importance of digital channels. Most millennials and Zoomers use mobile payments, so the market clearly has an appetite for a digital-first approach in finance.
Finally, the slow-moving healthcare industry is scrambling to deal with digital disruption as Apple, Google, Amazon and Facebook move hard into the health space, and a constellation of telemedicine startups steal away tens of billions of dollars in market share with digital-first approaches. The digital health market is expected to exceed $500 billion in value by 2027.
Companies that continue to pursue mere digital capability as an end game may find that the game is over, indeed.
Related: How to Succeed as a Millennial Entrepreneur
You need to be fully committed to a "digital-first" philosophy to succeed.
In the coming few years, what will separate winners from losers is a commitment to being digital-first. To be clear, however, there's no hedging on this. To be successful, this philosophy must holistically characterize the organization from boardroom strategy to hiring practice to customer-facing marketing and service. To disambiguate that a bit more, here are a few hard examples of how corporations can burn a digital-first mentality into their company culture today:
Work to serve your most demanding customers. Squeaky wheels don't just get the grease in the form of an outstanding customer experience, they also teach you what your other customers (and those of your competitors) will expect tomorrow. Great CX benefits all of your customers, even those who did not think they wanted more.
Be an early adopter of new technology. Those companies who experiment with new technologies before the curve sustain meaningful competitive advantages when those technologies go mainstream. Customers will also recognize you as someone who "gets them."
Use data to make decisions or solve problems, not "your gut" or "how we always did it here." Resources exist today, in the form of data analytics, to evaluate what your market wants. If you're not fully committed to data, you are limiting yourself.
Hire digital evangelists wherever you can. Having technology champions within your organization in non-technology roles will help create an environment that is hospitable to a digital-first mentality. That's how Amazon became what it is and that's how it will continue to eat up market share from less digitally-savvy competitors.
Test, iterate and test again — ad infinitum. The old-school approach of investing a lot of money, taking a year to implement and then sticking to the result is a recipe for 21st-century failure. You should be continually searching for and testing technology — especially agile solutions that solve today's niche problems.
All of the above are strategies that leaders in my generation have built into their businesses from the start. Listen to and act upon innovative ideas. Allow for a diversity of opinions — even from those with less experience and success. Get some people in your circle that challenge the way you think. The next generation of business success is indisputably digital-first. So why not include the first digitally-native generation of entrepreneurs in your vision?