Internet Trends 2014 Report by Mary Meeker

Internet Trends 2014 Report by Mary Meeker

Mary Meeker, partner at KCPB has released her annual Internet trends report. The tech industry plays pretty close attention to this report every year as Meeker tends to be spot on the trends shaping technology and behaviour.

I highly recommend reading the full report and digesting some of the stats and information. I've taken a stab at pulling out a few of the key topics I have found most interesting, outlined below.

Changing Nature of Social Networks

Currently there is huge growth in image and video sharing sites, with a large fragmentation to different platforms. These are also evolving as a tool for communication. InstagramPinterestTumblrSnapchat, and Vine are all experiencing rapid growth, which is also being driven away from Desktop only to multi-platform access.

On top of this, we are definitely seeing social networks evolve from just broadcast to include private sharing. So instead of sending out a large broadcast message to a large audience, consumers are creating more frequent interactions with smaller groups of close contacts, with the expectation of real-time connectedness.

In essence then, we switched from your phone book pre-Smartphone to the Facebook era social friend graph, and are now seeing a switch back to value in the graph created by your phone book. Snapchat's valuation and WhatsApp purchase price are for this reason - everyone is scrambling to gain access to your contacts.

Digital Transformation and the Customer Experience

I have recently completed a Slideshare 'Digital Transformation and the Customer Experience: Overcoming Barriers and a Framework for Success'. Take a look at the presentation below, I have added some additional bonus links as well as a full transcript of the content.

Bonus Content

To get a further take on the fact that "Software is Eating the World", check out the BRANDZ Top 100 Most Valuable Global Brands listing.

BRANDZ Top 100 Most Valuable Brands 2014

Only three of the top ten are not software companies by nature or choice (sourced via Bud Caddell).

Additional Reading

The following links provide further insight into techniques to develop the required Vision, People and Process to drive Digital Transformation. Some are quite radical, but represent some very interesting takes on modernising the organisation:

The Golden Circle
The Responsive Organisation
The Lean Startup
Netflix Culture
Hubspot Culture Code
Valve Employee Handbook
Getting Real by 37Signals
How Spotify Builds Products

Finally, for a great read on a business struggling with the ins and outs of Digital Transformation, have a read of the recently leaked New York Times Innovation Report, a document created by a digital committee to try and enact change. Some great learnings on the complexity of the challenges associated with modernising a business.

Full Transcript

Digital Transformation and the Customer Experience 

Overcoming Barriers & a Framework for Success

We live in an increasingly complex world. Information flow is growing at exponential rates and technology is bringing about fundamental and rapid changes to our society. 

Within this environment, smart organizations are realizing that adaptability is paramount and that there is a need to rethink the entire corporate structure. This, more often than not, is being led by Digital Transformation. 

A lot of organizations are making solid headway in adapting to the influence of digital. However a huge number of organizations continue to struggle to bring about change. This article is designed to help provide a framework for these businesses, and foster debate between executives, business strategists and agencies.

Digital Darwinism

A revolution is happening. Technology, society & business models are evolving at an unprecedented pace, however organizations continue to use yesterday’s thinking to approach the problems of tomorrow.

“We cannot solve our problems with the same thinking we used when we created them.” - Albert Einstein

We are entering the era of the emergence of disruptive technology and 'born digital'. These forces are driving a fundamental evolution in consumer behavior.

This has brought about a 'new consumerism' - shifting values, complex decision making, and new more real-time engagement expectations. Customers are in control, hence the phrase "the customer is king". 

In essence, these shifts are bringing about Digital Darwinism.

“Digital Darwinism is the evolution of consumer behavior when society and technology evolve faster than your ability to adapt.” - Brian Solis

In this new environment, understanding the digital customer experience is critical to success.

What is required to meet these challenges? Digital Transformation. 

Digital Transformation is more than just an investment in technology. Organizations must truly change, from the inside out, to become more responsive. Our goal is to improve the ways the organization sees their customers, creating new value throughout the customer lifecycle.

How Do We Embrace Change? 

A quick recap: the history of the world (of organizations).

Josiah Wedgewood (1730 - 1795) fathers modern marketing. Think direct mail, money-back guarantees, traveling salesmen, self-service, free delivery, buy one get one free, illustrated catalogues, price diffusion. Not a lot changed for a very long time, and a lot of these techniques still hold sway.
In a similar timeframe, the Industrial Revolution (1760 - 1840). Small stores shift to mass production in factories. 

Next revolutions: Employees, standardized quality control, innovative design for utilitarian products, investment, insurance, product development, branding and advertising.

This caused development of the Mass Production Theory - efficient factories could make average things for average people and triumph.

Mass marketing theory:

  1. Mass produce what you want at large scale
  2. Buy heaps and heaps of ad space
  3. This convinces Retailers give you some of their scarce shelf space
  4. This generates you sales 
  5. This lets you buy more ads (& repeat)

Advertising was about convincing the client to spend more and more money. It pushed the idealized version of the product, irrespective of reality. Think interruption, gross rating points, spreadsheets, mass reach.  

Communications platforms were limited.

Customer experience was fairly linear and predictable. 

Then, disruption happened. The Internet. Search engines. Ubiquitous technology. Social media.

Technology created a much more complex funnel.

This also brought revolutionary shifts in the way we connect, and the creation of networks (or the network effect). These are all Complex Adaptive Systems.

Connectedness begets complexity. Complexity begets uncertainty. Uncertainty begets chaos. Unlimited choice leads to paralysis. Uncertainty, therefore, is now the root cause of organizational problems. And this is amplified by Digital Disruption. 

Digital Disruption

Disruption is everywhere. If you think your business or industry is immune, think again.

Think of Clayton Christensen's influential book The Innovators Dilemma.

Classic examples: 

  • Horse & carriage to car.
  • Fixed line phone to mobile. 
  • Personal computer to smartphone.

New examples (with estimated value): 

  • Google - $369b 
  • Amazon - $181b 
  • Facebook - $104b 
  • Netflix - $20b 
  • Tesla - $18b 
  • Airbnb - $10b 
  • Dropbox - $8b 
  • Spotify - $4b 
  • Uber - $3.5b 
  • Quirky - $0.5b 
  • Warby Parker - $0.5b

“We believe that many of the prominent new internet companies are building real, high-growth, high-margin, highly defensible businesses… Companies in every industry need to assume that a software revolution is coming.” 
- Marc Andreesen

Why is this happening? All the technology required to transform industries through software is now a reality and can be widely delivered at global scale.

Software is Eating the World.

Technology is now a permanent fixture in everyones lives. Everyone has a high speed computer right in their pocket, accessible at all times.

Soon: the Internet of things.

“Hardware is just software wrapped in plastic.” - Brad Feld

Social. Location. Real-time. Networks. Customer behavior shifts.

The Wheel of Disruption

Social, mobile and real-time remain our catalysts. As they intersect, they are fundamentally altering the ways people connect, communicate and discover information. However, many, many organizations are still struggling with the weight of legacy technology and processes.

The Solution?

Complex adaptive systems require systems thinking. Think about corporate longevity. The average corporations lifespan is 12 years. The average multinational is 40 years. Only a tiny fraction thrive for centuries.

Arie de Geus, Director of Strategy at Royal Dutch Shell, put 27 of these ‘thrive’ corporations under the microscope. A number of factors contributed, but the one that stood out most: 

“The ability to learn faster than your competitors is the only sustainable competitive advantage.” - Arie de Geus

Again, Digital Darwinism. How long before a Jobs, Zuckerberg, Bezos or Musk disrupts your industry?

Digital Transformation

Let's define it:

“The alignment of, or new investment in, technology and business models to more effectively engage digital consumers at every touch point in the customer experience lifecycle.” - the Altimeter Group

Goal: Be digitally relevant through rapid business change.


But first, what are some of the barriers?

Barriers to Change

1. Strategy in Silo

Different departments manage different steps in the customer journey. They often don’t communicate, let alone collaborate. They often act as their own fiefdom. They use different standards and metrics. The experience feels disjointed. 

2. Internal Politics

Transformation threatens the status quo. This causes self defense mechanisms to kick in. Executives push back. They concentrate on their own priorities. Personal agendas win in favor of what’s right for the organization. 

3. Budget Allocation

Digital is new and unproven. It requires experimentation. Often this occurs in silo, and is rarely communicated beyond individual teams. Roi is difficult to identify. This creates ‘chicken and egg’ situations; “show me proof” before budget can be unlocked.

4. Mobile Fragmentation

A lack of mobile first or second screen thinking exists in the organization. Mobile and platform efforts are strewn across multiple departments with no dedicated team. Often the need to rethink websites, apps or e-commerce is a lower priority than other digital initiatives.

5. Education

Vastly different levels of knowledge or comfort exist in the enterprise. Knowledge is scattered across the organization. A millennial (digital natives) vs baby boomer (digital novice) divide exists causing friction. 

6. Leadership

Without a vision and someone to lead, employees follow a course of business as usual. Digital is kept at arms length or in fringe conversation. A lack of digital generalists mean strategy is viewed in silo or isolation.

7. Disparate Data

Existing infrastructure and processes lack a model to gather and distribute data. Data remains in silo, spread across departments or disparate systems. There exists a lack of understanding of who owns the data. No investment in staff and process to deliver data with actionable insight. 

Breaking Down the Barriers

Improving the digital customer experience takes collaboration, resources, leadership and an understanding of its business value. What it needs is a Framework.

Transformation efforts require an overall vision [purpose], the formation of a team to carry it out [people], and an understanding of the customer experience [process]. With this in place, we can create an ongoing strategy roadmap to optimize the customer experience.

Digital Transformation Framework

  1. Purpose - “Building a Vision”. 
  2. People - “Building a Team”. 
  3. Process - “Exploring the Experience”.   

“Building a Vision” 

Agents of change: 

  1. Updated company vision 
  2. Change agent & executive support

Digital transformation often requires a business case. This needs more than just evidence. We require a story and vision of what this will look like.

New tech companies are built from the ground up with a purpose that embraces their digital focus and approach. These “non-traditional” vision statements are customer centric versus commercial.


“Our purpose is to make the world more open and connected.”

“Our purpose is to organize the world’s information and make it universally accessible.”

“Our purpose is be the earth’s most customer-centric company.”

“If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea" - Antoine de Saint-Exupery

Vision must come from the top. But the reality is transformation rarely begins from the top down. Executives must support and continuously sell the vision for digital transformation for it to succeed. This is the challenge. 

Vision therefore requires a “change agent”. A leader or influencer who can stir the pot, drive initiatives and rally stakeholders to action.

Vision Steps 

  1. Take data from analytics and social spaces and turn it into insights.
  2. Document the factors that are disrupting your market. Assemble data or proof points that help to make a case to C-suite or decision makers.
  3. Articulate why this is critical to your business. Consider conducting a SWOT analysis to assess actual position for transformation.
  4. Draft a simple vision statement and supporting narrative for the end result of Digital Transformation. Outline advantages and how it improves customer experience.
  5. Seek out an executive sponsor or “champion” to help rally support. Find common ground with executives and ensure they communicate the vision to rally employees across the entire enterprise.

Warning - Without support, the change agent role can quickly lead to burnout and defeatism. It must be supported to succeed.

“Building a Team”

Agents of change: 

  1. Organizational restructure
  2. Alignment & education         

Who owns the customer experience? The reality is everyone in the organization does. While most companies have legacy departments and silos, your customers only see one company.

An example is Social Media. This often spans a large number of business units (Marketing, Product Management, Customer Support, HR, IT, Digital) however they often don’t speak to each other consistently or align. Social lacks a cohesive company wide vision and fails to drive business value.     

The end result is “digital friction” and a customer experience that lacks cohesion. This poor experience causes drop off and a loss of conversion. 

To create transformation, the entire organization needs to put egos aside, break the silos and embrace change. This starts with the creation of a cross functional Digital Transformation team.

People Steps 

  1. Identify candidates for a cross- functional team. This often works best as a small team of “intrapreneurs” to drive quick wins to prove results. Note, teams need a range of strategists and stakeholders. At this point, there is great value in leveraging ‘Digital Generalists’, who can understand the end to end view of the experience.
  2. Assign roles and tasks. Consider developing a RASCI model or similar for the group and establish a collaboration schedule and reporting process.
  3. Form a data collection and insights team. They need to collect and analyze data, but more importantly create a simple story to present this to executives.
  4. Note, in 2012, Gartner predicted that by 2017, CMO’s would spend more on IT than their CIO counterparts. CIO’s are fighting for their roles, overseeing legacy infrastructure, and often don’t understand the long term vision. This can be a huge source of friction.
  5. Build a strategic alliance with IT (they must be part of the team). Forge a greater dialogue between marketing and their department.
  6. Develop a training regimen to bridge the gap between existing and required expertise in the organization. Consider an executive education program. Consider tactics like reverse mentoring.
  7. Embrace hack culture. Look at rapid innovation cycles and fast problem solving. Our goal is to not be fail safe, but to safe fail.

“Exploring the Experience”

Agents of change: 

  1. Understand the changing customer experience 
  2. Data & insight         

Customers are using technology their way, regardless of whether your strategy aligns with their journey. “Born Digital”, “Mobile” and “Second Screen” are no longer predictions, but forces radically influencing experiences.

To bring about Digital Transformation, we need to understand how digital is affecting the customer experience. This requires research, not guesswork. We need to understand behaviors, personas and expectations throughout every stage of the lifecycle. 

This means having a holistic focus. We need to move beyond just mobile or whatever technology is trending (think the failed investment in QR codes as an example).

This also extends to our insight gathering. Forget “big data”. Let’s just leverage the easily accessible data we have to make better decisions. 

Ultimately our goal here is to foster a “digital first” mindset. We need to stop treating it as a bolt on to existing activity. Start with digital at the centre, and radiate out.

Thought starter - some key exploration questions:

“What uniquely defines the persona of our customers?” 
“What is different about their customer journeys?”
“What are the touch points they frequent, how do they use them, and on what devices?”
“What are their expectations, what do they value, and how do they define success?”
“How are they influenced and by whom? In turn, who do they influence?” 

Most important:

“What is the customer’s (new) path to purchase?”  

Process Steps 

  1. Connect the dots between disparate data stuck in silos. Connect data from Marketing, IT and CRM.
  2. Interview stakeholders about the customer journey as it exists today.  Explore digital customer behavior and highlight challenges and opportunities.
  3. Forget demographics. Observe the psychographics, personal traits and characteristics that are unique or dominant in your digital customer. Create customer personas (the phrase ‘18-25 years old’. What does that even mean?).
  4. Create a customer journey map including all touch points. Outline what the right experience could be, based on behavior. Organize by channel and screen. Recognize customers may not follow any one route.
  5. Observe the gaps in touch points and where there is and isn’t investment. Assess the processes, policies and systems that prevent success in engaging the digital customer. Pinpoint what can overcome hurdles.
  6. Pay careful attention to network effects in play. Look for direct customer journeys versus the journeys of those who influence customers or amplify.
  7. Be on the lookout for serendipitous ideas for product or service innovation. What is the biggest customer pain point? Can we provide anything new to solve it?

At this stage, you will hopefully have made headway on starting the journey to Digital Transformation. Mapping the customer experience, having a vision and building a team will go a long way in aiding investment choices and optimization and driving real business benefit.

A summary of benefits are as follows: 

  1. Updated Vision - Modernized, and more importantly, humanised.\
  2. Increased conversion & loyalty - Seamless, 360 experience improves long term results.
  3. Improved customer journey - Less friction & improved outcomes.
  4. Greater competitive advantage. - An edge over or brace against the competition.
  5. Increased collaboration - Less friction between internal teams.
  6. Empowered Workforce - Employees and executives feel educated & empowered.
  7. Improved Efficiency - Processes and decision making are more rapid.
  8. Deeper Data Analysis - Deeper understanding of the customer and their behavior.
  9. Culture of Innovation - Serendipitous products & service innovation.

Final Thoughts 

I have used the word transformation a lot here, but remember the danger of this word is it suggests an end point. Transformation does not end. It must become a mindset, to constantly evolve and respond to changing forces.

"The ability to learn faster than your competitors is the only sustainable competitive advantage."

The Two Pizza Team Rule

The Two Pizza Team Rule

When you need to come up with a big idea or address a critical problem, the more people you can throw at it the better, right? More brains must equal more ideas - although there is a big case to say that this mindset is very wrong.

The problem with groupthink approaches is that they very rarely deliver better ideas. The more people involved in the project or meeting, the more complicated briefings become, and the more hand holding is required to get people up to speed. In turn, more time is required to review the output from each individual, and you can get bogged down providing additional feedback.

The small group principle is based on a simple insight - everyone in the room should be there for a reason. Either you are critical to the meeting, or you should be off doing other work as opposed to wasting time and slowing down the project. The key here is simplicity.

Steve Jobs was famous for ruthlessly surveying a room before he began any meeting and throwing anyone out he felt shouldn't be there. He believed the key to Apple's success was to have small groups of smart and highly creative people working together, and based on the organisations success he was probably on to something.

You're Not a Leader, You're an Editor

You're Not a Leader, You're an Editor

I've mentioned this before on this blog, but we continue to face mounting complexity due to our increasing connectedness, and this complexity can lead to paralysis. It is interesting to see how different people are managing these changes to drive their careers - a great example comes from Square and Twitter Co-Founder Jack Dorsey.

Dorsey interestingly positions his job as an editor. Further to this, he believes that every CEO or leader in a company is (or needs to) embody this editor persona. Without it, you will fail to present a single cohesive story to the world.

Think about the history of the traditional print editor. Their role was to pick content out and weave it into a coherent story. You would try and remove "bad" content - remembering that this may include good ideas that don't necessarily fit into your master story.

The CEO as Chief Editor

Dorsey outlines the three key areas he needs to act as editor at Square, but is careful to point out that these priorities can be customised and applied to anyones role accordingly. They are:

1. Recruiting

2. Internal & External Vision

3. Money in the Bank

Watch the video below, with quotes to follow.

First Principles

First Principles

From PayPal through to SpaceX and Tesla Motors, Elon Musk has become the epitome of Tony Stark (minus the shiny red suit). When Musk speaks, it is usually a good idea to listen, especially when he is talking about innovation - this is especially true on his appearance on Kevin Rose's Foundation series

First Principles is a concept taken from physics that Musk applies to much of the innovations in his recent efforts. The concept is simple, start with the fundamentals you know are true, and work up from there.

From Musk:

"It's important to reason from First Principles rather than by analogy. So the normal way that we conduct our lives is that we reason by analogy. We are doing this because it's like something else that was done. Or it's like what other people are doing. 

It's mentally easier to reason by analogy, rather than from first principles. First Principles is kind of a physics way of looking at the world, and what that really means is that you boil things down to the most fundamental truths, and say what we are sure is true, or sure is possible is true. And then reason up from there - that takes a lot more mental energy.

The HEART Framework

The HEART Framework

As the use of A/B testing and other analysis methods grows, the need for effective metrics becomes more and more important. After all, you don't want to get stuck measuring the wrong thing, or being flooded with too much information that could lead you to paralysis.

Traffic metrics like page views or unique users are a good baseline when applied to websites, however don't often help as much when evaluating specific interfaces.

The UX Researchers at Google (found via Kerry Rodden) have come up with a simple framework to put some more rigour around evaluating the quality of user experience changes, by measuring both the quality and effectiveness against overall goals.  

The framework is divided into two areas:   

  1. The quality of the user experience (the HEART framework)
  2. The goals of your product or project (the Goals-Signals-Metrics process)

Let's take a look.

An Acquisition, Behaviour and Outcome Metrics Framework

An Acquisition, Behaviour and Outcome Metrics Framework

In Digital, often success lies in the ability to reduce complexity, and to focus on the minimal key ideas that can drive the biggest impact. We have abundant choice, but as we know from the science behind decision making, this choice can in fact lead to paralysis.

Finding the elements to drive focus requires an understanding of the business, a knowledge of what is possible, and the ability to balance current objectives with the future in mind - not an easy task, but all the more difficult without a solid base of data.

The always intelligent Avinash Kaushik has a simple framework to try and reduce the complexity around digital marketing metrics by providing a simple view top line view for decision makers. Let's break it down.

Acquisition, Behaviour and Outcomes (ABO)

The full spectrum of the digital customer journey involves three very top line steps - how we acquire traffic or customers, their behaviour once they land on our platforms, and the business outcomes that we generate as a result of this. While different agencies or departments may be focused on individual parts of this journey, we need to create a framework that takes a view of all three together - we often need to break the heavy silo focus that can exist in many organisations and their relationships with partners.

Analysis of the full and complete customer journey is the key to success.

How Might We Methodology

How Might We Methodology

When brainstorming new ideas, features or products, it can be very easy to get bogged down asking the wrong questions or trying to solve the wrong problems. A key component of this may in fact be the language being used to define these problems, which can cause creativity to be stifled.

An example is using statements like "how can we do this?" or "how should we do that?". In both cases, these statements are implying judgement, and seeding the idea of "can we really do this?" or "should we be doing this?" - again all statements that have a big potential to close down creativity.

A very simple solution to this is the 'How Might We...' methodology. Originally developed at Procter & Gamble, this method is now employed by Google, Facebook and IDEO to jumpstart their creativity, so it has very good pedigree

Super Normal

Super Normal

"Super Normal" is a Japanese design philosophy pioneered by Naoto Fukasawa and Jasper Morrison that is a great way to describe the process of industrial design and aesthetics. Dave Morin (CEO of Path) has done a great job of explaining the application of this model to software design. I will be repurposing a lot of his content here, so check out his original article.

Defining Super Normal

The concept here is simple - when you set out to create a new product, you don't start by thinking of something completely new. Instead, think of a product that is already "normal", and then try and make it better or "super normal".

Dave goes on to explain this beautifully with a standard household metal bucket. As he describes:

"The design we know today has evolved over the years to include a few simple features. The bucket is made of durable metal for longevity. It has ripples on the sides to make it easy to grasp with the hands. It has a curved metal handle making it possible to carry with one hand. The bucket design of today serves its function well."

This is our baseline "normal", and is very east to picture in your mind. We now ask the question - what are the key problems? In our bucket analogy when filled with cold water, we can define some of these as the handle which cuts into your hands, picking up the bucket which is freezing to the touch, and lastly the process of pouring out the water which is hard to control and makes you lose some of the water.