Written by Brad Cho, The Innovation Lab
It has already been nearly ten years since I first coined the term “Big Blur” in my book All the Boundaries You Knew Are Disappearing and announced the full arrival of the era of boundary convergence. At the time, I focused on three major points of convergence: the boundary between consumers and producers; the boundary between the small (startups) and the large (major corporations); and the boundary between the tangible and intangible (between online and offline, and between products and services).
The Big Blur has moved beyond a megatrend to become part of everyday life, firmly rooted in reality. Examples abound if we simply look around. Fans may secure advertising deals on behalf of artists, as happened with Brave Girls’ Kkobuk Chips commercial, or make record-setting achievements possible, as BTS’s ARMY did by helping the group remain No. 1 on the Billboard chart for eight consecutive weeks. A single startup can also have a market capitalization greater than that of several major corporations in its industry combined.
The startup Coupang, with a market capitalization of roughly KRW 100 trillion, is worth more than seven times the combined value of Shinsegae, E-Mart, Hyundai Department Store, and Lotte Shopping. Following its listing, KakaoBank also appears poised to exceed KRW 30 trillion in market capitalization, surpassing the market capitalizations of Korea’s four major financial groups, including Shinhan and KB. Contactless services in particular have surged since last year. Education has moved online, cars are becoming mobility services, and Mad Monster—a virtual idol alter ego created by two comedians—has built a large fandom. Virtual influencers powered by deepfake technology and the metaverse as an online playground for alternate personas further illustrate how most boundaries between the physical world and its online reflection are disappearing.
- Conditions for Survival in an Era of Collapsing Boundaries
The phrase “collapsing boundaries” itself sounds destructive, but the reality is the opposite: for consumers, disappearing boundaries mean a better world. Innovation is fundamentally about creating value, not destruction, and the disappearance of boundaries signifies the emergence of new approaches and value that did not previously exist. Companies that fail to use this strategically may eventually face a direct threat to their survival. How, then, can an organization survive and thrive as the walls that once protected it disappear? In simple terms, the answer can be expressed through the four arithmetic operations—subtraction, addition, and so on.
Subtract: Remove What Does Not Contribute to Customer Value
When boundaries disappear, change may appear to originate within an industry, but it will take lasting root only if accompanied by change on the customer side. Every company should redefine the business it is in and begin by removing the parts of its organization that do not contribute to customer value.
Add: Secure a Minimum Viable Market
A company cannot stop operating while it changes; it is destined to replace the car’s parts while the car is still moving. Creating the minimum level of consistent, stable cash flow needed to keep operating is therefore extremely important. Competing in large markets is also necessary, but the first priority must be to secure and protect a resilient, sustainable market that enables the company to operate.
Multiply: Build a Scalable Structure
Companies aspire not merely to survive but to grow. Particularly in an era of boundary convergence, a business must have a scalable structure if it is to respond flexibly to change while entering a growth trajectory. From an anchor market based on its redefined business, the company must continually explore and connect markets where customers still have unmet needs, expanding both horizontally and vertically.
Divide: Build a Continuous Innovation Pipeline Separate from the Existing Organization
Members of the existing organization are too busy to devote sufficient thought to new businesses. Yet boundaries are collapsing too quickly for management alone to consider new business models. A different approach is needed, especially in a market where understanding groups such as Millennials and Gen Z is increasingly important. One option is to form a dedicated team to identify new business models; another is to have internally trained innovation coaches support new-business efforts within the existing organization.
Based on my experience, I recommend soliciting new ideas from key talent and leaders within the company and allowing them to devote part of their regular working time to developing and validating those ideas in the market. This enables the company to pursue both talent development and corporate growth.
- Strategies for Finding Clues from Customers
Customers have the answers; sometimes they simply do not realize that they do. Communicating with customers is useful even when they cannot tell us exactly what solution they want, because they can discuss the problems they currently face in a particular situation. This is why one principle holds that we should ask customers about the problems they have, not the solutions.
Customers also receive and respond to a company’s product proposition holistically: verbally and nonverbally; functionally, emotionally, and socially; and in terms of price and value. The only way to learn how customers feel about and respond to a product proposition is to communicate with them directly. The fact that 80% of people who say in a survey that they want to buy a product do not actually purchase it shows that customers can be understood in their full reality and meaning only through deep interaction. How, then, can we gain customer insight? Many methods are possible, but we will briefly examine just two.
Ask the Right Questions (Why / What / How)
The best question for gaining insight at an early stage is always “Why.” It reveals the customer’s motivations, aspirations, reasons and grounds for behavior, philosophy of life, social background, and more. Questions about “What” and “How” also enrich our understanding of the customer and help us form a concrete picture.
Experiment and Observe Responses (Assumption Test)
Even in personal relationships, observing a person’s actions is more reliable than listening to their words. Testing hypotheses derived from an understanding of customers consistently produces highly useful results for companies. Customers may respond differently in practice from what they said they wanted, or the reverse may be true. Companies therefore need the expertise to set up and operate a virtual laboratory environment between themselves and their customers.
- Several Coordinates for Finding a Big Blur Business Model
In the Big Blur era of boundary convergence, both large corporations and SMEs must be capable of changing their business models and adopting flexible strategies to achieve sustained growth. For the past ten years, my work has involved helping companies through the process of business model change. Given the limited space here, however, I will mark out only a few coordinates. Plotting your company’s current activities against them should help you assess how closely its direction aligns with the Big Blur era.
First Coordinate: Do You Have a Platform?
Platform companies dominate the market. As of December 2020, just seven platform companies among the 500 leading U.S. companies accounted for nearly 25% of their total enterprise value. A simple coordinate for a platform approach is the combination of customer types, product types, and whether each generates revenue.
Second Coordinate: Are You Engaging with a Large Market?
Market-leading companies fundamentally solve customers’ Big Problems. They also seek ways to build direct relationships with customers and, where possible, pursue businesses that maintain long-term connections through memberships, subscriptions, and similar models. Subscriptions make a company more intelligent by establishing a channel through which customer data flows from the market into the company.
Third Coordinate: Do You Engage Customers in Participatory Communication?
Communication with customers has never been more important. To turn customers into fans, a company or product must continually communicate its worldview. This is clearly evident in ESG-based values-driven consumption and fandom culture. This is an era in which companies can grow by finding ways to involve customers continuously in R&D and marketing and to communicate with them in both directions.
We have now explored how companies can check their coordinates, gain insight from the customer’s perspective, and prepare themselves in an era of boundary convergence. I hope this has helped, even in some small way, to reflect on and assess where your company currently stands.
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Read the full article in the IBK Industrial Bank of Korea SME CEO Report