Simplifying complexity in Digital Business

The advertising industry has continuously been innovating to improve its performance and the results of its clients, but the massive penetration of the digital technology has transformed the whole sector.

Despite the disruption of modern technology, it is not easy to innovate in this new rich environment because of lack of holistic vision in the relationship between business and digital development process.

The introduction of monitoring and targeting tools allows companies to identify and understand their potential customers better, facilitating the display of the right messages to the right people at the right time. This new capacity has completely transformed the advertising business, increasing exponentially the complexity of its model.

On the other hand, the availability and affordability of monitoring and targeting tools have democratized the access to advertising to anyone, regardless of their marketing budget. It has had an enormous impact in the reduction of brands positioning and competitive advantage perceived by customers.

These two powerful forces, the business transformation because of technology, and the lack of competitive advantage because of the commoditization of technology, push advertising companies to innovate to stay in business.

They pose a real challenge to digital agencies confronted with the design of new digital products, functionalities or solutions to add value to their clients. These new digital improvements will transform the business because of their impact on customer relationship, value proposition or processes efficiency, provoking the rapid obsolescence or dysfunctionality of improvements. It is caused by the misunderstanding of the system that business and digital innovation process are part of.

Other internal challenge digital industry faces, is its focus on efficiency instead of effectiveness. The digital development process is focused on producing products and solutions as fast and cheap as possible, iterating to refine them. This efficient process does not necessarily make a valuable contribution to the business. A deep business understanding into the digital process is required, beyond the role of product owner in Agile processes. A wider comprehension of the nature of the business we are trying to improve, its culture and the interdependencies and feedback loops among all the key elements in the value chain are needed, too. Therefore, the digital process needs to be efficient but also, effective. To incorporate the comprehension of business behaviour into the digital process would allow digital agencies to identify the leverage points where the solutions could have the major impact with minimum effort.

We have created technology to improve our lives and it has had a major impact in our society, driving businesses to embrace digital innovation to respond people’s needs. However, this innovation is transforming both our businesses and society cyclically, closing the reinforcing loop that fuels the development of technology at global scale.

It is critical for the digital industry to understand the larger system it belongs to, to comprehend its behaviour and to be able to simplify its complexity to make the digital innovation process effective and efficient.

The advertising industry is at the first stages of personalization. Without a systemic and effective approach, it only would be able to make digital advertising more efficient, but not exponentially profitable.

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