The digital and physical worlds – and their supporting industries – differ widely. When it comes to production and transport, for instance, costs and speeds vary greatly. Digital is immediately more scalable and offers greater potential to abstract and simulate.
The technology of digital also allows for more personal experiences for users. As an example, the resolution of the control circuit that Google uses to manage digital advertising is several times higher than what’s used in the physical world, where a unidirectional medium like television or a billboard sends a static message to an unknown mass of potential customers.
The finely grained control of digital offers huge advantages that make the digital advertising market far more dynamic than the physical one, and for years now, advertising budgets have been moving from the physical to the digital sphere. Digitalization leads to high-resolution management because the cost of measuring and actuating elements is almost zero, while changes can be made with nearly the speed of light.
Digital does require platforms, however, and for brands and businesses to be competitive, it’s essential that they consider platforms carefully and more expansively.
Google serves as a model in this arena. It has put location, context, data, mobility, search, and mobility trends to good use. In fact, it has revolutionized the advertising market. Google analyzes search queries and collects clicks on web pages to measure user behaviors. Based on this high resolution and precise performance data, the company can tailor advertising messages to individual users and optimize its profits.
Google also measures user reactions in real time to determine the effectiveness of its banner ads. It uses these measurements to optimize its allocation model and quantify results for invoicing its advertising customers.
Lego and Philips are two product manufacturers who also created multi layer platforms. They each took two simple physical elements (bricks and light bulbs) and made those objects the foundations of complex platforms that not only serve a need but are, in fact, ecosystems.
This is the true definition of digital transformation – moving beyond an isolated or unique need (gaming for Lego, lighting for Philips) to create well-oiled platforms that serve as multi-layer ecosystems. These ecosystems enlarge the space from local to global, and help businesses improve products and more meaningfully serve customers.
At the end of the day, the digital economy is all about creating scalable platforms with well-designed customer journeys to serve and predict customers’ needs. It becomes really important to focus on how these platforms can serve customers needs and not company stakeholders’ requests. When platforms are ecosystems, in which constant exchanges with users and quick, smart improvements are always in motion, they make the physical objects entirely more useful and satisfying, providing a value that a mere physical object alone cannot.
