Our world has become digital-centric and the companies that know how to use technology to give their customers better products and experiences are increasingly the most successful. Look at how technology transformed who wins in retail. Leaders gave us seamless mobile experiences, let us post and read reviews, chat with support used AI to power recommendations engines. And over time, this set a new standard that we not only expect when we shop, but it spilled over into other areas like when we bank or even look for a job.
Those companies who can meet our expectations as they evolve, tend to pull ahead. And now we have a new technology, blockchains. That will lead to more competitive pressure. Over time, you’ll need to think what you are offering customers and potentially even your business model. That pressure takes a lot of forms, but there are two key areas that I’m going to advise you to keep an eye out for.
One, if you’re a middleman, and most businesses have at least some middleman role, you’ll need to be increasingly careful about whether the price you charge is justified for the value you’re delivering. Why? Blockchains help us cut out the middleman. That means you’re B2B or B2C, the tech makes it safer to transact directly person to person or company to company, without anyone sitting in between. Competitors, whether they’re new or established, could use the technology to build and launch alternative products and services that are lower cost or lower friction or both. Now today, the real cost of using a middleman is often hidden. Customers don’t have an alternative and they don’t know what they can’t see. But along comes a new kind of competitor and all of a sudden it reveals the true cost of a middleman.
Let’s look at a pre-blockchain example to see how this could play out. In the US, a pair of prescription glasses used to cost often hundreds of dollars. And then Warby Parker came along, going direct to consumers with $95 prescription glasses and free services like home try-on. Then other online competitors further drove the prices down. The last pair that I purchased cost me just $15. So all of a sudden, the old way of buying glasses looked far too expensive. These new competitors revealed the huge margins that were being sucked up by middlemen. The pressure of middlemen will begin in the areas where there’s a large gap between the perceived value of working with a middleman and the cost of using that middleman.
So as we see alternatives that enable customers to go direct, the perceived value of a middleman plummets, and then they start looking really expensive. Now for the second, it’s likely you’ll need to increase transparency within your business once blockchains are common. Blockchains can make many parts of a business more transparent. And we can expect that leaders are going to actively blockchains to demonstrate that they stand by their values and that their products are verifiable and they’re compliant. This is going to set new standards for transparency, and ultimately it’s going to create an expectation for it.
That’s going to create pressure for other businesses to follow along. And because the technology allows us to see so much more about a product over time, customer’s definition of quality can be expanding beyond the immediate characteristics of a good or a service. It can include a judgment on the creator, its origin, the journey into their hands. And consumers are going to increasingly have visibility into these attributes. In both of these areas, watch carefully, because blockchains will reset the bar. Even if your business doesn’t use blockchain technology, your customers will set their expectations of you based on what they’ve been exposed to elsewhere.
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