The Three Waves of the Digital Age

The rapid advancement of the Digital Age – the confluence of social media, smart devices, Big Data and Cloud computing – represents a massive opportunity for businesses. Data is at the heart of this opportunity. But as Digital matures, we will also see new opportunities emerging for consumers to gain advantage from their data.

To describe these opportunities, we should first consider the “three waves” of the Digital Age:

First Digital Wave: Commerce

The first wave is Digital Commerce. Typically, a previously offline business opens up Digital channels, such as online shopping malls, alongside existing routes to market. This can be extremely valuable for cost efficiency and top-line growth. Digital Commerce has been with us for many years now. But smart devices and an emerging generation of Digital Natives are changing the dynamics and creating new opportunities. Owing to its simplicity, usability, and, for them, normality, Digital is their chosen channel. Digital Natives shop in-store and on Digital devices simultaneously. They almost want to walk into a website when they shop on the high street! So even if a company has been online for years, many opportunities still exist to create additional performance and advantage.

The first Digital wave is thus about the Economy of Products and Services.

Second Digital Wave: Outcomes

The second wave is all about helping people achieve goals they care about. Simple goals can be delivered by well-engineered products. The goal of opening a bottle of wine can be perfectly delivered by the corkscrew. But as goals become more complex, creating products and services that deliver them becomes challenging. Personal fitness, healthy eating, a cleaner home, safer driving, greener/cheaper household heating: these outcomes can’t be purchased off the shelf in a traditional product form.

So, to achieve these outcomes the customer will need three things:

  • Better understanding of their own behaviour
  • Assistance with matters of discipline and willpower
  • A supplier that understands their needs and wishes very well

Digital technology can help brands and customers achieve these things today. Sensor technology, like the Fitbit wristband, can monitor what we do and help us understand our behaviour.  Social media and peer-to-peer comparison can keep us focused on our interests, as in Smart metering and Digital reports on average household gas and electricity consumption. In-car telematics can help people drive in a safer or greener way, and increasingly look at their cars as “service platforms”. Firms that utilise these technologies to understand customers and anticipate their needs will thrive. In the last example, an insurance firm can use information on car usage to calculate better premiums for consistently safe and responsible drivers (and many insurers do this today).
The possibilities are endless. And they have an additional advantage. The provision of real-time information for consumers provides them with a “life videogame”. The game is engaging, interactive and good fun. But its goals are real.

This second Digital wave is all about the Economy of Outcomes.

Third Digital Wave: Consumer Power

This wave concerns Digital Identity and will turn some assumptions about Digital upside-down. Consumers’ data footprints, collected by smartphones, fitness wrist bands, smart gas and electricity meters, and car insurance monitors, are currently “owned” and analysed by those who gather the information as service or product suppliers or by organisations that purchase the information from them. This is the traditional view of Big Data and it is a core element of the Economy of Outcomes. Tailoring and integrating complex offerings for customers depends on deep understanding of their desires and needs. Big Data can provide this.

But in the future, consumers may choose to take control of their data. They may pass data to trusted business partners, intermediaries who can analyse the information and use it to broker offers from other players in the ecosystem and to enable even more goals, and more valued ones.
For example, as a consumer, I could release my energy usage data and receive tailored offers from suppliers. I could release data about my habits of music consumption and appreciation. Then it is up to music streaming suppliers to tailor a competitive offer to me based on my consumption patterns.

Of course there are significant privacy and regulatory matters to be addressed. But what this wave of Digital will depend on is an inversion of our assumptions about Big Data.

Currently, Big Data is scary. You surrender your data. Collectors of this information do things with it you are mostly unaware of, for purposes you have not approved, and which will give you neither editing nor deleting rights. This is Big Data where the Company Is in Charge. Even where companies use the information with good intentions and to try to understand customer needs they run the show. But there is also another way.
In this new version of the story, the customer does not surrender data, but volunteers it. They use their data as a bargaining chip, bartering with it as the legal and respected owner, with full editing and deleting rights.

This dynamic would help customers achieve valuable goals. They would be in control, using their data like a currency. That’s the key: in the Digital age personal data is not a product to be sold for a bit of money, but a currency in its own right that can be spent on things that money alone can’t buy.

Here is another way to look at this: in the Digital Age people will want two Big Rights: on the one hand the “Right to be Forgotten”; on the opposite side of the spectrum, the “Right to be Aggregated”. Interestingly, both will require very high levels of trust. Especially the latter. Now, that’s Customer Centricity on a new, unprecedented level! It is Big Data where the Customer Is in Charge.

In this third Digital wave, the Economy of Outcomes is underpinned by critical new ingredients: consumer control and an even higher level of trust.

This dynamic will be critical to the evolution of Digital as a means of fulfilling consumers desires on their own terms – what we might call the Economy of Wishes.


Carlo Gagliardi is a Strategy Partner at PwC. Written as part of the MCA Year of Digital