In all of my work around digital transformation a couple of themes remain constant. The first is the idea that collecting new data and analyzing it in new ways leads to new value. The second is that new insights should lead to entirely different business models, rather than incremental improvement of existing models. And third, digital competitors, or ‘Jerks’ as I describe them in my book will come at your business from entirely new directions.
There is no shortage of examples of Jerks out there, and every industry is a target for disruption. A business as mundane as soup can be completely disrupted by the application of digital principles, as Campbell’s soup has recently discovered.
I recently read an article about Campbell’s Soup investing in a digital startup, Habit. This company collects and analyzes the DNA and blood chemistry of its customers, determines their health predispositions from their genetics, and then tailors an ongoing health and nutrition plan unique to each individual. Habit assigns health ‘coaches’ to each customer, providing guidance, encouragement and advice for healthy living. As part of the service Habit also creates customized pre-packaged meals for its customers, which are shipped to their home on a subscription basis.
What is profound about this business is that it is a total category-buster. Is Habit a food company? Well, sort of. Is it a healthcare company? Perhaps. Will it compete with fitness companies? Certainly. Will it be an aggregator and reseller of data? I certainly expect so. Who might be interested in accessing the data Habit will control? Pharmaceutical companies, health insurers, payers and providers would likely line up to have access to such information.
Rapid Digital Transformation
In one fell swoop, Campbell’s may make themselves an indispensable part of their customers’ everyday lives. How does an old-school consumer packaged goods manufacturer become a digital disruptor? Following the rules of ‘Jerk’ is a good place to start. Habit collects extremely sensitive personal data to create context. They build a model of each individual customer, and then create a nutritional solution perfectly tailored to their needs. They set health goals for each customer, and then track results against those goals. They weave their products into a unified, customized solution that is driven by data, making them indispensable and irreplaceable to their customers.
Through Habit, Campbell’s is taking their analog business of packaged consumer goods and turning it into a digital business, enabled through information. It’s reasonable to assume that at least part of the meals Habit will ship to its customers will use Campbell’s products and these customers will likely have a much deeper appreciation of Campbell’s place in their lives. This sort of deeply-intimate customer engagement is a new normal, and each dollar spent in this manner will be dramatically more effective than traditional marketing and advertising.
Defying Convention, Confounding Regulation
Solutions such as Habit will give regulators fits. Does its service fall under healthcare privacy laws such as HIPAA? Is it a healthcare provider? Should their coaches be licensed? Who is qualified to interpret the data provided by customers? Does their model introduce chain of custody or chain of control issues? Traditional companies would obsess over these questions for years before taking action. That Campbell’s leapt into this business speaks well of their ability to overcome organizational inertia and risk avoidance, in order to remain relevant in the digital era.
While Habit has yet to launch its new service, I anticipate that they’ll be very successful. This sort of application of deep personalization, bordering on creepy, is exactly what customers now demand. First movers into such solutions can build an insurmountable advantage over their competitors. Indeed, they make the need for change even more urgent for both their direct competitors, and those whose verticals they infiltrate. Companies that don’t adjust to these new expectations may find their customers saying, “No soup for you!” as they spend their dollars elsewhere.