(Or what a scientist from 1962 can teach us about ad tech in today.)
In a moment of frustration after meeting some potential tech partners who seemed not to sense that going forward, ad tech will be about the “how” – not the disruptive “wow,” I wrote a post in Ad Age explaining the importance of operational structure in ad tech: “Here’s the only marketing trend you need to know for 2016”.
While my arguments were lost on the tech folks, the article struck a nerve with Ad Age audiences because it expressed a deeply felt marketer frustration that tech is just too damn dominant in the ecosystem, making a marketer’s job just too hard.
I go on to suggest ad tech is overdue for a “paradigm shift” itself that can disrupt the colossal mess of complexity, fraud and technological black boxes that is now ad tech. My conclusion is that in 2016, “…marketers will replace the “awe” of algorithmic magic with awe-inspiring new questions about how (not if) we balance ad tech with the art of marketing.”
The groundswell of community support for the post was overwhelming. Amid the inbound, there were tons of questions curious about Thomas Kuhn and secondly, which solutions will realize the promise of integrated user experience out of the current ad tech operational chaos.
Therefore, to answer these questions, let’s take a 50 year trek through the historic evolution of paradigm shifting and the disruptive innovation myth so we can see just how ad tech is about to get disrupted itself (and by whom).
Thomas Kuhn – the Father of Paradigm Shifts.
Thomas Samuel Kuhn was a noted American physicist, historian, Harvard professor and philosopher of science, who published a highly respected book in 1962 entitled: “The Structure of Scientific Revolutions.”
The oxymoronic title of the book alone alludes to its quirky nature but does nothing to hint at the profound impact the book was to have in its day and for the next 5 decades.
When Kuhn was working, the 1960’s were tumultuous and exciting times with many major scientific advances being made in rapid succession. Kuhn undertakes, with profound scholastic discipline, to lay the groundwork for how the scientific community can standardize revolutions; using the well-known term “paradigm shifts;” so they are responsibly vetted before being unleashed on the public. Kuhn didn’t invent the term paradigm shift, but he gave it a specific meaning so it could become the foundation upon which scientific progress can rest upon with confidence.
Kuhn was deeply concerned with ensuring that scientific advancement is based on solid evidence and not wild conjecture or speculation. His emphasis on structure (as in the title) reflects Kuhn’s deep ambivalence about the concept of paradigm shifts. Paradigm shifts for Kuhn were extraordinary events that can only occur when there is an increasing number of paradigm-busting anomalies that challenge known paradigms. He fully appreciated their fundamental place in scientific advances; “[A paradigm shift] represents a shift in the problems available for solutions … transforming the imagination to change the very nature of how the work is done.”
But he advised caution because: “Almost always the men who achieve these fundamental inventions of a new paradigm have been either very young or very new to the field whose paradigm they change.” This was the scientific version of; “Ah – all these young whipper snappers with their crazy new ideas.” Kuhn was the ancient age of 40 when his book came out.
Kuhn understood that science was just smart enough to be truly dangerous. He articulated the process for advancement that spoke to generations of scientists because it delivered the needed framework for establishing responsible scientific advancement given the haphazard and dangerous nature of paradigm shifting. His established hallmarks for managing a paradigm shift are:
- Default position is trust in the current paradigm the scientific community has accepted (“normal science”) even in the face the unexplained anomalies
- If the number of anomalies continue to increase especially as a result of new data, then the scientific community must reach new agreements about how to measure the characteristic of the anomalies. Note – there is no paradigm jumping going on yet – but a simply a community consensus on how to accurately measure the results observed.
- Vetting of scientific results must include peer reviews and repeatable results from independent experiments
- Once community verified, the new paradigm is accepted by the community and thus becomes the “new” normal science
- “rinse and repeat” …
These principles are widely and rightly credited with the creation of well-established methods and processes for managing paradigm shifts. Kuhn puts tremendous responsibility on the shoulders of the scientific community; “As in political revolutions, so in paradigm choice—there is no standard higher than the assent of the relevant community… This issue of paradigm choice can never be unequivocally settled by logic and experiment alone.”
All this structure allowed the 1970s, the direct heirs to Kuhn’s ideas, to be considered the Scientific Golden Age. More than that, Kuhn’s principles gave us nothing less than our very high standard of living because scientific breakthroughs could safely developed and adopted.
Clay Christensen – the Father of Disruption Innovation
Kuhn may have deeply impacted everyday life but he remained obscure to most folks until Clay Christensen who, in 1997, published the run-away best seller business book called: ‘The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail.” It was a roadmap for how businesses take “paradigm shifts” (from Kuhn) and create a competitive advantage through “disruptive innovation.” Failure to ride the disruptive innovation wave, the book cautioned, was likely to put a company on the path to destruction. Disrupt or be disrupted became, arguably, the first mega business meme.
At its core, Christensen’s idea rests on Kuhn’s concept of paradigm shift but it was recast in a decidedly sleeker package:
- Identify those paradigm shifts likely to change industries
- Create the disruptive innovation to capitalize on the paradigm shift
- Automate everything so you can produce a product at a lower price with lower but acceptable quality
- “Rinse and repeat” so as to maintain competitive advantage
Christensen astutely provided stress relief to business leaders who were reeling in the chaos of the 1990’s digital revolution with his “silver bullet” answers to complex problems. The 1990’s were a “Reality be damned as long as it’s disruptive enough” kind of decade.
An important side note is to recognize that in the 1990’s, many future VCs were cutting their teeth at organizations where the Disruption Myth was a widespread, accepted business strategy. As we will see, this plays an important part of our story.
What’s different between Kuhn and Christensen?
The decades when Kuhn and Christensen were influential had many similarities. Generally speaking, both decades saw major technological advances; the 1960’s focused on industrial scientific advancements and the 1990’s digital revolution kicked off on August 6, 1991 when: “Berners-Lee posted a short summary of the World Wide Web project on the alt.hypertext newsgroup, inviting collaborators.” (Wikipedia). Just a few years later, Amazon and Google launched and the digital revolution attracted investments to anything “dot com.”
Whereas the decades themselves strongly paralleled one another, each man’s response was quite different. For Kuhn, a clearly paid out process for integrating new ideas into scientific knowledge was critical. By contrast, Christensen’s model was more concerned with the “big” concept around the importance of disruptive ideas, leaving big operational (yes – structural) gaps in his theories.
- How was one to define a paradigm shift?
- How do these disruptive innovations get incorporated into existing business models?
- What were standards for measurement?
- Could technology be duplicated so that it was transparently verifiable?
These and many other questions remained unresolved in Christiansen’s theory because he offers no framework for the industry’s development and evolution for disruptive innovation.
In practical terms, this meant and still means a lot of bumbling around in pursuit of the disruptive idea. Christensen’s meme did what every good meme does – go viral and in the process become a “truth” upon which almost all technological disruption since must rest.
Reality be damned.
In Disruption We [shouldn’t] Trust
Kuhn’s legacy is our trustworthy system to integrate new scientific ideas into our body of knowledge which has helped commercialize many new technologies; improving our standard of living decade after decade.
By contrast, while Christensen’s book itself was financially successful, it seems his theories were not. Probably because of its popularity, it took nearly 17 years for anyone to actually pick apart the math behind the Christensen’s work. Jill Lepore, a professor of American history at Harvard University and chair of Harvard’s History and Literature, analyzed the data behind his theories and scathingly observed in her 2014 New Yorker article, The Disruption Machine: What the gospel of innovation gets wrong: “Disruptive innovation is a competitive strategy for an age seized by terror …founded on a profound anxiety about financial collapse, an apocalyptic fear of global devastation based on shaky evidence.” She continues; “Most big ideas have loud critics. Not disruption. Disruptive innovation …has been subject to little serious criticism,”
Lepore’s goes on to challenge the underlying assumptions about the disruption myth and wryly notes that the investment fund established by Christensen using his principles was a total failure and shut down.
While Christensen spoke to the angst many business leaders felt, he left out any process for vetting the new technologies that were flooding the market. We can’t chalk it up to coincidence that the “dot com” bust happened just three years after Christensen’s book was published, washing away many disruptive Internet ventures. In other words, our faith in disruptive innovation to build sustainable business is as real as a unicorn in the forest.
Christensen’s Legacy Haunts Ad Tech Today
To this day, ad tech continues to live in the shadow of the Disruption Myth, trapped there by an investment community that believes unblinkingly in the ideology of disruptive innovation, largely I think because of their early exposure to Christensen’s model. This devotion shapes what and who VCs invest in, with blinders on as to the effect the tech has on marketers (agency and advertisers). This Ad Age post I did called, “Why Excluding Marketers from the Ad-Tech Boom Is a Failed Strategy” (April 30, 2015) laments the flood of “cool” ad tech that is increasingly detached from the real world of marketing. “My anger swelled at the scope of the marketing efficiency devastation. And my frustration knows no bounds at the abundance of tech “products” with an appalling lack of “productive” solutions. Mostly though, we lack systems where everyone has a chance to benefit — investors, ventures, advertisers, agencies and of course “Judy Consumer.”
The vestiges of the Disruption Myth that continue to haunt ad tech today are:
- VCs who continue to fund ventures based on their disruptive algorithm or automation platform without considering how the technology lives within the marketing ecosystem
- CEOs with little or no direct experience in the industry who create disruption without necessarily creating value for marketers
- The community of marketers that has largely been marginalized leaving the disruptions to be shaped in the VC/ tech echo chamber
- Measurement standards that are “best we can do” – not the best that can be done
- Lack of transparency fed by the “black boxing” of disruptive tech
On a human level, Christensen’s legacy means that if you work in marketing today, you are in peculiar type of hell. You appreciate the potential of digital marketing to build businesses yet you’re frustrated at the chaos and corruption of ad tech that is built on pillars of impressions sand funded by disruption-obsessed VC money.
Marketers are reeling from trust issues; between agency and advertiser and between brands and digital audiences. They are reeling from attribution issues and most challenging of all – they are overwhelmed in understanding how measure the artistry of marketing into the ecosystem as an equal partner to the technology. This is why the word “bust” is not far from the lips of any investor in ad tech in a “history repeating itself” déjà vu moment evocative of 2000. But it doesn’t have to be that way.
Slaying the Disruptive Innovation Myth.
Till 2014 or so, marketers were all too happy to take a hands-off approach, leaving the geeks to work it out amongst themselves. Marketing trade organizations belatedly scurried to catch up, by that time, the VC disruption die had been cast and tech disruption obliterated any investment in marketing artistry or operational excellence. Marketers had very much lost control of their own industry.
Reality be damned ads long as it was disruptive enough.
By 2015, though the “disruption” cracks were becoming gaping holes as marketers struggled even more in the fragmented ad tech landscape. An Entrepreneur article I did exposed the high cost of ad tech to people: “Disrupting the Disruption Myth” (August 2014) My aim was to crack open VCs narrow definition of what a disruptive venture can be, using Xiaomi’s (pronounced SHOW-me) phenomenal growth as a prototype of a wildly successful venture without any disruptive tech in sight.
Back in 2014, I may have been just one voice, but by 2015, there was a growing chorus of marketing voices demanding ad tech disruption be about human disruptive technology.
Looking for Disruption in all the Right Places.
If Kuhn had been writing in the 1990’s instead of Christensen, I suspect the ad tech landscape we have today would have been far different. There would have been “community” due diligence around how a disruption is an improvement over existing approaches. There would have been peer review to establish standards to describe these approaches. And most certainly there is would have been vetting process ensuring that potentially deeply invasive technology is used responsibly and to serve people well.
But as it was, the technologists and the “disruption myth” devotees at investment firms, have been in charge for the last five years with pretty much a free hand to “disrupt” at will. Now that many ventures are struggling – even the high flying ones, many VCs and technologists are scratching their head wondering what went wrong.
Any marketer can tell you. The only thing that ad tech really disrupted is the human element of marketing; so crucial in the creation of meaningful connections between brands and audiences.
That’s why going forward, there will be a new paradigm in marketing where the “how” is more valued by investors than the disruptive “wow.” The ventures emerging will create innovation specifically geared to balancing the art and science of marketing within a structured model of transparency, vetting and measurements. From 2016 and on, the community of marketers will be far more active in creating and assessing the disruptive value of new tech as disruption will mean innovation that drives genuine progress.
Ad Tech Disruption in the Future
By now, we can appreciate how the structured approach to “paradigm shift” that Kuhn imagined, was morphed by Christensen into a non-structured disruptive myth ideology that for ad tech, means a lot of chaos and operational dysfunction.
In 2016, the disruption dust cloud will lift, allowing clear heads to pivot; abandoning their reliance on tech-based disruptions in favor of ventures that focus on operational ad tech as their innovation.
Strategically, these ventures will share some common characteristics that are Kuhn inspired, distinguishing them from their Christensen-imbued predecessors:
- The distinct lack of disruptive “wow” or black boxes in favor of an operational analytical “how.”
- Abandoning the near sacred MVP (minimum viable product) model of most ad tech startups in favor of a new MVP = Maximum Valuable Product. Consumers are very sensitive to subtle changes that can occur in frequent platform iteration causing changes to expected campaign ROI.
- New “outcome-based” SaaS models as marketers begin to drive better contextual experiences through new contextual tech AND processes.
- Engineering obsession around a highly satisfying and frictionless user experience without ad tech compromise.
- The financials of these ventures will be realistically investable but also sustainable by the industry. Plainly put, today’s current VC expectation that ventures achieve 60%+ margins is unrealistic causing much of the click fraud that is weighing down the industry.
- Their leaders will likely be experienced marketers rather than 20 something tech geeks. Marketing is as much about processes as it is automation. It takes real world experience to create that merged vision of art and science.
And the winners are…
Taken together, we will see a blossoming of ad tech over the next five years in various industries and functions making these ventures interesting (and dare I say disruptive):
1) Healthcare as an industry is going through a “retailization” transformation that is largely about creating user responsive systems and services. This is, for the healthcare industry, a paradigm shift as the industry moves from “fee for services” model to an outcome based model.
A host of disruptive marketing technologies will burst onto the market from innovations around wearable tech to tackling the mountains of medical/ provider data. Healthgrade (http://www.healthgrades.com/) is an example of a company working on wrestling all this data into a user friendly format. Today, they help about 1 million people a day make sense of the vast amounts of doctor and hospital data (like reviews) available all customized to meet the needs of that individual. They plan to expand to power better ways for consumers to manage medical expenses through aggregating medical information, offering product information and making it transparent for the patient to decide while managing users’ online security. Ultimately this, like other ventures in this space, rely on an excellent user experience.
2) Direct marketers are likely to be winners in the new ad tech disruptive game because they are making the leap to deliver personalized experiences where tech supports the very human side of customer acquisition and retention.
Going forward, direct marketers will expand their email/ database capabilities into new marketing cloud offerings like Bombora (http://bombora.com/products ) who; “Aggregate. Organize. Activate.” data to make it incredibly useful for B2B marketers across business applications. Cue Connect (http://www.cueconnect.com) is also interesting because it takes a “direct” product level approach to helping retailers stay connected with customers and create excellent user experiences. Their online platform gives retailers new insights and tools to provide a better, integrated on/offline shopping experience for their customers using products level (not the more typical user level) insights based on their behaviors (i.e. – share or saving as a favorite). This product centered approach reflects a sensitive understanding of “how” real people shop for stuff – the “wow” is there but it’s not the point.
3) Content marketing is on ascend almost in direct inverse proportion to the degradation of CTRs on many forms of display advertising.
Today though, this category of ad tech is a messy, fragmented, incomprehensible landscape of content creation, social publishing, sentiment tracking and on. Each venture, eager to be disruptively investable, went deep into a functional silo leaving the marketer with a dizzying myriad of options that don’t play together too well. Native, just one form of content marketing, is an example with its dizzying array of networks and “platforms.”
Disruption here will revolve around ability to deliver true relevant brand messages through contextual advertising technology that will be well-defined; merging human creative process with programmatic RTB technologies. Our venture is an example in this space as we link data related to content and RTB programmatic advertising. Another example is Kargo, a great mobile venture that excels at amazing, rich and personalized video experiences.
4) The massive business called TV will be (finally) disrupted with the arrival of VR (virtual reality) in 2016 and Apple TV which will drive the final nail in the old world TV distribution model. The paradigm shift here will be the reverse of control from broadcasters and content providers to individuals where video streaming, gaming, shopping are all delivered seamlessly across devices. It is likely that TV disruption will come from the mega networks (ie Facebook) as any large tech company (ie Samsung).
The way forward depends on the human element.
Current marketing chaos is rooted in an excruciatingly unsustainable model imposed on marketers by VCs who limit their vision to disruption described with words like scale, algorithm and SaaS anything.
But now the alarm bell is ringing in everyone’s ears because more money is spent on more tech, yet marketers are getting less done and investors are getting less returns.
We can do better and Kuhn showed us the way. In 2015, marketers have experienced a paradigm shift of their own in the form of community unity propelling marketers to take back control from the technologists. Redemption will come from discarding the unproductive Disruptive Innovation mythology from our thinking (it may take VCs longer to let of this cherished tenant) and replacing it with a disciplined process as Kuhn imagined but coupled with a new sensitivity around the need for practical solutions that allow marketers to create new user experiences.
2016 will see the triumph of marketing brains and art over pure disruptive tech brawn. I’d like to think would Kuhn be proud.
Filed under: advertising, Agencies, Communications, Digital Agencies, digital marketing, Marketing Management, startup, Technology, VC, VC funding, viral marketing | Tagged: clay Christensen, Disruption, disruption myth, Innovator's dilemma, paradigm shift, thomas kuhn | Leave a comment »