I got to thinking about loyalty cards, specifically about the future of them. They are predicated on a particular set of technology: that of barcodes, barcode scanners, and computerized registers. But what is happening as more and more information is moving to mobile devices? Shoppers are beginning to desire keeping loyalty card information on their devices rather than accumulating piles of physical cards. The problem with that is current scanner technology does not work with barcodes displayed on mobile devices. (Just try it: If you have a smartphone, get a keychain app for your phone and load some of your loyalty cards into it. Now go to your favorite store, load up the loyalty card on the app, and attempt to swipe your phone across the scanner. I'll bet you and/or the annoyed sales clerk give up after 30 seconds.) The solution to this problem obviously involves some other protocol through which the mobile device and the scanner can communicate, such as Bluetooth. Or does it?
In fact, the solution may have nothing to do with mobile devices or scanners at all. It all goes back to the job for which the store is hiring that is currently held by the loyalty card. What is the store trying to do with the loyalty card? One could argue that the primary purpose is to collect customer purchase data. That is likely true, but there must be a reason that the store wants to collect such data. I would posit that the store wants purchase data so that it can find correlations in purchasing behavior and link it with demographic information. Going further, the goal of such correlations is to help the store optimize which products it offers, where it places them, and the like. Further still, the primary purpose of such optimizations is to increase the store's sales. That increase most likely serves to increase profits, which in turn serves the store's goal of maximizing shareholder value.
By recursively considering the real purposes behind each activity or goal, I created a chain of continually expanding goals, all the way to the store's ultimate goal of maximizing shareholder value (one could go even beyond that, but I think that's far enough for the purposes of discussion). Here's the big idea: Every one of the links in the chain could potentially be substituted. The loyalty card could be substituted by a smartphone to fulfill the goal of providing trackable purchase data, the product placement optimizations could be substituted by providing higher margin products to fulfill the goal of increasing sales, and increasing sales could be substituted by reducing costs to fulfill the goal of increasing profits. In other words, every one of the links in the chain is in a potential area for disruption.
Building such a potential disruption chain could be a useful tool for drawing out ideas for innovations. It is easy to think of innovations in the bottom link (Let's just use this newer, better technology X!), but as you move up the chain, innovations have much greater potentials for impact. Just imagine the store coming up with a new method for obtaining correlated purchase and demographic data, such as simply buying the data from a specialized firm. The specialized firm may offer much higher-quality analyses, and the store would be able to realize savings in the printing of loyalty cards, scanner equipment, data warehousing, and the performance of its own analyses. Breaking out the purpose of a particular activity into a potential disruption chain helps such ideas come forth.
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| A Potential Disruption Chain |
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