In 2012, two people who were struggling to pay their rent had an “a‐ha” moment. They were living in San Francisco at the time. They could put mattresses on their floor, provide breakfast services, and charge guests to stay at their place.

Fast forward to 2020. These same individuals, now with a business built on the idea of providing lodging services, underwent the largest IPO of 2020. Their company reached a valuation of over US$100 billion that year, exceeding the three publicly traded hotel chains' value, namely Marriott, Hilton, and Intercontinental.¹

This is the story of Airbnb, which took the concept of shared lodging and short‐term rentals to the next level. In addition to pioneering a new business model in the hospitality industry, in which owners can rent their dwellings to guests via a website and app, Airbnb understands how to solve customers' confusion over travel.

Guests can find what they need in a safe, user‐friendly environment. It starts with an inspirational travel experience. Users get to choose their unique spaces, ranging from a simple room to the exotic. Treehouses, caves, boats, condominiums, villas, and tents—they're all available via Airbnb.²

It doesn't stop there; Airbnb also offers Airbnb Plus, which provides the highest quality homes managed by hosts who get great reviews and pay great attention to detail.³ Travelers can even rent a city, village, or country.⁴

Airbnb pushes all hosts to facilitate an experience by creating a “You belong here” initiative. It measures the extent of the hosts' feelings of belonging and rewards them if they can show it. Conversely, if they fail to provide an experience expected by the guests (based on their reviews), the Airbnb algorithm will make the host's property hard to find.⁵

To support this, the three cofounders consistently visit and live at the homes of key hosts worldwide, which significantly affects loyalty formation. Airbnb also navigates these hosts through various activities in groups. Hosts can share knowledge, integrate into a host application that embeds hospitality standards and guidelines, and participate in stand‐alone meetups to exchange information.⁶

During the pandemic, Airbnb launched Flexible Search. This service enables users to choose a flexible date, making it easier to search for a weekend getaway, week‐long vacation, or month‐long vacation without setting specific dates. Flexible Search restores the users' traveling mindsets without worrying about future travel restrictions or cancellation fees.⁷

The Airbnb case illustrates how today's advances, coupled with consumer expectations, have enabled us to provide new navigation systems for customers. In this chapter, we'll continue discussing the “dynamics” section of the omnihouse model. We'll look at the customer element, which is positioned in the 4C diamond model (see Figure 4.1). Together with elements of change and competitors, the customer is one of the main determinants of a business landscape. Change, competitors, and customers are the sources of various business risks that the company must consider.

As we have seen, today's customers have extreme bargaining power. Thus, companies generally adopt a customer‐centric approach. However, customers are also increasingly stuttering with the piles of information they can get, including false information, hoaxes, and other misleading information. There is so much available that they can get caught in confusion. Companies need to supply customers with robust navigation systems so they can find the solutions they need.

In line with the advancement of information and communication technology, which triggers digital democratization, the world is increasingly connected. On the one hand, this provides new strength for every individual. On the other hand, it floods everyone with an extreme amount of information. There is so much to digest, and it is hard to ensure accuracy.

These circumstances open opportunities for companies to provide navigation that enables customers to better understand what they want. This maximizes their experience and enables them to enjoy the solutions. Clear, transparent, and honest navigation is essential in the post‐truth era marked by rampant hoaxes throughout the world.

The Connected Customers

In line with today's digital world, customers―who have been and will be served by companies worldwide―are also more connected. This leads to a number of factors:

• Customers are more informed. With almost unlimited access to a large amount of data and information, everyone will do their research before deciding on trivial or monumental decisions.⁸ In general, more than 80% of consumers do online research before making a purchase to validate their choice, such as ensuring originality and reviewing user experiences. Consumers appreciate detailed information about the product or service.⁹
• More sophisticated customers. Increasingly informed customers can lead to a gap between their expectations and the company's ability to meet them. These sophisticated shoppers have higher expectations, making it increasingly difficult for companies to accommodate them.¹⁰ More than 90% of consumers want to get products that are predetermined to be what they want.¹¹
• The shift of bargaining position. In turn, these highly sophisticated customers become empowered because they have a great understanding of products and services. They are price savvy and aware of how to determine which offer provides the best value. Furthermore, customers can even demand the freedom to customize. This enables them to make the most of every dollar they spend.

With the increasingly strong position of customers since the early 2010s, there have been several recent issues facing businesses. Let's look at these here.

• More challenging to satisfy the customers. For some product categories, customers seek product function over brand. Other times, they choose the brand with which they feel most strongly connected. However, there is a tendency for customers to ditch the brand immediately when neglected.¹²
• More challenging to have loyal customers. Consumers are dynamic, quick to understand, and at the same time change rapidly in line with their latest insights, which in turn has sparked a wave of disloyalty to brands in various parts of the world. As a result, only about 8% of consumers globally are committed to the brands they buy.¹³ Marketers put a lot of effort and money into delighting customers, but sometimes they don't care because most make buying decisions automatically. Therefore companies need to develop a “cumulative advantage.”¹⁴
• More difficult to get positive advocacy. In the pre‐connectivity era, we often used the level of retention and repurchase to indicate customer loyalty. Now, we include the willingness to support our brand in a connected world as part of loyalty. However, advocacy often puts customers at greater risk than merely making repeat purchases of a product or service, because customers who recommend a brand to others face “social risks.” For example, if others follow someone else's recommendation but the results are disappointing, the recommendation provider may receive social punishment. This risk causes customers to be cautious in expressing their advocacy.¹⁵

Customer Management Toward 2030

Facing this new breed of customers requires a serious overhaul of a company's customer management to survive and remain competitive. To do so, in the future, many more businesses will become internet businesses and work across all types of channels and devices. They will use a large number of tools in their tech stack and must have the ability to see their customers up‐to‐date and in real time. Customer data will be a valuable asset, and companies have no choice but to make digital transformation efforts, which will lead to the adoption of the customer data platform (CDP). In the next stage, CDP will determine a company's ability to provide the best customer experience.¹⁶ Let's look at what this means for digitalized marketing and the future business model.

Navigating Customers

Customers are overwhelmed by product information available in the market, making their decisions less accurate. A company must proactively act as a trusted navigator for these customers by following these processes:

• Provide a platform. Companies can provide a physical and digital platform for customers to use as a tool to identify their problems, find solutions, and learn how to get them. It's important to make sure customers can immediately understand the benefits of the platform. Ensure all the platform features are complete, relevant, and user‐friendly, especially for Generations Y and Z.

  For example, mobile apps for banking services are beneficial and remove all customer pain points. One famous quote says, “people do not need banks, but they need banking.” For example, a mobile app review on the Forbes page states that the complete banking services in a mobile interface are sufficient to address customers' needs, such as account statements, expense tracking, and debit card lock security, without face‐to‐face, on‐the‐spot verification.³¹

• Engage partners. Companies must involve relevant partners on the platform to support the resources, activities, capabilities, and even competencies needed to serve customers' multiple needs. These partners' involvement must be seamless and provide a hassle‐free experience for customers. They must ensure that the architecture platform is flexible and compatible with partners but has strict governance control.
• Focus on the solution. Through this platform, the company must provide complete solutions to customers that free them from pain at each point of the customer journey. The company must provide an understanding of how to use the platform and produce solutions that can solve the core problems of customers through customization and personalization. It should also offer opportunities for co‐creation and collaboration with customers.
• Provide supporting services. This support service aims to provide assurance to customers and must be accessible anytime and anywhere. Companies need to be ready to receive calls from customers at any time. They must make sure all support services can strengthen engagement with customers.
• Communicate value and values. Check that the company's value proposition focuses on experience and even transformation. Ensure that the company's values, especially those related to the broader community's interests, are embedded in the business model and communicated clearly to customers to understand and appreciate them. Engage customers in a community to interact with each other, help one another, share ideas, provide input, network, and even have fun.

The Choice: Conservative or Progressive

The terms market‐driven and market‐driving have been around for some time. Referring to the explanation by Bernard Jaworski, Ajay Kohli, and Arvind Sahay, market‐driven is a business orientation that seeks to understand the behavior of players in a particular market structure and then react to it. Meanwhile, market‐driving implies influencing the structure of the market and/or the behavior(s) of market players in a direction that enhances the business's competitive position.³²

Both business orientations are optional and highly dependent on various factors in a company, including those related to resources (tangible and intangible), capabilities, and core competencies. A more robust market orientation will give a company the potential to achieve better performance. We also know that business challenges are too massive for one company to face alone, so a company's involvement in a digital business ecosystem will provide a better chance for the company to survive in the long term (see Figure 4.2).

By combining the market orientation with the company's model, we can describe and predict that the more it goes to the lower left (in Figure 4.2), the more the company will be market‐driven. However, the more it goes toward the top right, the more it will have the market‐driving capability. This market‐driving capability will be even more powerful, especially if a company can drive the ecosystem, not only participate in it.³³

On the lower‐left section are conservative companies, and companies on the upper‐right section are progressive. We name the continuum between these two company characteristics the conservative–progressive firmographic continuum. Most companies will be somewhere in the continuum (or perhaps even outside of it), regardless of whether the company deliberately chooses its position or merely ends up with it by chance.

Progressive companies have a strong market orientation, are part of a digital business ecosystem (and may have the power to control this ecosystem), and have a market‐driving business orientation. For example, TikTok is available in every ecosystem. It drove short video content to such popularity that it has pushed other platforms to follow suit. Three billion users downloaded TikTok in under four years.³⁴ TikTok video is now available in a three‐minute duration to support some video categories, such as cooking videos.³⁵

By contrast, conservative companies have weak market orientation. They are stand‐alone or are not part of a digital business ecosystem. They are market‐driven in terms of their business orientation.

Companies with both conservative and progressive characteristics can exist, but progressive companies will have a better chance of building strong competitiveness in the long run. A conservative company is suitable for a static business landscape. By contrast, a progressive company is ideal for a very dynamic business environment, as we are now witnessing—and will continue to toward the year 2030. Progressive companies rely on their dynamic capability, enabling them to become market‐driving companies.

Conservative companies can survive in a business environment that tends to be static. To a certain extent, they are able to continue in a dynamic business environment but find it difficult to form a strong market position. Meanwhile, progressive companies can always follow―and can even help shape―this very dynamic business environment.

Conservative companies have a stand‐alone model that relies on conventional value chains. Progressive companies rely on networks with highly coordinated and interdependent partners within the digital business ecosystem, enabling them to strengthen their bargaining position relative to their customers. For instance, the cloud kitchen business model, adopted by ride‐hailing company Grab, enables many brands to cook in one central kitchen. These arrangements are often designed for online food orders. This concept allows Grab riders to pick up food faster than picking up orders in a restaurant. Started in 2018, this business model enabled the brand to stay operating during the pandemic.³⁶

Conservative companies still tend to apply conventional marketing approaches in contrast to progressive companies who commonly use a digital marketing approach to navigate their customers fundamentally, holistically, and proactively. For example, the DBS Digibank app launched LiveBetter to be a one‐stop digital platform that aims to help transition to a greener life simply by adopting green retail financial solutions across home renovation, car loans, and investment. This initiative enabled DBS to be one of the most profitable banks in the world. In 2021, DBS reported higher‐than‐expected profit, marking ten consecutive years of this achievement. DBS's transformation to adopt a digital banking system to serve their customers has made them one of the best Singaporean digital banks.³⁷

Both types of companies can navigate their customers. Still, conservative companies can guide their customers only in a limited way to things that are not fundamental, which tend to be technical, through various platforms, such as how to get information, how to purchase, the payment methods, how to use products, and so on. Meanwhile, progressive companies navigate customers more fundamentally, for example, by setting new game rules, making many incumbent players irrelevant in a competition, and changing the mindset and behavior of customers and competitors.

Progressive companies can present disruptive shock waves. Progressive companies are also able to significantly affect the macro environment. For example, they may force the authorities to revise regulations, create social/cultural changes, or even affect the market structures.

Based on these explanations, we can start to understand why conservative companies tend to have a temporary competitive advantage. By contrast, progressive companies can establish a sustainable competitive advantage. Those reasons also show that the more progressive a company is, the higher the competitiveness that company can achieve (see Table 4.1).

Several points need attention. First, a progressive company does not merely refer to its customers' perspective, as conservative companies do. It also comprehensively looks at various aspects of the 4C diamond model where the customer is only one of the elements. Companies cannot just focus on making products and services that are attractive only in their customers' eyes to guarantee business continuity. However, they must also comprehensively pay attention to the business environment dynamics, including what happens in the macro environment and the competitors.

Second, the new progressive approach, particularly how companies deal with their customers (and their communities), requires inspiring educational efforts to be immediately accepted and adopted as part of people's daily lives. Educating the market to achieve critical mass is a crucial matter that progressive companies must carefully consider.

Third, a progressive company's business model will differ from a conservative company's that relies heavily on forming competence based on its capabilities in using various tangible assets. By contrast, progressive companies build their competitiveness by leveraging intangible assets of companies that are very difficult to imitate, not available for sale in the market or rare, and have high value. Meanwhile, a company can obtain other assets that it does not own from multiple partners who are members of the business ecosystem, eventually forming an ecosystem advantage.

Fourth, 2030 is a strategic point in time and is a stepping stone toward 2045. According to Ray Kurzweil's predictions, there will be exponential increases in technologies such as computers, genetics, nanotechnology, robotics, and artificial intelligence, referring to the law of accelerating returns. Singularity is the point where human and machine intelligence will eventually merge.³⁸

Thus, every company must determine its future from now on. A firm cannot miss the momentum toward 2030 if they want to survive in the era after that. For this reason, companies must plan where their foothold will be in the conservative–progressive firmographic continuum.

Key Takeaways

• The customer, which is part of the 4C (customer, change, company, competitor) diamond model, takes center stage in the business landscape of today and tomorrow.
• Customers are more connected, which makes them more informed and sophisticated, and they have greater bargaining power. It's challenging to satisfy them, keep them, and have them advocate positively for a company.
• Going forward, companies will need to adapt digital marketing capabilities and review their business models.
• To navigate customers, firms can provide a platform, engage partners, focus on the solution, provide supporting services, and communicate value and values.
• Companies need to evaluate their conservative and progressive status and consider how they want to operate to prepare for the future.