Are Trade Shows Dead?

It is early to determine what permanent changes might happen in sales, marketing and customer support functions after firms have had a couple years worth of enforced use of virtual channels. 

But the behavior of sales and marketing teams since the start of the Covid-19 pandemic is fairly clear. Return on investment from virtual events or virtual conferences has been seen as sub-par. 

Generally,  trade show exhibitors and sponsors say virtual events have yet to match the networking and lead-generating potential of face-to-face experiences

Nick Borelli, Director of Marketing Growth at Allseated “worries that C-suite marketing teams may lose confidence in the value of face-to-face events as they gradually learn to live without them.”

Conversely, attendees at virtual events or exhibitions have overwhelmingly been concentrated among “learners” rather than buyers and sellers, according to surveys conducted by Bizzabo. 

“Learning is the primary motivation of virtual event attendees,” Bizzabo says. 

Virtual trade shows arguably have attendee pros and cons. They save money on physical travel costs, event exhibit costs and sometimes sponsorship or attendee fees. Virtual events arguably save time, as time out of the office is eliminated. 

Among the cons are lack of opportunities to network, ability to interact in the same way as in-person encounters, less engaging experience, possible technology or interface issues. Virtual is just more impersonal. 

Event managers who have had to pivot to “virtual” recognize the issue. 

source: Event Manager 

The big issue of importance is future behavior. Will firms have found work-arounds that make trade shows and exhibitions less important than in the past? 

One observation is obvious. Firms have had to learn how to drive sales, marketing and fulfillment operations even when physical channels are unavailable. In the process of doing so, there is some anecdotal evidence--and some hard financial results--that suggest the inability to conduct in-person sales and marketing has been detrimental to firm financial performance. 

Small business owners who generally rely on social media advertising, are generally unimpressed with the return on investment. Enterprises might be more satisfied, but also have the cost savings from not attending physical trade shows.

Conversely, if enterprises find they can sell, market and fulfill virtually, that is going to diminish the value of, and revenue for, suppliers of “live, in-person events.” Early in the Covid pandemic, event managers already were seeing the impact. 

source: Event Manager 

Virtual might still work for “learners.” It might not work so well for business-to-business sales purposes.

New Lumen Remains a Hybrid, but Barely

Asset reshuffling tends to be rather common in the connectivity business, with occasional bouts of merger unwinding. Consider the proposed sale of Lumen fixed network assets to Apollo Global Management.   

Basically, the deal unwinds the merger of CenturyLink and Qwest fixed network assets (more an acquisition by CenturyLink of Qwest) in 2011. What remains for Lumen are the original Qwest local exchange operations, plus networks in Florida and Nevada that were not part of Qwest.

Perhaps more important is the Lumen retention of the former Level 3 Communications assets. The proposed deal still leaves Lumen a bit of a hybrid: operator of large tracts of rural fixed networks, plus a handful of tier-two cities, as well as a global enterprise services network. 

source: Lumen

As was the case for the assets divided as part of the AT&T divestiture in 1982, observers will argue about which assets are most valuable. The new AT&T--focused on long distance and equipment manufacturing, was the “growth” play. The new Regional Bell Operating Companies were the “value” or “income generating” play, with little expected growth. 

Ironically, the eventual values were reversed. AT&T kept shrinking, while the RBOCs grew by acquiring each other. Eventually, new AT&T was acquired by SBC Communications, which had consolidated BellSouth, Ameritech and Pacific Telesis. 

Nynex was acquired by Bell Atlantic to form Verizon. 

The issue for Lumen is whether, shorn of roughly half of its local exchange assets, it can execute on a growth strategy driven by its enterprise and business customer operations, while shoring up losses in its consumer segments. 

Apollo may see upside from the rural ILEC operations in upgrading internet access while harvesting voice revenues. Still, it is a cash flow play, not a growth story. Lumen, on the other hand, will bank on a “growth” strategy. 

Lumen still remains a hybrid, deriving most of its revenue from its global network and enterprise connectivity services. Still, it remains one of the larger suppliers of fixed network access in the U.S. market. 

Before the sale, Lumen earned about 25 percent of total revenue from consumer services. After the asset dispositions, Lumen might earn about 12 percent of total revenue from consumer local exchange services.

source: Statista

So Lumen remains a hybrid--enterprise services and global networking--but with a 12-percent contribution from legacy consumer fixed network services.

DX, Digitization or Digitalization: Maybe There are Only 2 Categories

If “digital transformation” is a broader, organization-wide change, it probably cannot be quantitatively described. Some traditional attributes of “digitally transformed” companies include “agility” or “customer focus.” 

And efforts might still fail about 70 percent of the time. Each discrete process change might have a 70-percent chance of failure, defined as “no successful change” in process outcomes. In other words, investing to change a process, and then changing it, with no apparent improvement in outcomes, might still be deemed a failure. 

source: Digital Master Channel 

So perhaps nobody should worry too much about the difference between “digital” strategies; “digitalization” strategies and “digital transformation.” In principle and in practice, it often is hard to see the difference. 

Sometimes the difference is “objective.” According to analysts at Gartner, the difference might be the objectives of the application of any digital technology: optimization of any existing business process or transformation (changing) such processes. 

In fact, optimize or transform might be the key concept, even if Gartner itself defines “digitalization” as having “transformation” as an outcome, and perhaps “the” outcome. 

The problem is that, in some cases, changing an analog or manual process to a “digital” process (a “digital” objective such as replacing typewriters with personal computers for word processing; or electronic newspaper composition rather than manual typesetting) might also result in process change, which is supposed to be “digitalization.” 

Digitalization is “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities,” Gartner says. 

“One common misconception is that going digital is about implementing a set of technologies that get you to a digital outcome,” says Paul Chapman, Box CEO. “And that actually isn’t the case.” The problem is that it is not crystal clear whether that expectation of an outcome is an example of “digitalization” or “digital transformation.” It might be either; it might be both. 

SAP differentiates by saying digitalization is when “data from throughout the organization and its assets is processed through advanced digital technologies, which leads to fundamental changes in business processes that can result in new business models.” 

So an accumulation of digitalization efforts can eventually result in “transformation,” according to SAP, which tends to see transformation as a process that culminates or results from a series of more-discrete digitalization efforts. 

Others might argue that transformation primarily describes an entity’s ability to be customer-driven, end to end, across every internal operation. But just as many might disagree, arguing that transformation “means far more than a customer-focused technology transformation.”

In that sense, perhaps it is fair to see “transformation” as a concept, while “digitalization” is the set of practical changes in business processes, when digital technology is applied intentionally to change processes. 

According to Gartner, “digitization” is the simple substitution of a digital process for a former analog process, with no intent to change the business process. But as with “digitalization” and “transformation,”t often is hard to characterize the difference. 

Substituting automated teller machines for human bank tellers might be considered a “mere” digitalization move. But it might also enable a change of business model and processes. 

One might note the same for use of self-checkout kiosks in retail stores. That might be said to be a “mere”  digitization strategy, substituting a digital self checkout and payment process for a human clerk handling the same functions. 

But it also is a transformation of business model, to the extent that any business model includes both “how” an entity makes its revenue and all internal processes required to realize sales and revenue. 

Not only are operating costs affected, but human resources can be freed up to undertake other tasks, such as concierge services such as fulfilling shopper online orders for on-site pickup. To a real extent, that changes the model from traditional in-store retail to something else, including grocery delivery. 

Even our definitions require subtlety.

U.S. Office Workers REALLY Do Not Like Office Work

U.S. workers REALLY do not like working in the office, a survey of 3500 U.S. workers by Goodhire finds. 

 

Some 68 percent of respondents would choose remote working options over in-office work. 61 percent of respondents would be willing to take a pay cut to maintain remote working status. Some workers even suggested they would take a 50 percent pay cut to avoid returning to the office. 

Some 45 percent of respondents would either quit their job or immediately start a remote work job search if they were forced to return to their office full-time. Nearly 25 percent said they would quit if a return-to-office mandate was instituted.

Nearly three quarters of respondents said they need a continued remote working arrangement to stay at their current job. Fully 85 percent of respondents prefer to apply for jobs that offer remote flexibility, while just 15 percent would apply for a position that requires total full-time office work. 

Some 60 percent of respondents would move to a new city just for the opportunity to work remotely in any capacity; while 70 percent of respondents would forfeit benefits to maintain remote working status, most commonly: health insurance, paid time off, retirement accounts, and more.

About 74 percent of respondents believe that companies not offering remote working arrangements will lose major talent in the workforce. Also, 67 percent of respondents believe that companies that do not offer remote working arrangements will struggle mightily to attract quality applicants.

Additionally, 64 percent of respondents believe companies that do not offer remote working arrangements will have to increase salary offerings to entice job seekers to apply.

U.S. Telcos Halt Broadband Account Erosion

It might not seem like much that the biggest U.S. telcos added 50,000 net new internet access accounts in the second quarter of 2021. Not when the biggest cable companies added 840,000 net accounts in the same period. 

But the telco performance is important as it halts a 20-year period when cable dominated internet access growth. For most of the last two decades, telcos had either lost accounts overall or lost market share to cable operators. 

So far this year, telcos have had positive net net additions. 

Still, with cable companies adding new customers an order of magnitude faster than telcos, there is a long ways to go before telcos can hope to reverse the installed base trend, which has cable with about a 70 percent share, compared to about 30 percent share for telcos.

Change "What" More than "How"

Business advantage is the purpose of digital mastery. Otherwise, investments in digital processes are a waste of money. 

Some--because of their role in the business ecosystem and their own revenue models, emphasize customer experience almost to the exclusion of all else. That makes “customer experience” into “digital transformation.” That is fine as far as it goes, but is incomplete. 

source: MIT Sloan Review 

New business models are hard, complicated, complex and often time-consuming, so it is understandable that much DX thinking and action occurs at a more discrete process level. 

Of course firms are going to look for ways to sell online, to leverage newer sales channels. Some sellers of products will look for ways to create service businesses built on “rentals” of those same products. That is an example of a “product line extension” and does not require getting into a whole new adjacency in the value chain. 

In other cases DX allows new products to be created within the core business. Selling “outcomes” rather than products ranging from tires to aircraft engines. So the product is so many kilometers of safe driving or so many hours of propulsion: a service rather than a product purchase. 

The point is to focus on “transformation” rather than “digital.” “What needs to change” is the question, not so much “how it can change.”

Why "Winner Takes All?"

Digital markets often are characterized by a winner take all market share, led by oligopolies. One might argue that always is the case, which is why antitrust law exists. Power laws and Pareto outcomes seem quite prevalent in nature and economics.  

“Winner take all” outcomes arguably also happens for incomes of sports stars or other celebrities as well. The issue is why. Many cite the shift to intellectual capital as a reason for the rise of winner-take-all outcomes.

Other drivers are said to include economies of scale, scope and learning. Digital products and services have high fixed costs and low-to-zero marginal costs. That is scale. Scope is different. Such economies result when the production of one good makes production of another easier.

There also are economies of learning. You might call that the experience curve, or Henderson's Law. There is an inverse correlation between a product’s value added and the manufacturer’s experience in its production and marketing. 

In other words, as a company’s understanding and knowledge increases, the cost per unit tends to decrease. That is going to apply for artificial intelligence as it gains knowledge of particular tasks. 

Network effects can exist, where each additional node on a network increases the value of the whole network. One can consider fads and fashion an example of network effect. 

Platform business models also seem to encourage oligopolies. Platform businesses create value and earn revenue by matching complementary sets of people. Platforms make their money by extracting a transaction fee of some sort for connecting buyers and sellers, once they reach critical mass. 

Platform business models also are“multi-sided” and facilitate transactions between many types of users. That is why the notion of “ecosystems” is so prevalent. Also, a multi-sided market allows users to switch roles. A renter can become a housing supplier. A rider can become a ridesharing driver. A message sender is normally also a message recipient. Content producers are content consumers.

Some might credit sophisticated analytics, allowing mining of huge data sets, as also contributing to winner-take-all outcomes. As some colloquially note, “he wins who has the most data.”

Brand value also will tend to reinforce winner-take-all outcomes. Sometimes that happens because brands create ecosystems of goods, services and suppliers that “lock customers into a platform” by creating higher switching costs. 

Ironically, lower barriers to scale and competition might be among the reasons the “rule of three” (for example) seems so prevalent in digital markets. But some would note that most markets are oligopolies, digital or not. 

Others might mention the prevalence of leverage, luck or feedback loops as causes of the outcomes. Whatever the reason, relative performance, rather than absolute performance, is key. 

“Top performers might be only slightly more skilled than the people one level below them, yet they receive an exponential payoff,” says Farnam Street. “A small difference in relative performance—an athlete who can run 100 meters a few microseconds faster, a leader who can make better decisions, an opera singer who can go a little higher—can mean the difference between a lucrative career and relative obscurity.”

Were value deemed absolute, then a product or service with 90 percent of the performance of the “best” option would sell for 90 percent of the price of the “best” option. 

But what we often see in digital markets is that the “best” product gets 50 percent to 80 percent market share. The 10th-best product, with 90 percent of the best product’s utility, gets almost no share. 

That “winner take all” pattern arguably is true of digital goods in part because marginal costs are close to zero and because network effects often are generated. The former means the cost of supplying very-high demand is not onerous. The latter means utility grows exponentially with scale. 

Connectivity services tend not to exhibit that pattern as well, sometimes because high capital investment requirements discourage competitors. 

Back in 1981 economist Sherwin Rosen wrote about the phenomenon. Convexity is the principle that small differences in talent become magnified in larger earnings differences. 

source: Medium

 

source: Medium

Imperfect substitution is another concept that explains why “winner take all” markets develop. That can be driven by the value of an ecosystem of goods and services, brand preferences, switching costs or any other combination of values that create product differentiation. 

“Winner take all” might always have been an issue, but it is magnified in an era where digital economics operate.