If Uber taught business one thing it is that you can’t keep doing the same thing in the digital economy and not expect innovation to come along and throw you into disruption. As GE’s former CEO Jack Welch would say “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”Whilst Uber’s rise may have appeared like an overnight phenomenon, its ability to rapidly take hold against the taxi industry was a long time coming.
Recently, headlines have suggested that sports role in society is no longer the sacred cow it once was. This is not a blip on the screen nor is it an overnight change. Sport’s viewership figures are in decline particularly in younger demographics and participation – a precursor to fandom – has been declining for decades. Millennials, and the connected generation, have been telling us for a long time that they are different; different in how they consume, different in how they engage and different in what interests them.
Perhaps we haven’t been listening because market conditions told us there was no need to. As Prof. Clayton Christenson, who coined the phrase ‘digital disruption’, would tell us it’s not because leadership made bad decisions but rather they kept doing what had kept consumers (our fans) happy for a long time, and in doing so missed the transformation. That tipping point for sports is now here!
From Attention to Attachment Economy
Digital and social media has forever transformed how information is available and consumed. This has changed our attention span. All the information we could ever need is at our fingertips and on demand. Our expectation of products and services is the same. Research indicates that we check our phone 85 times a day which is twice as much as we estimate – mobile is a sub-conscious behaviour!
Rights holders now need to compete for the attention of an audience of one. Sport is also finding that capturing the interest of casual or new fans is harder than ever. When you capture attention it needs to count towards a lasting impression or positive sentiment. Businesses that understand this best create an ‘attachment’ from their brief window of attention. We are moving into an ‘attachment economy’.
Younger people do not consume sports in the same ways that previous generations such as Baby Boomers, Generation X and Y did. For previous generations, sports participation or fandom was often pre-determined by parents and older siblings.
Now, digital DNA is the more powerful force for the connected generation and sport businesses need to figure out what this means for them and their business model. For a Millennial already feasting on streaming, gaming and social media, Rio 2016 – the pinnacle sports story – lacked an interesting enough narrative to fit into their digital life. What is in this lesson for the rest of us?
From Fan Engagement to Fan Attachment
Creating attachment in micro-moments of attention is critical for capturing the connected generation – the only growth market there is. Leagues now see social media, streaming and gaming as their biggest threat – and not other leagues. Richard Scudamore, the English Premier League chief has publically said as much. The connected generation is ‘attached’ to these activities.
Now sport, for the first time ever, has to find a way to attach itself to the connected society.
The newmodel creates an ecosystem, or digital platform, that connects fans to your business in multiple ways. Fans apply your digital touch points in ways appropriate to the experience they seek. Game day-apps and mobile are the live experience creators. In return, the business is provided with data to use for continued learning, improvement and deeper fan engagement.
Blurring lines between business and fan is the sweet spot of fan engagement where both parties co-create value and define the experience. FC Sounders fans, enabled by management, own the game day atmosphere in Major League Soccer which also makes Sounders the most valuable franchise in the league.
Everton FC in the EPL is enjoying a break-out membership season which they attribute to ideas and energy coming from their Fans Forum. Importantly, they are attracting the next generation of fans. The best way to know what fans want is to ask them. It creates new touchpoints and crowdsourcing can reveal insights that challenge long-held views.
Attachment to younger generations is also the reason that teams, leagues and events develop partnerships with eSport players and publishers. The gaming industry leads the way in experience co-creation and game publishers also have a sophisticated data and analytics model. Sport can now benefit and learn much from eSport.
The New Business Model
Now that fans are in charge the rules have changed and rights holders have to work more digitally to connect with the connected. This is the modern product, not selling tickets, and for this reason a digital business model is needed.
Digital product development and social engagement are now business hot spots – investment, analytics and talent need to move here within a culture of collaboration and fan-first design. This new business approach requires bold leadership – like changing a tyre while the car is moving!
Business model questions to address include; how does digital become the business model and not a set of disconnected technologies; how can social principles ‘it’s not what you know but what you share’ be used to create a social business; how can IT become the innovation partner; how can budgeting prioritise investment over operations and what data is our strategic asset.
Before any of this, the team needs to firstly have a vision that is relevant for the digital era.
Some great examples have emerged in recent years; Real Madrid, the biggest sports team there is, envision themselves as ‘a fan company’; AS Roma in the Italian Serie A aspire to be ‘the most connected team’ and The Screaming Eagles, a US Indoor Football League team, has taken crowdsourcing to a new level under their vision to be ‘the internet’s team’ (how else would they get such a cool name!).
With a digital-age vision, any sports business can then build out their ‘Digital Line of Sight’, as the following table illustrates.
Technology vendors such as Microsoft and SAP spend a lot of time working with sport enterprises across the globe. Their respective CEO’s have observed sport to be ‘the most disrupted of all industries’. Digital transformation is the renaissance that the sports industry needs in the face of its declining attachment in society.
From a number of reports, there is a general rule of thumb that only 25% of companies in any industry have mastered digital; a further 50% are emerging and the remaining 25% are laggards. Studies in sport suggest the level of digital mastery is lower than this average.
I hope that my contribution, ‘Sports Strategy in Digital: The DATA Model Story’, a new online course available on isport.edu.au, can be the playbook to help us all get there.