BY TONY MORONEY FOR ADELLO MAGAZINE
Every day we hear more and more about the metaverse and this futuristic virtual reality world that will complement our physical world.
Big investments coupled with the ongoing growth of social media, online gaming, digital currencies, blockchain, accessories including NFT (non-fungible tokens), and sales of virtual reality headsets are all adding to expectations. But what does it mean for leaders, organizations, and brands?
While the metaverse is not a new concept, its breakneck speed in attracting brands and millions of dollars in investment is impressive.
Already, Wall Street thinks the metaverse will be worth trillions of dollars. Both Goldman Sachs and Morgan Stanley see the metaverse as an $8 trillion opportunity. Citi is even more bullish and sees the metaverse as an $8 trillion to $13 trillion opportunity. Citi believes we will see continued growth in the digital economy and that the metaverse could have as many as 5 billion users by 2030.
From a business perspective, the opportunities to interact and create new experiences for millions of customers are highly attractive. This includes digital experiences that are truly immersive, virtual, and three-dimensional. In essence, an alternative digital world.
Numerous brands are already leveraging the gaming aspect of the metaverse. Nike is a good example. Nike initially focused on the Web 2.0 metaverse platform Roblox, before shifting up a gear with its acquisition of the digital apparel company, RTFKT, “a leading brand that leverages cutting edge innovation to deliver next-generation collectibles that merge culture and gaming.”
“This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture,” according to John Donahoe, President and CEO of NIKE, Inc. “We’re acquiring a very talented team of creators with an authentic and connected brand. Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities.”
Nike has also partnered with Roblox to create a virtual world called Nikeland to enable consumers to create, share experiences, and compete with each other. And as you might expect, Nikeland has a digital showroom that allows consumers to outfit their avatars with special Nike products.
Nikeland is successful not only as a way to introduce the brand early to younger people but also for the information it gathers and its use as a testing ground for the brand. This is a clever move by Nike in that it builds brand loyalty from an early age — behavioral economics 101.
Undoubtedly the metaverse is an opportunity to build an immersive experience that changes how we work, play, learn, shop, and meet with friends and family. It is also a world where we can consume content in real time and, importantly, have shared experiences. This will have implications for how we consume brands too.
To succeed, companies must recognize that the metaverse is characterized by virtual communities, gamification, and value creation. Critically, it creates an opportunity to bring consumers inside your brand to both consume and shape their experience and, in turn, enables organizations to experiment and learn in real time based on consumer behavior and preferences.
To take advantage of this opportunity and succeed, leaders will need to become totally immersed in the metaverse to really understand its true potential. The proverbial “sheep dip” will not suffice. Instead, it requires real engagement and a willingness to experiment, particularly as the metaverse is still being defined.
Without a doubt, the priority should be the user experience. The technology, while improving, is only an enabler. It should never be the starting point. Whatever organizations decide, it should be based on an in-depth understanding of customers, their aspirations, and, indeed, their pain points.
This is the key to building lasting relationships. Anecdotal evidence from the gaming world shows that highly engaged audiences tend to be passionate about brands and extremely loyal. Anyone with teenagers will have seen this first-hand.
Isn’t this what we want for our brands too? For far too many years, organizations have spoken about their desire to meaningfully engage with consumers and build brand loyalty. The metaverse creates this opportunity. The real question is whether brands can risk losing out.
Creating brand experiences in the metaverse is limited only by our imagination.
This is an opportunity to rethink our business from the customer-in. Already, companies are looking to the metaverse to:
But why stop there? The metaverse offers a unique opportunity to connect with highly-engaged customers. Astute leaders will leverage numerous opportunities to differentiate their brands and user experience in this immersive hyper-connected virtual world.
To some extent, leaders need to unlearn some of the things their organizations do today. Just as we have seen a shift from in-store to digital, to mobile, we now need to ask hard questions about the potential impact of the metaverse and its implications for business models.
Experience suggests that successful organizations will be those that really understand existing and future consumer preferences and behaviors, particularly how these will differ in the metaverse. This necessitates new insights, new metrics, and new success factors based on a deep understanding of users and their needs.
The metaverse is defined as a graphically rich virtual space, with some degree of verisimilitude (the quality of seeming true or of having the appearance of being real), where people can work, play, shop, and socialize.
Whereas a metamorphosis is a profound change, where a person or thing develops into something completely different. It suggests an abrupt or startling transformation.
The big question: are both necessary? Or can an organization simply adopt the metaverse?
The experience with digital transformation, where all the evidence indicates that over 70% have failed, suggests both are absolutely necessary. Simply overlaying the metaverse as a new technology platform on an organization changes nothing bar some of the technology. And in reality, we should not be transforming for the sake of technology.
Instead, organizations should be transforming to create new and better experiences for both current and future customers. The objective should be to ensure organizations are both relevant and competitive in the future. It is easy, however, for leaders to confuse change management and transformation. Terms such as digitization, digitalization, and digital transformation are used interchangeably. And while these are all related, they are not, in fact, the same things. The same confusion exists for the metaverse.
Another issue is how we think about opportunities. If our mindset is rooted in the past and we are simply trying to make things easier, faster, and cheaper, we are engaging in incremental improvement, which at best is a digitization and is the job of management. On the other hand, if we create a new future not anchored to the past, we create the impetus and conditions for transformation. This is a key role of leadership.
Regardless of whether we are talking about digital transformation or the metaverse in the context of digital transformation, we must have clarity of purpose and a real understanding of why the organization exists in the first place. We must also have the right mindset and culture.
Leaders must create a compelling vision of the future state, ensure that the entire organization is engaged, and be realistic about the organization’s starting point. This creates the foundation for how the organization needs to transform. Only then should we address technology questions.
The same is true for the metaverse. Leaders must understand what the metaverse means and its disruptive potential. Equally, leaders must ensure their organizations are designing human-centered experiences for an immersive virtual world.
While the metaverse is still nascent, many of its component parts are already relevant.
Many business leaders are starting to ask themselves, “What is the Metaverse? What impact will the metaverse have on our business? What is our strategy?”
Other key questions for leaders include:
Business leaders should also be taking steps to prepare their organizations for the metaverse. Research by PwC suggests that organizations should adopt the following actions.
The first three actions focus on opportunities and available use cases. The last three focus on building the capabilities to support organizations successfully embracing the metaverse.
The metaverse could profoundly change how organizations and consumers interact.
The possibilities are infinite in terms of brand cut-through, monetizing digital assets, and the potential to engage with consumers that heretofore were considered unreachable or inaccessible.
Every organization should have a strategy and this strategy should incorporate its ambitions for the metaverse. Continuously sitting on the sidelines is not a strategy. And while organizations today cannot predict with absolute certainty every possibility, they can predict that the metaverse is going to have an impact n their businesses, their brand, their approach to marketing, customer engagement, and customer experience.
In the short-to-medium term, organizations should seek opportunities to experiment with the metaverse, learn from it and scale successful initiatives. This will require commitment underpinned by a culture that instills both intellectual curiosity and psychological safety.
Undoubtedly, many transformational leaders are already thinking about the future and long-run opportunities for their organizations. To paraphrase Wayne Gretzky famously,
“I skate to where the puck is going, not where it has been.”