Differentiation is a tough nut to crack.  It was prior to Internet, and remains, even now that we are neck deep, in sorting out new business models and approaches with Internet.  This from McKinsey in January 2006.  I post it now having been reminded by the word “tacit” in this McKinsey Quarterly.  One of these days, I am sure McK will get around to RSS.

The next revolution in interactions,” shows that the shift from transactional to tacit interactions requires companies to think differently about how to improve performance and about their technology investments. Moreover, the rise of tacit occupations opens up the possibility that companies can again create capabilities and advantages that rivals can’t easily duplicate.

Source: Internet Changes Everything: The next revolution in interactions

The point here is that online has generated a new opportunity for differentiation because of the virtual element.  That opportunity lies in the smart, and intelligent linkage between people and technology.

In today’s developed economies, the significant nuances in employment concern interactions: the searching, monitoring, and coordinating required to manage the exchange of goods and services. Since 1997, extensive McKinsey research on jobs in many industries has revealed that globalization, specialization, and new technologies are making interactions far more pervasive in developed economies. Currently, jobs that involve participating in interactions rather than extracting raw materials or making finished goods account for more than 80 percent of all employment in the United States. And jobs involving the most complex type of interactions—those requiring employees to analyze information, grapple with ambiguity, and solve problems—make up the fastest-growing segment.

This shift toward more complex interactions has dramatic implications for how companies organize and operate. In the mid-1990s, McKinsey studied the growing impact of interactions on the way people exchange ideas and information and how businesses cooperate or compete. In 1997, “A revolution in interaction” presented the findings of that research.

Complex Interactions.  I was sitting in a session this afternoon on that topic.  Its not as simple as the two normally quoted, and obvious extremes:

1. smart intelligent search
2. highly trained independent thinking Contact Centre personnel

Message #1 to the Bank Executives.  #1 only works if you have #2 managing the admin of the software.

This from the email that came today:

Interacting for competitive advantage

Although companies have long tried to raise their productivity by automating production, competitors can easily imitate such innovations. But it may be harder to emulate efforts to boost the productivity of workers who mainly interact with customers, suppliers, and other employees—particularly now that so many of them undertake complex (or “tacit”) interactions, such as managing supply chains, rather than routine (“transactional”) ones, like recording shipments to warehouses.

Tacit interactions demand that employees make judgments based on experience and be comfortable with ambiguity. Those who undertake these interactions, such as salespeople and managers, command higher salaries and have a disproportionate impact on the organization. Companies that make these employees more effective and efficient stand to reap huge gains.

Relevance to Bankwatch:

Competitive positioning used to be # of branches, followed by branches + training.  We have a new element …. technology + training.