Many companies find themselves at a crossroads. The next few years will decide which business models will survive and which will undergo sweeping changes. Technological evolution, the modern consumer and the total market compels us to answer that one crucial question: who is prepared to reinvent their company as well as themselves?
This blog post will introduce you to a philosophy that makes it possible for people and organisations to reinvent themselves. The objective is learning how to be relevant and successful in a tumultuous market.
2013 Made It Clear How Fast Things Are Evolving Nowadays!
Last year the world reached the tipping point. For the first time in history we spent more time in front of small screens (smartphones and tablets) than large ones (desktop and TV). The next two years will undoubtedly see the breakthrough of wearable devices (smartwatch, Google Glass…) and the ‘internet of things’ (from smart cars to smart toothbrushes). You might say technology will become the consumer’s sixth sense.
2013 also illustrated how uncertain the fate of a company really is. Nokia was sold for $5 billion when a few years earlier it was worth a multiple of that sum. Blackberry also fell by the wayside.
Companies Face Three New Types of Competitors
Most companies use competitor analysis to analyse their direct competitors. While such analysis is obviously important, it is no less crucial to take a closer look at three new types of competitors.
- Start-ups: small, sharp players are undermining quite a few of the traditional business models used by established companies. Smaller players are looking for new and efficient ways to enter the market. In spite of their limited initial market, it is still crucial to monitor their activities. This is the type of player that revolutionises the market.
- Major digital players: every company should start from the assumption that organisations like Google, Amazon, and Apple may one day become their competitor. These big players have lots of clout, money to burn, and a wealth of data and top technology, enabling them to enter any market they choose with a fair degree of creativity.
- Consumers themselves: technology is becoming ever cheaper and better and in many markets this has already resulted in competition by consumers themselves. The introduction of cheap and high-quality digital cameras destroyed the independent photography business. Modern consumers have no use for a photographer anymore; they take their own pictures. The taxi industry is under attack by Uber and the travel industry is struggling with AirBnB. More and more often, companies find themselves competing with their consumers’ hobbies.
There’s Only One Answer: Reinventing Your Company
Markets are unpredictable and in a constant state of flux. While a long-term strategy is still indispensable, it may be a good idea to evaluate that strategy every three months. In order not to become obsolete, you need to self-evaluate thoroughly and prepare for the future using a different approach than the one that has proven successful in the past.
Step 1: Reinventing your business model
If you’re afraid to disrupt or ‘eat’ your own business model then you’ll find your head on a plate someday. As a player in an ever-changing market you must have the courage to let go of what you have and opt for something new, even if that means cannibalising your own market.
A recent example would be the Blockbuster versus Netflix story. Blockbuster was one of the biggest video rental businesses in the world. At one point there was a Blockbuster branch within ten minutes of every American’s home. And then Netflix came onto the scene. They initially offered a subscription for ordering DVDs. The DVDs were shipped via regular mail and the customer simply sent them back afterwards. When Netflix and VOD eventually killed Blockbuster’s business model, they started taking over other companies. Blockbuster wasn’t willing to adjust its existing business model whereas Netflix immediately jumped on the streaming trend. By offering streaming services, the company lost some of its post order customers to its new service. Just a few years later, Netflix abandoned its post order activities altogether to focus completely on streaming. They weren’t afraid to eat their own business model and as a result they didn’t end up on someone else’s plate.
During a recent visit to Stanford, professor Baba Shiv advised his listeners to carry out a ‘pre-mortem’. Companies and people are usually good at performing a post-mortem. Once it’s too late, we analyse the causes of the disaster and determine how it could have been averted. A pre-mortem aims to identify possible future causes of death in advance, thereby enabling a company to take proactive steps to ensure its survival. This is a golden tip for any organisation. The key is to plan the pre-mortem while your company is still in top form.
Step 2: Re-inventing the customer relationship
A traditional customer relationship typically consisted of a marketing or sales funnel. Nowadays that relationship is a perpetual loop. Decisions are influenced by a great many sources and channels. The customer remains involved after the purchase and he remains part of the loop.
Companies must realise they only have one customer relationship per consumer. The consumer who visits the site and the one in the store, on Facebook, and in front of the TV are one and the same. There’s little sense in implementing both an online and an offline strategy. Your company just needs a customer strategy, period. The Apple account is probably the textbook example of what a single customer relationship should look like. I still can’t get over the fact that a credit card purchase in London or Chicago is enough to be recognised as an Apple customer. They always find my customer data with no trouble at all. A modern customer relationship is primarily based on an attitude of extreme customer centricity. The elaboration of this relationship is often most apparent in the details. A McKinsey study has found that satisfaction in a customer relationship is mainly dictated by details.
Step 3: Reinventing the company structure
The final step is implementing the new approach, which is pretty difficult within the existing company structure. A touchpoint-based organisation makes for a fragmented customer relationship. The trick is to infuse an organisation with speed and flexibility. Most of all this requires mental agility. We often think about adopting new structures but these do not work without a mental adjustment. Adam Pisone, co-founder of Yammer, made a strong statement on the subject. He claims that ‘you don’t have to change the structure of a company to become flexible; you just have to stop using the company structure’. Peter Hinssen’s latest book, ‘The Network Always Wins’, examines the use of internal networks. If the market has become a network then your organisation has no choice but to also operate as one. ‘It takes a network to serve a network’ is one of the most remarkable quotes in his new book.
There’s Also a Personal Challenge for Each and Every One of Us
It’s not just about reinventing companies. It is even more important to reinvent ourselves. There’s much talk about the need for change in organisations. Well, when you think about it, this boils down to changing the individuals that work for those organisations. We all know how hard it is to change others but when it comes to ourselves, we are completely in control. This is a story about changing ourselves, about having the courage to stand in front of a mirror and truly ask ourselves on what level we need to up our game so we can still make a relevant contribution to the organisation in a few years’ time. The battle between man and machine will intensify in the years to come. As humans we will have to prove our added value. The hard truth is that robots will probably replace humans in many cases. Whereas in the past we would bring in cheap labor from low wage countries, robots may be the solution of the future. If and when that happens, we humans must bring something extra to the table. The answer is not being afraid of reinventing yourself instead of only looking to others for change.
If you missed Steven’s last blog post, check it out here.
Steven is one of Europe’s thought leaders in the field of social media, conversations and digital marketing. His latest book ‘The Conversation Company’ sold over 10,000 copies in six months, and offers a roadmap on how to become a genuine customer-centric organisation that exploits the possibilities of digital media to the full.
Steven is also an experienced speaker at national and international conferences and has received several best speaker awards over the years. Find out more at http://stevenvanbelleghem.com.
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