For years now, business leaders have been told that they are living in the “age of disruption”. The rate of innovation means that no business or sector is immune from the threat of either entirely new entrants or existing businesses moving into new areas.
Of course, much of this is a result of the rapid growth of the internet, which has transformed how business is conducted. The ongoing challenges in retail illustrate this clearly. Department stores and supermarket chains have responded to the growth of purely online retailers, such as Amazon, by developing their own internet services and then linking them to their traditional “bricks and mortar” operations through the “click and collect” concept that is becoming a central part of the UK shopping experience. The problem has been that, in seeking to win customers through such means as free delivery, retailers are not always making as much money from online sales as they would like. Hence, the widely-reported move earlier this year by John Lewis, the venerable department store and grocery chain operator that has led the way in integrating traditional, online and mobile shopping, to introduce charges for click and collect. Managing director Andy Street argued that the change was necessary to make the service “sustainable”.
Another sector that is changing rapidly as a result of the internet is banking. The provisional findings (ahead of a full report due next year) of the investigation by the UK’s Competition and Markets Authority into current account and business banking may not have gone as far as many would have liked. But there is plenty of evidence that change is afoot anyway. Not only are the high-street banks constantly improving their online offerings, but new entrants are starting to nibble away at activities that have traditionally been lucrative for the existing players. For example, TransferWise, the London-based start-up, has grown rapidly through making a service increasingly in demand for individuals in a globalised economy (namely transferring money between countries) easier and cheaper than ever before. Today, a white paper written for the World Economic Forum’s Global Agenda Council on the Future of Finance & Capital by MBA students from Said Business School, Oxford says that financial technology companies are leading the way in disruptive innovation in financial services, helping to bridge a $2 trillion funding gap for millions of small and medium-sized enterprises seeking credit to expand their businesses. According to the paper, fintech entrepreneurs are disrupting SME financing by offering such tailored services to SMEs as invoice and supply chain financing, equity crowd funding and SME-to-SME lending.
Given all this, it would be easy to assume that the future lies entirely with technology. But, while it is obviously impossible to ignore the importance of the internet and related activities, it is equally clear that being in this field is no guarantee of success or indeed survival. The rapid rises and falls of the likes of Nokia and BlackBerry demonstrate that in technology life cycles are liable to be much shorter than in other areas of business. This is why new product launches from such companies as Apple and Samsung are so eagerly awaited. Any hint that a company is slipping behind its competitors is seized upon by commentators and can quickly escalate into serious trouble. This is the context in which the social media site Twitter finds itself after announcing redundancies. Analysts and others will be keeping a close eye on a company that was once a darling of the internet but is now being described as the first in its field to go through a restructuring.
For all the talk of “Digital Darwinism”, it is fair to say that much of this intense competition began when the internet was barely on most people’s radar. In the 1990s, Andy Gove, the former head of the chip maker Intel, published a book called Only The Paranoid Survive and helped kickstart the notion that innovation was not just for those in technical fields. Innovation was as vital in services and business processes as it was in products.
Data is a case in point. Just about every business executive is aware of the power of “big data”. However, most struggle to harness it fully for reasons ranging from simply struggling to gain access to information that is often stored in different places to lacking the skilled analytics specialists required. But, as James Petter, vice-president for EMEA at the enterprise storage company Pure Storage, points out, there is “a leadership thing here”. Essentially, leaders need to embrace this technology and find new businesses or developments of existing businesses, he says. Noting that the requirements of quarterly reporting prevent chief executives from betting too much, he urges them to “build sandpits” where they can invest a few hundred thousand dollars with the aim of creating opportunities. They need to “get an analytics team and experiment,” he says.
However, as many successful businesses attest, success in the 21st century is not just about embracing the internet. Even markets that might be assumed to be transformed by the new technology can retain elements of the old way of doing things. A report in the Financial Times last week on the 60th anniversary of the UK television listings magazine TV Times pointed out that such publications have p[roved more resilient than might have been expected. Three of the top five best-selling magazines in the UK are television listings magazines, according to the report. The reasons cited for this range from the fact that their audiences tend to be older and hence more resistant to change to the convenience of having a printed guide to what is on TV, especially now there is greater choice than ever before.
The argument that the listings magazines complement what Liz Watkinson, publishing director at H Bauer Publishing, home of the market-leading TV Choice, calls the nation’s favourite pastime in some ways echoes the views of Shaun Gregory, chief executive of the outdoor advertising company Exterion Media Group. The company, which operates advertising sites on the London Underground, buses, billboards and elsewhere, is enjoying strong sales, even as the conventional wisdom is that marketing is increasingly shifting online. As someone with extensive experience of driving digital strategies in conventional companies – most notably with the publisher of the Daily Telegraph – Gregory is an unabashed enthusiast for the possibilities of new technology. But he says that – in marketing, at least, there is a “need for a balanced approach” between the traditional and the new. Pointing out that the fact that companies such as Facebook are taking out advertisements on primetime television shows that even the stars of the new economy see benefits in old-fashioned brand building, he adds that the key is to mix “classic” with new approaches, such as social media. “Marketers are becoming far more intelligent about how to use different forms,” he says.
The difference now is that there is far more data, and marketing officers are in the vanguard of using it in an effort to obtain the best value for their spending. Again, however, he cautions against becoming too carried away. While some organizations are integrating their marketing with customer relationship management, others are struggling to be as targeted as they would like to be. After all, just about every online shopper has been irritated by repeated contact from companies offering services or products that they have already bought. Stressing that it is “early days” in the online marketing revolution, he says that social media, while fragmented, is providing plenty of “reach”, but that the “engagement” that all crave is proving harder to achieve. In this – as in so many other respects – data is and will continue to be key.
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This article was written by Roger Trapp from Forbes and was legally licensed through the NewsCred publisher network.