5 ways traditional businesses can keep pace with the disruptors
This post is written by Candyspace, a London-based agency of digital product experts. They create apps, websites, and digital products for ambitious, results-focused organisations investing in growth.
“It’s a little bit like, is the Albanian army going to take over the world?” said Jeffrey L. Bewkes, the chief executive of Time Warner, when asked in 2010 about the threat of Netflix. Fast forward a decade or so and it seems, well, the Albanian army has taken over the world.
So while Time Warner is currently being dismantled by its parent company to counter the threat of Netflix; Paypal is now bigger than all but one Wall Street bank; Airbnb is worth more than the top three hotel chains combined – and when Amazon casually announced they were considering launching healthcare services for its employees it wiped $30 billion of market value off of the top ten health and pharmacy companies in just two hours.
Understandably, many traditional businesses are struggling to adapt to this unprecedented disruption and it’s estimated that even at the current churn rate, half of the Fortune 500 will be replaced in the next 10 years. In reality, it’s likely to be even more of a bloodbath.
Those that survive are likely to be the ones who take radical inspiration from the digitally-native disruptors themselves, focusing on these five key attributes:
1. Speed and agility
In the early days of Amazon, Jeff Bezos initiated a rule that every internal team should be small enough to be fed by two large pizzas. Aside from the boost to local Italian takeaways, this had the effect of ensuring the business could operate at speed – both because smaller teams means more time getting things done and because adding additional teams then doesn’t require more internal structures, allowing the business to scale at pace.
And speed is now more critical than ever: we’re now at a point in history where exponentially accelerating technologies – artificial intelligence, robotics, nanotechnology, biotechnology, blockchain, IoT, AR, VR and more – are beginning to converge. To survive, traditional businesses need to embrace the type of speed and agility that comes naturally to the disruptors as the drivers for success in this exponentially-changing world.
The global pandemic has thrown even sharper focus on this, with businesses rushing to bring new D2C offerings, new services and new digital products to market – a recent survey found companies had digitised activities 20 to 25 times faster than they had previously thought possible in the first six months of Covid.
Kudos, then, to Levi Strauss & Co, a long-established business who reacted with admirable agility during Covid, launching a virtual concierge service allowing customers to have one-to-one interactions with employees; turned closed stores into micro-fulfilment centres; enabling consumers to make purchases through links posted to TikTok; hosting nightly concerts on Instagram; using AI to drive a 4x increase in sales during an e-commerce promotion; and upping the ante on the personalised features available to loyal customers on their mobile application, with download rates doubling from the first to second quarter 2020.
New disruptive business models have been at the heart of digital’s biggest success – digital marketplaces (Uber), freemium services (Spotify), sharing economy (Airbnb) and so on. Traditional businesses who limit themselves to merely upgrading technologies in their quest to keep pace with the disruptors are unlikely to thrive. Instead, true digital transformation requires a fast-paced reimagination of business models for a digital world.
Siemens, a manufacturing company that’s been around since 1847, have done exactly that through their Siemens Mobility subsidiary, whose MoBase platform is an online marketplace for rail products and solutions. With over 800,000 products from different manufacturers, it connects professionals across the globe and offers other services such as 3D print-on-demand spare parts and training.
In a similar vein Candyspace recently helped Rolls-Royce explore, define and build a disruptive new business model: an open platform to facilitate the sharing and monetisation of data and digital solutions across the aviation sector, Yocova. It now boasts over 850 members across the globe including professionals from airlines, OEMs, airports and other aviation industry players.
And the Chamberlain Group – a nearly 70-year-old business making garage door openers – is completely reinventing itself. “We are moving from a company that opens doors to one that creates seamless access journeys by connecting people, points and events,” says CTO Gani Nayak.
That involved launching an ecosystem of connected products and services including the first-ever garage door opener with a built-in wide-angle camera and two-way communication, in-garage Amazon delivery and a connected doggie door to allow pet parents to control access to the garden remotely.
Traditional businesses were built on a bedrock of cautious stability – the rapid innovation that has brought so much success to the disruptors is alien to them. With the best will in the world, ingrained culture will not change overnight, legacy processes, systems and technologies don’t budge easily and mindsets often remain fixed in the past.
A sobering thought: right now – according to this survey – only 21% of executives believe that they have expertise, resources and commitment to pursue new growth successfully.
However, traditional businesses who have established innovation hubs, in-house accelerators or digital teams that sit outside of the shackles of the existing infrastructure, processes and mindsets of the organisation are the ones most likely to keep pace with the disruptors. Those offered the fullest freedom – in terms of technology stack, talent and process – are likely to run the fastest.
Anheuser Busch InBev set up its ZX Ventures innovation arm in 2015 with a mandate to develop new products and business models in line with emerging consumer trends. Crucially it was housed in a different building with its own separate business functions like HR and finance. Since then it’s been behind the launch of beer delivery app Ze Delivery, vending machine Beer Box and a number of new brands including low alcohol canned wine Saturday Session which collectively have made over $1 billion in new sales.
“True disruptors focus on their customers, not on their competitors or the financial markets” said Walter Isaacson, former CEO of CNN and, again, traditional businesses have much to learn. We are living in the Age of the Customer, where buyers are empowered like never before in making their purchasing decisions.
Consequently disruptors have put customer obsession at the heart of their businesses, with businesses such as Slack developing their product based on constant, real-time customer feedback, and using metrics such as NPS and daily active users to assess their success.
To emulate this, traditional businesses need to recognise that the speed, quality, consistency and personalisation of customer interactions is paramount. (PwC reports that 1 in 3 customers will leave a brand they love after just one bad experience).
Caterpillar – a manufacturer of construction and mining equipment since 1925 – recognises this and has invested in the experience for its B2B customers. “Customers expect the same digital solution sophistication level in their business life as they do in their personal lives. You need to be ready for their expectations of simplicity of use and good performance,” said chief digital officer Ogi Redzic.
Caterpillar deploy telematics — the intersection of telecommunications, transportation and computer science – to empower customers with predictive analytics; employs customer champions throughout the business; and has transformed the dealership and e-commerce experience with the customer in mind, with more transparent pricing and an environment more consistent with B2C retail. Caterpillar remains number one in its sector, with its stock more than tripling in price in the last five years.
Covid and the consequent lockdown meant that automotive businesses such as Mazda – another Candyspace client – had to focus intently on its customer centricity in new, unprecedented circumstances. With dealers shut (then partially open, then shut again) Mazda recognised that their web platform had to be the central hub for customer engagement and lead conversion.
Candyspace’s rapid user testing with Mazda owners and prospects exposed key areas for fundamental improvements in user journeys, allowing us to optimise UX and ensure consistency of experience across all digital touchpoints. As a consequence we reduced bounce by 50%, increased finance conversions by 55% and improved dealer locator conversion by 39%.
5. Data-driven decision-making
If the long-term survival – and success – of traditional businesses is dependent on speed, agility and bringing customer-centric digital products to market in new business models, then those businesses also need to think differently about how they maximise the value of these investments once launched.
“The road to recovery is paved with data,” says McKinsey senior partner Kate Smaje, adding, “Winning companies are investing in the tech, data, processes, and people to enable speed through better decisions and faster course corrections based on what they learn.”
To deliver on this need for fast-paced, data-driven decision-making – rooted in the needs of customers – businesses need the right analytics products. And while well-established tools such as Google Analytics do a good job of assessing the performance of marketing activity, they’re not set up to reveal how customers are actually engaging with digital products and experiences.
Product Analytics tools such as Mixpanel allow businesses to understand why customers engage, convert and retain – providing results in seconds and allowing them to rapidly identify areas to improve experiences, drive customer value and inspire growth.
But this type of data-driven decision-making cannot reside in the hands of analysts alone: the Harvard Business Review reports that 48% of executives cite “people issues” as the number one barrier to being data-driven as an organisation. Mixpanel enables anyone across a business (whatever their personal technical capabilities) to self-serve answers and gain deep insight into the needs of their customers in real-time.
And that combination of a data-driven understanding of customers, the ability to iterate digital products at speed and deliver value back to the business is a potent one. That’s why Candyspace and Mixpanel have teamed up in developing an AI-driven mobile app for Mars Petcare to help dog owners monitor the health of their pets.
While creating real value for customers, it helps deliver on the strategic purpose of creating a better world for pets and provides data enrichment and potential new revenues for the business. As Gordon Cameron, Global Design & Innovation Leader at Mars Petcare, says: “Our customers now live in a world where they blur the lines between brands and services, and products and goods. And what they’re looking for is total support and total service solutions, not compartmentalised into individual, little categories.”
Candyspace brought the AI-driven mobile app to Alpha testing in 12 weeks. After all, with the Albaninan army making advances every day, there’s no time to waste…