One of the spectacular side effects of digital is its uncanny ability to muddy the waters between industries—the “theoretical” roles of businesses and the reality of their business models. Once upon a time, manufacturers were manufacturers, media was media and distributors were distributors. And inside these big families, the lines were clearly drawn: car manufacturers made cars and salesmen sold them; record producers produced records and the radio played them. Major retailers predicted the future by introducing private labels (which really disrupted the model at the time), but this evolution remained confined and thus easily understood.
As more time passed, the more difficult it became to organize the new economic actors derived from digital into one tidy box (of course, however, I just labelled them “new economic actors derived from digital”, which isn’t a vocation at all). But, they had an asset that gave them an almost insurmountable competitive edge over certain other “old” economic actors: Agility.
The Googles, Amazons, Twitters and Facebooks of the world—also including companies such as Netflix, Airbnb and Uber—aren’t where we expected them to be, having developed their business models according to what opportunities arose. They learned to manage the abundance of new combinations made possible by digital rather than the shortages (of space, of products to sell, of consumers) imposed by the physical world. It’s Chris Anderson’s “Long Tail” concept.
Companies with a history of fixed processes and closely managed client relationships aren’t agile—it simply isn’t part of their DNA. For example, many brands are back-peddling to catch the e-commerce train. Above and beyond having to learn a new trade (end-user distribution), they are often paralyzed by the idea of having to ruffle their existing networks or change the internal structure of established employee roles. We can’t blame them for being scared to shake things up. But in the time it takes for these established organizations just to start thinking about it, players in the digital age have already tried, abandoned or validated several value proposals and as such gained priceless experience…
That’s what makes the competition from an entity such as Amazon so absolutely unfair (concretely, not legally…). The incredible speed at which the company adds new categories to its catalogue or can drum up alternative ways to generate revenue or connect with consumers is not at all the same as that of a traditional economy. Their latest acquisition? Double Helix Games, a game production studio. Google participates in this full-on growth movement, too, with its purchase of Nest, as does Netflix, which produces its own television series.
The challenge in the years to come for many traditional agents (major brands, large retailers, even certain public services, such as Canada Post) will be to invent ways to “crack” their own organization. To break the taboo of conventional roles. To communicate the urgency of accepting to do certain things differently. To accept the idea that doing something differently doesn’t necessarily mean making concessions to existing benefits. To assume its power and reinterpret its size and local presence as opportunities rather than threats. Each company’s culture can find its own way without abandoning its soul, either by a full-out, head-on transformation or by implementing agile units in parallel with normal operations.
No company can avoid facing the extent to which digital will impact its future. No matter the line of work, it’s essential to go after pure-players on their own turf, with their strengths and weaknesses, or sooner or later, they’ll be the ones coming to do it.
This article was first published on Infopresse.
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