By Anton Moulder, co-founder and Managing Partner of Urbian
If you’ve been listening to the conversations that management teams have, you will have heard the words “digital disruption” a lot. That’s because anyone who runs, owns or manages a business is aware of how technology is transforming their industry, and in some cases, putting their business at great risk.
The most frequently cited example is, of course, Uber – the global transportation brand that transformed the way people get around. There was a time when getting a ride somewhere involved the frustration of trying to hail a cab or tangle with a telephone call. Uber changed all that by making moving around cities as easy as touching a button on your smartphone.
The digital disruption brought about by Uber isn’t just the story of how that business model has forever changed the transport industry; it is much bigger than that. The larger narrative that business leaders need to appreciate is how technology has forever changed customer behaviour, and what this means, not just for transport, but for how vehicles will be made in future.
But before going forward, let’s take a step back. Remember ‘Mad Men’? That period drama about one of New York’s most successful agencies? People loved that series, not only because it was so brilliantly conceived and made, but because life was a lot easier for Donald Draper and his clients. Back then, all a business needed to do to sell goods was to come up with a catchy campaign that advertised their product.
Back in the day, a brand would make products, tell people about those products and then customers would buy. It was a relatively simple process. But those days, like ‘Mad Men’, which stopped airing early in 2015, have gone.
Uber, Facebook, Twitter and WhatsApp have forever changed humans and how they engage with companies. Today people have become used to technology that is useful, adds value to their lives and that serves them.
When we want something, we find it using Google. When we need to know the answer to a question, we go to Quora. Locally you don’t have to worry about carrying cash if you have a smartphone. Snapscan enables payment as easily as one would take a photo. You get the picture – technology becomes pervasive because it is useful.
The useful software and apps that we find on our favourite devices have been so effective at delivering service and value to us, that consumer expectations have changed. Moreso, it has fundamentally shifted what people want when they engage with brands.
Needless to say, if you’re a Big Five bank and you shuffle people through a clunky call centre, where they have to input multiple keypad digits that make sense to your business processes – but not the customer – you’re in trouble. Nowadays people want service that’s so intuitive it is almost absent.
The big disconnect for more traditional brands is that companies like Google were birthed on service, while locally that big red retailer that is rapidly becoming obsolete was created to sell products. If you’re a bank, retailer or legacy brand and you can’t make the change from product to service, from selling to adding value, you’re ripe for disruption.
The big question is: how can traditional companies change? Transformation is challenging for big companies which is why an entire consultative sector was spawned under the moniker of ‘change management’. The obvious knee-jerk is to hire brilliant people — after all, the top technology companies globally are characterised by extreme talent.
But people alone don’t cut it. Innovation and digital disruption are driven by people and processes. What’s important to realise here is that big companies are behemoths that have inherited ways of doing things for as long as they’ve existed. This is why CEOs are often frustrated by investments in technology and people that don’t materialise the transformative change required, to add significant customer value and drive business growth.
Then there’s the challenge of speed of change. Process transformation takes time, so what should big brands do in the interim? Waiting is not a useful answer. What’s good for business is to look at breaking off autonomous innovation teams that will be given specific projects, budget and a timeline. Ensure you’ve got the right team so that the leadership team doesn’t ‘babysit’ this innovation cluster. Finally, give the team the independence needed to innovate the right disruption or differentiator to benefit your business.
By a differentiated service or disruption, I’m talking about a noticeable innovation in the market that will surprise and delight customers. The kind of thing that Uber did. Which was not just to make getting a ride easier, but to create a service that has challenged and changed the automotive industry.
Today, Tesla, BMW and General Motors are creating cars with the functionality to pay for themselves. Thanks to Uber, gone are the days when cars will be chosen merely dependent on their brands or models.
Tesla’s self driving car will make you money when you’re not using it, but not by using an Uber app – by using the company founded by Elon Musk’s own ride sharing app. Musk confirmed work on the innovation, saying: “You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you’re at work or on vacation, significantly offsetting, and at times, potentially exceeding the monthly loan or lease cost.”
German car manufacturer, BMW, has also launched its own response to Uber [and Tesla]. The automotive brand launched a car sharing pool in Seattle in the US this May. BMW and MINI lovers have been able to rent any one of 520 vehicles in the city under a new business called ReachNow, a car-sharing service. Cars in the free-floating pool can be located and used thanks to the ReachNow app, or with a physical card. Users pay a per minute fee. The new venture has been expanded to Brooklyn and Portland.
BMW has also announced it will spend some €500 million on innovating automotive technologies including self-driving vehicles and mapping to make BMW vehicles more “intelligent and efficient”. This indicates that in the future car manufacturers will provide built in functionality that enables vehicle owners to share and make money out of cars, which looks set to enable a pay-as-you-go automotive market.
General Motors (GM), on the other hand, has thrown its lot in with Lyft, the US peer-to-peer ridesharing service launched mid-2012. Early this year GM and Lyft announced a “long-term strategic alliance” that would see the two deliver an integrated network of on-demand self-driving vehicles in the US.
There’s a huge chunk of time when people don’t use their vehicles, so tomorrow’s car will drive itself out of your work’s parkade, and while you’re busy with your career your car will be earning money for you. And when you’re done with your day, the car will be back in the parkade, ready to take you home.
The take-out from the Uber tale is that customers are spoiled for choice when it comes to products. People don’t need cars in new-fangled colours or shapes, but now want better service and utility. And as Tesla, BMW and GM demonstrate, technology is the easiest way to connect and become really useful to the people you service.
So whether you like it or not, if you want to manage the risk of disruption, you need to embrace technology. In tandem with this, your business needs to stop focusing on selling and start focusing on serving.
A word of caution though: anything is possible, but not everything is possible. Businesses that try do everything right all at once often run the danger of not getting anything right. Don’t aim to do everything at once, rather do one, two or three things that will be valuable to your customer, amazingly well. Once you’ve proven value and penetrated a market, you can use these learnings to try nail the next opportunity.