I recently read an article in the Wall Street Journal about the investment that Liberty Media Corp is making into Barnes & Nobel. The article was noting the difficulties facing BN, and competition was top of the list. The competitors listed were Amazon.com, Google Inc., and Apple Inc.
Wow! When I read that list I was struck at how the landscape has changed so dramatically that these technology companies are the biggest threat to the bookselling giant. (Amazon.com has become such a retail behemoth that I hardly remember they started as a bookseller.)
A couple of days later, another article was published in the WSJ by Marc Andreessen where he makes the case that “Software Is Eating The World,” saying that “technology companies are invading and overturning established industries.” He goes on to give case-by-case examples of long-term industries that have been overtaken by technology companies or have overhauled their business models to try and stay relevant:
- Books (Amazon.com)
- Video (Netflix)
- Cable (reinventing themselves)
- Music (iTunes, Pandora)
- Entertainment (video game makers)
- Direct Marketing (Google)
- Telecom (Skype) (ATT/Verizon have reinvented)
- Recruiting (LinkedIn)
In The Upside by Adrian Slywotzky, he identifies a number of strategic risks to which all businesses must pay close attention – these are risks that threaten the company’s business model. He specifically calls out the music industry and their response to technology companies, which were threatening their business models. Instead of responding by recognizing that people’s patterns and desires were changing and modifying their offerings, the music industry dug in to defend their current model, which was quickly losing ground and relevancy.
We’ve long contended that someone will be the new competitor in the insurance industry, and likely it’s someone we don’t currently recognize as competition. With all of these other established industries being taken over by technology start-ups – the guys & gals with a fresh perspective on an old standard – we have to be acutely aware that we’re not immune to such a take-over. And we need to be proactively managing that strategic risk we all face.
How do we do that?
Every industry, every business should be constantly watching a broad scope of news and industries to keep an eye on the trends. Every new idea that comes along could be potentially relevant. It doesn’t matter what industry the idea comes from. In fact, the industry-crossing ideas are where the real game-changers come from.
What do we do?
Understanding what business you’re really in is a good starting point. Then you want to have regular team discussions about your clients needs.
If you’re in the product selling business (benefit & commercial policies), then you should be asking, “What products do our clients need in order to offer a quality benefits program and/or protect their businesses?”
If you’re in the business of helping clients run better businesses (solution provider), then you should be asking, “What business challenges are our clients facing?”
Explore your solutions and possible competitors:
Ask, “Who offers products or solutions that might benefit my clients?” When you look for answers, be really curious – who might profit from a change of customer behavior? They could become your next competitor or your next partner offering.
Think about Apple – they offered music playing devices and wanted their customers to have direct access to the music for those players. So they went direct – and profited.
In the insurance industry we’ve seen payroll companies like ADP expand to offering HR and benefits administration services. And accounting firms, like CBIZ, have expanded to sell employee benefits and commercial insurance. We did not see these companies as competitors when they first started - but we do now.
The opportunities are there for these natural transitions and expansions. We need to be looking for them.
Create a filter
If you put everything you read, see, and hear through a filter, you’ll be seeing those opportunities everywhere. Always ask yourself, “How could this help my clients improve business operations?”
We no longer have the luxury of waiting for the ideas to be given to us – we need to be coming up with the ideas ourselves and moving faster than our possible competitors.
Not actively looking for new competition and possible business opportunities is irresponsible and lazy. Our businesses are too valuable to us personally, and to our employees who entrust their livelihoods to us, to be complacent or to “not have the time” to think about it. We have to make the time.
And that becomes the point of differentiation – instead of waiting for someone else to have the idea (likely outside of the industry – someone tired of not getting the solutions or results they need) and take over the marketplace or industry with it, you get to be the one who is reinventing the industry and not only remaining relevant, but is setting the new industry standard.
Content provided by Q4intelligence
Photo by elisasizzle.