Strategy

Apple – the real disruption (and value?)is in services

  Apple’s earnings release overnight talked about its services revenue -$5.5bn USD for the quarter. 
While focus is generally on Apple’s products and the sales it gets from IPhones, IPads etc – the services revenue from iTunes, App Store and Apple Pay is huge and high quality. Not only is Apple’s revenue from services as big as all revenue that Starbucks derives, it demonstrates the huge ‘tied’ customer base that Apple has. 

While people will talk about how the iPod and iPhone changed our lives, it was the fundamental disruption of the music industry by iTunes that has been at the heart of the change  – and also just happens to have created a high quality and huge revenue stream for Apple. 

While innovation in products causes disruption, business model disruption, such as seen by Apple in the way we access music, apps for a range of leisure and business uses and increasingly in the way we pay for goods and services, is the key to significant change. 

Do we all face disruption?

  A great article by Adam Lashinsky @adamlashinsky on Fortune.com talking about the San Francisco taxi cooperative filing for Chapter 11 due to the disruption impact of Uber and Lyft. 

He rightly poses the question ‘ are you at the risk of being disrupted by a fast moving, lightly capitalised upstart? He also rightly answers the question at YES. 

“It has become a cliché in the technology world that everything moves faster now than it used to. The cost of starting a company is lower. The time it takes to get to market is shorter. The ability to disrupt even established and powerful players is greater.

Clichés must be challenged because they often mask a shallow understanding of the facts. In this case, however, the cliché is true.

Take, for instance, the blink of an eye it has taken to all but cripple the U.S. taxi industry. Lyft and UberX (Uber’s ride-hailing app for amateur drivers, versus its earlier service for licensed limousines) both started in 2012. On Friday, San Francisco’s Yellow Cab cooperative filed for bankruptcy protection, a development Fortune’s Kia Kokalitcheva previewed two weeks ago. At the time, it appeared Yellow Cab’s financial woes had more to do with a personal-injury damage award, than competition from cleverer upstarts. Yet according to court papers examined by the Wall Street Journal, the San Francisco taxi organization cites worsening business conditions as a reason for its Chapter 11 filing. (The co-op intends to continue operating as usual.)

It’s a safe bet that no healthy business would experience weak business in a market as overheated at San Francisco. The city at the heart of the global technology boom will prove a curious footnote in the demise of the global taxi industry. San Francisco’s taxi service was particularly bad. Hailing a cab on the street was more like a small-town experience, and calling for one was an erratic proposition at best. Adding insult to injury, Yellow Cab now offers a ride-hailing app of its own, pathetically named, and I am not making this up, YoTaxi.

What began in San Francisco has spread lightning quick around the world. Yet so many questions remain. Can Uber consistently make money? Is Uber the global winner, given the many competitors it faces, including a global anti-Uber alliance? Will regulators step in and alter the path of progress. (It wouldn’t be the first time.)

Are you in a business that could be disrupted by a fast-moving, (initially) lightly capitalized, risk-taking upstart? Without knowing what you do, the answer is far more certain than these others. The answer is yes.”

Adam Lashinsky

Which strategy will win in the war for customer connection and data?

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It is always interesting to see how different organisations see the importance of data and customer connection and the strategies they adopt to connect with customers.

Under Armour is rapidly becoming a technology owner – acquiring MapMyFitness, MyFitnessPal, and Endomondo for a combined $710 million. A big number for a company that turns over $4 billion.

It’s a big bet by them on the importance of data and I’m sure it is a strategy to create a platform to build customer loyalty and secure additional revenue streams. Reportedly, Under Armour is developing its own tracker and new apps to interface with customers.

Under Armour is going after a strategy that Nike has abandoned – presumably because it was unsuccessful for Nike. Nike shut down its FuelBand fitness tracker line. Nike is now relying on alliances (an alternative and very legitimate strategy) for its data and ‘wearables’.

Maybe it’s not a fair fight with the might of Nike vs the smaller Under Armour – but it’s going to be interesting to watch and I like the level of importance that Under Armour is placing on trying to create a platform for customer connection.

Digital disruption – the block chain and its impact

Forget Bitcoin -- What Is the Blockchain and Why Should You Care?

I am fascinated with what is happening at the moment- every industry, every organisation is on the cusp of significant transformation, largely due to the changes in technology.

I am no technology geek – the technology has little fascination for me – but what it does to the business model, the ecosystem and industry structure I find incredibly interesting.

Crypto currencies, such as Bitcoin, have been talked about for a few years now – and getting an understanding of them and how they are likely to impact hasn’t been easy. I have no doubt that they will play a role, particularly within the banking system and the person to person  payments process.

BUT, the hidden sleeper behind Bitcoin, that I believe will have enormous impact, is the Block Chain. Block Chain is the technology driven consensus authentication process that authenticates every transaction and verifies asset ownership. It has huge potential to transform payments, transactions, auditing and credit.

The link below provides a simple explanation of the way the Block Chain works.

http://recode.net/2015/07/05/forget-bitcoin-what-is-the-blockchain-and-why-should-you-care/?_lrsc=d4e73b6a-2606-4333-a54c-97d90fe99ba4&trk=elevate_tw

It’s so unique that everyone has it

“We have a unique methodology that allows us to deliver projects more efficiently and with greater ongoing success. There are five major steps: discovery, design, development, implementation, and measurement”

I imagine for most people that statement sounds familiar but also makes you cringe.
It is marketing speak that all consultants use and it means nothing to the client. It could be lifted from any number of our organisations proposals.

Saying something is unique is a big call – and if it’s not, then saying it is damages credibility. Having a methodology is important – but clients expect that all consultants will have a methodology and that it is tried and tested.
The key is not the methodology but how the method and our experience will benefit the client. Demonstrating the benefits to the client in a tangible way, that they can really see how they will come to fruition, may just about be unique in the pitches they receive.

When Price is the Objection

I often get told that the service or product is exactly what they want but the price is too high.

Here are 5 tips in handling money objections:
1. Money is often a “red herring” objection a good question to ask is “If money were no object…” – this will usually bring out the real issues behind the money question.
2. Make the value tangible – ‘fees too high’ is often code for I don’t see the additional value of your solution. You need to find a better way of making the value clear and tangible
3. Is it their objection or ours – often it is the service provider who is hesitant in stating the price. Make sure all the client’s needs are established and likely impact and the value to the client of the solution are clear. If you have, then it’s easy to state the price with confidence
4. Don’t lower the price without changing scope or deliverables – if you do, you are creating a platform of mistrust and lower prices ongoing.
5. Be sure you are dealing with the decision maker – money is always an objection for the person that doesn’t hold the decision. The objective for them may be more about getting a ‘win’ on the price to carry favour with the decision maker rather than creating the best solution.

In the end, if the service provider doesn’t have faith in the value of their services, you can be certain no one else will.