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.
Further to a couple of my recent posts regarding the impact of Social, the attached Economist article talks about 2014 being the lowest year of movie attendance in the US since 1995.
The relevance of this?
Social Media is so quick and effective that if the audience is not wowed on the first screening, it will have ongoing impact at the box office. This happened in 2014 when a couple of intended blockbusters didn’t live up to the pre-launch hype.
Consumers now have a strong voice impacting (both positively and negatively) all businesses through Social Media. The customer experience has become paramount.
A lot of work is often done on the product or service. The question is ‘has enough effort gone into making the customer experience a great one?’
“The Oscars: Hollywood drowns its sorrows”
What was life like before we could ‘Google it’ to find an answer, get direction on our smartphone from various map apps or connect with friends around the world on Facebook?
Most of us forget that Google, Facebook, apps and social media sites have been around for less than 10 years. Although we marvel at the rate of change, we have trouble remembering what life was like just a short time ago.
The trouble is that despite knowing the huge change we have just been through, we tend to believe that how we do things now will be the norm (with marginal adjustment) going forward.
Most of us have a human bias towards the status quo. We don’t prepare to change until either we have no choice or the weight of the market or population forces us to adapt.
In business, the rate of change can render our business obsolete very quickly, particularly if we are set on retaining our current way of working.
We have to prepare by creating far greater optionality in our strategy, systems and business models. Having a number of ‘bets’ that allow us to be flexible; to more readily adapt if the market or competitors take a different path than the current way of working.
I found the recent Forbes article interesting on ‘technologies that will blow up business’. To me it is not these technologies per se, but how they (and others) will impact the way we do business in 2015 and beyond.
One of the most intriguing 2 hours I spent last year was with a very successful ASX50 CEO – talking about the way that he made decisions. His philosophy was to make binary decisions as late as possible; always keeping optionality for as long as possible. This flies in the face of a lot of ‘macho’ wisdom about making quick decisions. There is no question that the approach this CEO had used had stood his company in good stead. It has been good from a strategy and a risk perspective – allowing them to have options that they can take if the market changes or if there is a need to respond to competitor action.
The article below talks about taking time in decisions and broadening the alternatives rather than rushing to consensus. I havent read the book (and not promoting it) but I do think there is merit in the key concepts discussed.
Hope you enjoy the read.
One of my favourite topics has been the changing nature of the organisation. In particular the extended enterprise, now commonly referred to as a company’s ecosystem is a major shift that organisations have only recently started to get their mind around. Most organisations still do not have a structured way of targeting, forming and managing alliances.
The other major shift in organisations is being created by the digital revolution. Not only in terms of organisation delivery through online, but the rapidly changing nature of the way people will work due to online. There is a huge shift in the ‘democratisation’ of work or the rise of the ‘individual corporation’. This is rapidly reshaping the way that we work and the way that we will deliver all of our products and services.
The attached article from the Economist gives a fascinating insight into the enormous growth of the ‘freelance workers’.
Hope you enjoy reading it as much as I did.
Differentiation has become the name of the game – making sure that individually, our service and our organisation stand out from our competitors. Generally, to differentiate, most add-on; that is they bundle more and more to try to make the offer compelling.
Increasing the bundle may be attractive to the client, but often we see:
- the client doesn’t value everything in the bundle and so there is unnecessary ‘noise’
- in the desire to provide add-ons, the central purpose of why the client is buying the service is lost or de – prioritised
- the cost to the client blows out due to the expense of delivering all the add-ons.
I often use the analogy of the Mercedes AMG; the tailoring by AMG of the base Mercedes with add-ons that make it go faster and look faster. For a few, the add-ons and the final package is seen as valuable and something they really want. For a lot of people, they dont see the value and are more than happy with the base car.
In so many markets, we see competitors keep adding on and ‘one upping’ each other. In reality they are all offering Mercedes AMG’s when most of the clients want a base car and only value the base car. In reality the opportunity to differentiate is to offer the base product – thereby showing that less is better.
In the thought leadership publication ‘The Directors’ Cut’ I spoke about major companies moving to a 6 + 6 of strategy. What does this mean?
Due to disruption and the GFC, companies reduced the timeframe of their strategic plan – moving to 3 year strategies rather than 5 to 10 years. Despite the critical need to be adaptive in strategy, most found that a 3 year view is not long enough to set a clear direction for the organisation to follow.
The 6+6 refers to the fact that Boards and CEO’s are now trying to manage strategy in two-time frames. The first 6 of the ‘6+6’ therefore relates to a 6 year+ timeframe for the company’s strategic vision. The second 6 refers to a 6 month perspective; ensuring that strategically they remain agile to respond to rapid market changes and the threats of any disruptive force.
While organisations have always been in the day-to-day operationally, the fact that they are having to continually review strategy as well as keeping a long-term direction, is adding complexity for both the Board and C-suite.
Business model disruption is top of mind for most Non – Executive Directors. The most common question I hear from Chairs; “is my business model sustainable?”. The flip side of this question is “what might disrupt my business?”. This genuine (and right) concern is one of the key reasons why I believe corporates in Australia are lacking confidence; being nervous to be bold in case disruption is around the corner.
Disruption is largely being caused by online business models; new digital models that provide better service to customers or provide a cheaper service. Strategy ‘converts’ know that Porter talked about one of two choices – be better or be cheaper. New online models do give organisations for the first time, the real opportunity to be both better and cheaper.
Disruption is not only created through digital means; supply chains are also being disrupted due to a range of other customer and supplier actions. The major food retailers selling $1 bread and $1 milk has created huge disruption to bread manufacturers and the dairy industry; in one move completely changing the economics of whole supply chains within an industry.
The businesses and industries that are facing disruption first, are the businesses that know least about their customers and have not developed a systemic way of gaining customer insight and knowledge.
Media and Retail are both great cases in point. They have classically treated their customers as an audience and therefore been susceptible to new business models that can treat their customers as ‘markets of one’ through individual targeting and clever analytics. A number of our major retail and media organisations have been slow to respond with their own online models or have responded by creating online versions of their traditional mode; thereby missing the opportunity to get on the front foot to create a new organisational and customer construct.