Our Founder and CEO, Erich Joachimsthaler recently presented on Trends, the Business of Platforms and Disruption for Fossil. From differentiating between the World of Walls and the World of Webs to answering what we mean when we speak of disruption, Erich provides insights on how to innovate to thrive in today’s Platform Economy. Below are some highlights:
The 3 Eras of Connectivity
The first era featured information, with the birth of the internet, Google search, and e-commerce. The second era entailed connections between people through digitized relationships, facilitated by social media and mobile phones. Now, we are in the era of everything being connected – the Internet of Things, blockchain, 5G, Artificial Intelligence and machine learning are all coming to maturity. And never before have all of these major technologies matured at the same time at a rate like this.
From a World of Walls to a World of Webs
We’ve been living in a World of Walls for the past 100 years. In this world, competition is based around the business of better, faster, cheaper production. It’s a constant cycle of design, make, sell, use and reuse. Customers are on the receiving end of the traditional supply chain. But in the World of Webs, uber-disruption creates exponential growth for businesses. In thinking collectively of all opportunities and leveraging value created by interactions, a business or brand can greatly benefit from this re-framing. Consumers become active value creators and, in this world, you gain competitive advantage in the digital space. This shift is ultimately from a world of transactions to a world of interactions.
Guidelines on How to Compete in the Era of Disruption
There are four main principles to follow when competing in the modern world – the world of disruption characterized by the connectivity of everything.
1 – Compete head-on
Just like you can’t outrun a bear, you can’t outrun disruption. Target well-exemplifies this principle as it invested to build out it’s advantage against Amazon – it’s storefront presence and proximity to consumers. It also added value through exclusive brands and is on its way to beat the disruptor at its own game – in this case, Amazon and its extreme convenience. Target is building online/offline interactions by encouraging online browsing but store buying.
2 – Identify new ways of creating value
Another case study – Best Buy embodies this principle as it is competing with Amazon and Target, though it has had an outdated business model for quite some time. So it is leveraging its advantage by not only offering in-store pickup of online orders but also investing in adjacent in other opportunities, such as in healthcare. Also, it is solving for important consumer pain points that disruptors can’t through its Geek Squad, which helps customers with troubleshooting technology.
3 – Create interactivity that builds the brand
The many different ways to practice this principle are seen in the evolution of Burberry’s brand. First, Burberry returned to its brand by communicating what it is not – it is not a company that makes trench coats, instead it is about all things British, from art and entertainment to British royalty. It also adopted a millennial mindset – though the ideal target market may seem to be the posh lady with the purse who “does lunch,” it is instead the millennial. Third, Burberry democratized luxury. This is best shown through a quote from the former CEO of Burberry, Angela Ahrendts: “I grew up in the physical world and I speak English, the next generation is growing up in the digital world and they speak social.” Ultimately, as seen with Burberry, taking social media seriously drives commerce and sales.
4 – Personalize and integrate into people’s lives
Though Apple is often considered to be the world’s largest retailer, it is second to Chinese supermarket giant, Hema. The key to Hema’s size capture is its fully personalized and convenient shopping experience, with an entire retail value chain completely digitized. The secret? Behind every single interaction, there’s data collection. From the moment you open Hema’s app, it collects massive amounts of data to leverage in personalizing and making more convenient every experience with Hema.
So while there is a World of Walls that we compete in with other brands in particular categories and segments, there is also a World of Webs – and with it, a whole new world of opportunities. With the combination of technologies that enable interactivity and connections with consumers that are both emotional and functional, the future of business is changing the way we live our lives.