You may have seen a graphic doing the rounds on social media lately quoting Tom Goodwin of Havas Media.
“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”
It’s the prelude to an article that talks about the importance of customer interface for modern day e-business and getting it right. While that is quite pertinent it also throws the spotlight on significant risks for more traditional industries today. Raising the question “is your business sufficiently agile to respond to changes in your market?”
Let’s look at the first one mentioned, the Taxi industry. Prior to Uber they had a virtually monopoly on door to door transport services. Competition only came from other taxi drivers and/or companies. Uber then devised an effective way to put travellers in touch with drivers directly to provide these services. With relatively low overheads they could make good money while taking a smaller margin, sending more money back to drivers and still providing a lower cost to passengers. They also set higher standards of service by drivers (and passengers) to make sure the whole experience was a better one. It’s a situation where everybody wins…..except the traditional taxi industry.
Uber has taken an idea and utilised readily available technology to rapidly gain a huge share of a market. Just 3 years ago if you asked an senior executive of a taxi company what their biggest challenges were the response would have been things like managing people, maintaining margins with increasing costs or any number of the regular business challenges. None of them saw this one coming.
The initially response has been to fight on legal grounds and lobby for legislative changes in an attempt to remove (or at least restrict) this new competition. Now that’s a long and costly process with no certainty of outcome. Reality is the industry was not prepared for this dramatic shift and is battling to adjust.
Whatever industry you’re in change is both perpetual and imminent. The risks of getting blindsided will always exist. It’s unrealistic to expect that you can identify any possibility. Regardless of your knowledge and experience you cannot be expected to foresee all potentials shifts in the market.
The best way to handle such situations is to ensure your business has the agility to adjust as the course may change. Ensure you’re not tied down to processes, reliant on narrow revenue streams or locked in to operating how everybody else in the industry does.
There is no one answer as it will be different for individual scenarios. The best place to start is an honest self-assessment and ask yourself that critical question. Is your business is sufficiently agile to cope with unforeseen change? More importantly, what is limiting your agility and what steps can be taken to improve this?
Be proactive and take action to prepare now while you have the opportunity. Don’t wait till the change occurs or you may be spending too much time, effort and money on damage control or worse still only left to pick up the pieces of a once successful business.
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