Victims or Victors

“Companies rarely die from moving too fast, and they frequently die from moving too slowly.” Reed Hastings, the CEO of Netflix

Working in ‘brand space’ has always been fascinating but in the last few years the speed of change in technology and its impact on customer’s expectations has given rise to a preponderance of businesses that are potentially either digital ‘victims’ or digital ‘Victors’.

Clients that come knocking at our door are often either incumbent businesses, striving to grow, retain and protect what they have, or are start-up upstarts looking to reinvent the value proposition in a product or service sector. Often the mindsets in these two businesses are poles apart. One sometimes risk averse and ponderous, the other agile, bright and sometimes shallow in experience. It’s intriguing and I have often wondered why ‘big brands’ with all their smarts and deeper pockets fail to grasp their role as ‘market makers and innovators’.

I think there is still a legacy ‘systemic’ issue of a brand management structure that rewards custodianship rather than creativity but I think it also goes deeper than this. Management also has a short-term ‘denial’ perspective that counters mid-term risk taking, even though disruption is clearly on the horizon. Many successful organisations fail to look for new things their customers want because they’re afraid to hurt their core businesses. This has been called the innovators dilemma (1). An inertia caused by the risk of the unknown and the fear that the distraction of focusing on the horizon will lead to a lack of focus on near term sales and revenue plans.

The interesting model below from McKinsey clearly illustrates the point where an incumbent’s existing business model, for a short-time, out performs the theoretical new model. Adapting to market change has created some stagnation in growth but in the longer-term has ensured the sustainability of the business. Kodak and Blockbuster are good examples of businesses that succumbed to a period of myopia, ignored the inevitable digital disruption and failed to adapt as a result.