As human beings, we have been designed to fear change – which is interesting, as all life is change.
Aristotle equated time with change – if there is no change, time does not pass. A corollary: if time passes, life changes. To be prepared for life, no matter what black swans big or small come our way, we must prepare for and embrace change. Like when a small startup might take one of your valuable core services and do it better, faster and cheaper than you, in the eyes of your customers.
What is your reaction when you hear about a new product or service from a competitor, or from a startup not even in your space, which duplicates a product or service which you perform today? Do you immediately think: Ha, nice try, but our service is far superior to yours in every way, or do you take a close look at the service and determine if it is a threat to your market? Is it something that your customers may decide to move to? Is there some aspect of the service which is highly compelling that you might not have? Are the costs or inconvenience too significant for the customer to switch, or maybe not? In this time of disruptive change, hubris might not serve you very well. You must be on constant lookout for threats from every possible corner and industry – especially the tech space.
Loyalty may be a thing of the past when the costs and inconvenience to switch are no longer an issue. Customers could switch between companies in the tech space at any time and will expect the same level of service from you.
Before 2008, customers were loyal to specific companies, since they felt that their loyalty was rewarded. However, the Great Recession of 2008 saw many companies taking a more “mercenary” approach to their customers – as if they realized that if they lost one customer, they could always go out and find a similar or even higher valued new customer. Once the loyalty bonds were broken, however, customers were more than ready to switch to a new provider, and they expect a seamless experience, much like phone number portability. The customer is not just always right, but they are also free to switch from service to service with no contracts and no downside.
What if I wanted to make all my payments with PayPal instead of Zelle? How could you stop me? Instead of banking, I would use PayPal and Venmo for payments, Ally for a bank account, Rocket Mortgage for loans and mortgages, and other services for other uses. I would not need a bank, per se, I’d use a bundle of services from different companies so I could get the products with the features that I wanted. Eventually, even the concept of banking will disappear.
Could this happen in your industry? As technology creates new opportunities for your product and service suite to be replaced either entirely or in bits and pieces by smaller competitors, what is your response?
There is an ideation exercise that we run called “Kill The Company,” (no relation to the book of the same name by Lisa Bodell, although the concepts in that book are also valuable). During this session, we think what most people think is unthinkable, what if a competitor, a swarm of competitors, or a technology were to emerge which would effectively snatch your customers out from under you? How would you respond, what changes would you make, what would you do, to survive? It’s a great thought experiment, driving you to think beyond your current, seemingly solid position in the market.
These sessions generate new business models, new products, new services, and new markets. At worst, they create a “backup plan” for your business, building a library of tools that you can call upon when needed. If novel enough, they can contribute to your patent portfolio. At best, they are options to explore today, improving your position in the current market.