Why You Never Saw It Coming
It's surprising that so many
companies are surprised by challengers who seemingly appear out of the blue.
They get too entrenched to look beyond what is right in front of them.
We've talked and
worried for years about the potential harm to businesses that unforeseen
results and unintended consequences can cause, especially when the companies
involved are new and relatively immature. When you read the typical
after-action analyses, which try to make sense of these seemingly "abrupt"
changes or the "surprise" upsets, they are almost always directed
toward studying how well or poorly the particular actor, entity, or business
fared as a result of the inability to anticipate or mitigate the nasty changes
brought about by its own deliberate actions. Of course, these kinds of problems
don't simply effect newbies.
Just look at the
growing backlash that Starbucks is facing as in-store customers are
increasingly treated as an afterthought by an overwhelmed barista staff trying
to keep up with the influx of mobile orders. Didn't anyone there suspect that,
in our hurry-up world, creating two classes of customers and visibly shoving
the fact right down the thirsty throats of the losers was a really bad idea.
The question they didn't answer was not "how can we do a great job serving
the glut of new mobile customers?", it was "what happens to the
regulars who come in every day?".
Many of these failures aren't all that interesting, in that
someone could or should have known what might happen if they had fully done
their homework and taken the time to carefully look ahead and plan accordingly.
If you don't know or care what road you're on, it shouldn't come as a big
surprise when you end up in a ditch somewhere. A "plan" without a
roadmap is nothing more than a daydream. (See Why You Need a Reverse Roadmap) Folks in a hurry to get started without much
of a care about where they're headed basically get what they deserve.
For startups, it's
more interesting and far more valuable to look at the risks and consequences of
the kinds of changes that are much harder to see-- even with Superman's X-ray
vision and a crystal ball-- because they're outside of the traditional scope of
inquiry and investigation. Academics and other analysts rarely look beyond the
primary participants to examine the ripple effects and the impact on more
remote third parties, which can often be even more problematic.
This is also why the
big guys so often miss the boat. Blockbuster, Borders, Blackberry, etc. At the
same time, their neglect and oversights create a continuing stream of exciting
openings and opportunities for new businesses. Too often, when large,
established players look at their markets and direct competitors, they only see
what they're looking for and what's pretty much right in front of them. But in
today's world of immediate and radically disruptive innovation and overnight
shifts in supply and delivery chains, as well as the constantly-escalating
demands of consumers, you can have the best in-market research and competitive
intelligence in the business and still get bit in the butt by a newcomer from
nowhere.
More and more, the existential risks and the primary threats of
abrupt displacement come laterally-- from new entrants, from unrelated
businesses expanding into your space, from leapfrog technology, and from
changes in the customers' needs and requirements. These can provide clear
opportunities for your own business if you seize them (See Five Reasons Your Market is
Bigger Than You Think.) and serious challenges
to your company if you're asleep at the switch.
Starting from the publication in 1997 of The Innovator's Dilemma, by Harvard Business School's Clayton M.
Christensen, we've become increasingly aware of the risks of ignoring the new
kids on the block. So, I don't regard this as much in the way of breaking news.
In fact, the far more interesting questions relate to the increasing instances
where changes and new behaviors in a given vertical or marketplace have
enormous consequences in other sectors of the economy that we would never have
imagined.
We've always understood this in the context of nature - the "butterfly effect") is often cited albeit scientifically
unproven - where a material variation in any basic ecosystem could
inadvertently harm countless other and different lives, but it's been
underappreciated in the business world. For sure, some of this proliferation is
a product of our hyper-connected world, but it's also the availability and
ubiquity of new technologies at lower costs that's accelerating behavior
changes across markets more broadly than ever before.
For a startup, if you
want to get ahead of the pack and look for open fields and unexplored spaces,
you've got to think even further downstream than the obvious cases and start
considering the demands for new kinds of products and services that these more
remote "ripples" will create in the near future. Some of these
implications are pretty clear. There's not much hope for cabbies and truck
drivers. Amazon's cashier-less stores will soon imperil 11 million retail jobs
in this country. We have far more cashiers in the U.S. than teachers, which is
a sin of a different stripe. And as voice input and video output continue to
explode, I'd hate to be manufacturing keyboards much longer. But that's just
the head of the stream.
Between online
ordering (fewer store visits), automated home replenishment of commodities
(ditto) and in-store pickup combined with self-service checkout and kiosk
deliveries, the chewing gum business is in the toilet and impulse sales at the
register (candy, necessities and magazines) overall are plummeting. Bubble gum
sales are off more than 40% over the last few years. Who'd a thunk it and why
is this happening? Because we are no longer standing trapped with our carts in
the "transition zone" and subjected to the constant temptations
stacked conveniently at our fingertips. Amazingly, more than $5 billion in
grocery store sales each year used to originate in the checkout line. So long
spur-of-the-moment Snickers and Wrigley's Spearmint. Both brands are owned by
Mars Inc., which has to figure out the next delivery channel or mechanism
before someone else does.
Every day, on-site
assembly and on-demand 3-D printing becomes less of a stupid and wasteful
novelty and more of a business necessity, eliminating inventory and
transportation expense and providing just-in-time supply solutions. Thousands
of plastic parts in millions of businesses cost more to transport than they do
to produce. Sadly, it's more bad news for the transportation industry. The
pressure to push everything closer and closer to the perimeter-- basically to
the point of purchase and delivery-- is ripping apart all the elements in the
traditional supply chains. The 3-D machines are still slow and costly, but the
future is clear.
And voice commands are gonna take an even bigger bite out of and
be even a bigger threat to brand equity than online purchasing, which has
already almost entirely eliminated the pizzazz and tactile impact of packaging.
Whichever tool or voice assistant you use, you'll find early on (as the current
stats are clearly showing) that it's a pain in the ass to give incremental
details like brand names or product sizes to the machine and, as the machine
increasingly knows what you've already ordered, you'll be ever more inclined to
just ask for "the usual". (See Can You Have Too Much
Technology?.)
Amazon already has Alexa default whenever possible --and
sometimes whether you like it or not-- to the Amazon versions of many commodity
goods. You can override these things, but who wants to go to the trouble and
who really cares what brand of batteries you're ordering anyway? Maybe these
guys at Brandless are really onto something?
