Interconnecting Merchandise And Ecosystems | Branding Technique Insider
This is arguably the most exciting time to be in business. We are experiencing profound changes worldwide that are influencing today's business in an unprecedented way – and offering a unique opportunity. In addition, the speed and scale of change is unprecedented – the spread of information over the Internet has fundamentally changed the way companies compete and win. As an illustration, consider the following:
In less than five years, RIM (now BlackBerry) had a larger market share in the smartphone market than Apple and Samsung combined, reaching a market share of less than 1%.
Such a rapid change is unprecedented.
The Renaissance and Industrial Revolution. Michelangelo and da Vinci. Vanderbilt and Rockefeller.
We look back on times of expansion like the industrial revolution and consider them exciting times with global opportunities in which giants of culture and industrial titans changed our world. Bill Gates once said: "We always overestimate the changes that will occur in the next two years and underestimate the changes that will occur in the next ten years."
The pace of change is so high today that it can hardly be overestimated. Indeed, sometime in the future, people will look back at the present and consider it the greatest period of expansion and opportunity in the history of the planet – and a time like no other in the business world. To understand why, think back to the beginnings of the Internet and the “dot.com” period of the late 1990s. At the time, the claim was that the Internet would change our lives and that instant communication (e.g. email) would change our productivity. While many companies have worked around the clock for connectivity, the impact on innovation, productivity, and opportunities has often failed to reflect hope and hype.
Jobs, Zuckerberg, Musk, Bezos, Brin, Schmidt, Gates
Google was once "just" a search engine. Now, however, it is ready to take a dominant position elsewhere – for example in relation to internet advertising, mobile phones, television, the Internet and cards. In fact, we no longer exclusively rent hotel rooms through the usual hotel brands, but rent rooms or private apartments from Airbnb, we no longer call taxis, but "rent" trips from companies such as Uber or Lyft and we increasingly rent cars by the hour as needed Companies like Zipcar. Olli, a Local Motors offering, will even pick you up (like Uber) on a driverless bus powered by IBM's Watson – and the list goes on.
However, there is often a fine line between success and failure. Just think of the following:
- Before YouTube there were over 17,000 "YouTubes".
- Before Google, there were 18 web search services, some of which were very similar to Google.
- Net2Phone started the year before Skype.
- Friendster (and many others) came before Facebook.
What is so different today? Why are some successful, others fail?
Imagine you are a manufacturer of "white goods" (i.e. washing machines, dryers and refrigerators). Throughout most of your career you have participated in a combination of costs, sales, sales and features – the latter range from the “beautiful” avocado colors of the 1970s to newer stainless steel surfaces. You can segment your market and have a range of offers, product lines and prices that suit different budgets and segments. You may have spent your entire career in the value chain, using the production system (to gain an advantage on the cost side) and sales teams (to assert yourself in a consolidated retail environment) within a competitive industry.
However, in the early 2000s, white goods manufacturers were concerned that they could make huge profit margins on “Internet-enabled” devices (i.e., refrigerators and similar devices that were connected to the Internet via touch screens on the devices). Using this connection, users can, for example, control the devices on the go and order groceries to complete recipes. In fact, manufacturers could potentially make huge profit margins for these new internet-enabled devices. However, they encountered at least a few major obstacles. First, customers didn't flock to the devices when they were introduced. There simply weren't enough advantages – smartphones had not yet become widespread, so it was difficult to connect to the devices remotely. Also, what exactly would you do with your fridge when you were away from home? Secondly, as soon as smartphones and tablets conquered the market, all functions of your internet-enabled refrigerator could be replicated – with a lot of additional functions and mobility. Why in the world does someone need an internet-enabled refrigerator?
Fast forward to 2020
Imagine a world in which the objects around us can talk to each other. The baby is crying? Soothing music plays as the answer. A storm is coming or the floor is sufficiently damp? The irrigation system switches off automatically. Do you drive your car out of the garage? Your lighting is switched off, the heat or cold is adjusted, your alarm and motion sensors are switched on automatically and your doors are automatically locked. Your coffee machine adjusts to your watch so it turns on five minutes before the alarm clock – or your local Starbucks recognizes your approach and prepares your usual order. The label on your dog's collar will send you a text message if Fido leaves the yard. The heating in your swimming pool adapts to your Outlook calendar and your basketball court automatically records your shot percentage. Well, maybe that's not a good idea!
However, this is not the storyline of a new film, but a reality that can be realized today – and it is only a matter of time before it becomes commonplace. In fact, every single part has been generally feasible for some time; However, it is the networking and omnipresence of information that has turned the feasible into business opportunities and modern realities.
Think: ecosystems instead of platforms – and platforms instead of products
Now back to the white goods, for example. Imagine an intelligent fridge that can determine the expiration date of a milk carton in your fridge and relate its contents to the contents of your pantry to confirm the choice of the recipe on a Friday night. You no longer need the touchscreen on the front of the refrigerator as originally intended – you can do all of this with your smartphone or tablet. What if the fridge could automatically order a new milk carton and deliver it to your door to replace the one you used the night before? Are you now interested in the premium that the manufacturer charges? In fact, there is a plethora of evidence that, from Wi-Fi enabled smart TVs to home assistants, shows that consumers are willing to pay more for the devices themselves when they are Internet-enabled. So there can be opportunities for companies that can connect everything seamlessly – from home and from home.
What is different about today's markets? In short, networking. Nowadays, the competitive game can have an impact not only in the entire value chain of an industry, but also in all markets. In today's competitive environment, it's no longer just about being successful in an isolated part of the market – the new game is a game of competition across different markets. Companies that win today connect – from products to ecosystems!
Contribution to Branding Strategy Insider by: William Putsis, author of The Carrot and The Stick: A strategic control approach to win in today's connected markets
The Blake project can help build a bigger future in the Disruptive Brand Strategy Workshop
Branding Strategy Insider is a service from The Blake Project: A strategic brand consultancy that specializes in brand research, brand strategy, brand growth and brand building
Free publications and resources for marketers