This is a very difficult time for many industry leaders. Technological advancement has caused so much disruption in so many industries that many industry leaders are at their wits’ end. Technology has changed the way many businesses are conducted; it has extended frontiers, created new possibilities with new values and has precipitated the displacement of established market leaders.
Right now, the Central Bank of Nigeria (CBN), in its bid to extend banking services to rural areas, is contemplating licensing telecommunication companies to offer mobile money services. That most likely will affect the bottom line of the deposit money banks because some of the charges that have solely gone to them will go to the telcos. The newspaper industry is challenged by the incursion of digital technology-empowered social media which has eroded the exclusivity of print and electronic media to mass dissemination of news. Those in the service industry such as travel agents are seriously challenged as technology has made it possible for the end users of such services to interface directly with the service providers without any recourse to the agents. Digital technology sounded the death knell for films and chemicals as a means of producing photographs. With digital technology, the laborious process of developing photographs in dark rooms has been effectively done away with.
So many other industries have been affected one way or the other by technological advancement. However, while the development means good news to new entrants in the industry, it has brought telling woes to others.
While technological advancement has led to the death of some well known market leaders, it has strengthened others. It is a function of the kind of leadership in place in the organization. But the fact is that market disruption is not enough to knock a company over if the leaders are forward-looking. Outstanding business leaders understand that industries will always be challenged because the market is dynamic. They know that the only thing that is constant is change. They know that new thinking will always challenge old ones. They are also conscious of the fact that new products will always threaten to take over from established ones. So, they are able to embrace change with open hands and adapt to the new trend. But business leaders who stay rooted in what they have always done or limit their capacity to what they have always known would be shortchanged in the scheme of things.
What to do when your industry is challenged
When your industry is challenged, it is not time for lamentation, neither is it time for pity party, it is time to swing into action.
Challenge your thinking to beat the challenger
Your industry being challenged is an indication that a new thinking, a thinking that is different from the regular, is at work. To tackle that, you have to challenge your thinking and outthink the disruptor. When your industry is challenged, it is not time to fold your arms and do catch up. It is time to take on a new thinking and do new things. If you do what the disruptor does, he will take over the leadership of the industry. You have to outthink him and do much more than he has done to retain your leadership of the industry.
If you consider the challenge to your industry leadership as a problem, you have to raise your thinking above the current challenge to beat the challenger. As observed by Albert Einstein, a problem cannot be solved at the same level of consciousness that created it. So, to solve the problem, you have to raise your thinking above the situation to get a satisfactory solution. That is what Friesland Campina WAMCO, Nig Plc, makers of Peak Milk, did when its leadership of the dairy industry was challenged by Cowbell Milk produced by Promasidor.
For years, the leadership of Peak Milk in the dairy industry had gone unchallenged. Then came Cowbell Milk which introduced cheap and affordable powdered milk in sachets. The innovation affected Peak Milk as many people, especially those in the lower rungs of societal ladder, opted for the affordable Cowbell Milk. But Peak Milk did not just surrender its ground to the new entrant, it fought back. Its fighting back was in the form of outthinking Cowbell. The leaders of FrieslandCampina WAMCO did not just ape what Promasidor was doing, they tried to beat the company at its game.
First, Peak Milk introduced powdered milk in sachets so as to be able to compete with Cowbell. Then, it also introduced liquid milk in sachet. That was novel and was welcomed by those who opted for powdered milk in sachet because of cost. The product has continued to enjoy heartwarming patronage.
Peak Milk was saved from losing its edge by the thinking of the company leaders. They rose up to the challenge posed by the new comer and were able to secure the company’s prime position by matching and outthinking competition.
Great things happen when leaders take time to reflect.
Improve on your product and services
There is always a better way to do what you are doing. That is the rationale behind innovation. So, no matter how well you think you are doing what you are doing, it is still possible to improve on it. There is no better time to do this than when your industry is challenged.
One interesting thing about consumers is that while they want a change, they often do not know what change they desire until they are offered by a manufacturer. Hence, those who pioneer such offerings always have an edge over others.
Air is free. Anyone who plans to sell air is wasting his time. True? Not exactly.
In the beginning, everyone depended on nature to get refreshed when there was heat. Then some people devised the hand fan as a means of getting refreshed when the weather was hot. After a while, the hand fan was considered inadequate to keep people cool in hot weather. Then the electricity-powered fan was introduced. From electric fans, the world moved to air conditioner.
Moving from natural air to hand fan was a marginal improvement. From hand fan to electric fan was an incremental improvement, while from electric fan to air conditioner was a phenomenal improvement. Each improvement resulted in creation of value and the value created was accompanied by resources. Till date, hand fans are still being produced and the producers still manage to get by, but what they make is infinitesimal compared with what air conditioner manufacturers make. The reason is that the value they offer is nothing compared with the value offered by air conditioner manufacturers.
So, when your industry is challenged, improve on your products and services, increase the value you offer to your customers. When you offer more value, you will earn more revenue. No matter how tough the situation is people will always pay for value. Fund is only scarce to the extent that value has not been found. Money always goes to where value is. To increase your access to resources, increase your value creation.
Create a new territory for yourself
When your industry is challenged as a result of technological disruption, you have to create a new territory for yourself within the industry. If you don’t, you lose out and go broke. But if you do, you get stronger and create your own luck.
Absolute Success Travels and Tours, popularly known as U Fit Fly, is a Nigerian company in the travel and tour business which started as a ticketing outfit. As a travel agency selling tickets to travelers, it had a minimal impact. But its breakthrough came when the industry became challenged. With technical disruption which avails potential traveler opportunity to buy tickets online directly without having to go through an agent, the business became challenged. But rather than throwing in the towel, the leadership of the company created a new territory for themselves within the industry by arranging tours and serving as guides to travelers. The company started by organizing pilgrimage tours to Jerusalem and Saudi Arabia. Later, it increased its services to organizing tours to other countries. Now, it organizes so many tours that it takes people on different tours to different countries almost every week. Recently, it veered into education tourism by linking those interested in pursuing education programmes in foreign countries with foreign institutions.
What started as a challenge has become a money spinner because the company created a new territory for itself within the same industry.
Create new customers
According to Peter Drucker, an accomplished business expert, a business’s raison d’être is to create and keep customers. Drucker says, “The customer is a foundation of a business and keeps it in existence.”
Companies create customers when they identify and satisfy customers’ needs. They, however, retain customers by exceeding customers’ expectations. Without ensuring customer satisfaction, achieving long-term corporate objective is a mirage. So, the customer is the oxygen that keeps any organization going.
Creating new customers must be an unending activity for a forward-looking company because current customers may die, relocate, get fed up with the company or even lose their means of livelihood. Should any of these happen, the company’s bottom line would be negatively impacted. Companies that make continuous creation of customers their focus are not overwhelmed when their industries are challenged.
Invest in R&D
Inadequate research impedes the identification of new opportunities. Many businesses do not get their desired results because decisions are not hinged on sound research findings. Granted that now, many companies have their own research and development (R&D) department but the fact is that people see things as they (the people) are, not as things are. In-house people are sometimes swayed by what they consider to be the body language of management. So, their research findings are often a poor reflection of the true situation. As counseled by Richard Branson, Chairman of Virgin Group, for an ongoing concern, relying solely on the advice of in-house people to veer into a new line of business may be misguided; it is always better to consider the informed position of experts, especially independent researchers from outside the organization.
Tough time doesn’t stop those who are creative and imaginative; it launches them to greater heights.