In a bygone era, access to media and information was limited. Attention was in abundance, however. That situation has now been completely reversed. For businesses, the quest for mind and market share can be very challenging in such an environment. But the ones who get it right are unafraid to take chances and quick to respond to market signals.
Time was when the whole family used to sit down in front of the TV and watch a program. That was a time (frankly, not so long ago) when choices were limited. Limited programming meant that our world was organized around dinnertime TV viewing.
Today, each one of us has our choice of distraction — smart phones, Facebook, e-mail, Youtube, social games, chat, Netflix, 500+ TV channels, to name just a few. The explosion of options has solved a problem but created a new one. While access to media was scarce earlier, attention was in abundance. Now, it is exactly the opposite. Top news stays at the top for a few minutes or, with some luck, a few hours.
There is a dynamic balance, in our universe, between things that are abundant and those that are scarce. Innovation happens at the frontier of scarcity because that’s where value and opportunity lie. This innovation – usually some kind of technology or process or knowledge breakthrough – opens the floodgates and what was once scarce ends up being abundant. But now, the scarcity shifts to some other part of the system. It doesn’t go away.
The floodgates in our generation are formed of the Internet and the kind of globalization it has fuelled, ensuring that we are instantly and always connected. There is an explosion of information and media as well as of access devices. The rules of this era are different from those of the previous one. As a society, we cannot deny that our collective attention span is shrinking. And it will continue to do so. Media content and form, already unmanageable, will keep growing at a relentless pace. Google glass, Youtube, connected TV, cloud, Internet of things, 3D printing, smart watches, wearable computing – the list is endless, and the pace ever more frenetic.
The impact for businesses is still unfolding. They are finding that it is becoming hard to get their message to customers and even harder to sustain mind share. The abundance of choices available to customers makes analyzing, understanding and responding to trends an overwhelming task for businesses.
In a survey by The Economist, 74% of companies said that the pace of change in their operating environment has picked up in the past 5 years. 79% believe it is critical that they respond quickly to the changes but only 39% state that they are making the right decisions. Product preferences are highly volatile and loyalty is a fading commodity. Faster introduction of new products is making products obsolete faster.
So, how should businesses prepare for and manage this new reality?
The primary challenge businesses face is in organizing themselves to handle the seemingly contradictory forces of short-term agility and long-term stability. Increasingly, in today’s volatile environment, short-term feedback and signals are chaotic and businesses find it challenging to navigate them while moving towards their long-term goals.
The following strategies can help organizations steer their course in this new environment:
Embracing ambiguity: Constantly shifting market trends don’t provide a deterministic line of sight for businesses. To stay ahead of competition, companies must find a way to conceive and support not one, but multiple strategic directions for their companies. Apple is a great example of a company that embraced this ambiguity and entered markets it had not been in before. Through a category disrupting slew of products that included the iPod, iPhone and iPad, it radically changed market expectations and shaped the technology of the previous decade. Apple’s strategy played a significant role in the decline of incumbents like Motorola, Blackberry, and Nokia. Its ability to sustain and foster a broader vision in consumer products helped it come back from the brink of closure to become the world’s #1 consumer products company with a market capitalization of $400 billion. Sensing and responding quickly to market changes: Businesses are organized to operate at a set rhythm. In most cases, this follows a pattern that all companies in a given industry follow. Breaking away from this in response to changing consumer expectations can provide a competitive advantage. Traditionally, in the fashion industry, new designs are introduced during season changes. High-end fashion companies typically make two collections every year. However, this century-old pattern was disrupted by the Spanish retailer Zara which pioneered the concept of “fast fashion”. Unlike others in the field, Zara introduces new stock every two weeks. That’s an average of 24 collections a year. Zara does this by aligning the communication between its stores and designers so that customer feedback and requests are relayed on a daily basis. This is again tied to a well-orchestrated supply chain and operations that are quick to respond to changing customer preferences.
Taking bets, failing fast and learning: Disruption emerges, not from following a predictable path, but from making long terms bets, embracing change early on, failing fast and then learning from it. Netflix is a good example of a company that has proactively and successfully embraced change. First started as an online video rental company, it reinvented itself a few times as it navigated the landscape of customer preferences and loyalty. The first time around, it faced a serious threat from its large offline incumbent competitor, Blockbuster Videos, which had physical stores along with an online presence. Netflix responded by focusing on making its delivery system flawless and disruptively improving its movie recommendation engine. As a result, Blockbuster went out of business. The second time around, as video streaming was becoming popular, Netflix overhauled its DNA, going from being an operations-heavy company with a warehouse full of DVDs to a technology company delivering high quality, fast streaming, on-demand videos. It was also willing to cannibalize its existing rental subscription before its competition woke up to the opportunity.
Embracing ambiguity by daring to support different versions of a company’s future; developing highly tuned market sensing and response mechanisms; and taking bets, failing fast and learning from failure – all of these are examples of agility and adaptability that are critical for businesses today. While planning is important, businesses should be willing to modify it when market conditions change.
There is no clear predictor of what will work and what won’t. So, like Apple, businesses will have to support different paths simultaneously. When the window of opportunity is limited and shrinking by the day, businesses should learn to seize it and respond like Zara. Finally, as the Netflix example shows, everything can get disrupted in a business instant. You need to be ready to proactively abandon your business model and build a new one – before someone else forces you to. Your leadership’s imperative is to build the culture, team and processes that can chart your company through this increasingly choppy but rewarding voyage.