So you think you know your competitors? Think again.
A brand-new car sold by a vending machine and a robot that brings in the laundry - How to prepare for new competitors entering the market.
In recent years we've witnessed corporations entering new fields, thus shaking up the markets - and not necessarily through the traditional method of mergers and acquisitions. This phenomenon teaches us that a corporation that thinks it knows its competitors well is likely to be taken by surprise by a new competitor - and soon. Why soon? Because the pace of technological change makes it possible, unlike in the past, and because corporations are constantly looking for additional sources of revenue and increased value to their customers, which are their real asset and which they must retain at all costs.
Link to a lecture on open corporate innovation at a The Economist conference that was held in Athens last week:
Link to the conference website:
Who would have believed that a retail company like Walmart would consider entering the VOD market and complete with specialists in the field like Netflix? In 2010 the company took its first step toward just that by acquiring VUDU, a company that provides video-on-demand services. In recent months there have been signs that the company plans to move into the market more intensively and offer VOD services on a scale that will allow it to compete with VOD giants Netflix and Amazon. Apparently the taste they got in 2010 gave them an appetite.
Another retail giant which is constantly checking out new markets and fields is Alibaba, which recently signed a contract with Ford enabling drivers in China to take cars out for test drives based on their credit rating. The machine is built like a vending machine, and all a driver has to do is leave a deposit and a selfie in order to drive off with a car which he receives automatically, with no service or sales representatives, for up to three days. The company plans to place these machines all over China and offer the cars for sale as well while offering a model for financing.
Alibaba's innovative efforts don't stop at car sale machines; the company is looking into automation in another field - hoteliery. The company stated recently that it will soon be offering robots for the hotel industry which will help the staff by performing specific room service tasks such as sending food and laundry to the guests' rooms. These robots are expected to free up time for employees which they can spend doing more complex tasks. If this experiment in the hotel trade works, we may be seeing robots in other markets such as the hospital, office and restaurant trades.
Another retailer that serves as a model for corporate innovation which is expected to shake up an entire market is Amazon. Amazon has reinvented itself several times, offering new services each time. Now the company is working on expanding the Amazon Project service through which it offers, even now, coverage for breakage or theft of items purchased through the company. Amazon is now looking into business models and technologies which will enable it to expand this service and offer an insurance model based on state-of-the-art technology. This will make Amazon a direct competitor for the insurance companies.
A few weeks ago Microsoft signed an agreement with Volkswagen to form a partnership in the automotive field. This isn't the company's first step in this direction. This is an important partnership and another step taken by the software giant into the field of smart vehicles. The partnership centers around the field of cloud technology and Microsoft's R&D department is expected to offer a variety of services, from music that starts automatically upon entering the vehicle to malfunction-prediction features.
Corporations are currently struggling to find their place and expand into new fields. For example, four out of ten acquisitions of tech companies in the first quarter of 2018[1] were conducted by companies from other fields than they are engaged in now. This is because the companies are interested in expanding their spheres of business while remaining on the cutting edge of technology and staying ahead of their competitors and thwarting future competition.
Among the fields which are now endangered by the possible entry of competitors adopting up-to-date technologies are tourism, transportation, banking and finance.
In banking, for instance, revenue from physical branches has tapered off as technological models and platforms have grown in importance. Companies like Apple or Amazon can offer financing that can set the market reeling. In order to stay relevant in a world that's constantly moving forward, companies must act wisely, see which way the wind is blowing and where future competition is likely to come from.
Here in Israel, too, it was recently reported that SuperPharm is investing in startup BringBring in an effort to enter the food market by offering deliveries within four hours.
Here are the main tips that can help your corporation:
1. Know your competition - Know who your main competitors are, what they offer and what makes them unique.
2. Know your customers - Know who they are and try to figure out what they're looking for and what's important to them. Understand what the experience and the product are that they're looking for and what is likely to make them choose you over your competitors.
3. Try to enter new markets - Don't hesitate to look into new markets, especially those based on advanced technology. This may include new customers, other countries and even new fields of business. Use your understanding of your customers' expectations to figure out which services, products and technologies you can offer them.
4. Be innovative - Keep tabs on the latest technologies and innovations. Don't hesitate to create partnerships with other companies, with academic entities, with other innovators and especially with startups. Collaborations with these entities will help your corporation maintain its status and even help it reinvent itself before a new competitor comes along and it's too late or too expensive. By nature, a partnership serves as sort of de facto market test which costs less than a merger or acquisition, and after testing the market the corporation can decide whether or not to adopt the technology and expand the partnership.
5. Look toward the future - Plan your business model for the next few years and follow consumer trends. Invest in technologies and spot future competitors and other entities that may influence the market even before they pose a threat to you, and remember: your main asset is your customers and in order to retain them you must offer them what they expect to get.
Whatever your business may be, you must remember that your competitors of today are not your competitors of tomorrow. In the future, probably the near future, new competitors will pop up whose advantage is that they're innovative and quick to adopt the latest technologies.
The only way to deal with the unknown is to be on the forefront of technology, and here in the startup nation you have the tools and the ability to do just that.
[1] according to PwC, April 2018
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