I recall a speech by President Bill Clinton to the Saudi leaders sometime back where he said that Middle East should not be Oil repository of the World, it should be Energy repository of the World. He exclaimed that with big open desserts, high degrees of temperature and so much sunlight, what better place can be there to invest in solar energy! That’s so much true. There is continuous effort out there to locate alternative sources of energy as a primary means to fulfill the energy needs. Why not use this as an opportunity instead of threat? Same applies for the oil companies out there. These companies should see that the customer is trying to find alternative means to fulfill their energy requirements. So if they are not the ones showing customer the way by providing oil supplements, they should at least chase the customer and be in the business of meeting the customer needs. There should be no Oil company, there should be Energy companies that address customer needs of energy with oil as well as other alternative energy sources.
The same principle applies to any business. It’s the need of your customers that’s important, not the product that you are providing them to address the need. If there’s only one thing that’s constant in the World, it’s change. Change occurs with revolutionary new things or continuous evolution in existing things, but sooner or later it occurs. When it is lead by revolution, some new product to address customer needs in a better way comes along and the customer slowly starts moving towards it leaving the existing product they are using. When it occurs by evolution, it’s a gradual process and the customer keeps adopting the better product as the developments occur. Most of the existing companies try to retain their customer base by gradual improvements in their products. But what they tend to miss are the revolutionary new products in their field which pull the customers away from them. Why? Because of some obvious and some not so obvious reasons. These companies are so much concentrated in satisfying the existing customer requirements and making improvements in their existing products that they place these revolutionary products in their blind spot and completely miss them. In other cases, the big corporations generate high revenues and profits by marketing their existing products. When a start-up brings a new product to the market and till it doesn’t reach to mass adoption, the revenues generated by this product are considerably less and gets ignored. And then there are companies that believe in the “Used Apple Policy”, who like to wait and watch for the first comers to take the risks and jump in after the first comer shows the signs of success. So what do these companies do if they missed the opportunity to show customer the way? The smart ones follow the customer in the new product segments, start in-house development of the new product and/or do acquisitions, mergers and partnerships with the companies involved in developing the new products. Others either remain content with their existing products and try to retain customer with improvements in them or start to go downhill depending on how revolutionary the new product is.
There are several examples that can highlight this principle. To pick one, let’s talk about the entertainment industry. This is one industry that has evolved continuously over the past, taken several tangents and will keep doing the same in the future. Starting with the revolutionary part…(not going back to the medieval ages,) there was live theatre entertainment, then came cinemas, radios, televisions and now the Internet. With each of these revolutionary new platform of delivering content, new players evolved and several existing one made adaptions to the new platform. Most of the ones that became successful chose to either show customer the new platform of entertainment or chased them to the new platform and provided them content in there. The latest shift in the industry is from television to Internet. With the evolution of the World Wide Web and the broadband, slowly customer focus is increasing on getting more and more content on their computers. Television will always be there, but a very large customer base will adapt to the Internet providing the first stop for entertainment. Several big broadcasting networks like Viacom, News Corp and so on didn’t notice this at the start because either they were highly concentrated towards television based entertainment, or the revenue stream from videos on Internet was not clearly identifiable. This lead to new players like Yahoo, MSN and lately YouTube, MySpace etc. to evolve in this field. Observing the shift, the obvious happened – MSN and Yahoo started showing news and show snippets online and News Corp acquired MySpace. So what’s next? Very soon we will see all the big networking companies either going in for stronger partnerships or more acquisitions to keep hold of its customer base. The ones that won’t chase the customer, will still be there, but their growth might not be as fast as the ones that make the move.
Moving on to improvements with continuous evolution of the platforms…let’s consider television as an example. In case of television it started with black and white televisions sets, to color television sets and so on leading to high definition television sets to something much better in the future (I am no expert in this area…but change is constant). Most of the companies providing content to the customer on television kept evolving and providing content on improved platform and will hopefully do the same in the future.
The important thing to understand is that in the entertainment industry, it’s the content delivered to the customer that holds the importance, not the platform of delivering the content.
This is the case with every industry and will remain the same. A company should focus on the entire industry and not just the product they are delivering to fulfill some needs in that industry. Everyone should acknowledge that changes will occur and the better way to deal with them is to lead the way to bring changes and if that’s not happening, try to align yourself to adapt to the changes. Either show the way to the customer or chase them wherever they want to go.