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It’s time to take today’s technological threats seriously and change the way you do business.
If you haven’t noticed, a high-stakes global game of digital disruption is currently under way. It is fueled by the latest wave of technology: advances in artificial intelligence, data analytics, robotics, the Internet of Things, and new software-enabled industrial platforms that incorporate all these technologies and more. Every enterprise leader recognizes that, as a result, the prevailing business models in his or her industry could drastically and fundamentally change. A wide range of industries, such as entertainment and media, military contracting, and grocery retail have already been profoundly affected. No enterprise, including yours, can afford to ignore the threat. Yet most companies are still not moving fast enough to meet this change. Some leaders are still in denial about it, some are reluctant to upend the status quo in their companies, and some are unaware of the necessary steps to take. But these excuses are not good enough.

If your company is aleady struggling, then digital disruption will accentuate your problems. You may not have needed a plan for the new digital age yet, if only because it didn’t seem relevant to your industry. But you will need it now. Otherwise, no matter how well you run your business, it will not produce results at a scale that will allow you to compete. The companies with a clearly differentiated identity — those that stand apart from the crowd — are in the best position to thrive. For every company, this is an immense opportunity to rethink every aspect of the business, and chart a bold path for success.

Disruption, by our definition, means a shift in relative profitability from one prevailing business model to another. The dominant companies, accustomed to the old approach, lose market share to a new group of companies. Not every disruption is driven by advances in technology, but this one is. And because the software fueling this transformation can be applicable across traditional industry and business function boundaries, competitors can emerge from seemingly anywhere. In sector after sector, new entrants are lowering prices, meeting consumer needs in novel ways, making better use of underutilized assets, and hiring people with broadly relevant digital skills, who have collaborative, creative, and efficient work styles.

If you’re skeptical about this, it’s probably because you’ve seen digital technology appear before, without much of an effect on your core business. Even industries that feel pressure will not be completely trransformed. No matter how many people order their paper towels and canned soup online, for example, there will continue to be some brick-and-mortar grocers.

But the wave of disruption that’s cresting now is more comprehensive and far-reaching than any previous wave. Consider what has already happened to less physically based industries, such as media and entertainment. They have had to rework their business models, seeking revenue through social media and new forms of consumer engagement. Industrial and manufacturing companies are following a similar path: embedding logistics systems with sensors, linking supply chains with shared data and robotics, opening the door to innovations in energy and materials, and changing the way that every product is made and delivered.

Your shareholders (particularly activist shareholders), customers, and employees expect you to respond quickly. But panic and full-bore opportunism, in which you pursue every seeming source of revenue, will not work either. The answer is to develop a coherent strategy, seeking out the options that fit best with what you already do well. Here are 10 principles for accomplishing this, drawn from the experience of companies that have done so.


Recognizing the Change

1. Embrace the new logic.
When you first hear about a new digitally enabled competitor, you may tell yourself that company can’t succeed. It’s operating in a narrow niche, and it won’t be profitable at scale. Hundreds of executives of established companies have made this mistake, dismissing such innovations as the photocopier, steel mini-mill, graphical user interface, smartphone-embedded camera, and video streaming service. Instead, view each upstart competitor as a company you can learn from.

There’s always logic behind a new entrant’s business model, a reason it is being introduced. It meets customer needs more effectively than you do (see principle number 4), offers consistently lower prices (principle number 5), or makes better use of assets (principle number 6). Chances are, it does all three. For example, Zume, which makes pizza to order in its oven- and robot-equipped trucks, delivers fresh, inexpensive food to people’s homes rapidly. As of October 2017, it had raised more than US$70 million in venture capital. Although no one can predict whether Zume or another contender will succeed, the general logic of vehicle-based fast-food represents a major threat to low-cost restaurant chains. The very existence of potential disruptors in your industry — especially if they are funded by venture capital — is a sign that your business model is regarded as obsolete. It’s up to you to figure out why, and how you can change it.

In addition to studying your new competitors’ logic, look closely at the assumptions embedded in your company’s current business model. Keep in mind what you know digital technology can do for you. How could you redesign your capabilities to deliver better value than your competitors can? What aspects of your business model could you change to deliver better value, on a grand scale, than any upstart could? What would you have to do differently to make your own disruption work?

Best Buy went through a thought process much like this, and became one of the very few specialty retailers to compete successfully against online retailers such as Amazon. Among the disruptive factors it had to deal with, as New York Times reporter Kevin Roose put it, was “showrooming: customers were testing new products in stores before buying them for less money online from another retailer.” Best Buy chose to disrupt its own business model with a price-matching guarantee, a renewed emphasis on customer consultations (building on its “Geek Squad” experience), new workforce policies to gain a more skilled and loyal employee base, and improved logistics that integrated its online and in-person experiences. (In effect, manufacturers now pay to be included in Best Buy’s “showrooming” array.) These elements added up to a powerful new approach for Best Buy that raised its stock price more than 50 percent in 12 months.

2. Start now, move deliberately.
You have to balance moving reactively and acting strategically when the signs of pending disruption first appear for your industry. “We always overestimate the change that will occur in the next two years,” wrote Bill Gates in his 1995 book The Road Ahead. “And [we] underestimate the change that will occur in the next 10. Don’t let yourself be lulled into inaction.”

To be sure, it may take a year or more for customers to change their habits at a scale that affects you financially. During this period, you are still relying on your old business model for earnings. But if you don’t start visibly taking steps to change that business model right away, it could affect your company’s market value. Investors are gauging your effectiveness based on their perceptions of the digital threat approaching your industry. If they consider you unprepared, they will have reason to pounce.

At the same time, you have to proceed deliberately and strategically, rather than frantically and reactively. Panic is contagious. You are not looking for quick opportunities — you are plotting the new trajectory of your company. Use this time to develop your own sustainable, digitally enabled value proposition, to build out your own distinctive capabilities, and to sell off or shut down the assets you will no longer need when the disruption fully takes hold.

Be bold and openly declare your intentions. Make it clear to your constituents — not just investors, but employees, suppliers, distributors, and other members of your business ecosystem — that you are preparing your own disruptive innovations. Continually reevaluate and refine your new approach, adjusting it to reflect changes in customer behavior and in your industry. Prototype new products and services and take them to market quickly, testing them with real customers. Bring the best ideas to scale.

When your industry’s changes finally reach a tipping point, it will seem sudden to everyone else. But you’ll know better. Because of your early start, you’ll be ready with the capabilities you need. You can then move fast, seize the advantage, and lead your sector.

Amazon has provided an example of this approach since the 1990s. Starting with books, then branching into other types of retail, and ultimately moving into general logistics and cloud-based computer services, it always had the same game plan: to expand gradually, taking on challenges when it was equipped to do so. It took Amazon 20 years to build up the requisite capabilities to master grocery delivery, an extraordinarily difficult challenge because fresh food can easily spoil. By contrast, Webvan, which also began in the late 1990s, started out with a home food delivery concept, overextended itself trying to cover the then-too-expensive “last mile” to the customer’s door, and went bankrupt.


Building Your Identity

3. Focus on your right to win.

A right to win is the ability to meet challenge after challenge with a reasonable likelihood of success. Instead of relying on a single product or service to define your business, develop a strong identity — a recognizable expression of what your enterprise does well and why it matters — that makes your company truly distinct. Don’t abandon your old business model entirely; build on your existing strengths. In many disrupted industries, the new and old business models continue to coexist: Brick-and-mortar groceries will not go away entirely, just as bric-and-mortar bookstores have not. Combine those core capabilities to create one consistent approach that applies to everything you do. Like Amazon, Apple, IKEA, Starbucks, or other iconic companies, you will send a strong, steady signal of who you are and what customers can expect from you. Or as Harvard Business School professor Clayton M. Christensen, who developed today’s prevailing concept of disruption, put it: “Decide what you stand for, and then stand for it all the time.”

One company that has gained a right to win is PetSmart, a retailer of pet products and services. In April 2017, PetSmart made the largest e-commerce acquisition in history. It acquired Chewy.com, a pet supply site, for $3.35 billion — just a bit more than Walmart paid for the online store Jet.com around the same time. Chewy provided customer service capabilities that complemented PetSmart’s extensive retail store network and its multiple services (such as boarding hotels, grooming salons, and walk-in pet clinics). Chewy offered a high level of customer interaction, comparable to that of premium retailers such as Nordstrom. The company calls customers proactively to address service problems, and sends cards to thank people for their business. These combined capabilities give PetSmart and Chewy a much clearer identity and way to compete.

You gain your right to win by building and maintaining a system of distinctive cross-functional capabilities — combinations of people, knowledge, IT, tools, structures, and processes, refined and developed over time. To preeminent business historian Alfred D. Chandler Jr., this “integrated learning base” was the single most important factor for business success. You already have some of those capabilities, or you wouldn’t have gotten this far, but you may need to develop or acquire others, as PetSmart did. Orient your business around those key capabilities. Make long-term investments to support them, and divest businesses that don’t fit.

Another prominent example is Honeywell. In the mid-2010s, its right to win enabled Honeywell’s heating, ventilation, and air conditioning (HVAC) business to beat back a disruptive threat from Nest and other digital thermostats. Honeywell had a strong distribution capability; its people knew how to maintain strong relationships with HVAC installers and contractors, who referred customers to Honeywell’s digital thermostats instead of those from the startup. This gave the company time to bring its technology up to date.

4. Create your customers’ future.
What does your customers’ future look like? Think about meeting their needs in a more fundamental way, so that they continually want more contact with your company and its offerings. Your mission, as Steve Jobs told his biographer Walter Isaacson, “is to figure out what they’re going to want before they do.” This will require imagination and insight; they won’t be able to articulate it if you ask them. Creating your customers’ future may require an obsessive focus on them. Make their problems go away. Remove the friction in their lives. Make things easier and less complex, while reducing the price they have to pay.

The most effective consumer-oriented companies rely on privileged access to their customers. For example, IKEA has an extensive program for sending executives to the homes of customers, who welcome them because the company has enhanced their daily life. You can also learn a great deal from co-creating your products with customers, involving them in design and development. Adobe Systems, for example, routinely consults with graphics professionals in designing new packages for them. Google and Facebook had a huge advantage in the large number of sophisticated early adopters in their own workforce. The companies continually sampled their employees’ reactions and adapted their offerings accordingly.

As marketing experts have pointed out since at least 1960, when Theodore Levitt’s groundbreaking Harvard Business Review article “Marketing Myopia” was published, customers are most compelled by outcomes: the results your products and services deliver, rather than the products and services themselves. This was how Philips profited from its halogen bulbs, the kind that retailers install in parking lots. Concerned about losing out to makers of lower-priced commodity bulbs, Philips set up a service to change the bulbs when they burned out, and continued its R&D on longer-life bulbs so the costs of that service would go down. Similarly, GE’s aircraft engines, Daimler’s trucks, Tesla’s electric cars, and Siemens’s power systems are all embedded with sensors, designed to provide analytics about not just the machines’ behavior (for better maintenance) but what the customer (the airline, truck driver, or power utility) is doing day after day, and how that experience might be improved.

5. Price to drive demand.
Nearly every significant disruption reduces costs in some way. Customers respond more powerfully to cost reduction than to other types of increases in value. When you set your prices low, you attract customers, scale up your new business model, and force changes that make it more difficult for rivals to compete.

Even high-profile disruptive competitors do not dramatically affect the rest of the industry until they become competitive in price. For example, it was only with its launch of the “affordable” $35,000 Model 3 in 2017 that Tesla began to compete with a wide range of other automakers. For most products and services, it’s best to build your response to disruption by lowering costs and looking for a larger customer base. Often this means using digital technology in inventive ways. Sometimes, as with Amazon and Uber, it involves pricing at a loss for the sake of long-term scalability and market share.

Undoubtedly, you are already diligent about reducing costs. But you may not have gotten in the habit of strategic pricing: cutting costs to drive up demand. A notable example is IKEA, which builds a 1.5 to 2 percent product price reduction into its budget planning every year, as a forcing function. This requires its planners to figure out how to reduce costs significantly, and it has created the kind of customer loyalty that no disruptor can dislodge.

6. Profit from overlooked assets.
Many digital disruptions take advantage of assets that have been underutilized. This approach is feasible because of the way digital technology reduces friction and reveals options. The sharing economy businesses that sell access to unused time in privately owned automobiles, production plants, homes, and office spaces changed their industries by monetizing their assets’ previously unused capacity.

You, too, can disrupt your industry, by identifying ways to create value from underused assets. These may be found anywhere in your business. With a cloud computing installation, you may make more effective use of your computer processing power — and your programmers’ time. Or consider the stockroom of a big-box store. The space is big because of the scaling factor of labor. Once you have paid for the cost of putting in one pallet, putting in the next four is quite cheap. Because digital interoperability makes it easier to process multiple materials and products from multiple vendors, why not share back rooms and warehouse staff?

Overlooked assets don’t have to be physical. They can include proprietary information, continually gathered data, or specialized expertise. For example, the Aravind Eye Hospital in India is one of the most effective cataract treatment centers in the world. It values professional expertise as a specialized asset. Each surgeon treats 10 times as many cataract patients per day, on average, as a similar surgeon would in the United States. The hospital, whose processes were modeled after those of McDonald’s, uses every means possible to focus a skilled surgeon’s time where it matters most: on the cataract operation. Everything else, including administrative work and referrals of complex cases, is handled by someone else.

It may take time to develop a compelling and profitable approach to your assets. The first shared office space enterprises emerged in the early 2000s, but it wasn't until the mid-2010s that companies such as WeWork landed on a format and package that brought the concept mainstream. While you are developing your own approach, consider divesting the assets that hold you back or require ongoing costs. Every asset you own should contribute to, or benefit from, your differentiating capabilities.

7. Control your part of the platform.
Disruptive companies don’t do everything themselves. They rely on the capabilities provided by others. Those capabilities will be more widely available as vast business-to-business platforms emerge: platforms such as Amazon Web Services, GE’s Predix, Siemens’s MindSphere, and the emerging Chinese “Belt and Road” system. A platform is a group of interoperable technologies that provide a basic infrastructure into which applications and processes from a host of companies can fit, working together seamlessly. The new digital platforms will help transform enterprises in the same way that their online predecessors, such as Google, Facebook, and Amazon, helped change consumer habits. A platform provides access to others on the platform, new ways of creating value from digital assets, and a much greater scale at minimal cost. Just as it’s vital to know what your company is best at, it’s critical to know where you can rely on others’ technology and solutions.

Some companies thrive by becoming platform providers. Salesforce, for example, has used its capabilities in developing software-as-a-service and other cloud-based offerings to build an open ecosystem for sales and customer relationship management that gives the company a distinctive competitive advantage. By incorporating independent developers, system integrators, and consultants into the Salesforce ecosystem, the company has become a hub for a vast number of innovative businesses in multiple sectors, giving Salesforce unique access to information and leading trends.

But you don’t have to own platforms to profit from them. Instead, focus on a part of the platform that gives you a right to win and establishes stable standards for an entire ecosystem. For example, if you are one of many component manufacturers for, say, servers or home-control devices, or one of many developers of similar software apps, you may lose value. But if you carve out a distinctive identity and role within other companies’ ecosystems, you can still draw value to you. You can be like Corning, manufacturing the Gorilla Glass used in the iPhone, along with many other kinds of specialty glass used for automobiles and other smartphones; or like HCL Technologies, which has parlayed its distinctive R&D and consultation capabilities into a refined outsourced technology business serving other high-tech companies.

Because digital technology blurs boundaries among industries, you should use platforms to break free of the constraints of your sector. It is no longer necessary to manage your own supply chain to connect with suppliers and distributors. Apple, famously, is in music and video streaming, information technology hardware and software, Internet services, telephony, timepieces, digital photography, and retail. It is number one in most of those businesses. It doesn’t matter anymore what sector you think Apple is in; Apple is number one at being Apple. It has consolidated its market around one distinct identity.

Choose carefully the platforms you join. Once you are intertwined with them, there may be enormous switching costs if you need to change. Protect your control over your customer data, intellectual property, and distinctive capabilities system.

There may still be an advantage to integrating vertically; as Inditex (Zara), Amazon, and Haier have discovered, it can provide opportunities for differentiating your company. But the best option is to make a more fine-grained assessment of your costs and customers, and design your mix of vertical and horizontal activity accordingly.


Bringing Your Future to Life

8. Integrate, don’t isolate.
The perception that disruption is imminent has many executives scrambling to launch digital side projects in the form of programs, products, and services that can stand on their own. There are many evocative nicknames for these mini-enterprises and isolated projects: Skunkworks. Pirate ships. Special forces. Labs. Quarantined units. The names convey the problem: a basic lack of connection between this subscale unit of activity and the core enterprise.

To be sure, “pirate ships” have more freedom than the rest of the enterprise. They avoid the usual restrictions and requirements, the cultural antibodies that hamper creativity. They can even generate innovative products and services that seem to be the wave of the future. But because they are not integrated with the rest of the company, they don’t have the capabilities or support they need to be sustainable. Nor does the core business learn from them or benefit from their capabilities. Even if it succeeds in a narrow context, a pirate ship dissipates resources and makes it more difficult to go to scale with a new digitally enabled business model. In the end, transformation doesn’t happen in silos; it requires an enterprise-wide digital effort.
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Dembracing digital transformation is key to survival in today's business world. Find out how these companies succeeded where others failed.
Bon-Ton, Radioshack, Toys "R" Us, IHeartMedia--these are just a few of the companies that filed for chapter 11 in the past year. Both the retail industry and media industry have struggled to keep pace with our evolving digital world, but many other industries are facing similar challenges.

However, where some companies are failing, others are making tremendous strides forward. There are many traditionally based businesses--companies that have been operating well before the Digital Age changed everything--that have embraced digital transformation with open arms. These companies have incorporated omni-channel shopping experiences, invested in IoT sensors, leveraged data analyzation, and more. Their leadership is not afraid to shake up the status quo while keeping a keen eye on future tech and trends. So, even though entire industries may be facing disruption on many fronts, these companies have found a way to beat the competition and continue delighting their customers.

Here are just a few examples of companies that have successfully leveraged digital strategies to thrive in today's hyper-competitive markets:

New York Times
Twenty years ago, if you hopped on the subway during rush hour in Manhattan, you'd be surrounded by people with their noses buried in newspapers. Today, however, everyone's attention is glued to their phones instead.

Digital has been killing the media industry--particularly publishing and newspapers--for over 15 years now. According to The Atlantic, "Between 2000 and 2015, print newspaper advertising revenue fell from about $60 billion to about $20 billion, wiping out the gains of the previous 50 years."

But one newspaper managed to navigate these turbulent waters by embracing digital. The New York Times decided to implement a successful subscription model for their online content that allowed the company to continue to deliver the same type of high-quality journalism and content their readers trusted for over 167 years. They don't rely on ads or clicks so they can make content decisions based on journalism principles instead of the advertiser's demands.

This method appears to be working. According to their January 2017 report, "Last year, The Times brought in almost $500 million in purely digital revenue, which is far more than the digital revenues reported by many other leading publications (including BuzzFeed, The Guardian and The Washington Post) -- combined."

Fidelity
Founded in 1946, Fidelity has come a long way when it comes to digital transformation. While many other companies in the financial industry have struggled to compete with fintech startups, this multinational financial services corporation has been betting big on digital and it shows.

The mobile app, in particular, is one of Fidelity's shining achievements. With a current rating of 4.7 stars and a half a million reviews on Apple, it's safe to say customers are happy with the Fidelity app experience. One of the biggest wins is that this company managed to successfully mimic the desktop trading experience in the app--allowing customers to make trades and invest on the go.

Disney Parks
While Disney is definitely not a princess that needed to be saved, it's important to make note of their impressive digital transformation efforts.


In 2015, Disney Parks announced it would be investing $1 billion in IoT sensors to be used throughout their parks. Today, guests who attend Disney World get a MagicBand wristband that uses RFID technology to make their time in the park seem even more magical. These bands act as payment, hotel room keys, and even ride tickets. And the data Disney collects as their customers use these bands only helps the company find more ways to improve the user experience.

Walmart
While smaller retailers are dropping like flies, it's only a matter of time before Amazon starts taking out the big name players like Target, Home Depot, Best Buy, or Walmart. The latter, however, decided to take action rather than sit on the sidelines and wait for the inevitable.

Walmart has been squaring up with Amazon by changing its online return policies to make things easier for consumers, offering the lowest prices, and promoting the fact that you don't need a membership to order online (this latest ad hit right when Amazon increased Prime memberships).

But it doesn't stop there. Walmart has also diversified its offerings--buying up online brand names like Jet and Mod Cloth and even selling clothes from Lord & Taylor. In addition, the Walmart mobile app continues to improve the customer experience. The latest update allows customers to add up the costs (including sales tax) on their shopping lists before they even leave the house. Once a customer gets to the store, they can interact with the app's "store assistant" to guide them to items on their list via a map.

The Harvard Business Review sums these efforts up nicely: "Walmart is increasingly becoming a 'digital winner', as it builds out a fast-growing ecommerce business and also leads in digital innovations when compared to other brick-and-mortar retailers."

This is one company that's leaning into digital hard, and giving Amazon a run for their customers' money.


Wrapping up
While each of the above companies uses different strategies when it comes to digital transformation there is one common denominator across the board: a better experience for the customer. The companies that are successful in digital are the ones who put the customer at the center of everything they do. No matter how the technology continues to evolve, the brands that focus on the customer will know the best ways to transform moving forward.
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Don’t be fooled by the term ‘disruption’. Many people misinterpret this as meaning the process of digital disruption is a negative one; that it is an attack on their business.

In reality, it is only a negative force for those who chose to ignore it or try to fight it. Those who embrace it often find that it can benefit their business in various ways, contributing to their success.
What Is Digital Disruption?

Digital disruption is a transformation that is caused by emerging digital technologies and business models. These innovative new technologies and models can impact the value of existing products and services offered in the industry. This is why the term ‘disruption’ is used, as the emergence of these new digital products/services/businesses disrupts the current market and causes the need for re-evaluation.

An Example of Digital Disruption: Kodak Cameras Fail To Capture Future Markets

Kodak were one of the first to introduce cameras to the mainstream market. They monopolised the markets for the majority of the 20th century, but unfortunately failed to keep up with the changing identities of their customers and the changing needs and expectations that came along with them.

Digital cameras made the move from being a just piece of photographic equipment to being a much more life-friendly, fun gadget. And where as Kodak originally had their target consumer pegged as female, the male digital camera market opened up thanks to the ‘gadget’ culture. Some clever marketing from other digital technology brands led to changes in consumer perceptions and created a new ‘need’ for photographic gadgets.

This allowed brands such as Sony and Canon to swoop in and steal the hearts of the consumers with their new technologies and approaches, while Kodak stuck to their guns and fought the change for as long as they could. Despite rapidly losing market share, they refused to succumb to the inevitable force of digital disruption and in 2012 they eventually declared bankruptcy.

How Does Digital Disruption Impact Businesses?

The lesson we can learn from Kodak is that digital disruption is an unstoppable force and to try and fight it is futile.

But what businesses can do is embrace digital disruption, even plan for it. Keeping an eye on the ball and knowing the signs of digital disruption emerging in your industry means you can get ahead of the game and work with the flow rather than against it. Not only does this prevent the wave of digital disruption from washing away your success, it can also lead to further growth and new opportunities for the business.

Digital disruption typically marks changes in consumer needs and therefore working with the tide allows you to fulfil these emerging needs, keeping existing customers happy and opening up opportunities for new customers to find what they need from your brand.

The below video by James McQuivey goes into more detail about how digital disruption impacts brands and how they can work with it to create a stronger, more successful future.
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As a strategy & innovation consultant I came to meet & work with many large & mid-size organizations in various industries. Far from generalizing or being judgemental, I often notice that in most cases Inertia and lack of strategic thinking have done more damage than a slow economical cycle which is outside their control.
Let me explain, if we take Lebanon as a marketplace, we quickly observe that the big chunk of companies are operating either in mature or in declining categories. Moreover, their business practices did not evolve much since at least 20+ years.

Wether in retail, automotive, F&B, etc.. all these segments will not witness major growth due to: demographic stagnation, competitive intensity and bargaining power of consumers to name a few. Most of these industries with their current structure have reached their peak and will at best grow in line with the national GDP rate (1-2.5%). if applied on a company that sells for $M5 worth of goods, the incremental revenues will at best represent $K100-$K150/year, barely enough to cover the increase in cost of living or cost of doing business due to inflation (approx. 4%). people will not start eating 5 meals a day, will not drive more than 2 different cars at best, will not buy more clothes than what their closet can fit, etc..

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That shows why most companies have seen their sales & profits stagnating over the past few years. And for those who will manage to beat the market and increase sales by more than 10%, it is most likely that this result will be achieved at the cost of very low profitability as they will need to invest in aggressive marketing and promotion in various forms & offers to steal market share.

So if the market is not growing enough & you can't profitably gain market shares from rivals due to customers inertia driven by your offering's lack of differentiation, the question becomes 'Where would growth come from?'

I am sure you agree that this is not a good story for any businessman who would like to see his turnover doubling every 5-6 years and his return on Capital following suit so he can invest in salaries increase, recruitment, bigger stores and up-to-date technology. so how can we break this vicious cycle and ignite sustainable growth that create value?

The answer is not seeking to gain incremental growth in mature sectors but rather to invest in Innovation strategies to create new market spaces and new consumers. How? let us look at examples that have disrupted existing businesses and created new markets & new customers​

Airbnb: This company has adopted what we call a 'Disruptive innovation' strategy by smartly targeting 'non-consumers' of hotels and travel services &/or 'over-served customers' who don't really need or value a lot of the hotels numerous facilities with their expensive price tags and limited immersion in city life experiences (living like true Parisian or Lebanese). Their innovation was to have an in-depth understand of these users problems & aspirations then leveraged technology to put them in contact with a segment of people who are looking to make some extra money by renting their real estate/assets when not in use. By doing so Airbnb created a whole new market and opportunities for those 'always wanted to travel or live like the natives' and for a lot of entrepreneurs to open shops to serve these Hosts who are not able to manage their properties on regular basis (due to work schedules or other constraints).

In Lebanon, occupancy rate for apartments on Airbnb is increasing, averaging around 55 percent in Beirut, according to AirDNA, a website offering statistical data on Airbnbs around the world. The number of Beirut properties listed on Airbnb has grown fourfold in the last three years, with listings jumping from 300 to nearly 1,200 offerings this year, according to the November issue of Lebanon Opportunities. Renting apartments and rooms through the online platform has become an attractive business for investors. “Airbnb started with individuals listing their apartments, but it is becoming a business model, where professional management companies are leading the market,” said Elie Karaa, managing Partner at Local Host, which manages 50 apartments through Airbnb.

One can confidently say that a substantial chunk of the growth in the hospitality sector has been scooped not by traditional players (hotels) but by a company that don't have an operation in Lebanon nor a single employee or ever invested in any asset!..Yet managed to create & grab a whole new market & customer base.

Same applies to Uber ( new mobility model), Netflix (who disrupted the low-quality video rentals shops). These examples show that the new competition has no boundaries and it will not play in existing markets but will innovate to Create new ones and render the legacy ones at best very weak & at worse totally obsolete.

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What can local companies do about it? Innovate to create new businesses that will re-ignite double-digits growth.

Innovation carries a lot of misconceptions ranging from: technology only, not critical at this stage, 'not for us', etc..

Innovation is not 'invention'. It is simply a way to design better or cheaper new offerings that will make your company strategy tangible to accelerate growth that is economically profitable and appreciated by existing & new customers.

There are numerous ways a company can innovate. to do so it has to start by:

a. Conduct a PEST analysis to contextualize your business now & in the near future.

b. Defining what business are you in? (equally which ones you are not)

c. Understanding your customers 'job-to-be-done', their frustrations & aspirations

d. Identifying your current competitive advantages and core capabilities

e. Synthesize the above data then Ideate new 'Business models' with ten-types scenarios.

f. Design prototypes to test the solution in-situ to measure its appeal & mitigate risks.

Let us give a tangible example; auto-dealers are all suffering from a decline in sales which are highly dependents on the mother company's ability to design & manufacture new models that will hopefully appeal to local buyers taste but also to consumers spending appetite. This makes their business outlook fully reliant on external factors that can be highly cyclical.

The solution: 'what if' a car dealer decides to innovate in order to lower his dependency on suppliers and stabilize his revenues by offering a car sharing platform service? Leveraging those who have a car that they don't always use (only drive to work & back for ex.) and targeting those who either use cabs & poor public transport or those who can not afford to buy a car for each family member or those who moved down-town and now need a car only 'occasionally'?

The legacy thinking would say that this initiative would affect new car sales. Well, not quiet true since he would be targeting non-users or over-served but also dealer can supply potential entrepreneurs with his range of pre-owned cars to be put for sharing after being recouped from new sales..


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This is just to illustrate what should every company be thinking about to move from 'Playing to play' onto 'Playing to win'. i.e beating market levels and winning with customers in a unique way (profitability, experience, market share,...). To do that it must seek to strategically answer the critical questions: Can I redefine the business am in? Where would growth come from? how can I reduce dependencies? Are there opportunities to differentiate that am overlooking by being in my comfort zone? Then use innovation to develop adjacencies and new categories that will energize the growth curve, create new jobs, new entrepreneurs, profitable growth and transform our aging 19th century domestic economical model into a brighter 21st century knowledge & innovation based model.


Joe Ayoub is the founder of brandcell. A Strategy + Innovation consulting firm
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There’s a change in business leadership that’s transforming the way we solve problems...and that shift revolves around design thinking. Design affects much more than appearances and can help develop innovative solutions for just about any problem.

Paola Antonelli, said it best: “Design is not style. It’s not about giving shape to the shell and not giving a damn about the guts. Good design is a renaissance attitude that combines technology, cognitive science, human need, and beauty to produce something that the world didn’t know it was missing.”

If that sounds a like a bit of a stretch, bear with me for a moment…

According to Tim Brown, design thinking is “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Businesses deal with diverse and complex issues on a daily basis, but all of these issues all have two things in common: we need to understand them, and we should address them. Design thinking helps with both.


Take IBM As An Example:

In a recent project, an airline approached IBM to improve its kiosks to speed up passenger gate check-ins. While the engineers started by improving the kiosk’s software, designers went straight to gate agents to ask why the check-in kiosks weren’t used more effectively. Designers found out that female gate agents struggled to keep kiosks charged because their constricting uniforms prevented them from reaching electrical plugs behind the machines. By finding the root of the problem, IBM delivered a mobile app that significantly eased the boarding process and reduced airline costs. -Anne Quito of Quartz.

Thinking like a designer helps you become aware of issues in a way that isn’t very natural to other disciplines, and this can be especially helpful when users are involved. Design both helps you understand issues in a new context, and figure out how solutions will work in real-time.

And now that I have your attention...

Here’s Exactly Why Industry Leaders Are Betting Big On Leading With Design:

1. It Redefines The Problem

IBM was able to come up with an innovative solution because the designers involved questioned what the real problem was. Sometimes the real issue at hand isn’t immediately obvious...or worse, the problem we try to address is really the symptom of a larger problem. Design thinkers always question the brief, because sometimes the real issue isn’t seen at face value.


2. It’s Collaborative

Design thinking calls for collaboration, creating a positive environment that’s great for growth and experimenting. Herbert Simon, Professor of Psychology at Carnegie-Mellon University even said “There are no judgments in design thinking. This eliminates the fear of failure and encourages maximum input and participation. Wild ideas are welcome since these often lead to the most creative solutions.”


3. It Solves The Same Old Problem In A Different Way

It’s important to create and consider many options for similar problems, even when the solution seems obvious. Having multiple perspectives can lead to innovative approaches. After all, would the same old problem keep happening if solutions were effective enough?


4. It Puts The User First

Design thinking helps shift focus away from a ‘features-first’ approach to a ‘user-first’ mentality. By observing and speaking directly to users, you can solve the problems that real people face. That’s the difference between adding value versus blindly adding features based upon assumptions. Great problem-solving taps into a customer’s feelings and experiences to provide purposeful and informed changes.


5. It Leads To Simpler Solutions

Design perspectives don’t just address challenges, they rethink them entirely. This tendency to reshape problems leads to innovations that seem deceptively simple. With the user constantly in mind, design thinking ensures that solutions are intuitive, and even humanizing.


Better Business By Design

Design is a process; and when you think of it that way, it becomes less about appearances and more about discovering new opportunities to meet and exceed a user’s expectations. It’s both a mindset focused on solutions and managing philosophy of great businesses.

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Some of the world’s leading brands have rapidly adopted the Design Thinking approach:
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The McKensie report regarding the Lebanese economy development has been finally out earlier this year. One of its main recommendation for regaining stability and growth  is to focus on the key sectors that would drive the economy potential.
It is not surprising that knowldege and innovation are at the core of these recommendations. They should be a key focus for the Lebanese government economical plan: relying on thechnology to develop the productivity in key sectors but also helping companies across sectors to  innovate in order to survive and drive growth.

To do so, Lebanese Companies need to focus on critical, differentiating capabilities in order to align innovation with their overall business strategy. Referring To Booz & Co article on the subject, “the best performing companies develop additional capabilities that are very specific to their chosen innovation strategies. Some companies are technology drivers: Their strategy is to develop leading-edge products. These capabilities, however, are less crucial for need seekers, whose strategy is to identify unmet customer needs and innovate to fill them. The most successful companies, we found, are those that focus on a particular, specifically aligned set of common and distinct capabilities that enable them to better execute their chosen strategies.”

Successful innovators globally focus on what matters most rather than spreading their effort and resources on capabilities that are less critical. Identifying the core value proposition of Local Brands and Businesses will lead to better focus and alignment, and will uncover innovation opportunities, boost top-line growth and reduce relative costs--all at the same time.

Today, through the toughest economic crisis of the country, it is the right time to react and take action. Innovation should not be considered as a luxury anymore, Innovation is a must to survive, to avoid cannibalization, to disrupt the market before being disrupted.

It is time for local businesses to re-invent themselves like global ones are doing constantly to keep up with market changes. Lebanon has always been the country of services and creativity, in a time where services are gaining grounds VS products facilitating the life of busy consumers, Local firms in the sector business for instance should jump on the opportunity to take their offering to a different level using the latest human centric approach to be in line with their customer’s changing expectations.

Brandcell Innovation and strategy consultancy have been applying the design thinking approach for few years now, helping Brands and Companies in Lebanon and the region in various sectors (banking, HORECA, Healthcare, Retail...) define their value proposition, innovate and re-design their service strategy and experience. 

Because we believe that here in this small country more than anywhere in the world innovation is the precious fuel of our future.
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With pressure at an all-time high and investors losing patience, it’s time for brands to take control of their destinies. Although there’s no single way forward, the mission remains clear: Disrupt your business before someone else does.

On the whole, the fast-moving consumer goods (FMCG) sector continues to face headwinds to growth. Many longstanding brands within the sector, while once prosperous, have found it challenging to repeat yesterday’s success. At the root of these challenges is the rapid pace of change in the world, which has forever altered the way consumers engage with brands. While this dynamic has certainly challenged traditional conventions, it has also presented many new opportunities. The brave brands that have capitalized on these opportunities are finding success and are seeing a clear path back to growth. Those who haven’t proactively embraced today’s pace are finding themselves vulnerable to a new generation of fearless entrants intent on bringing disruption.

It’s time to bring the fast back into fast-moving consumer goods. We offer four ways that brands can bravely seek to disrupt their businesses, as well as examples of brands that have taken the leap, in an effort to jumpstart their business, and returned the fast to FMCG.

1. Disrupt by Thinking Like a Startup

Innovation is the lifeblood of any brand. It always has been, and always will be. But innovating at scale has posed a challenge for large brands within large corporations. Applying established growth methods to established brands is, by definition, counter to the innovation they seek. To achieve mass disruption, brands need to think like a startup.

This is a strategy into which many FMCG companies—including Nestlé, Procter & Gamble, Coca-Cola, General Mills, and Mondelēz—have leaned, forming startup/venture funds or incubators to find their next innovation. These organizations are finding success by isolating themselves from the typical constraints and KPIs of their larger businesses and acting like entrepreneurs, working with lean innovation philosophies built to nurture a startup mentality and disruption.

Within this year’s Best Global Brands ranking, there are several standout examples of brands fostering mass disruption by thinking like a startup. All of these companies have demonstrated strong commitment and responsiveness:

  • Nestlé started an internal innovation project consisting of a digital acceleration for the company. Called DAT and inspired by Facebook and Google, the project is an entrepreneurial space, located in Nestlé’s global headquarters, where employees work for periods of eight to 12 months at a time. DAT members undertake immersive training and work on strategic business ideas, often participating in hackathons and intensive problem-solving activities. For Nestlé, the overarching goal is to “loosen the screws” of a large and hierarchical corporate company in order to permit flexibility and experimentation, e.g., the values of a successful startup.
  • Pampers found success in its Pure Protection line, which is an example of its lean innovation process, developed by a 10-person team over approximately 18 months—roughly half the amount of time and staffing resources of a typical rollout.
  • Lancôme launched Le Teint Particulier, a cosmetic foundation that was created by L’Oréal’s technology incubator. The foundation is customizable to specific skin tones: the Lancôme staff take a full scan of a customer’s skin and then use a diagnostic tool to calculate the precise formula that matches that skin. The foundation is then mixed in-store, before being placed in an identifiable bottle, with all the skin-type and color-preference information kept on file for the consumer’s next visit.

Want more inspiration on thinking like a startup? Explore the Breakthrough Brands that are driving disruption across sectors.

2. Disrupt through new business models

The rise of e-commerce has certainly transformed the landscape for FMCG brands forever. Brands that have relied on traditional business models, built on the shoulders of brick-and-mortar distribution, must continue to look for new ways to develop consumer-centric propositions—from product development to branding to distribution. Brands that haven’t sought new business models have found themselves being disrupted.

For instance, we’ve seen how FMCGs have been disrupted by the direct-to-consumer (DTC) challengers that are taking control of their value chain, capitalizing on shifting consumer purchasing behaviors. It wasn’t long ago that propositions like Dollar Shave Club, Warby Parker, and Allbirds were not considered serious competitors by the category’s elite. However, these brands recognized that the DTC business model has many benefits: the ability to be nimble, leveraging the opportunity to get much closer to consumers, innovating in real time in the marketplace, controlling the entire value chain, and pivoting with agility.

In response, some large FMCG brands are taking a page out of the disruptors’ playbooks and exploring alternative channels and business models as a means of innovating at mass scale. From this year’s Best Global Brands list, we highlight the following examples:

  • PepsiCo launched DTC product Drinkfinity, as the company responds to consumer preferences that are shifting from fizzy beverages to alternative territories. This innovation features a reusable water bottle with disposable flavor pods.
  • Kellogg’s launched a key innovation initiative, Joyböl, a “ready-in-seconds smoothie bowl,” targeting the hyper-convenience trend. In doing so, they also launched DTC, forgoing traditional distribution.
  • Gillette, fighting back against category disruptors, began receiving orders through the company’s new online DTC service, Gillette On Demand. This new service offers the traditional subscription-only option and an additional flexible on-demand purchase option, with an industry-first reorder process that is as simple as sending a one-word text message.

3. Disrupt through acquisition

With organic growth continuing to be a challenge, FMCGs should look to grow through acquisition, either to boldly enter new categories (to capitalize on shifts in consumer desires) or to bravely double down on categories where they already play.

Interbrand’s Brand Strength methodology comes into play when considering an M&A strategy, as data shows that this is a viable approach to jumpstart a stagnant category. M&A activity among the top FMCG companies, including P&G, L’Oréal, Nestlé, and Unilever, has seen an increase for 15 years running, driving the highest revenue jump for this group since 2011.

Examples from this year’s Best Global Brands:

  • Kellogg’s acquisition of RXBAR for USD $600 million was a bold move to capitalize on shifts by consumers to more health-conscious offerings with simpler ingredients.
  • L’Oréal acquired Modiface, a leading-edge VR technology player, signaling its commitment to evolving consumer experiences with cosmetic brands.
  • Colgate purchased two of the fastest-growing professional skincare brands, PCA SKIN and EltaMD, in an attempt to elevate the brand into the global skin-care category.
  • Danone completed its USD $10 billion acquisition of WhiteWave, bringing together businesses and brands to better meet consumers’ diverse preferences in high-growth categories.

4. Disrupt by bravely taking a stand

Disruption can take many forms, including casting your brand in a new light and creating new relevance and engagement opportunities with your audience. More and more, people are not merely buying your brand but rather buying into your brand, as they seek those that align with their values.

This is playing out as brands go beyond the traditional approach of simply pushing their product’s benefit messaging. Instead, brands that stand out engage in true brand activism, driving home a stance that bravely tackles topics that matter to consumers. Some examples of brand activism from this year’s Best Global Brands:

  • P&G announced a partnership with advocates, including journalist Katie Couric, aimed at driving gender equality. P&G announced the partnership during its #WeSeeEqual Forum and noted that some of P&G’s best-performing brands have the most gender-equal campaigns: Always’ #LikeAGirl, SK-II’s “Change Destiny,” and Olay’s “Live Fearlessly,” along with Tide, Ariel, Dawn, and Swiffer ads that show men sharing the load in household chores. Chief Brand Officer, Marc Pritchard, noted, “It’s clear that promoting gender equality is not only a force for good, it’s a force for growth.”

 

  • Danone is another brand firmly taking a stand when it comes to “One Planet. One Health.”—a campaign that reflects its vision that the health of people and the health of the planet are interconnected. What makes this successful is the internal commitment and external authenticity with which Danone leverages this brave brand stance.

The future belongs to the brave

Brands need to take bold action to achieve growth. The path forward can take many shapes. Opportunities are out there, but to find them, brands need to have the bravery to disrupt themselves before someone else does. This isn’t a sector for the timid. The future belongs to the brave.

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A successful company understands the need to reinvent itself every now and then to keep up with competition, market changes, technology and customer interest. Not doing so can mean a drop in stock price, a decrease in revenue, bankruptcy and even death. Does the name “Blockbuster” sound familiar?

Netflix Before

Today’s generation probably doesn’t remember that in the late 1990s and early 2000s, “Netflix and chill” wasn’t as easy as firing up the laptop and picking out a movie or TV show to binge-watch with no commercial interruptions. Instead, Netflix was kind of like an online Blockbuster.

In 1998, Netflix launched the first DVD rental and sales site with Netflix.com. One year later, the company debuted its subscription service, which allowed movie buffs to rent unlimited DVDs for a low monthly cost and receive them by mail.
 

Netflix After

It wasn’t until 2007 that Netflix transitioned to online streaming. Finally, viewers of all ages would have access to some of their favorite shows and movies, as well as original Netflix content.

Although the company has received some negative feedback from customers due to pricing changes, it’s experienced financial success over the long term. For example, Netflix stock was trading at $3.55 at the beginning of 2008. On Sept. 5, 2018, the stock closed at $341.18.

These days, it’s safe to say that Netflix is one of the best stocks to invest in. In July 2018, Netflix announced 5.15 million new subscribers during the previous quarter, bringing its total base to 130 million.

 

IBM Before

IBM knows a thing or two about reinventing itself and keeping pace with ever-evolving technology.

Since debuting as the Computing-Tabulating-Recording Company more than 100 years ago, IBM has undergone major transformations. Back then, CTR manufactured and sold various types of machinery, such as commercial scales, industrial time recorders, meat and cheese slicers and more. It wasn’t until 1924 that CTR became International Business Machines Corporation, although it had operated under the name since 1917 in Canada.

Fast-forward a few decades to the 1960s, after Thomas J. Watson Jr. became CEO and “led IBM’s transformation from a medium-sized maker of tabulating equipment and typewriters into a computer industry leader,” according to IBM’s website. In 1964, the company created System/360, which made it possible for machines in a product line to work with one another, creating a huge impact in the corporate world.

Less than 20 years later, in 1981, the IBM Personal Computer arrived. Although it wasn’t the first-ever PC, people began buying these computers to use in their daily lives.

However, the 1980s and 1990s were rough for the company. According to its website, “IBM was thrown into turmoil by back-to-back revolutions.” The PC revolution also brought competition from Microsoft and Apple, reported NPR in 2011. Further, IBM suffered annual net losses that reached the billions — a record of $8 billion in 1993, to be exact.
 

IBM After

The company had two options: reinvent or die. So, IBM shifted its focus to IT and consulting, according to NPR.

Still, the company has plans to further reinvent itself. In her most recent chairman’s letter, CEO Ginni Rometty wrote, “We have reinvented IBM for this moment — to fuel your dreams with Watson, with IBM Cloud, with deep expertise, with trust.”

According to the company, cloud and security revenue was up 20 percent in 2018. The increased trust in their cloud and security services led to a 4 percent total revenue increase from 2017, or $20 billion.


 

Amazon Before

More than 20 years ago, Amazon was a very different company. It’s hard to believe this go-to online retailer that sells everything you could possibly think of — from TVs and computers to groceries and household items — started off as an online book retailer.

In July 1995, CEO Jeff Bezos launched Amazon.com, which has changed drastically since the mid-90s. Back then, the website contained a lot of blue, hyperlinked text — quite different from the colorful photos and well-organized categories you’ll see on the site today.

Author Brad Stone — who wrote the book, “The Everything Store” about Amazon and Bezos — told NPR in 2013 that he thinks Bezos started off selling books because it was “a good place to start: [Books are] small, they ship easily in the mail, the selection that the internet enables was a great strategic advantage over the traditional chain booksellers of the time like Barnes & Noble and Borders.”

Indeed, buying books on Amazon was — and still is — easy and preferable to going to a physical bookstore for many people. Although Amazon experienced success with its book-selling strategy, in time Bezos reinvented Amazon to sell more than just books.


 

Amazon After

In 1996, the retailer introduced an affiliate program — known as the Amazon Associates Program — which helped the company expand its reach, according to CBS News. And after announcing its IPO in 1997, Amazon introduced “1-Click shopping” and began offering different products and services in various categories: music, DVD/video, home improvement, software, video games, gift ideas, kitchen and more.

These days, the company is making big money. For the second quarter of 2018, Amazon earnings reached $52.9 billion. In early September 2018, Amazon also became the second U.S. company after Apple to hit the $1 trillion mark in market value.


 

Old Spice Before

Old Spice is no longer associated with “old” men, thanks to successful rebranding attempts. The antiperspirant — which debuted in 1937 as Early American Old Spice for women and then in 1938 as Old Spice for men — is now a popular brand for all ages, but it wasn’t always that way.

After experiencing decades of success, Old Spice began to lose sales as competition increased. A 2014 case study by the University of Southern California found that by the early 2000s, the company suffered from “an outdated brand image.”

In 1990, Procter & Gamble — which owns brands from Pampers to Gillette — bought Old Spice from the Shulton Company. P&G attempted to rebrand the product, but it wasn’t until Old Spice launched its “Swagger” Campaign in 2008 that it started attracting the younger demographic it needed to compete with brands such as Axe, according to the study. Old Spice’s real moment of reinvention, however, came two years later.

 

Old Spice After

In 2010, NFL player Isaiah Mustafa starred in Old Spice’s “The Man Your Man Could Smell Like” campaign. You might remember it: Standing in front of a running shower with nothing but a towel on, Mustafa tells female viewers, “Hello, ladies. Look at your man, now back to me. Now back at your man, now back to me. Sadly, he isn’t me.” He goes on to suggest that if men switch to Old Spice, they can smell like him.

When the ad debuted on YouTube during Super Bowl weekend, it became a viral hit. And the campaign made an impact on sales, as well. AdWeek reported in July 2010 that overall sales for Old Spice body wash products jumped 107 percent after two new TV spots and online response videos debuted.

 

McDonald’s Before

In 2001, the book “Fast Food Nation: The Dark Side of the All-American Meal” came out — and it didn’t have that many nice things to say about fast food giant McDonald’s. Rob Walker wrote in a New York Times book review, “The aim of [author Eric Schlosser’s] book … is to force his readers to stop and consider the consequences of McDonald’s and its likes having become inescapable features of the American (and, increasingly, global) landscape — to contemplate ‘the dark side of the all-American meal.'”

Although it’s hard to tell if the book’s release directly — or indirectly — hurt McDonald’s reputation and brand in a monetary sense, the Wall Street Journal did report in 2003 that the restaurant posted its first quarterly loss in 38 years as a publicly traded company.
 

McDonald’s After

In the years since “Fast Food Nation,” McDonald’s has tweaked its menu offerings. McDonald’s currently offers healthy options including salads, milk, fruit and more, and makes its nutritional information available to consumers. In addition, McDonald’s has reinvented the fast food world by offering “All Day Breakfast.” No longer is McDonald’s only seen as the place to grab a Big Mac loaded with 500-plus calories.

In the second quarter of 2018, McDonald’s earned $5.4 billion in revenue. It was trading at $161.72 per share on Sept. 4, 2018. McDonald’s plans to spend more than it’s second-quarter earnings by shelling out $6 billion to make cosmetic upgrades for its restaurants. By 2020 McDonald’s will have new counters to enable table service, expanded McCafe counters and self-order kiosks.
 

Lego Before

Lego has been around since 1932 and for years has been a hallmark toy in many children’s lives. At one point in 2014, Lego was even the top toy company in the world, surpassing Mattel’s Barbie doll, reported the Wall Street Journal. But the Danish toy company wasn’t always a star performer.

According to a 2015 Fast Company article titled “How Lego Became the Apple of Toys,” the company was reportedly on the brink of bankruptcy about 10 years ago. The growth of video games and the internet threatened the toy company. In reaction, Lego reportedly made a few mistakes. Eventually, by cutting costs, improving processes and managing cash flow, the company started to bounce back.
 

Lego After

Next came a Lego line called Lego Friends, which appealed to young girls and fought the perception that only boys could play with the building blocks. But in 2014, when “The Lego Movie” hit theaters, things really started to change. The movie and its products helped Lego get the revenue boost it needed to overshadow Mattel in 2014, according to the Journal. Thanks to innovative products and a successful string of movies, Lego is more than just a toy now — it’s also a cool franchise.

According to Box Office Mojo, “The Lego Movie” grossed more than $469 million worldwide. Its sequel, “The Lego Batman Movie,” grossed $311 million worldwide. And according to the company’s 2017 annual report, net company profit was $7.8 billion.

 

Apple Before

It’s hard to imagine, but in the late 1990s, Apple was on the verge of bankruptcy. Fortunately for the company, one of Apple’s biggest competitors — Microsoft — rescued Apple from collapse by forking over millions.

According to Bloomberg, Microsoft’s $150 million investment helped Apple get the money it needed to change the technology space. In fact, it might be fair to say that, thanks to Microsoft, Apple is one of the world’s most valuable and innovative brands. With a brand value of $182.8 billion, Apple is currently the No. 1 company on Forbes’ most valuable list for the eighth year in a row.
 

Apple After

But give Apple some credit for its success; the company reinvented itself as more than just a Mac maker. Its handheld devices — from the Apple Watch to iPhones to iPads — have brought the company to an entirely new level.

Apple’s ability to reinvent itself helps explain why it’s consistently considered one of today’s best brands, and why Apple loyalists are always wondering, “What’s next?”

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For consumers the future of customer service cannot come soon enough. The customer experience landscape is ripe for disruption. Companies are slowly making progress toward more seamless and simpler customer experiences.
Today only a select few companies leverage all the technology at their fingertips to enable customers to use the technology they use daily in their personal lives when dealing with the brand. A company on the forefront includes Amazon. Amazon has made progress building a compelling customer journey. It's not just the vast and efficient marketplace they've built--Amazon is innovating on all sides of the consumer equation. They have connected their Amazon virtual assistant the Echo (affectionately called Alexa) with purchases customers make. A customer can order more of a product by just verbally asking the Amazon Echo for it. Want to know how many grams in a kilo? Ask Alexa. Want to play your Spotify list in your kitchen? Alexa will gladly do that for you. Outside of technology innovation, Amazon has the most hassle-free customer service and return process I have seen. Another great company is Sephora. Sephora is using messenger apps like Kik to provide personalized content and buyer experiences to customers. They seek to create interactions that feel tailored to the customer, and one on one. Most companies still haven’t mastered social media, yet alone mobile messaging.

Today the technology for most customer service operations is still not savvy enough for customers to avoid the burden of the old phone call. Customers prefer self-service, but will call when it’s a more complicated matter says Kate Leggett, Analyst at Forrester. That includes account closure or booking a complex airline ticket with multi-city travel. It’s only a matter of time until the game changes entirely because of improved technology. Let's face it, the younger generations do not want to call brands--and those younger generations will soon be the bulk of your customers (not to be morbid or anything, but it's the truth). We’re at an awkward inflection point where some companies are doing an amazing job of being on the forefront of customer experience technology, and others are still struggling with the basics. In the future customer experiences will be much more simple. I have created an infographic with nine predictions for you on the future of technology versus the past (and where most of our brands are still today). Please see the infographic below and feel free to share the image.


Prediction #1: Technology Makes Experience Better

For the consumer it can feel like the brand is hiding behind bad customer service technology. Examples? On the phone tree pressing zero does nothing—there is no human to save you from the bad interactive voice response system. Even though it’s 2016 sometimes customer service technology makes things worse.
In a recent article in CIO Magazine an Accenture study was highlighted. Conducted with over 25,000 consumers, it became clear that "Companies have lost sight of the importance of human interaction and often make it too difficult for consumers to get the right level of help and service that they need," says Robert Wollan, a senior managing director at Accenture Strategy.


Prediction #2: Customer Service Is Open 24/7

Customer problems do not only happen five days a week eight hours a day. We live in the global economy where companies must serve customers during many time zones. At the same time customers expect fast responses at night and on weekends. According to influencer and author Jay Baer, 32% of consumers expect a response within 30 minutes through social media channels.

The same report found 57% of consumers expect the same response time at night and on weekends as during normal business hours. Companies tomorrow must operate in a 24/7 world. Otherwise they risk losing business.


Prediction #3: Customer Is In Control Of Where Interaction Happens

Remember when everyone was talking about how brands have lost control? It was kind of a big deal. Brands felt nervous about how customers now controlled the conversation. Social media turned everything on its head. Customer service became part of many very public conversations. This was great for the contact center, it catapulted this department into the limelight, giving more responsibility to knowledgeable employees—improving customer service’s relationship with marketing. However, brands took their strategies and attitudes about customer service and continued to try to control the conversation on social media. We set up customer service outposts on social media. For example on Twitter, along with the main brand’s Twitter account, we set up customer service  Twitter accounts. If the brand is @XYZ on Twitter the help account would be @XYZ_help. Many Facebook accounts were set up the same way, with even a separate Facebook page to help customers.

The problem with this approach is the proliferation of service channels. Where as today often customers have to tag customer service accounts or write on a brand's Facebook wall for the brand to find them, in the future you will see less and less of the tagging of service accounts. With the proliferation of channels there is no way for brands to operate with the same approach they have in the last few years. Every week there is a new latest channel customers talk to each other on. They are sending Snaps to friends, Kik, WhatsApp messages, Weibo, WeChat, texts, tweets and Facebook messages. The proliferation of channels is upon us.

The challenge for big companies is speed and scale. Brands need to explore technologies that will allow agents a unified workflow solution that moves seamlessly from channel to channel. The technology should allow the brand to focus more on finding the customer, regardless of channel—and allowing the agent to easily pop in and offer service.


Prediction #4: Company Knows Information From Every Channel

The No. 1 customer frustration according to Harvard Business Review is the customer having to repeat themselves. Internal dysfunction, old CRM technologies and lack of a customer oriented culture all contribute to poor customer experiences like this one. In the old days you could differentiate your product by delivering it cheaper, or maybe faster, but now it’s a different game. It’s not just about solving the customer problem quickly and effectively. Brands need to ensure they are doing all the work, so customers don't need to remember every single piece of information to provide to the company. What happens when a customer contacts the company from a rural highway in the middle of nowhere? That customer might not have their account information or verbal password. The company will need to make it easier for the customer.


Prediction #5: Mobile Messaging Volume Is High

As mentioned earlier, phone use for customer service has steadily decreased over the past six years. Analyst Kate Leggett said, “we predict it will dip even further as customers increasingly adopt digital channels.” People spend an average of three hours and eight minutes on their smartphone every day doing non-voice activities (Source: Yahoo! David Iudica). The bigger the phone, the more usage. That said, customers are enjoying the ease of communication via messaging in their personal lives—whether it’s through text or even Snapchat, Kik, WhatsApp, WeChat or Facebook Messenger. A few brands (Sephora mentioned earlier) are doing great work on messaging apps—but most companies are slow to take advantage of mobile messaging. In fact it seems that the sharing economy is one of the biggest superuser industries of mobile messaging. Examples include Uber, Airbnb, Etsy and TaskRabbit to name a few. Customers enjoy the ease of use and not having to call the call center. It feels as easy and seamless as an interaction with a friend or family member. This is the future of customer service.


Prediction #6: The Content Finds The Customer

Today a customer’s first attempt to fix a broken product (on their own) is through Google. Google will lead the customer to the most closely related community thread or article. But this isn't ideal, sifting through customer service content can be messy and time consuming. In the future companies will take advantage of data through the internet of things, where content is sent to the customer as soon as the product realizes something is wrong for the customer. Another scenario includes sending helpful just-in time content such as recipes. For example, Absolut is working on making its vodka bottle smart—meaning the bottle will talk to the consumer offering useful content in real-time. Mattel’s “Hello Barbie” listens to consumers and engages back to that consumer based on what she heard. Eventually customers will not have to search through tons of community threads and articles, but the company will ensure content is automatically sent to the customer at the right time.


Prediction #7: The Product Fixes The Product

Today when something breaks customers must take the proper steps to fix it. That includes contacting the company that sold them the product. However in the future as our products get “smarter” the products will be able to fix themselves. An example of this comes from Tesla. Tesla is the only car that’s completely run on software. You can update and service your car while you’re taking the dog for a walk. In the future more of our intelligent products will be able to fix themselves. This is the beauty of the internet of things.


Prediction #8: The Agent Works Through One System

Today agents are plagued with system overload. They’re working in ten different systems that include CRM systems from 30 and even 40 years ago. Not only is this terrible for the employee experience but it’s terrible for the customer experience. Having to wade through 10 systems makes the employee want to pull their hair out—additionally it adds a ton of time to the customer experience. In the future our CRM technology will allow agents to seamlessly move in and out of different customer service channels while staying in one customer service tool. While it will look very different for the customer, it won’t look different for the agent—it will be one easy, seamless experience.


Prediction #9: Customer Service Gets Marketing’s Budget

You rarely hear about the Chief Service Officer. Sometimes you might find a Chief Customer Officer or Chief Experience Officer but rarely is there a c-level officer devoted to service specifically. However you would never see a company without a senior marketing leader such as a Chief Marketing Officer or EVP. But now we know that being helpful can be the best form of marketing. In fact most of the messaging that happens from the customer toward company has to do with customer service—consumers that need help. Customers are not on your website looking for the latest marketing asset. Let's talk about social media for a second. Social media programs are launched by marketing or PR and handed over to customer service after it becomes apparent that service is the only group qualified to answer these questions. But budgets are still not granted to customer service like they are to marketing (or even sales). There’s a reason today you can’t get through to a human on the phone. There is also a reason things are often broken when it comes to customer service programs. Customer service often does not have any money. The budgets go to marketing and sales—but in the future customer service will be the darling of the organization with the money it needs to do right by the customer.

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