Old-school organisations are taking on the disrupters at their own game
A view from Dominic Mills

Old-school organisations are taking on the disrupters at their own game

Amazon CEO Jeff Bezos claimed last week we are on the cusp of a golden age of technology. Of course, given he heads one of the most powerful businesses on the planet, he can afford to be chipper, writes Dominic Mills.

But the likes of Kodak, Blockbuster and Nokia won’t be there to see it… so is it only the disrupters – the digital buccaneers of the noughties – who will be able to enjoy the fruits of Jeff’s golden age, or are older, longer-established businesses invited too

The experience of the latter has not been dissimilar to those experienced by a ship’s captain at the dawn of another golden age – that of piracy. There they were, happily cutting across the waves, when along comes a chap in a boat with a black flag and an entirely new and highly disruptive business model.

Our old-school captains then had a choice to make. They had the same platform as this disruptive ne’er-do- well (ie something that floats, with a bunch of paid employees sitting inside) and could easily adopt this business model.

Is it only the disrupters – the digital buccaneers of the noughties – who will be able to enjoy the fruits of Jeff’s golden age, or are older, longer-established businesses invited too?

But it came with obvious risks attached (not to mention an ethical dimension) so perhaps it was better to find a way to come to an accommodation with the disruptive new interloper. In the early days of the disrupter, that second approach was the one adopted by too many businesses.

Genuine innovation was left to the new guys – with the reaction to their impact limited to either token efforts to acknowledge new realities (hey, let’s build an app) or – more usefully – a scramble to adopt their platforms.

The latter certainly made sense… if these new entrants were using technology to open up the market, and bearing the cost of developing and deploying said technologies, why not use them? If you’re the BBC and Netflix can get your programme archives to a new audience, you may as well sell them the content (at an admittedly knock-down rate).

The same principle applied to manufacturers in regards to Amazon too. It wasn’t just about new platforms either; organisations bought entire digital ecosystems off the shelf in order to get an early leg up. You used to be able, for example, to look at any three local council websites and more often than not they would be identical aside from a colour scheme and logo – they had all bought the same white-labelled website from the same developer.

On the high street, meanwhile, many retailers’ early ecommerce solutions were provided by the same vendor – and it showed.

Herein lies the problem, because not only were the disrupters becoming incredibly successful and taking control of the markets they had so recently arrived in, established players were finding it increasingly hard to find a point of differentiation – a way to capitalise on their hard-won market experience.

This is why established businesses are now looking beyond the disrupters’ initial impact, finding ways to leverage their market knowledge by taking up these new business models and then adding further value to them. Be it via through acquisition or internal innovation, established, traditional brands are turning to technology to take on the newcomers and beat them at their own game.

Established players were finding it increasingly hard to find a point of differentiation – a way to capitalise on their hard-won market experience.

An obvious example would be the aforementioned BBC’s exploration of launching a subscription platform of its own, while it was certainly the principle behind Volkswagen’s move last week to acquire a controlling stake in on-demand car service Gett.

In return for its $300m investment, the automotive giant gets to leverage its excellence in building cars (at least in mechanical, if not environmental, terms) into the new disruptive market that had the capacity to threaten its core business – taking on the doyen of the disrupters, Uber, at the same time.

South West Trains, meanwhile, showed the value of internal innovation last week, when it introduced a new website and mobile app that featured its own ticketing system, as opposed to the white-labelled version of Trainline that it, along with most other train operating companies (TOCs), was using.

The Trainline was a textbook disrupter – and by buying into Trainline’s system, the TOCs could quickly provide a service the passengers wanted, without the hassle of paying for its development or jumping through the required regulatory hoops.

But where was the differentiation? South West Trains sells tickets for 230 million passengers a year, so who better to re-engineer their ticket-buying experience?

Digital might have levelled the playing field, allowing new entrants to shake up markets like never before. But the principle cuts both ways, and established companies have all the tools – and the knowledge – they need to add value and fight back.

Indeed, back in the Caribbean, it turned out that often the best people to take on the pirates were, in fact, former pirates. They knew how the pirating market worked, and also bought other things to the table the piratical newcomers couldn’t match – be that in terms of scale or (floaty) platform expertise.

Yes, the old-school businesses are turning into the disrupter hunters of Jeff’s new golden age of technology.

Dominic Mills is the chief technology officer of digital agency Zone

Topics