- Brick & mortar folks need to embrace ‘fail faster’ mentality
- CEOs can learn from Tony Fernandes about what tech means
ONE thing that was immediately evident from the brick and mortar (B&M) companies that participated in DNA’s inaugural conference, What’s Next: The Business Impact of Digital Technology, last week, was how clued in they were to the digital disruption that is upon their business today.
But then to say that this represents a wider trend is definitely not true, as DNA invited a number of companies to speak at What’s Next but they declined.
The ones that participated clearly had a digital adaption story to share. So this was, loosely speaking, self-selection at work, and I cannot claim it to represent a wider trend.
Digital adaption is different from just having a digital strategy, which usually means companies have a social media engagement plan coupled with search engine optimisation and other digital marketing tactics in place – including a business unit with ‘digital’ in its title.
If you think this makes you digitally ready, then you have just given that hungry and well-funded startup a huge boost as it plots to eat away at your market share and fulfill the ‘small fish eat big fish’ prediction by Catcha Group founder and chairman Patrick Grove.
For in reality, digital adaption is not about marketing but about the entire company reconfiguring how it approaches its customers and potential customers who are changing because of the massive impact of digital technologies on life itself.
Incidentally, there is already a book on Digital Adaptation by Paul Boag which I just discovered while writing this piece on a Sunday evening. It provides a much more encompassing view of digital disruption than the customer-focused angle I am coming from.
Predictably, even for some of the B&M players which have started adapting here, this change is not coming easy for them, as their chief executive officers admitted.
And from their sharing, especially from Ramzi Toubassy of AmMetLife Bhd and Teh Maimunah of Hong Leong Islamic Bank Bhd (HLIB), comes the first of my five takeaways from What’s Next.
1) Forget about thinking ‘out of the box’
One of the most popular management clichés is also one of the most outdated in this digital era. In this always-on era with multiple communications channels, who has the time to think out of the box? There’s deadline after deadline, deliverable after deliverable.
Employees just do not have the time or incentive to think out of the box. The only way to inspire a totally fresh and unrestrictive approach to capture any opportunity arising from market disruption caused by life going digital, is to create a team that comes from outside the box itself.
This is what AmMetLife has done with its innovation team of six executives based in Singapore, all from outside the insurance industry. You can call it a multi-disciplinary approach by them. This is also what HLIB is doing.
Anything less and you would have unwittingly set the stage for an effort that will likely fail. And trust me, you don’t want to be doing that – especially if you are in retail.
Which brings me to my second take-away.
2) Clock ticking for retailers?
As I have written before, it is the consumer-focused B&M players that are the most vulnerable to being attacked by startups which rely on them to be slow to react, or to not react at all, to the implications of life going digital.
Nowhere is this more evident than in e-commerce. And our speaker based in Thailand, Dr Adrian Vanzyl, chairman of end-to-end e-commerce fulfillment startup aCommerce, really set the clock ticking here for traditional retailers.
He confidently predicted that there was only a 12-month window for traditional retailers to get into e-commerce and be part of the boom that is going to happen.
If they miss this boat, they will then be fighting to be niche players only, he says.
The boom he speaks about is where e-commerce in South-East Asia will jump from 1% to 10% of retail transactions over the next three to five years. The existing players in the region, all startups, will be enjoying this tremendous surge in growth and continue to cement their brands as the preferred e-commerce destinations.
I would take Vanzyl’s prediction seriously because he is also chief executive officer (CEO) of a venture fund, Ardent Capital, which already has a successful e-commerce track record in the region. The founders of Ardent built and then sold their Thailand-based regional e-commerce company, Ensogo, to US-based LivingSocial in 2011.
aCommerce, which has raised US$20 million (RM88.2 million), has the largest e-commerce merchants in South-East Asia and some traditional retailers using its fulfillment service.
Which means “we have data – lots of data about e-commerce in the region,” says Vanzyl (pic).
And his prediction of missing the e-commerce boom is made by studying the data aCommerce has. And that’s why I take what he says seriously.
And there is also this trend in e-commerce where the top two players in any category seem to capture 80% of the market. Will that happen in South-East Asia with retail as well?
The dynamics in this region are different from the developed markets where this 80% market share trend is most evident.
Which is why I may just invite him back next year for What’s Next 2016 to hold him accountable for his prediction, and get a large B&M retailer to share its experience in e-commerce as well.
3) B&M companies must embrace ‘fail faster’ mentality
The phrase ‘time is money’ may have been coined by Benjamin Franklin, but it has been long adopted by the business world, even before the Internet and smartphones, to mean that speed is important.
Yet startups have taken this meaning of speed to the next level with ‘fail fast’ standing as one of the sexier lexicons in the ecosystem – often taken to mean that experimentation must be carried out fearlessly and measured to gauge its impact.
But this mentality is not their exclusive domain. B&M companies have so much to gain by adopting this as well.
Because their businesses are not digital in nature and their cultures are based on traditional practices, they console themselves thinking they cannot measure the impact of everything they do as fast as startups, and there is the real fear of being stigmatised by failure.
However, they need to recognise that this is not okay anymore! Not in the digital world we are moving into.
Nobody expects overnight change, however.
The critical change is that they must recalibrate what their view of failure is, when experimenting with new products and services that are digital-based; and start viewing failure through a new lens where it is seen as paving the way for eventual success, not a career dead-end.
This recalibration has to start from the top with the CEO, and the entire senior management team acting as cheerleaders for the digital adaption drive.
In the United States, General Motors has already put a million connected cars on the road. When Fortune magazine asked David Mingle, its global head of customer service what the killer app would be, he was unwilling to make that prediction.
Instead, he emphasised that his mandate was to experiment. “The only thing that makes this work is that our leadership is committed to doing it. Not to say that we have it all figured out, but their support is unparalleled.”
4) It really is not about the tech, stupid!
“I hate call centres,” said Tony Fernandes (pic above), the AirAsia cofounder who was also the keynote speaker at What’s Next.
It caught me by surprise when he said it, and declared that AirAsia would be launching an app to take over the role of call centres.
AirAsia has long relied on its call centres to take bookings from customers still reluctant to use the Internet, and to resolve customer complaints.
I am speculating here, but Fernandes likely wants to use an app to replace some of his call centres which employ hundreds of people in both the Philippines and Penang. That’s both a cost-cutting measure, and about Fernandes putting more power in the hands of consumers who are increasingly becoming more digital-savvy.
And this rising digital-savvy behaviour of consumers is led by rising smartphone adoption all over Asia. This is not rocket science. The rapidly rising smartphone adoption is a trend that is regularly written about by the media. It did not just creep up on the business world unannounced.
Because of the instinctive manner in which he ‘gets it’ about technology, Fernandes is a great role for all B&M CEOs who do not understand technology and are likely struggling to grasp the rapid changes digital disruption is unleashing on their markets and customers.
They just need to look at Fernandes and recognise that he probably knows as much about technology as them (not much), but that he is also aware that technology and digital disruption are more business issues than they are technical and technology issues.
Do you see companies preferring to use old cars which were more mechanical than today’s highly automated and software-driven versions? So they should not let the rapid changes happening around them distract them from the one truth of all that is happening:
Everything that can go digital in life, will. Be it process, product or service. Deal with it and understand what it can mean for your business and your customers, and adapt now.
And if it is not too late for you, attend next year’s What’s Next for another sizzling edition that brings B&M CEOs, top consultants, traditional tech CEOs, together with startup founders and venture capitalists who are backing startups in the hope they disrupt traditional businesses.
Other What’s Next Stories:
Tony’s Top 10 Tips for Entrepreneurs
AirAsia is an Internet company … no, really!
Disruptors will not kill off banking incumbents
Think about zero, or become irrelevant
Traditional retailers do have an edge
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