14 Sep Hyper Competition – It’s Not Just for Sports Anymore
The cautionary tale that the record industry presents us with is only one example of how technological advancements have made the old management methods obsolete. Very few industries are safe from the threat posed by hyper competition. Barriers to entry are now almost nonexistent for virtually every product or service. Even before the internet became the most disruptive advancement since the wheel, hyper competition was occurring. Look at what happened to Kodak film once digital photography met the needs of consumers who wanted a cheaper and faster delivery system for photos. Kodak had grown complacent over time, choosing tweaks over Breaker innovation.
If you’re from my generation, you might remember weekend trips to Blockbuster. Then came Netflix, changing the way we consume visual media through its streaming service. This innovation was not unlike the one iTunes brought to market. It’s the same basic idea, but with a different application. Netflix responded to the inconveniences expressed by customers. Because it listened, it has been received with open arms, becoming synonymous with television and movie watching. Although I sometimes miss the ritual involved in scanning shelves packed with movies tucked into hard cases, I don’t miss rewinding, having to rush to return the tape, the late fees, or, worst of all, my disappointment when the movie I wanted wasn’t in the store.
We now have Hulu and other comparable services, but Netflix stands in a league of its own. Is it establishing risk management systems? Are its leaders wasting time worrying about making a stupid mistake? No. Netflix is creating its own television shows and finding other ways to deliver content to its customers.
Print newspapers, magazines, and books are now in a similarly precarious situation. Printed books have benefited from nostalgia, with readers like you and me keeping them in existence. But coming generations don’t share our sentimental attachment to turning actual pages. Newspaper publishers have been hit the hardest, as news is now in our social media feeds or a Google search away. The rise of blogs and media companies such as Gawker suggest readers want their news in a different form and style. Why would you pay to wait until Sunday when you could have it free now?
One of the most frightening changes resulting from hyper competition is the online store. Brick and mortar shops now have to face online retailers such as Amazon. We witnessed the stock price for the likes of Best Buy plummet and force these stores to react. The only problem is, they’re only doing more of the same, maintaining through cost reductions and job cuts, not innovating. This has become such a problem that RadioShack’s stock momentarily went into the negative range several times in 2014 and the company probably won’t make it to the next holiday season.
Many offline retailers have been reduced to becoming nothing more than locations for showrooming, the phenomenon of consumers testing out and interacting with a product at a store before buying it from another online retailer, usually for less than the “showroom” price. In this instance, can you blame the consumer for buying online when an HDMI cable that costs $30 at a Best Buy store costs just $4 on Amazon? Not only do you save money and time, but you can benefit from user reviews directly below the product description.
Amazon continues to push the boundaries of what’s possible for online retailers. That’s why it has tested seemingly odd ideas like drone delivery. Sure, government intervention shut this down before an Amazon branded robot could even get off the ground, but you can’t criticize the company for trying. Amazon is showing that it is well aware of hypercompetition and the increasingly important role innovation plays in the modern market.
There’s a single trend throughout these examples: informed courage. Each “David” took informed chances to make what “best practices” would say were bad decisions. This meant listening to customers, shareholders, and employees for insights that could lead to innovations. It also meant keeping a hypercompetitive mindset that will continually provide for the needs and wants of the modern consumer.