These days, Danish media is full of doomsday prophecies following Amazon’s announced arrival in the Scandinavian market – with promises of free delivery in just one hour. In the wake of this story, lots of ideas as to how business can survive are emerging.
At Børsen’s yearly Retail Conference where I had the pleasure of speaking earlier this year, the talks were all about artificial intelligence, machine learning, big data etc. under one joint heading: ‘Are you ready to compete with Amazon?’ But what does it take? What gives your company a lasting competitive advantage? In heavy industry there is a saying that technology is globally accessible – it can easily be bought or even copied. Hence, technology can be seen as a window of opportunity. Are some of your competitive advantages in reality just windows soon to be closed? In the battle against big corporations like Amazon, many companies are working with data – tons of data, which is supposed to enable us to be relevant to our target audience and thereby increase sales and boost customer loyalty. And data can be proprietary.
However, consider this: are you the only company with access to your type of data? Is it a sustainable competitive advantage for you or just a window? And are we in fact ready to deal with data in these GDPR-times where consent is king? Furthermore, we have to consider, that many users have now realised just how much information they are actually making available across media and devices and are hence becoming more reluctant in handing over data – and hereby, data is for some, now more difficult to access. In some areas you can say that the market has become self-regulated, and the typical consumer now knows that if you don’t pay for the product, you are the product.
As you might have noticed, I am preoccupied with enabling people to see the difference between a lasting competitive advantage and a window of opportunity. I’m not saying that one is better than the other, but I do believe that it’s important to pay attention to the difference between the two, as the way we approach the market should differ accordingly.
So, what do you, your brand or your company have that is proprietary? What is just yours, yours alone and cannot be copied? You have your identity – your brand. Meaning who you are, why you are here and how you do it uniquely. This asset can, if handled properly, be your everlasting competitive advantage. But will it be enough and where should I raise the bet? This is the question we would all like to know the answer to. One of my clients has a saying which is useful in this scenario. He says: ‘If you only have DKK 100,- – how will you spend this money?’ I really like this approach as it forces us to face the truth that we all have limited resources – regardless of company size. I will return to my answer to this particular question.
Sergio Marchionne, CEO at Fiat Chrysler Automobiles, has an interesting approach. The auto industry in which he operates is undergoing changes – as are many industries these days. New business models are emerging, and the industry is racing to meet the demand for electric cars. Yet Sergio Marchionne has not invested heavily in electric vehicles, for which he has been scorned in the media. He has instead chosen to look for the right partnerships. As he states in a Bloomberg article: ‘If you would have come at CES (International electronic fair), you would have discovered that the number of non-carmakers who are providing electrification and artificial intelligence solutions for the car industry has exploded. So, we talk to everybody, and we are continuously learning and making selections on the basis of the best available technology.’ Furthermore, Marchionne points out that parts of his industry will most likely be commoditised in the near future, which creates new demands for many companies: ‘If a portion of the industry is going to be commoditised, then the attrition rate is going to be tremendous for those cannot distinguish by brand.’
Our brand – and our identity, is an asset we all possess – no matter whether we are individuals, big brands, companies or organisations. And we can all put this asset into play and use it as a management tool in most business-critical situations.
And to get back to the point on how you should spend your DKK 100,- … With Sergio Marchionne’s approach in mind, I recommend you spend a small part of the money on finding the best business partners in the market and invest the rest in building your brand.
When Amazon eventually enters the Scandinavian market, I find it hard to see how any of us can compete in terms of data, delivery times or product range. But we have what makes us special; our heritage, our unique approach that enables customers to distinguish us from competitors and care about us and our products. So, find it, protect it, make it stronger and use it.