Following Amazon’s announced arrival in the Scandinavian market – with promises of free delivery in just one hour – Danish media were full of doomsday prophecies. In the wake of this story, many ideas about how businesses can survive emerged.
We had the pleasure of speaking at one of Børsen’s yearly Retail Conferences. The talks were 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. However, 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 tons of data, which is supposed to enable us to be relevant to our target audience and increase sales and boost customer loyalty. And data can be proprietary.
A competitive advantage or a window of opportunity?
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 to hand over data – and hereby, data is, for some, now more challenging 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, we are preoccupied with enabling people to see the difference between a lasting competitive advantage and a window of opportunity. We’re not saying that one is better than the other, but we do believe that it’s essential 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 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 appropriately handled, be your everlasting competitive advantage. But will it be enough, and where should we raise the bet? – This is the question we would all like to know the answer to. One of our clients has a saying which is useful in this scenario. He says: ‘If you only have DKK 100,- – how will you spend this money?’ We really like this approach as it forces us to face the truth that we all have limited resources – regardless of company size. We will return to our answer to this particular question.
What do you, your brand or your company have that is proprietary? What is just yours, yours alone and cannot be copied?
Sergio Marchionne, the former CEO at Fiat Chrysler Automobiles, had an interesting approach. The auto industry in which he operated 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 did not invest heavily in electric vehicles, for which he was scorned in the media. He had instead chosen to look for the right partnerships. As he stated 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 pointed 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 that cannot distinguish by brand.’
“If a portion of the industry is going to be commoditised, then the attrition rate is going to be tremendous for those that cannot distinguish by brand.'”
Identity – an asset we all possess
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 to spend your DKK 100,- … With Sergio Marchionne’s approach in mind, we 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 enters the Scandinavian market, we 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
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