Futurist Tom Cheesewright, discusses why during a time of digital transformation - looking after your customers and keeping agile are both key
Two years ago I was asked to give a guest lecture on the future kitchen. Kitchens have always been a low-volume, relatively high-value business. And fairly stable. The greatest disruption has come from the big DIY and home wares chains like B&Q and Ikea.
In preparing for the talk, I did a quick search of the Chinese marketplace AliBaba. I found over 5,000 suppliers and 100,000 products. A competitive manufacturing base of a scale that the domestic industry has never faced, working to a price point they will struggle to match. What stops them dominating the market?
Relationships. Or the lack thereof.
Teach drives transformation
Right here, right now, in our developed economy and (relatively) stable democracy, the biggest driver of change is technology. Not Brexit, not our climate – though this will one day prove more influential. Technology is driving change at a relentless, accelerating pace and it is touching every aspect of our lives and businesses.
One way that I help people understand the impact of technology is by showing them how it does the same five things to every market it touches. Technology creeps into every niche, accelerating change, lowering barriers, speeding information flow and driving ever greater competition.
The kitchen is just one example. Technology has accelerated the flow of information through the value chain, with digital capture of spaces, transmission of designs, and automated manufacture. Technology has connected the global supply chain, giving everyone access to every market, and enabling new start-ups at an incredible rate. With the exception of opening a bank account – still a slow process – anyone can start a business from their phone in under an hour.
Caught on the back foot
The speed of change has wrong-footed many businesses and their leaders. From the global CEO who dismissed the internet (and there were many) to the humble taxi driver disrupted by the arrival of Uber. Where before, business planning might have looked out to a five or ten year horizon, today billion-dollar businesses are being flattened by something that was barely visible 18-months earlier.
So what’s a responsible business person to do?
If you’re looking to build sustainable success, then the answer is to focus on agility. Ensure that you devote time to looking forward. Cut the friction inside your organisation to ensure that you can react fast. And structure your business so that it’s adaptable: you want to be able to snatch opportunities when they come.
The price of agility
These changes don’t come without a cost. If you’re focused on being agile enough to take tomorrow’s opportunities, then you can’t be wholly focused on today’s. Specifically, the cost of being agile is not being optimal. The more you optimise around today’s business, the harder it will be to change when tomorrow’s business opportunity appears.
This presents two challenges. First of all, you are not maximising profit, and that can be hard. Hard for you, and hard for your stakeholders. It takes courage to maintain a course that is focused on long-term success.
Secondly though, you may not be minimising cost. And in a globally-competitive, price-sensitive market, that can present a tough choice for your customers.
What do customers value? In an age of fast-moving technology and global competition, it can be easy to forget. But with one exception, they value the things they always did. For a recent project we surveyed 7,000 16-35 year-olds around the world – the so-called ‘millennials’. What they talked about was quality, trust, and brands. They wanted a relationship with the people they bought from.
What has changed is how long they’ll wait to get what they want, and how many other places they can get it from, if they have to wait too long. Future-ready businesses don’t just look at the friction inside their walls, they focus on the friction in their customer relationships too.
Relationships over all
An agile business may fundamentally change its proposition from one day to the next. It may jump market sectors, change delivery models, open new channels or close old ones. But there’s one thing an agile business should always maintain. And that’s its relationship with customers.
In our accelerated world, it’s possible to bring new products to market in a matter of weeks. To jump borders without leaving your office. To reach millions with a few clicks. But it still takes time and effort to build a brand. And that brand is built on solid customer relationships.
Well-maintained, your customer relationships are perhaps your most stable asset in an increasingly uncertain world. If you want to build sustainable success as an agile business, ensure you invest in keeping your customers with you, however much you change.
For more blogs from Tom Cheesewright visit https://bookofthefuture.co.uk