Sunday, August 9, 2009

The Internet will "Change" your Business &/or Industry

Following up on our discussion about Gary Hamel's innovation video, I made a comment in class that apparently bothered some of my classmates. It was rather terse, so I can understand the reaction to the tone, but it was needed to simplify the concept. The comment was made in response to a number of people not understanding how to get their company to adopt an innovation culture and seeming to be stuck on the idea that they were a data-driven company and innovation often lacks the necessary data to gain approval.

So I recommended to people to have a discussion within their company on, "How the Internet will "Change" (alternative wording used) their business or their industry?" It was blunt and maybe harsh, but it's the reality of today's compressed-cycle economy.

I thought I'd make a list of where some of those discussions could go for the industries that are represented within my class:

Education - I've discussed this several times before (here, here and here), but the Internet will allow the model for education (at many levels) to become collaborative and global. And if the actual education content becomes free via certain outlets, then what new value will schools provide their customers? Is job placement &/or venture funding (or incubation) the new value to provide? Are silo'd discplines (Liberal Arts, Business, Science) easier to blur with Internet technologies, hence creating new opportunities to create "renaissance majors" which may produce more competitive students?

Manufacturing - We're already seeing what digital technology and fabricated labs can do to initiate "creation" opportunities in emerging markets. Combine this with organizations like that provide funding for entrepreneurs, and you have the potential for radical change in how manufactured goods could be created and sold in emerging markets.

Radio & Newspapers - (see New York Times) - enough said. And if you've got a niche in a local market (ie. Hispanic audiences in North Carolina) and you're able to make that model work, why not look to use the Internet to aggressively license/franchise that to other parts of the country? Even companies like AOL and Google haven't figured out "local" yet, so leverage your competitive advantage as quickly as possible.

Mattresses - I highlight this one separately just because one of my classmates is in the "sleep enhancement" business and has an interest in technology. He mention a few weeks ago that their largest distribution channel was a big-box retailer who sold the mattresses vertically in a rack on the floor. Not a fancy showroom where people come in an "try them out", which is how many mattresses are sold. He then said that one of their competitors just decided to move to an all-online model. He said that his company was taking a wait and see approach to moving online because it could disrupt their existing distribution channels (ie. channel conflict). Let's think about that one:
  • "Wait and see" on the Internet. How has that worked out for other industries? Maybe those Gen-Y mattress buyers will go against their current buying habits and want to shop in stores (see Zappos).
  • Their largest distribution channel already sells the product without the "lay on it" option, but you're still worried that online might not provide the options your customers want?
But even if they aren't sure how to deal with the channel conflict that could happen from an online strategy (hint: channel conflict will always be there), what about setting up an online contest or "fan" page on Facebook or crowdsourcing community that allows people (all ages, all disciplines) to design your next generation mattresses? We've already heard 3-4 good ideas generated in our hallway conversations, why not open that up to 1000x the number of smart minds that might have a suggestion for using a mattress?

Banking - Why should I pay for high-end financial services advice when I can go to Mint or Motley Fool or eTrade or even Charles Schwab? Why should I trust companies that take my tax dollars and make them their dollars without providing any value? The Internet is making financial information more readily available and more transparent, so where could banks do to create need value-creating knowledge for customers? Charging additional fees on ATMs and Account Management is not the answer. Using Internet technologies to expose customers (not hiding information) to knowledge faster, and more globally is where new value will be created.

Healthcare - What are companies doing to get homes for elderly people wired so that low-cost monitoring equipment can be installed to remotely provide services (refill prescriptions, monitor movement for falls, monitor breathing equipment, etc..)? What are you doing to encourage the use of technology (speech recognition, online communities, etc.) that enhance the quality of life when patients are home alone or away from friends (or other with similar illnesses that want to share stories & support)?

Airplanes and Air Travel - The airline industry is already been radically changed by the Internet (see Travelocity, Expedia, Priceline), but now it faces a threat from technology companies like HP and Cisco with their Telepresence systems. But are the airplane companies working with their technology companies (or creating their own) to enhance the connectedness when people do fly? Are they allowing kids to play video-games against each other (in different rows) to help parents relax? Are they helping business travels stay better connected while flying?

That's just a few industries represented in my class, but each of them will be radically changed by the Internet in the next 5 years (if not already). Getting people to think through the possibilities of what could happen is (imho) an important strategic activity for them to consider

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