Innovation is moving faster now than ever before — so fast that traditional businesses and regulators are having trouble keeping up.
Take the hotel industry. While your typical hotel room offers a bed, a bathroom, and a closet, an apartment or house through Airbnb can offer those same amenities — plus a kitchen and more space.
But Airbnb has faced its fair share of challenges. For example, in New York, people are prohibited from renting out their homes for less than 30 days unless they’re present during that shorter rental time. But for 64 percent of Airbnb’s New York listings, the hosts “presumably would not be present during the rental period,” causing some regulatory issues.
Despite these challenges, Airbnb has seen great success and is valued at $10 billion — about $1 billion more than Hyatt Hotels Corp.
So what do Airbnb and the hotel industry stand to teach the rest of us? In today’s fast-moving marketplace, a sizable market share alone won’t save you from the innovators, and to maintain that competitive fervor, you have to think like a challenger — or risk losing your perch.
It’s Dangerous at the Top
For long-standing industry champions, staying successful and iterating at the same time is a challenge. What might have worked in the past has become embedded in your DNA, and modifying these practices across the board takes time. So many companies become complacent and forget how to compete.
However, McDonald’s and other fast food restaurants stand to challenge that notion.
The fast casual food market has grown 550 percent since 1999 and now controls 5 percent of all restaurant traffic. In fact, Chipotle’s sales have quadrupled since 1999, and Panera’s have more than tripled.
Rather than standing idly by, fast food restaurants have started to fight back by mimicking the competition. McDonald’s, for example, now allows customers to build their own burgers, and Wendy’s has been remodeling in hopes of making customers more comfortable.
The front-runners like McDonald’s certainly keep score, but they don’t dream of relaxing if they move ahead in one quarter because next quarter is always a different story. In effect, they must play champion and challenger simultaneously. Their strategy requires a dual and often competing mindset.
Here’s how you can preserve the same mentality:
- Don’t downplay the competition. If your industry has become so saturated that you can’t keep track of the competition, stay alert. That’s when your market position is the most threatened. Always be on the lookout for new players and how they’re innovating. Most importantly, never underestimate their potential.
- Stay agile. Smaller startups can move quickly, which puts them at a distinct advantage. How will you match up?To maintain an agile edge, North Highland has created an approach we call “design labs” in which a few experts (representing various functions, locations, levels, and tenures) come together to address challenges. This small group is locked in a room for three days to define the problem, determine what’s in scope and out of scope, and work through a design solution for the challenge or problem in question.We’ve used this process for situations like determining career paths and performance expectations, redefining our business development methodology and processes, and establishing a refined go-to-market approach.
- Be humble. Too many industry giants fall prey to challengers simply as a result of arrogance. They assume their huge stature means no one can knock them down. Just look at Hostess. Despite consumers’ transition from highly processed foods to cleaner eating, Hostess continued churning out the same unhealthy foods. This led the company to shut down in 2012.
- Refine your focus. Challengers, especially budding startups, can’t outcompete industry giants on every front. So they focus on customer centricity at aggregate and individual levels.On an aggregate level, we sometimes see that some of our marketing messages aren’t resonating, so we have to adjust our approach. We can see what segments of our customer base want to see from consultants and ensure we’re meeting — and exceeding — those expectations.On an individual level, we hone in on one single buyer or client to determine what’s working and what’s not. This allows us to individualize conversations and follow up in a personal manner. If you’re a challenger firm, you’re constantly looking to evolve, but you have to keep tabs on the pulse of what individuals want. Everyone on my team spends a portion of his/her time on this and regularly asks, “What does this mean for clients, and why are we doing it?
- Unlock the power of storytelling. If you make storytelling and educating your audience part of your marketing mix, you can steer the conversation. People listen to and emotionally invest in stories, not blatant marketing blitzes. When you can connect with your audience through authentic storytelling, your audience will give you the benefit of the doubt before the competition.
- Embrace your unique personality. Free of the “corporate” mindset, challengers can be more edgy and “sexy” in their approach. Once you’ve become the best, this becomes more difficult because people are scrutinizing your every move, especially if you’ve gone public. But that doesn’t mean you can’t have spunk. Play on your company’s personality in your marketing approach, but be cautious not to offend or confuse your audience.
- Don’t just compete; answer a need. Although the phrase “Kodak moment” has endured, these moments almost certainly won’t be captured on Kodak film. The company failed to address the market need and continued pursuing film. With the proliferation of smartphones, it quickly became irrelevant, while swift startups like GoPro were able to capitalize on digital imaging and consumers’ desire to capture action shots.
- Prepare for a perception shift. When you make the move from challenger to champion, your audience will perceive you differently. Maintain your authenticity, and keep the challenger mindset alive. You never know when another startup will sweep in and steal the limelight like you did.
- Don’t fear risk-taking. Apple could afford to take risks and wait for consumers to realize its value because it had deep pockets, but this isn’t always the case. If you’ve done your research and provided a great product, you need to trust what you’ve built and take some risks. Just make sure your moves are strategic.As the top dog, you have the most to lose. If you don’t have the capital to blow (most companies don’t), you must justify your risks. When RadioShack tried to remarket itself as “The Shack,” it only confused its audience. You can’t always market your way out of a losing market position.
- Look outside your industry. Some of the most innovative ideas are tested approaches re-envisioned in a unique way for a different customer base. Our marketing team is constantly looking to other industries for ideas. The special sauce is in how we apply those ideas in a way that will resonate with our client base.As a consulting firm, North Highland creates teams of experts who specialize in an industry, function, and solution and who have strong generalist management consulting know-how. This non-siloed approach helps ensure our clients get the best of what has worked elsewhere. For example, we can take a consultant who has helped improve the manufacturing process for an automobile plant and put her on a team that’s helping a hospital client improve emergency room efficiency. There are many principles in common — the magic is applying them in uncommon ways.
Whether you’re a long-standing industry giant or a humble startup, you can never get comfortable. Consumers demand products and companies that respond to their ever-changing needs. Continue to be the obvious solution by being a challenger that puts its audience’s needs first and moves swiftly to meet them.