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Digital does not matter; we are too big to fail. The death of GoPro? And other stories.

September 8, 2016

A cool product which is only a hardware thing might have been a great thing in the past. Having had two recent happenings where you could see that the future is digital - and we are not talking about e-commerce - I see that bigger companies will need to adapt much more quickly to this new digital era (Industrie 4.0 etc.). And most companies I know do have to take a lot of effort to get in this direction in case they don't want the same challenges as GoPro.

 

Whenever you discuss digital transformation with the board members of bigger institutions, you will most likely here one thing: We are too big, our business model is somewhat complex and you need such a lot of money, experience and knowledge even to cope with us on a small scale, that there will not be anything new in competition the next years to come. And even if there will be a competitor, they will start small, we will see them and they will not make it in the long run. It's all about having the lots of money you need to survive and grow as big as we are...

Then you start to think about it loud that there might be something coming up and they are telling you that they even have a surveillance system implement to get all relevant digital start-ups in their market on the radar, as soon as they appear on the landscape. Wow, that's fantastic, but from my perspective and what I already saw as a consultant and interim CDO when you look behind the curtains is absolutely different. Bigger companies do not love to move quickly, sometimes they can't because of complex processes and politics, in other circumstances they do lack a strategy about how to use all kind of digital systems within their IT landscape.

And yes, obviously there is all kind of competition screening in these kind of companies, but... most companies do never look in different sectors and you never know how things will evolve.

 

Let me just give you two examples to understand what I really mean. First of all my friend Beat recently told me about a new camera which is fantastic for driving, going around in companies, circling around products et cetera. When you first thing about camera brands, your mind tells you Olympus, Leica, maybe even all the mobile phone producers. And of course GoPro when it comes to the action cameras. So I thought cool, a new product from GoPro which might help them to make better on the market (they recently cut down their number of products and missed lots of sales and revenue targets, so there shares price went further down, see the chart). But then he smiled and told me 'no, it's not from GoPro', it's a new product from DJI. 

 

I thought that is interesting, DJI is a high-end drone manufacturer who is doing a very good job, what is the reason for them to go into the camera market? That was relatively easy to find out: For their drones they need cameras with a very good stabilisation for the pictures, vertically and horizontally, as a drone is not flying that quiet in the air without any turbulences. I dived down a little deeper into the details and found out that they launched their first camera in 2014 and, you probably guessed already, GoPro launched a first drone at the end of 2015. But they launched this camera stick at the end of 2015, called osmo+, which you can hold in your hand (see picture on the right side), walk around through your company, around your products and whatever you like. And you don't 

 

need a camera team, no producer, you just do it by yourself (and maybe someone will help you a little with cutting the video) and the software in the camera is doing all kind of stabilisation so even with your slightly shaking hand it's not a problem. That's cool. Now you don't need an agency and film team anymore, you just need this camera stick and someone doing the cutting, which saves costs and time. Just imagine what this will bring for companies needing video material from their products or even brokers walking through a property. This helps immensely in this branches.

And it's not only hear, also Amazon just entered the restaurant delivery service in London. Its not their core business, there is big competition on the food delivery market, but they don't care and the competitors that just want to go public have a new big entrant in the market which will not help them to grow faster.

Second example is a little easier, it's only about the future role of hardware. Most companies are not producing by themselves anymore, they have outsourced this to subcontractors somewhere in Asia. This means not only you are losing the grip on the hardware but you will have competition much faster as other companies might launch the same product literally just

 

minutes later. A good example is the recent launch at the IFA in Berlin of Blaupunkt. They launched a nice lamp with USB and Bluetooth connection, loudspeaker and some other interesting features. It's great to have it on a conference room table as it is flexible, usable for conference calls and relative cheap (~65 EUR). Last week (so some days before their probably very expensive product launch at IFA) I was at my client MONACOR, a European B2B market leader for security devices, light and sound equipment. At the end of our meeting they gave me a cube which looked exactly like the one mentioned before, but it was not from Blaupunkt, it was their own product, one of their bestsellers from recent weeks and the price is way lower (you only get it as a B2B client here).

 

Having told you that, what did I learn out of these examples?

 

1. Competition does not only arise within your sector, there is a big chance that someone will come from the outside and you don't see it until it's too late.

 

2. Innovations will probably not come as a pure hardware anymore; the hardware is always manufactured somewhere else so it's easier to copy. You have to focus on the software and the digital business model behind it.

 

3. As a company you need to redesign your products frequently as lifecycles are getting shorter and add new features, but you should not miss to develop new product categories to get a higher degree of independence within your revenues from a single product range.

 

 

Summarising I don't need to tell you that the times are getting tougher and it's an interesting development that digital business models and software play and even bigger role in the future for every company - and there is already a shortage in this resources on the market. So if you are member of the board of directors, take care about your digital strategy within your company, you will definitely need it and your personal future success will be based on this.

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