Strategic Game Change
Is your organisation vulnerable to being turned upside down by strategic game changing ‘platform’ technology, similar to the kind of power and technology that has facilitated the rapid rise of Uber and Airbnb? Consider the following in your assessment:
- The extent of government regulation and whether such regulation can be conveniently set aside or substituted with alternative ‘free market’ protectionism. It is the classic ‘carrot or stick’ approach. For example Airbnb has a public rating system which acts as a substitute incentive for Airbnb facilities to keep their properties safe and comfortable otherwise they will get no customers (the carrot approach). In this regard there is no need or at least less of a need for government regulation to enforce adherence to safety standards (the stick approach).
- The ease of replicating codified business processes such as those adopted in the travel industry. For example Airbnb facilities essentially need to be kept clean and comfortable. Achieving this is not rocket science nor are the standards difficult to replicate.
- Engage the law and litigate which is what the taxi industry has done in many locations across the world in response to Uber. This avenue has achieved success in some jurisdictions but not in others.
- Embrace the new reality and try and replicate what the game changers are doing. The taxi industry has also taken this approach by launching booking apps which are similar to Uber.
- Differentiate and play to the strengths of your organisation. For example hotel guests often want concierge and reception services so a hotel group in New York called CitizenM provides these services but their hotel rooms are a much smaller pod style and hence more affordable which allows CitizenM to compete with Airbnb on price.
- Recognise the inevitable and either close down for good or reinvent yourself. Look at what Qantas has done with Jetstar. Against the threat of low cost carriers, Qantas established its’ own low cost carrier, Jetstar and over the last 10 years has transferred a number of routes to the budget airline. This has been a process of reinvention.
Reference: “Spontaneous Deregulation”, Benjamin Edelman and Damien Geradin, Harvard Business Review, April 2016.