Tag: disruption

The cost of media disruption

The price workers pay when an industry is disrupted shouldn’t be understated

What happens to journalists when no one wants to print their words anymore?

The Bill Moyers website has striking accounts of sexism, ageism and exploitation of younger journalists as the industry deals with its Twentieth Century business model collapsing.

Much of the dislocation Dale Maharidge describes could have been written about factory workers twenty years ago and will be probably written about a whole range of white collar occupations over the next two decades. The disruption being felt by journalists is not unique to the media industry.

While the media industry struggles to find the 21st Century’s David Sarnoff, the human cost is real. The price workers pay when an industry is disrupted shouldn’t be understated.

 

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Disrupting professional services

Stripe’s US business registration service shows how professional services companies are under threat

As Irish immigrants, the founders of San Francisco payments company Stripe, John and Patrick Collison, know too well the difficulties of setting up a US based corporation.

So the company establishing Stripe Atlas, a service to help foreign entrepreneurs set up their US presence makes sense and the payments services bundled into the package may also generate business for the brothers.

The Stripe Atlas service also illustrates the challenges facing professional services businesses as the service automates many of the bread and butter tasks that were good earners for lawyers and accountants.

Until recently it was thought those ‘higher level’ occupations would escape disruption, now it appears software will eat the professions as well.

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Telcos shifting up the stack

For the world’s telecommunications companies it’s a matter of diversify or shrink.

One of the Twentieth Century’s great rivers of gold was the telecommunications industry. As the world became connected, first by telegraph, then telephone and finally mobile networks, owning a telco licence became a path to riches.

Late in the century, the mobile phone was a spectacularly profitable device for telcos in the 1990s as consumers flocked to buy them and pay dearly for services, particularly SMS which was practically free to provide.

Just as the century was coming to a close things changed dramatically as the Internet became accessible to the general public and while data was still profitable, telco revenues started to fall dramatically. Then, early in the new century, the arrival of the smartphone disrupted the entire industry.

Becoming a dumb pipe

Twenty years later and the arrival of smartphones using data services has changed the economics of cellular networks, leaving the incumbents worried they are going to merely become ‘dumb pipes’ offering just a low margin utility.

Around the world incumbent telcos and mobile network operators have responded by moving up the value chain into managed services and cloud computing and one particularly interesting company in this respect is India’s Reliance Telecom.

Reliance has responded to the changes in its market, something made more problematic by India’s arcane and complex cellular licensing system, by strategically selling off various parts of its infrastructure and focusing on where it sees opportunity.

At a lunch in Sydney yesterday CEO Bill Barney of Reliance’s global network division was showcasing their cloud services for Australian customers and showed how the quest for profits is moving telcos into areas like data centres and managed services.

Emerging markets corridor

Barney argues that Reliance’s network, which spans South Asia, the Middle East and into Eastern Europe, gives the company a strong position in the “emerging markets corridor”. He also boasts the product the company offers allows easier development of smart services.

In this respect, the Reliance Global Cloud Exchange differs from similar plays like Telstra’s PacNet network across East Asia – which Barney previously headed – in that it offers services higher ‘up the stack’ making it easier for companies to deploy smart applications, something Barney sees as being particularly attractive to the media and financial industries.

While Reliance’s claims are yet to be tested in the market, the company’s shift to higher level services illustrates a struggle facing all telecommunications operators. To do this, Reliance and Telstra look to global networks and data services, Singapore’s Singtel tries its hand at media content in a similar way to Britain’s BT and Vodafone makes a strong Internet of Things play.

For each of these companies, diversifying into other fields makes sense however each strategy brings its own risks – in Reliance and Telstra’s cases this means competing with cloud services vendors like Amazon and Microsoft – that telcos haven’t been exposed to in their core markets.

Those core markets though are being disrupted and will never be as profitable as they were twenty years ago. For the world’s telecommunications companies it’s a matter of diversify or shrink.

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Working in the gig economy

The motivations of demand economy contractors are varied and not without suspicion towards the services that employ them.

Just what do people think about the on-demand, or gig, economy? A survey by public relations company Burston-Marsteller looked at those who use and provide services for companies like Uber, AirBnB and Instagram.

Unsurprisingly the majority of users are have positive experiences with on-demand services which allows them to access product they couldn’t afford otherwise.

More important are the views of the contractors, and those who are doing these jobs for the flexibility are matched by those who’d rather have full time employment but can’t find a role.

Strikingly, the longer a contractor has worked for one of these services the more likely they are to find the company’s practices exploitative and more than half believe the platforms are gaming the regulations.

Overall, it shows participants in the ‘sharing economy’ have no illusions about the caring aspects of the services that employ them, unlike many of those touting the benefits from the sidelines.

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Opportunities in broken systems

Uber shows how opportunities arise when systems are broken

“Taxi drivers are good people, they are just treated badly”, Uber founder Travis Kalanick told Salesforce CEO Marc Benioff at Dreamforce last week.

Kalanick flagged how in most cities around the world the taxi industry is broken. Nowhere is that more true than in Australia and a piece I wrote for Business Spectator about the disruption to the nation’s taxi industry illustrates that well.

The success of Uber in disrupting those markets – although it should be noted the company is far from becoming profitable – shows the real opportunities lie where existing markets are broken or distorted.

If you’re benefiting from a broken market then this is a risk to your business. For outsiders, it’s an opportunity.

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How design will change the world of business

Changes to the world of design are going to have an effect on all businesses

“I always believe small companies usually illustrate big shifts faster than larger companies. In many ways big companies are responding to the shifts being driven by smaller businesses,” says Andrew Anagnost, the Senior Vice President of Industry Strategy and Marketing at Autodesk.

Anagnost was talking the Dreamforce media contingent after a tour of his company’s San Francisco Gallery where possibilities of today’s design and manufacturing tools are displayed.

Those possibilities are changing business, not just in design but across most industries as the means of financing and building new projects changes along with consumer demand as production methods change.

Anagnost breaks these changes into four major trends – the way things are designed, how they are produced, the nature of demand in a world where things can personalised and the very notion of what a product is.

“What people expect in from products today is very different.”

A supercomputer at your fingertips

“Every generation brings something new to design,” says Anagnost. “Imagine the generation that grew up with social media, online gaming, all the things that previous generations did not grow up with.”

This generation will be more collaborative and the idea of working in fluid, unstructured groups where many of the members will never physically meet anywhere.

Cloud computing is the other factor Anagnost sees as changing design as “it puts a supercomputer behind every screen”, which brings to the desktop great power in testing designs. “The designer gets a chance to explore options they couldn’t access before.”

That supercomputer at your fingertips changes all businesses, giving them processing power to carry out complex analytical tasks and modelling in all industries.

Financing the change

Another change to the production process is how people are financing their products. Increasingly platforms like Kickstarter are creating new ways for entrepreneurs to raise funds and also to test the market for a product before investing money and time.

“Before people would have to pitch their ideas to a larger manufacturer, an investor or a VC but now they can pitch it to anyone,” says Anagnost. “The means of financing products is now changing.”

The new means of production

‘Fabless manufacturing’ promises to change manufacturing by reducing the need for massive factories as micr0-factories start to change the economics of making products. These miniaturised robot factories are easily configurable and can be located locally rather than across the country of oceans.

Coupled with 3D printing, again it becomes cheaper and quicker to bring products to market and changes the dynamics of getting goods to market. “When it gets cheaper to deliver a complex product, the field gets levelled and more people can deliver innovative products to market,” says Anagnost.

The other trend within manufacturing is prefabricated assembly. While nothing new, improved design tools and manufacturing methods are making it easier and more efficient to assemble things like buildings onsite, coupled with 3D printing this is going to see massive changes in sectors like the construction industry.

Generational changes

Changing manufacturing and designs creates changed consumer expectations, as design becomes more accessible and personalisations easier customers are increasingly going to want products that meet their specific tastes and needs.

Another aspect to this is generational change, where younger consumers expect personalised products and don’t identify the same way with major brands as their grandparents and parents did.

“We’re going to see a move from rampant consumerism to a more selective consumerism,” says Anagnost.

This means markets are going to be far more volatile as the brand loyalty erodes in the face of a demanding customer. You’re only as good as the last conversation you had with your customer and if they aren’t happy they’ll go elsewhere.

Connected devices

The final factor Anagnost sees is the world of connected devices, increasingly consumers will demand products that have online functionality built in.

Increasingly we’re seeing this with motor cars and in the near future we’ll be seeing devices as diverse as motorcycle helmets and light bulbs being shipped with networked capabilities.

“Everything in your home is going to be connected in some way and people are going to have that expectation they will be,” says Anagnost. “Sensors are getting cheaper and cheaper and cheaper. There’s an assumption of connectivity.”

What Anagnost and Autodesk are flagging is business is changing, barriers we thought were unsurmountable are increasingly falling. For every industry, easily accessible computing and manufacturing power is changing the competitive landscape.

Paul travelled to San Francisco as guest of Salesforce.

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Slaying the internet’s goliaths

A big competitor entering your market doesn’t mean your business is doomed

Techmeme has long been one of the most useful sites for technology news and this week it celebrates its tenth year.

For those, like me, who write every day on tech issues the site has been a godsend. Many a time with the end of the day approaching Techmeme has pointed me an article that has got the creative juices flowing.

Gabe Rivera, the site’s founder and CEO, tells of the lessons learned over the past decade with a repeated theme of ‘Techmeme killers’ regularly coming along.

Prominent among them was Google’s relaunch of its Blogsearch product which was billed as a ‘Techmeme killer’. Like so many of Google’s products, Blogsearch was quietly retired two years ago while Techmeme is still around.

Techmeme’s success in the face of an attempt by Google to take over their market isn’t surprising, marketing guru Seth Godin described how his startup, Knol, survived an onslaught from the giant company in 2013.

Despite Google’s cash and market strength, execution matters and often larger companies lack the committed evangelists that give the smaller businesses their energy.

Both Techmeme and Knol show that no company is guaranteed success, despite its resources or power.

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