The competition isn’t the competition you think it is

The last year has seen the rapid digitisation of many industries. While digital transformation has been on the cards for most businesses, COVID has accelerated the transition, particularly as many physical experiences become contactless.

Within this movement is the potential for brands to think much bigger than out-digitising their nearest competitor. In this space it’s not enough to have a better website, app or eCommerce function; businesses also need to offer a customer experience equal to or better than the digital experiences people are getting elsewhere, outside the business’ primary industry. For example, the Bunning’s website doesn’t just compete with Mitre 10’s website; Bunnings competes with Uber and Netflix in terms of ease of use.

Lesson learnt

Many years ago, I worked in the music industry as an “exploitation manager”, a somewhat bizarrely-titled job that sought to maximise how people might access music outside of a traditional user journey.

The traditional user journey was as follows: You are in your car, listening to the radio, when you hear a song you really like. Maybe you catch the name and artist when the DJ back-announces it. You might drive to a record store and ask for the song. The store assistant says, “we had that album but we sold out. You can pay us $30 and then we’ll back order it for you.” You wait a week and they call you to tell you to pick up the CD. Then you drive home and you listen to it on a CD player.

Given the small file size of music files, digital channels, specifically peer-to-peer distribution services like Napster and LimeWire became the ideal distribution channel for music. A growing number of consumers realised that they could think of a song and immediately download it and play it on demand. This near-instant gratification would be the key to the future of the industry and many other industries.  Sadly, the music industry struggled to understand how to monetise this new channel for a long time. Many labels chose to blame piracy, litigate, and seek to stop this instead of developing a business model that monetised this better distribution form.

Through that experience, I saw how digitisation and user experience can transform entire industries based on users driving the change. If the business – or industry – cannot keep up with what the users want, it will get left behind. Margins evaporate. This is the precursor to digital disruption. They were faced with a situation that Ernest Hemingway described in “The Sun Also Rises” in which a character is asked how he went bankrupt. “Two ways,” he answers. “Gradually, then suddenly.”

Follow the user

Since those music industry days, I’ve taken that lesson into every other industry I’ve advised: businesses should not seek best practice within their industry but compete with businesses that offer the best customer experiences beyond their industry. It’s follow the user, not follow the leader.

I’ve always observed industries’ greatest innovations and ideas come from addressing consumers’ current and future pain points. Many music consumers of the 1990s wanted what Napster and LimeWire gave them: that’s how those platforms became popular. The problem was that the music industry was more concerned with addressing their in-category competition rather than offering an out-of-category, user-focussed solution.

Consider how to make things more convenient for consumers. There’s an increasing expectation that each new transformation, each new version of a product or service should make things easier; easier for the user, not easier for the business. Street maps are extinct because digital maps are updated more quickly and can combine with GPS for automated route planning, not because of an opposition street map’s quality. Yesterday’s competition for Melway was Gregory’s. Today’s battle is something quite different altogether.

People are always going to be ahead of business. The user experiences that people have every day with technology will raise expectations that things should be easy like this wherever they go. If you’re not there, consumers will leave you behind. That means your competition is not just the business next door – it’s anyone who is lifting the benchmark to give customers a better experience.

Con Frantzeskos is the CEO and founder of Penso.

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topics best practice competition Con Frantzeskos digitisation Innovation Penso technology technology innovation user experience

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