Businesses that forgot to reinvent
If only newspaper publishers, book publishers, record companies, and movie producers would have had the vision to see their future as we now see it, we might have become a digital society with much less disruption and loss of jobs than we have experienced these past years – and continue to experience.
Seeing the future of frictionless commerce
Did the proprietor of the neighborhood bookstore or national rental chain not see this
coming? Frictionless distribution through moving bits of information is so much cheaper for all but those making their living in the middle of the supply chain. Money always flows to the most inexpensive solution that meets the needs of a buyer.
It should have been obvious to all in those niches and others like it that digital distribution would supplant product manufacture, inventories, physical distribution systems, warehouses, and limited retail shelf space, as soon as the infrastructure allowed it to do so.
It is human nature to avoid change
And yet, as we have explored in past insights, it is human nature to protect the business, the existing product and the existing revenue stream – and against human nature to displace one’s own product when it is still generating good income.
Some thoughts on how to reinvent a product-based business
[Email readers, continue here…] There are many ways businesses can reinvent themselves, even if a product must be manufactured and put into the hands of the user in physical form. Product marketing materials, user manuals, service manuals, sales guides, and catalogs all must migrate to the web to cut the use of paper and make them more accessible over time and distance.
Reinvent the core of your business
But even more important to the future of your company is the deliberate reinvention of how the essence of the company’s core is delivered.
Can a consultant be as effective when half or more of the meetings held are using Skype or telepresence? Can a software product be delivered as a service “on demand,” saving hardware and human error in updates? Is there a way to speed to the user a product, such as a new music release, to gain instant gratification and lesser cost at the same time?
Disrupting the supply chain with or without you
Everywhere we look the supply chain is being disrupted by companies finding ways to deliver bits of information or entertainment instead of atoms of paper, DVDs or hardware.
Strategic thinking about the digital transformation
In your strategic planning, do you consider ways to obsolete one or more of your products 
or services by delivering it in bits not atoms? Digitally rather than with any form of “hardware” product? Recurring service rather than single sale? Lease rather than sell? There are a million ways to disrupt yourself before someone else does. Are you thinking of this as a top of mind strategic opportunity? Or are you just protecting the status quo because it is making money now and there seems no reason to change?
Many observations come to mind when reading this. I’ll try to keep it short.
1. It wasn’t movie producers as much as the studios / distribution companies that got caught flatfooted by the streaming services. Producers will sell their product anywhere they can get financing or distribution.
2. Both studios AND producers resisted the use of digital filming in HD for a long time as opposed to actual film which then had to be converted to digital. One could say there were quality issues with digital vs film. It came down to where do you want to spend your money.
3. The cable television industry had the opportunity to be in the streaming / on-demand business 40 years ago. And the system operators chose to build, at most, 54-channel copper wire systems instead of fiber systems, which would have given them much more bandwidth.
4. Long before DISH and DirecTV, there was a satellite distribution company, whose name escapes me, in the mid-80s. It had a golden opportunity because people were already disgusted with cable TV’s horrendous customer service and ready to cut the cord. Can’t remember why it didn’t make it. Ironically its president, the late Ron Castell, later went on to run Blockbuster Video for many years.
5. Speaking of Blockbuster, it also missed a golden opportunity because it could have delivered many other products besides videos to the customer base of homes it had already assembled, instead of making people come to the stores.
6. On the subject of migrating service manuals to the web… I worked for a company in the emergency management business whose user manual was ONLY on the web; did not yet exist in hard copy. So what happens if a first responder in the field can’t get connected to the internet, for whatever reason, and doesn’t have a manual that will spell out the alternatives? Always good to have backup…