WATCHING THE CONTINUUM: A leadership imperative
Which products in our life have already gone through or at present going through dissolution of meaning for us from its intended functional utility? The iPhone, iPad and Android devices itself begat a broad sweep of product & services redundancies and here are a few of its languishing victims: Bookstores,personal diaries, declining paid newspaper industry, external hard drives (Mediafire, Dropbox, Google drive, cloud computing should suffice for storage), book maps and atlases, handheld gaming consoles, MP3 devices, CD’s, DVD’s, VCR’s, DVD players, photographic films & stand alone cameras, pagers, voice recorders or dicta-phones, flashlights, encyclopedias, classifieds in newspapers, dial up modems, landline phones, yellow pages and address books, brochures and catalogues, fax machines, wires (most devices and gadgets are wireless these days), hand written letters, walkman, stand alone radio’s, photo albums, bedside alarm clocks, cheque books, desktop computers (replaced with laptops, smartphones & iPad’s) and many others.
What happened to these products? They accosted obsolescence, either technical obsolescence or functional obsolescence or style obsolescence and is no longer popular. Replacement products pushed these to the precipice. With the 1995 introduction of DVD, the VHS and CD industry were decimated and now even DVD is facing extinction. Go back in time and we can trace the path of which products eliminated what. With the ‘burst in’ of smartphone and downloadable mobile applications, practically a whole lot of industries were consigned to the obituary section.
The metaphor earlier used to be ‘as the future gradually unfurls’ but the word ‘gradually’ has lost its usage significance in this immoderately developing technology context or technology led obsolescence arena. The future will not gradually unfurl but will change abruptly, definitively and continuously. 10 to 12 months is the life cycle of a smart phone these days before which a much better product either from own firm or competition shows up. Leaders in organizations are apprehensive, high strung and going forward this may be a new behavioural exigency. Why, because there doesn’t seem to be an ordained comfort span available for leaders even after bringing to fruition, a path breaking product as these days the market latches on to it fast and further innovates, improvises or improves upon their product. The shelf life of even the most complex products has shrunk due to a highly networked and connected world. Leaders have to constantly knead their team’s creative minds and revisit ‘what business they are in’ and the question here is not whether their business is insulated for future but a more prudent line of inquiry is ‘For how many years can they sustain their product leadership’ as disruptive innovation is omnipresent. What is the Internet doing to industries? It is mercilessly exterminating middlemen oriented businesses.
INDUSTRIES/ HABITS DECIMATED BY INTERNET & MOBILE DEVICES
• Travel Agents: Worldwide round trips can be done on a smartphone and within an hour even payment can be processed. Travel agents are not needed
• Physical Bank Transactions : People once used to go to a bank to make transactions but online transactions are such a breeze.
• Physical Dictionaries: Dictionary apps on mobile phones has made physical dictionaries redundant.
• Office Space: People had to mandatorily go to office to conduct business but these days with an Internet connection, a laptop and a phone anyone can work from anywhere. Too early to say that office space will become altogether redundant at this stage but there seems to be organisational malleability towards ‘working from home’.
• Blind Dating: These days anyone is Googleable in 5 min (LinkedIn, Facebook, Twitter and 10’s of sites). If someone doesn’t have a digital presence these days he/she it is considered as either a clandestine operator or technologically not savvy. Blind dating is redundant.
• Live Television: Digital media receivers such as Apple TV make TV viewing at one’s own convenience instead of adjusting one’s time to the program’s schedule. One need not hanker for the living room to see a program live of course barring crucial sporting events where there is a threat of knowing the outcome of a game from emails, social networks or euphoria and shouts from neighbours house etc. Delayed watching is catching up.
• Diaries: Earlier people had to retain phone numbers and many other details in memory or store it in personal diaries. With ubiquitous Internet availability, people can free up precious memory and delegate it to the web.
• Basic Diagnosis: Look at the proliferation of health sites and data available on the web. These days’ patients meet their GP’s armed with such information and perhaps in future, for initial diagnosis, they may not even need a GP. BP, Cholesterol, Diabetes and other checks can be self-administered these days.
• Physical Writing: Anyone writing either a whole page or a paragraph is a rare occurrence. Apart from filling up forms, signatures, remarking on drafts, and departmental memo’s, taking notes as in journalism, classroom, seminars, workshops, psychotherapists etc. people don’t write much. Cursive handwriting is superfluous now.
• Gaming Arcades: Dedicated Video gaming arcades are dwindling. Residual arcades are there at Brighton & Blackpool (UK) as well as Las Vegas as it still draws in tourists but with always on gaming, cloud gaming, augmented reality, open source gaming, smart glass etc. the experience in the handheld devices itself is amazing.
• Cinema Halls: Habit of people spending travel time to go to movies is changing. For high special effects and 3D kind of experience the theatres continue to attract audiences but with more sophisticated 3D television and home theatre sound effects, one day perhaps the movie business through cinema hall mode may face obsolescence. Audiences strive to seek comfort and preserve time; technology is making it easy.
• High Street Retail: High street shopping is on the decline. ROTOPO is the new strategy by consumers; Research online, trial offline, purchase online. People research on the internet for example say someone wants a pair of NIKE shoes, they go to the high street shop, checks the product, feels the texture, size fitting etc. and then source the product online at 20 % lesser cost. How do you beat this phenomenon, you can’t. Firms are compelled to create robust online commercialization or face extinction.
• Secretarial Jobs: With shareable calendar, others can fix meetings for us on our iPhone’s. We just need to accept or decline invitations. With productivity applications, instant messaging, and spree of tools, secretarial jobs are getting redundant.
Hundreds of such ‘behaviour change’ examples exist. Hordes of organizations have been wiped off and newer adaptable firms have emerged. Leadership teams have to ensure that ‘product or services redundancy’ w.r.t. their organization is located at an early stage in order for corrective navigation to be applied and to father this doctrine the apparent panacea is to build an innovation oriented organization ground up. There are very few industries able to withstand their erstwhile mode of operations and strategy. Here are a few retail companies that went bust in the last 5 years: Comet, JJB Sports, Clinton Cards, Game, Borders, Barratts, Focus DIY, Floors-2-Go, the Officers Club, Oddbins, Ethel Austin, Faith Shoes, Adams Childrenswear, Thirst Quench, Stylo, Mosaic, Woolworths, MFI, and Zavvi/Virgin Megastore. Sears is going to close 300 stores in 2014, Staples will close 225 stores by 2015, Barnes & Noble plans to close 223 by 2023, Abercrombie & Fitch plans to close 180 by 2015. The 2nd and 3rd tier list is even bigger.
Thus far we have seen both, the kinds of industries as well as kind of companies that have been squelched with the advent of technology led changes in consumer behaviour. Astonishingly there is one industry that is showing signs of sustenance in spite of the iPhone & touch screen epidemic; the wristwatch industry and let us delve into this a little more to see how well tempered is this industry in the present environment.
THE WRIST WATCH TENACITY
With a cellphone always available, do we really need wristwatches these days? Certainly present youth don’t seem to need one. Look at the genealogy of watches. The 16th century saw the advent of watches being invented. It was an out and out mechanical device, powered by winding a main spring which turned the gears and which in turn rotated the needles. In the 1960’s there was inclusion of the quartz watches with vibrating quartz crystal which revolutionalised the watch industry (thin sleek watches) and in 1980’s it was even being captioned as the quartz crisis, such was its influence upon the industry. Quartz was powered by battery and much lighter whereas mechanical watches use carefully regulated release of energy from a wound spring and much heavier. Later digital watches came but finally these quartz and digital watches succumbed to the unassailable class of mechanical watches and today super luxury segment is swamped with these mechanical watches.
All along the predominant functional utility of a wristwatch was to show time, date and perhaps a stopwatch facility. These days a watch is more of a style statement than a functional utility. A watch may have a split second chronograph, may be water proof, 2nd time zone, annual calendars, very intricate craftsmanship, have qualified watchmakers and micro technicians, stone-setters and guillocheurs (who engrave intricate decorations onto the dials), use exemplary metallurgy and precision tools, hand assembled, etc. but no convincing script exists to justify a $ 5 million price tag (Swiss watches cost anywhere from $ 700 to $ 5 million). There is an incredible mark up on the cost price, call it price for brand positioning, celebrity endorsement and conditioned thinking of people that the more a watch costs the more aspirational the product is. Wristwatches in the price range above $ 1000 always transcends functional utility and moves into the luxury segment. Since there is no authentic justification for higher prices, watch companies attempt to take us through an imaginative world of art, music, fabled legacy, emotional history, celebrity accomplishments & lifestyle, image nurturance, exhilarative adverts, promotional bliss and resplendently sponsored events. The ‘Swiss made’ print on the watch itself will fetch a 100 % premium. Check out these interesting statistics:
• 1942 Rolex Chronograph watch costs $ 1.6 million,
• Patek Philippe Super Complication watch costs $ 11 million (an 18 carat gold watch with over 900 parts, took 5 years to make). At present owned by a Qatari royal family.
• Breguet – Grande Complication Marie-Antoinette Number 160 costs $10 million!
• Chopard 210 Karat costs $ 25 million (it is akin to a piece of jewelry)
The above watches with their astral pricing are even beyond the reach of movie and sports celebrities and perhaps relegated to the tastes of the exclusive elite. People of a certain caliber of wealth and accomplishment at least own two super-luxury watches one for office work and one for sports. Patek Philippe, Vacheron & Constantin, Blancain, Breguet, Audemars Piguet etc. are watches that enjoy unmatched eminence. Each Patek Philippe watch is hand assembled and even if you can afford one, it is hard to get as Patek Philippe makes just 50000 watches in a year compared to Rolex’s 700,000. Look at their company’s value statement, “You never actually own a Patek Philippe. You merely look after it for the next generation.” It is handed over by the father to his son and so on and lasts more than 100 years. Keen to know Patek Philippe’s 10 values, here it is: Independence, Tradition, Innovation, Quality & fine Workmanship, Rarity, Value, Aesthetics, Service, Emotion and Heritage.
Look at the other range of watches some of the eminent people wore at one time. Clinton wore a Panerai, Pierce Brosnan wore a Omega Seamaster, Tara Reid wore a Rolex Daytona and so did Daniel Craig, Leonardo Dicaprio wore a Tag Heuer Carrera Calibre, Stallone wore a Panerai Luminor 1950. All these watches are in the $ 4500 to $ 50000 price range.
By now it is a no brainer and everyone understands that a wristwatch is a luxury and fashion accessory hence the Swiss watchmakers aren’t perturbed about any of the wearable devices that companies such as Apple, Google, Samsung and others threaten to introduce. They don’t feel these firms are in anyway competing with their super luxury segment as they are confident about preserving and growing their premium customer segment. It is improbable to see Tom Cruise wearing an Apple or Google wearable wrist device, however efficient the device may be. Being a star and fashion icon, he has to leap beyond the sea of sameness into the river of differentiation and embrace exclusivity hence luxury watch market depend on such rationale. It could be true in case of celebrities but whether wearable devices will offer zero threat to established Swiss industry is something that time will tell and the Swiss watch companies are indeed ‘watching the technology continuum’ with fervor. As long as Horology is perceived as an art, the premium and super luxury watch industry will survive a technology onslaught and the watch making community pumps in millions of dollars to keep this perception of people within artistic confines. So far brilliantly successful but hold on, wearable devices haven’t experienced commercialization yet and till such time, do kindly be respectful and glance at a Patek Philippe and the likes of it with reverence.
The wristwatch industry case is merely an example but from an organizational sustenance perspective, leaders must keep a watch on the technology continuum and evaluate how insulated are their products and service against rapidly emerging innovative products & services. A better strategy would be to lead a category or in fact create a category of product or service e.g. Apple, 3M, Google, NIKE, Amazon etc.