As technology evolves, it creates business opportunities. These new enterprises often become profitable quickly, challenging century-old business models. Innovative businesses not only knock old players off their perch, but also make them obsolete if they do not change with the times. So will today’s top 10 brands still be here a decade from now?
According to Brand Africa, South Africa’s top 10 brands in 2014 were MTN, Sasol, Vodacom, Standard Bank, Absa, Nedbank, First National Bank, Mediclinic, Investec and Woolworths. Totalling nearly R180-billion in brand value between them, there is much to learn from these institutions. These brands represent sectors that are threatened by technology and by disruptive innovators such as Elon Musk, Mark Zuckerberg, Sergey Brin and Larry Page.
Of these, financial institutions are probably the most vulnerable to innovation. They have to face the reality of growing demand for mobile and virtual money. According to Frost & Sullivan, the consultancy, the mobile-money market in sub-Saharan Africa is valued at $656-million and is expected to reach $1.3-billion by 2019.
Mobile money payments are a game changer in Africa because it circumvents the perception of high transaction fees for physical banking, especially among people whose income is unreliable. Its key asset is its ability to stimulate financial inclusion.
Similarly, Bitcoin’s virtual currency system also poses a threat to banking. It holds millions of dollars in bitcoins for consumers. Banks are not required to redeem bitcoins and the system is independent of country borders, though its value and stability are still being debated.
Many telecommunications companies owe their existence to rapid changes in technology, but even some of these young, hugely successful businesses face threats from alternative voice-calling options such as WhatsApp, FaceTime and Viber.
Facebook, the world’s largest social network, has launched its video-chat facility in 18 countries. This has massive implications for telecommunications providers that offer voice and video products.
In the energy field, Elon Musk has revealed a battery that can store electricity off-grid for home or business use.
In the retail sector, the migration from physical stores to online shopping is gaining momentum. Retailers now have to pay attention to fulfilment logistics and proving the value of their brands to consumers across borders. They also have to compete with pure online plays such as South Africa’s Takealot.com, which recently received more than R1-billion in funding from Tiger Global Management, the New York-based fund.
Established and successful brands are doomed to fail unless their approach to innovation is proactive. They cannot wait for sales to dip before implementing new strategies, for it may then already be too late to catch up with the latest trends.
Not only does a product have to remain relevant, but the channel that delivers it to the consumer has to keep pace with technology too. While humans will be making and recording music in perpetuity, the way it is released and consumed will remain dynamic. CD stores, for example, are going the same way as video-rental stores amid the shift towards digital buying.
Nowadays, consumers want to the latest movies and music for free and do not think twice about illegally downloading such content. These industries, which have found it almost impossible to plug the holes, must innovate to remain profitable. As in the days of US alcohol prohibition, if a product is not easy to find, there will be a black market for it.
Standing the test of time comes down to business acumen and strategy. Embracing the consumer mindset, technology and an innovative management style are critical. Here is my 6 step cheatsheet to staying ahead:
- Take the Millenial test:
Whilst Millennial’s may seem like they are not brand loyal, they are in fact displaying firm signs of brand loyalty between the ages of 26 – 33. Product or service switching is highly influenced by a change in financial situation. Value and price is a major consideration for trial amongst 18 – 33 year olds. In the Marketing Charts survey, customer-centricity is the key to brand dominance in this segment.
- Let the consumer lead you:
Simple services based on human insight and great functionality will continue to be successful. Take Uber, the taxi service, which simplifies its taxi service through a smartphone app, is currently valued at $40 bn. In financial services, mobile money payments transcend literacy and language barriers to enable the poorest of the poor to transact.
- Appoint fearless leaders and keep on innovating:
HSBC and Telkom have just announced 25 000 and 7 800 retrenchments respectively. Traditional businesses need to bring in new and younger brains that are able to understand the new consumer led world. Apple, Google, Facebook and Tesla are renowned for the leaders who drive and deliver change at every opportunity.
Apple announced 7 new product releases on the 8th of June: Apple music; iOS9; a news app; OS X el Capitan; watchOS 2; Apple pay us and uk. Post the launch of the iPod, Apple has continued to develop their product set beyond the operating system. There is no limit to the seamless integration of its products and the evolutionary thinking.
- Don’t be greedy and play nicely with new thinkers:
Comcast is a stalwart in the US entertainment, cable and Internet business. Their revenues are good, however, consumers perceive them to be unfriendly and there are questions being asked about their passive co-ownership of Hulu. Amid these and other concerns regarding their influence over the streaming service industry the Federal Communications Commission stopped the proposed merger with Time Warner.
- Putting your money where the innovation is:
Much like Takealot.com’s R1-billion investment, it is important to commit the appropriate funds to innovation and digital technology.
- Get mobile or go home:
Operating in 22 countries across the Middle East and Africa, MTN has realised that it is a mobile-first continent. Plan and be mobile at all times.
The difference between innovative companies and those that simply maintain their past recipes for success is becoming obvious. Technology will resign to the scrapheap those businesses that fail to innovate. The sooner large, bureaucratic organisations realise this, the better. For some, it will be a painful process given their size. Others, such as Facebook and Google, are embracing this change – the success of their business models depends on their ability to keep delighting their consumers with new products and services.
These brands will continue to set global best practice for their respective sectors. Businesses that want to be successful in Africa must follow suit. The size of economies across the continent will only increase in the near future, making it critical for businesses to innovate in time.