In This Issue:
Lessons Related to Paper vs. Digital in Battling Disruption–Can Paper Win at All?
Lessons Related to Paper vs. Digital in Battling Disruption–Can Paper Win at All?
Digital disruption threatens many industries. Companies grapple with how to respond. Some blunder badly, while others come up with productive ways to deal with the disruption.
Dealing with disruption typically works best when it builds upon prior strengths and past foundations. Here are two key approaches:
1. Find ways to develop digital capabilities that fit your strengths and can move your company forward into the digital age. Britannica did this in going from a hard copy print encyclopedia to an online version. Britannica's shift to digital is discussed in my February 18, 2013 blog post, "Don't Panic! It Won't Save You from Market Disrupters", and is briefly touched on in "The Strategic Role of Digital and Technology" in my May 2013 newsletter.
2. Determine if there is a market space where your business can still do well with old technology that your company is strong in, and continue to offer the old technology. Radio is one viable older technology. IKEA emphasizes the older bricks and mortar retailing far more than the newer digital. And, paper producer Domtar Corp. is an example of committing to the benefits of paper, an older technology in our digital world.
Since my previous writing has not yet addressed point #2, this newsletter article concentrates on issues associated with continuing to offer older technology. IKEA and Domtar are discussed in this newsletter, and source articles about them are cited.
As a starting point, however, companies must determine whether it even makes sense to continue with old technology, since the pursuit of dying technologies that no longer offer any advantages can be futile. Yet, in some cases, even fading technologies still have benefits, allowing new and old technology to coexist. These situations can offer market opportunity for companies with the strengths to pursue an older technology.
For example, despite television's disruptive threat, radio still has a place today. With the advent of television, a visual component was added to broadcasting and it disrupted some of radio's earlier position. With television, people could watch shows like dramas and thrillers, that years ago were voice only radio programs. Radio, however, lives on where voice only is appropriate, such as during driving.
A downside of pursuing older technologies is that it may only be a matter of time before market niches that now seem to favor older technologies are eventually disrupted. For example, radio may be further disrupted by driverless cars, which can eliminate the drive-time need for voice only media. Yet, potential disruption at some vague point in the future should not necessarily dissuade companies from embracing older technologies today. Future disruption may not materialize for decades, as has been the case for radio, which has co-existed with television for more than 60 years.
With older technologies, the challenge is not merely how long the technology can remain viable, but also whether or not a company will do what is needed to thrive. For example, although often attributed to digital disruption, the demise of bookseller Borders was also due to strategy and management issues. Borders failed to build upon its bookselling strengths. Its shift into music didn't have the best timing for long term viability. And, seeming to lack a commitment to bookselling, Borders did not put enough emphasis on retaining its book loving clientele.
Succeeding with old technology requires a strategic commitment to that technology. This can't work if the old technology no longer has any advantages. But, if there is a role for the old technology, a company that offers it generally needs to fully support it, rather than treating it with a sense of abandon that encourages it to die. This is essential because many companies seem to abandon their competitiveness in the face of tough times and disruptive threats.
Some companies do make a valiant attempt at responding to disrupters. Often, however, their response to disruption seems mired in an almost panic-like urgency, and ends up not only fitting poorly, but also faring poorly. These ill-fitting attempts are not only unsuccessful, but they also hamper, and can even ruin, the company's ability to pursue remaining opportunities for the older technology.
Of course, even companies offering older technologies need to innovate, continuously improve, update their approaches, adjust their business model as required, and modernize within the realm of their older technology. Essentially, they must continue to evolve with the times as suppliers of the old technology. For some, this may entail incorporating a piece of the new technology, such as when retailers start adding online capability, but continue to emphasize their largely bricks and mortar business–like IKEA, for example, is doing.
On the other hand, depending on the outlook for a company's business, at some point a strategic revamp may be warranted to find better opportunities in case the older technology's future deteriorates. But, whether emphasizing the old or shifting to the new, success calls for responding to disruption in ways that fit well and build upon companies’ strengths. And, when those strengths lie in an older technology with a viable role, successful pursuit of it requires commitment.
IKEA is a company committed to its stores. IKEA saw its profits rise, according to the January 29, 2014 Wall Street Journal article, "For IKEA, Online Isn't the Main Showroom". As the article points out, IKEA's CEO believes it should focus on adding more stores and that by the year 2020, most of its sales will still come from stores, rather than online. This is the case even though, according to the article, visits to IKEA's website "increased nearly 20% in fiscal 2013, while visits to physical stores modestly declined."
In the paper industry, where digital technology continues to make disruptive inroads, the approach of paper producer Domtar Corp. illustrates commitment to the benefits of an older technology. To pursue and enhance the still remaining opportunities for paper, Domtar developed a campaign called "Paper Because". The campaign points out all sorts of good reasons for using paper. Domtar has "Paper Because" ads as well as a "Paper Because" web site. Domtar's approach is described in the article "Better on Paper" by Christine Birkner, in the January 2014 issue of Marketing News.
According to the Marketing News article, "one ad reads, 'Paper because it is easier to learn on paper' and cited research that reading on paper is 10 to 30% faster than reading a screen." Additionally, the article reveals that Domtar's ads also address perceptions about paper and the environment, pointing out that so much paper is recycled. Yet, as Kathy Wholley, Domtar's Director of Communications and Strategy, said in Marketing News ,"We’re not competing with or trying to defeat digital. The idea is to slow the decline, to make people think."
Domtar's commitment to the still viable role of paper may be doable because paper still has some advantages. This can allow paper to co-exist with digital, much like the situation for television and radio discussed earlier in this newsletter. Yet, just as television disrupted radio where visuals were ideal, digital is far better than paper in numerous circumstances and has disrupted paper in many of them. For example, communicating electronically via emails, texting, and tweets can be quicker than paper. Digital retrieval of information and documents can go so much faster than with paper, and can be easier than carrying around all those bulky books and documents.
On the other hand, computer glitches sometimes slow things down. And, there are times when it seems like you have to click forever to access desired content. So, paper still does offer the kinds of benefits highlighted by Domtar. As technology advances, however, paper may play less and less of a role, and companies providing it for print use may eventually have to seek other opportunities. But, as long as paper's role remains viable, some companies with the strengths to offer it can co-exist with suppliers of newer and increasingly pervasive digital technologies. Whether pursuing older technology or new, however, companies should never forget that businesses succeed by building on their strengths.
La Grange Park, IL