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Beware - Will technology destroy my business?

By Jon Peterman on 09/04/2015 - 0 Comments

We will never know when the words “technology will destroy my business” were first uttered.  We can be pretty sure though that whenever this was, the words technology and business, although concepts, were not recognised words in the way we think of them today. 

One look in a British history book will reveal the impacts on employment of technological advances in the cotton industry. In today’s world there is no successful business owner who is not aware of the potential impact of technology on their business. But should you fear the seemingly ever accelerating impact of technology, or embrace the opportunities that it can bring? 

Two key things we have all grown up with are words and pictures. Let’s take a look at the history of these two things; how technology has changed the way we interact with them and crucially how two of the world’s most renowned companies have reacted to the technological opportunities relating to them. 

Time for a quick history lesson.  Back in 1452 Johannes Gutenberg printed a section of the bible which is generally seen as the first book. However, the Chinese had been using wooden blocks to “print” for around 600 years by that time.

As for pictures, it was in 1888 that George Eastman produced the first mass market camera with a roll of film that would expose 100 images. When exposed the camera had to be returned to his Company, Kodak, for processing. The camera was then sent back to the customer with a new roll of film installed along with the prints. The advertising slogan used to launch this revolutionary concept was “you press the button, we do the rest". 

This embraced the philosophy of making life simple for the customer and encouraged them to put their faith in Kodak.  Remember this slogan as it will later feature in a way that Eastman, who died in 1932 would no doubt have marvelled at.

So how did a company that went on to be such a dominant player in 20th century technology and one of the world’s top corporations become the just surviving entity it is today? 

Well, the fragmentation and decline of the company was primarily due to changing technology and their sense of complacency in their role as the world’s leading photography brand.  No doubt back in 1888 there were voices saying that by introducing a consumer camera Eastman would destroy the professional photograph business. It was in 1975, some 87 years after the introduction of the mass market film camera that a Kodak research scientist presented a device that would ultimately destroy the market for the invention of the company’s founder. 

The Kodak management team’s conclusion that this invention would decimate its film business was 100% correct, but it was their approach to this invention that ultimately destroyed the company. The research team were told to put it in a drawer and forget about it.   The invention was of course the digital camera.  Is it fair to say that this one decision caused the decline of this giant?  Well no it is not, the general belief of the company’s invincibility as a market leader and massive profit margins allowing inefficiencies throughout the supply chain to be “hidden” all played their part.

However, their failure to embrace and lead the digital photograph revolution was at the heart of Kodak’s decline.  Fear of the impact of new technology is no reason not to champion it.

So let’s go back and look at the printed word and see how another company has dealt with the threats, or in their case opportunities presented by new technology.

The year is 1994 and Jeff Bezos decides to set up a book supply business based in his garage.  In 1888 George Eastman decided on the name Kodak as he liked the letter K so set about a name that had it at the start and end.  He had been told by his branding advisors of the day that starting and ending with the same letter in a relatively short word to name your brand was the way forward.

When Bezos was looking to name his company, like Eastman he also went for a short word but in his case chose one based on the vision for his business. He wanted his business model to resemble a main flow with multiple streams flowing in to it. The name was that of a major fast flowing river with multiple tributaries, the Amazon.  From day one Amazon was at the forefront of technology using the internet as its customer interface, focusing on a lean and responsive supply chain to deliver their products.

Let’s fast forward to 2007, three years before the first iPad was launched.  By now Amazon is a well-established internet book seller that has expanded its business model to include multiple other streams of revenue, but still keeps books at its core.  Along comes an invention that has the potential to dramatically affect the number of books that Amazon can sell. This invention was of course the Kindle. 

Rather than shunning the new concept of an electronic book as a potential threat to the Amazon business, they embraced it and established themselves as the world leader in the supply of e-book readers as well as the e-books themselves. Some eight years later despite the existence of numerous other tablet devices and e-readers Amazon have around a 65% market share of the e-book market. Rather than fearing the development of new technology and pushing it to the back of a drawer, as Kodak did, they championed it.

So what are the lessons here for the SME business owner?  With hindsight it is very easy for us to see the reasons for the success of Amazon and the demise of Kodak.  Yet, while hindsight may be something that we all possess, it is also something that eludes us at the crucial moments that we make important decisions.

Thankfully there are a number of good business practices and tools that we can use to help us make the right decisions and be at the forefront of the trends in our market. It is these things that distinguish successful businesses from those who get left behind to play catch up, or worse.  

At ICON we encourage and assist our clients to use a number of techniques to help ensure that they stay ahead of the market and make the most of the opportunities that are out there for them to grow their business. 

The first tool may sound painfully obvious, but is something that, in my experience business owners rarely carry out in an effective and useful manner. The simple act of compiling an effective customer survey is essential to growing your business in the right direction.  You should be looking to establish how well you are catering for their needs, how your service matches up to their expectations and what else they desire that your business can provide them with.  It is obviously desirable to get feedback from customers that tells you how brilliant your business and services are.

However, the real value in customer feedback is of course the information you get on where your service, the product you supplied, your team’s performance, etc. were not top notch. There are numerous ways in which you can carry out a customer survey to suit every business type and budget. 

For some it may be a simple tick box survey filled in at your counter, others may possibly go for an internet online survey or you could even employ a market research company to carry out a survey on your behalf.  If appropriate for your industry, you can also incorporate a one on one feedback session as part of a project handover.

Another key tool is to carry out a “S.W.O.T” analysis on your business. The “S.W.O.T” technique is used to analyse the Strengths, Weaknesses, Opportunities and Threats to your business. These four characteristics are also broken down into internal and external influences.  Strengths and Weaknesses are internal factors, relating specifically to YOUR business and should include features such as management skills, team structure, product portfolio, supply chain, financial control, location, etc. 

The Opportunities and Threats relate to the economic environment and this article deals specifically with how the external market can influence them.  Just imagine what the world would look like today if Kodak management had seen the digital camera as an opportunity rather than a threat and if Amazon had seen e-books as a threat rather than an Opportunity. 

The moral of the story is to take an active and positive stance so that you are always on the lookout for opportunities, while taking steps to ensure that it is you not your competitor that takes advantage of them first. Remember- it is your customers who can help you identify these things. If you would like to know how ICON can help you to carry out a S.W.O.T analysis on your business please do get in touch.

So let’s pop back to George Eastman’s marketing slogan for his camera. “You press the button, we do the rest".  He was spot on. What we all want as clients is to have to do as little as possible and be confident that the company whose “button” we have chosen will do the rest as efficiently and accurately as we expect them to. Remember George’s slogan the next time you order on Amazon and press the ‘one click’ order button. 

We can all learn from both Kodak and Amazon’s approaches. Now would be a good time to stop for a cup of tea and use two of our favourite ICON business tools, a blank sheet of paper and a pen. Draw a button at the top, put yourself in the shoes of your best client, push the button and make a list the things that you think they want to happen. With a bit of luck you could think of something new to help you stay one step ahead of your competition and provide your customers with the most up to date and efficient services in the marketplace.

Jon Peterman
29th March 2015

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