Relatively new market entrants are offering a far better experience than their more established, corporate competitors but how can these legacy organisations close the gap?
I got a new iPhone last week and I’ve been having a cull. I wanted to get rid of the applications (and notifications) that aren’t useful or that I just don’t use anymore.
Those that didn’t make the cut were my apps for mobile banking, the supermarket and a car rental company. They’ve all been replaced. Banking by Monzo, my supermarket by Gousto and my rental car company by Turo.
Monzo let’s me chat with a customer service agent instantly through its chat interface without spending 20 minutes on an automated phone line. It categorises my spending intelligently so that I can clearly see where my money goes (hint: coffee) rather than asking me to tag things myself and login on desktop. It also lets me split bills with friends in a swipe rather than using five different cards at dinner.
Monzo categorises my spending intelligently so that I can clearly see where my money goes.
Gousto lets me choose from an extensive list of recipes every week on a flexible subscription rather than having to plan meals at home and research how to make them. They deliver those recipes to my door every Monday with the exact quantities of everything I need, rather than having to buy more of what I don’t need from a supermarket. It also walks me through cooking those recipes and based on what I like, suggests things I might like next week.
Gousto sends recipes to my door every Monday with the exact quantities of everything I need.
Turo allows me to book cars all over the world from local ‘hosts’ rather than waiting in line at rental desks in airports. Those hosts also deliver it to the kerbside instead of having to navigate multiple car parks. They’re also 35% cheaper than car rental companies because there’s no physical desk to wait at in airports.
Turo allows you to book hire cars all over the world from local ‘hosts’ rather than from outdated, premium-heavy rental firms.
There’s a gap emerging, and the answer is focus.
I’ll accept that the sample size for this observation is just me. But I don’t think it’s a huge leap to imagine that beyond the initial set of early adopters, more and more people will spot these alternatives. Alternatives that remove hassle, save time and sometimes cash.
There’s a gap emerging between the offering of big, established companies and that of more disruptive market entrants. And the gap shouldn’t really exist. Why is it that often cash strapped start ups and new technology companies are replacing these legacy companies in our lives when they have deeper pockets, huge workforces and a pre-existing customer base?
The answer is focus. The job of most big companies is to protect market share, the operating model and the status quo. Too few are focused on finding new markets, better ways of serving customers and disrupting themselves. There’s a huge cannibalisation complex in leaders at these companies who are worried that if they upend their existing models, it’ll eat into revenue from other parts of the business. The reality surely is that if they don’t, then someone else will.
Big companies should be squarely focused on making sure they’re not replaced. They should do this by getting closer to customer needs, understanding their frictions, prioritising projects to overcome them and building design thinking, lean and agile practices into the capabilities of their existing teams. We think there are 4 areas that established businesses need to bring focus to:
1. Get way closer to customers
Nobody at my old bank had ever looked in the whites of my eyes and asked me what I’m trying to get done, yet Monzo have regular customer town halls, a community and a transparent product roadmap. If you’re not customer-led as a business, how can you hope to better serve them? Working in isolation of customers, not communicating with them and have no understanding of the jobs they need to get done creates a break in a critical feedback loop.
2. Identify frictions and solve them
Why, in 2017, when I had an account with my old rental car company did I need to wait in line at an airport to fill out forms, collect keys and have a car inspected? Surely I could use my phone when I land to identify myself, chose a car, pay for it, access it and drive off? My new company, Turo are getting closer and closer to making this friction-free, and cheaper. Map out where the breaks are, figure out why they’re there and use design and technology to remove them. Start with the customer problem, not the tech you have to hand.
3. Prioritise projects and work through them
I’ve been with Gousto, the company who have replaced my weekly supermarket shop, for about 5 years. In that time they’ve improved and iterated on the first version that we experienced by adding new recipes, introducing guest chefs, providing dinner party kits and becoming a lot more flexible on delivery. Nobody is expecting that the supermarket I used to use would be able to ship a comparable experience overnight but they can learn from this iterative approach. Start with the most fundamental part of the experience that’s broken and build on it.
4. Give your teams the right skills
None of the upstarts I’ve shone a light on here are operating like the big companies that they are challenging. That is exactly why they are challenging them. Established organisations need to look to the more disruptive startup and technology world to understand the mindsets, principles and methodologies that are powering them.
Hint: it’s not months of research followed by months of requirements gathering followed by years of development — it’s using design thinking, lean and agile to move quickly, take feedback and iterate.
Looking for some support on closing the gap? Grab some time with us here.