By Robert Craven, MD at The Directors’ Centre
Everything and nothing has changed in the New World:
• The High Street is dying
• New, low-cost business models are everywhere
• Freemium and premium pricing models exist side by side.
There are clearly new rules for what is rapidly becoming a New World for most of us. Here are 11 Rules for the New World:
1. Advertising doesn’t need to be risky any more
CPC (cost per click) and CPA (cost per action) deals now dominate online advertising spend; it is inevitable that marketers will demand the same responsiveness from other media.
2. Low-cost models are the future
BA post losses in the week that EasyJet announce profits… Ryanair, PoundLand and Iceland experience record profits. Need I say more?
3. Partnerships are the future: David and Goliath now work together
Increasingly businesses are collaborating. Smaller businesses can use the resources and footprint of larger businesses to fast-track their growth; meanwhile the larger business gets access to the innovative thinking of the smaller body.
4. You snooze, you lose
The speed of doing business has accelerated to the speed of light. There may never have been much point in sweating over 5-year plans, but even 3-year plans now seem hard to rely on. This changes investor horizons considerably.
5. Goodbye High Street, hello supermarkets and online
Where and how and when people buy is changing faster than ever before. Five year old business models and assumptions become defunct. Rest in Peace: Kodak, BlockBuster …
6. Sector boundaries are vanishing
Apple took over music retailing and mobile phone manufacturing out of nowhere. BT is now an IT support service provider; Google is now taking on Microsoft Office; newspapers, magazines, radio and TV stations are all suddenly direct competitors online. What does this all mean? Where will it end? How can you build defensible market positions in such a world?
7. Business is now truly global
It is now extremely possible for even a start-up to service customers globally without significant infrastructure. It is also imperative for many industries. Being a happy, modest domestic or regional business may no longer be an option in future. In fact, it may be like signing your own death warrant.
8. Small is the new medium
The global economy will feature a small number of global giants, and a vast array of smaller niche businesses. Medium-sized businesses may not be able to compete, and will need to merge, shrink or die.
9. The Customer is no longer just King, but Emperor
Now that customers can talk to each other easily and almost immediately, their opinion on our products and service matters more than ever. Treat them well, and you can benefit massively. Let them down, and your business will suffer.
10. Cash is Crucial
With the shock to the world’s financial system, credit will be harder to come by for many businesses, meaning that companies with cash will have an enormous advantage over those without. This will last for some years.
11. Price for Profit
It is far too easy to price for maximum sales, all of which are unprofitable. For many, competing on price is a mug’s game.