Will today’s top 10 brands still be here in 10 years?
Even the best brands are doomed to fail unless they have a proactive approach to innovation, writes Bronwen Auret, head of digital operations at MetropolitanRepublic.
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:
1. Take the millennial test.
While millennials may not seem loyal to brands, they do in fact display signs of brand loyalty between the ages of 26 and 33. Product or service switching is often influenced by a change in the consumer’s financial situation.
Value and price are major considerations for trial among 18- to 33-year-olds. According to the Marketing Charts survey, customer-centric brands will dominate in this segment.
2. Let the consumer lead you.
Simple services based on human insight and great functionality will always succeed. Take Uber, the app-driven taxi service, which is valued at $40-billion.
In financial services, mobile money payments transcend literacy and language barriers to let the poorest of the poor transact.
3. Appoint fearless leaders and keep on innovating.
HSBC and Telkom are retrenching 25,000 and 7,800 workers, respectively. Traditional businesses need fresher thinking to understand the new consumer-led world or they, too, will face staff cuts.
Apple, Google, Facebook and Tesla Motors are renowned as leaders that drive and deliver change at every opportunity.
Apple announced seven new product releases in June this year: Apple Music, iOS 9, a news app, OS X El Capitan, watchOS 2, and Apple Pay in the US and UK.
After the launch of the iPod, Apple has continued to expand its product set. There is no limit to the seamless integration of its products and the evolutionary thinking behind them.
4. Don’t be greedy – play nicely with new thinkers.
Comcast is a stalwart in the US entertainment, cable, and Internet business. Its revenues are good, but consumers perceive it to be unfriendly and question its passive co-ownership of Hulu.
Amid such concerns regarding Comcast’s influence over the streaming video industry, the Federal Communications Commission stopped its proposed merger with Time Warner Cable.
5. Put your money where the innovation is.
Commit the appropriate funds to innovation and digital technology – think of the R1-billion investment in Takealot.com.
6. Get mobile or go home.
Operating in 22 countries across the Middle East and Africa, MTN has realised Africa is a mobile-first continent. Plan and be mobile at all times.
7. Get out of your ivory tower.
Do not have any misconceptions about Africa. There are consumers everywhere. Technology is an enabler. It allows consumers to explore products and services from anywhere.
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.