3 Ways to Make Digital Dinosaurs Dance

“Digital is the main reason why we expect 40% of the Fortune 500 companies will have disappeared in the next 10 years.” – John M. Olin, School of Business at Washington University, 2014

Although digital disruption is nothing new, that is still an amazing number. This means that 40% of the world’s biggest companies won’t be able to adapt to a reality which for many of us comes so naturally.

An example of this struggle is the failed 6 Dots project, which was an initiative by Belgian banks and telecom to come up with a universal mobile payments system.

How to make digital dinosaurs dance? Although it may seem like the traditional companies have a serious disadvantage compared to today’s disruptors of industries in terms of agility and innovation.

They actually hold quite a few cards which may give them a competitive edge, Wim Decraene states. These are situated at the cross-section of marketing and finance.

Successful digital dinosaurs share the following 3 characteristics:

1. They create investment capacity from their current core business

For example, bpost’s parcel delivery service is still only responsible for a small part of the turnover and there is a lot of competition from other players such as DHL, etc., but they can finance the growth with profits from their core business of mail services.

They create this capacity by:

• Structurally reducing costs (via marketing automation tools, etc.).
• Keeping revenues steady.

This approach allows them to invest in startups and perform acquisitions of other companies. What is so unique, is the fact that they can both drive growth as well as reduce costs same time.

2. They design and scale the new business

For example, D’Ieteren are employing some very aggressive tactics to get a foot in the ridesharing business. They started out by setting up a joint venture with Poppy, a new service in Antwerp which is to launch in 2018.

Now they aim to flood the market with 400 cars. That way, they hope to immediately eliminate any possible competition in the city from other ridesharing startups.

In 2016, 85% of all new products failed. This is why successful dinosaurs employ two tactics when launching new products:

• Let a thousand flowers bloom: launch a lot of new projects and allow room for failure. Failure is an option. However, make sure to keep the balance.

• Design for love: actually focus on customer needs (both functional and emotional) and build a product catering to those needs.

3. They pivot wisely from their current core business to the new business

For example, Barco with their ClickShare product, which started out as a digital solution to aid their customers with the usage of their physical screens, but is now fast becoming an extremely popular tool. ClickShare’s sales have doubled in the last year.

It’s all about timing. Pivot too soon, and you risk losing out on sizable profits which could have helped support the new business.

Do it too late, and you risk having to battle fiercely for market share which was previously ready for the taking. Also take into account that the growth curve for a new disruptive product isn’t a bell curve, but a shark fin curve.

Usually with this type of products, there are only 2 or 3 big competitors instead of many, so it is paramount to become one of those.