That old & established brands can be disrupted by today’s tech powerhouses is passé. The burgeoning fin-tech segment is a clear example of how venerable banking establishments are regularly threatened by the new tech upstarts! Ditto for retail, travel & taxi services. But there’s a way to respond positively to such disruptions.
Beyond Digital Transformation
To stave off assaults from disruptive external sources, traditional brands must launch new digital brand avatars – that extend, complement & even challenge the current brands.
In other words, to respond to pressure from younger, more innovative challengers, established brands must go beyond digital transformation of their legacy businesses. They must spawn digital avatars, which could behave quite ‘dissimilarly similar’ – just like real avatars (incarnations) do.
Spinning Digital Avatars
Established brands can best ring-fence their domain by spinning new digital brand avatars – apps & platforms which extend, complement & even challenge the existing brands. This can be done by ensuring that brand teams train their sights not only on digitally transforming core offerings but also developing new digital brand avatars.
That said, it is quite a logical expectation, given that the parent companies of successful brick-and-mortar brands are:
- Used to investing heavily in research & development of their brands
- Have the financial muscle to buy a start-up &/or set up a venture fund/incubator for start-ups and leverage their capabilities
So, what inhibits these established brands from spinning new digital avatars? It’s seen that venerable brand-owning companies display two characteristics which slow down all radically new initiatives:
- Structured management with rigid reporting & answerability
- Senior management who has no concept of how much of a ‘free hand’ is required to commercially scale up an innovative idea (this is quite different from allocating budgets for conducting research)
Added Advantage
To respond to the threat of disruption, established brands must change their expansion model. Their new units must be structured like an ever-evolving start-up, with the added advantage of their significant commercial ‘fire power’. This way, they can adopt the best practices of start-ups along with the tested advantages of their infrastructure, network & experience.
This is like building an in-house “manufacturing plant” superstructure on the existing structure, with free access to the existing commercial network (clients, vendors, creditworthiness). But at the same time, giving the “plant” managers a completely free hand to commercially try new disruptive ideas to compete with external start-ups!
And all this can be easily achieved thanks to the parent organisation’s financial strength & huge existing commercial infrastructure. All that is needed is to ensure that the “plant” is provided with:
- A free hand to develop commercial ideas & go to market
- Complete freedom from day-to-day bureaucracy
- Encouragement to take advantage of the existing commercial infrastructure
Apt Response
The new structure will enjoy the best of both worlds. On the one hand, it will benefit from the substantial infrastructure, expertise and credit relationships that a large brand enjoys – opening doors to an extensive network of business constituents, vendors & customers. On the other hand, it will have autonomy, with which it can smoothly side-step the bureaucracy of the parent brand’s organisation!
When large brands invest in building disruptive new brand avatars by following a ‘start-up’ game plan, they could end up giving an apt response to the nimble start-ups who threaten them.
Even if that involves cannibalising their own established brand’s business!
Article By Biswajit Das, Founder, Brandintelle Services Pvt Ltd
