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Why You Never Saw It Coming

 We've talked and worried for years about the potential harm to businesses that unforeseen results and unintended consequences can cause, especially when the companies involved are new and relatively immature. When you read the typical after-action analyses, which try to make sense of these seemingly "abrupt" changes or the "surprise" upsets, they are almost always directed toward studying how well or poorly the particular actor, entity, or business fared as a result of the inability to anticipate or mitigate the nasty changes brought about by its own deliberate actions. Of course, these kinds of problems don't simply effect newbies.

Just look at the growing backlash that Starbucks is facing as in-store customers are increasingly treated as an afterthought by an overwhelmed barista staff trying to keep up with the influx of mobile orders. Didn't anyone there suspect that, in our hurry-up world, creating two classes of customers and visibly shoving the fact right down the thirsty throats of the losers was a really bad idea. The question they didn't answer was not "how can we do a great job serving the glut of new mobile customers?", it was "what happens to the regulars who come in every day?".

Many of these failures aren't all that interesting, in that someone could or should have known what might happen if they had fully done their homework and taken the time to carefully look ahead and plan accordingly. If you don't know or care what road you're on, it shouldn't come as a big surprise when you end up in a ditch somewhere. A "plan" without a roadmap is nothing more than a daydream. (See Why You Need a Reverse Roadmap) Folks in a hurry to get started without much of a care about where they're headed basically get what they deserve.

A "plan" without a roadmap is nothing more than a daydream. Folks in a hurry to get started without much of a care about where they're headed basically get what they deserve.

For startups, it's more interesting and far more valuable to look at the risks and consequences of the kinds of changes that are much harder to see-- even with Superman's X-ray vision and a crystal ball-- because they're outside of the traditional scope of inquiry and investigation. Academics and other analysts rarely look beyond the primary participants to examine the ripple effects and the impact on more remote third parties, which can often be even more problematic.

This is also why the big guys so often miss the boat. Blockbuster, Borders, Blackberry, etc. At the same time, their neglect and oversights create a continuing stream of exciting openings and opportunities for new businesses. Too often, when large, established players look at their markets and direct competitors, they only see what they're looking for and what's pretty much right in front of them. But in today's world of immediate and radically disruptive innovation and overnight shifts in supply and delivery chains, as well as the constantly-escalating demands of consumers, you can have the best in-market research and competitive intelligence in the business and still get bit in the butt by a newcomer from nowhere.

More and more, the existential risks and the primary threats of abrupt displacement come laterally-- from new entrants, from unrelated businesses expanding into your space, from leapfrog technology, and from changes in the customers' needs and requirements. These can provide clear opportunities for your own business if you seize them (See Five Reasons Your Market is Bigger Than You Think.) and serious challenges to your company if you're asleep at the switch.

Starting from the publication in 1997 of The Innovator's Dilemma, by Harvard Business School's Clayton M. Christensen, we've become increasingly aware of the risks of ignoring the new kids on the block. So I don't regard this as much in the way of breaking news. In fact, the far more interesting questions relate to the increasing instances where changes and new behaviors in a given vertical or marketplace have enormous consequences in other sectors of the economy that we would never have imagined.

We've always understood this in the context of nature-;the "butterfly effect") is often cited albeit scientifically unproven-; where a material variation in any basic ecosystem could inadvertently harm countless other and different lives, but it's been underappreciated in the business world. For sure, some of this proliferation is a product of our hyper-connected world, but it's also the availability and ubiquity of new technologies at lower costs that's accelerating behavior changes across markets more broadly than ever before.

For a startup, if you want to get ahead of the pack and look for open fields and unexplored spaces, you've got to think even further downstream than the obvious cases and start considering the demands for new kinds of products and services that these more remote "ripples" will create in the near future. Some of these implications are pretty clear. There's not much hope for cabbies and truck drivers. Amazon's cashier-less stores will soon imperil 11 million retail jobs in this country. We have far more cashiers in the U.S. than teachers, which is a sin of a different stripe. And as voice input and video output continue to explode, I'd hate to be manufacturing keyboards much longer. But that's just the head of the stream.

And as voice input and video output continue to explode, I'd hate to be manufacturing keyboards much longer. But that's just the head of the stream.

 

Between online ordering (fewer store visits), automated home replenishment of commodities (ditto) and in-store pickup combined with self-service checkout and kiosk deliveries, the chewing gum business is in the toilet and impulse sales at the register (candy, necessities and magazines) overall are plummeting. Bubble gum sales are off more than 40% over the last few years. Who'd a thunk it and why is this happening? Because we are no longer standing trapped with our carts in the "transition zone" and subjected to the constant temptations stacked conveniently at our fingertips. Amazingly, more than $5 billion in grocery store sales each year used to originate in the checkout line. So long spur-of-the-moment Snickers and Wrigley's Spearmint. Both brands are owned by Mars Inc., which has to figure out the next delivery channel or mechanism before someone else does.

Every day, on-site assembly and on-demand 3-D printing becomes less of a stupid and wasteful novelty and more of a business necessity, eliminating inventory and transportation expense and providing just-in-time supply solutions. Thousands of plastic parts in millions of businesses cost more to transport than they do to produce. Sadly, it's more bad news for the transportation industry. The pressure to push everything closer and closer to the perimeter-- basically to the point of purchase and delivery-- is ripping apart all the elements in the traditional supply chains. The 3-D machines are still slow and costly, but the future is clear.

And voice commands are gonna take an even bigger bite out of and be even a bigger threat to brand equity than online purchasing, which has already almost entirely eliminated the pizzazz and tactile impact of packaging. Whichever tool or voice assistant you use, you'll find early on (as the current stats are clearly showing) that it's a pain in the ass to give incremental details like brand names or product sizes to the machine and, as the machine increasingly knows what you've already ordered, you'll be ever more inclined to just ask for "the usual". (See Can You Have Too Much Technology?.)

Amazon already has Alexa default whenever possible --and sometimes whether you like it or not-- to the Amazon versions of many commodity goods. You can override these things, but who wants to go to the trouble and who really cares what brand of batteries you're ordering anyway? Maybe these guys at Brandless are really onto something?

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Topics: Insights