Now it’s the car industry that is in trouble, other industries will follow, prepare for the great disruption, and look for winners.
Get ready for the falling dominos
I was impressed. So, I recently changed bank accounts, now I use Monzo Bank and every time I make a transaction I get a ping on my banking app. The other day, I wanted to watch Killing Eve, and in a moment of absent mindedness, called up my Netflix app, only to discover my account had been frozen because my direct debit from my old bank hadn’t been paid. I got one of those moments of dread, err, how long is this going to take? Well, it took hardly any time. Netflix signposted me to the correct page, I changed the bank details, pressed okay. This is when I became impressed, because what felt like in an instant, my fingers were still resting against the okay button, my phone pinged twice. Once from Monzo confirming a new banking arrangement, once from my Netflix app telling me account problem had been resolved.
That’s why the two are so successful — at least Netflix is. Monzo is not yet on the stock market, I hope it won’t be long before it is.
Then I realised that Killing Eve was on the BBC iPlayer — which gave me some comfort. Despite the fact that the BBC is currently under attack from right wing politicians and jealous media that can’t come close to matching its level of balance, the BBC is at least still producing programmes as good as the best shows on Netflix.
But my little story above illustrates a truth. Older, traditional companies, are being held back by their legacy, they can’t see past the way they have done things in the past. I have never encountered such a super efficient way of updating an account before. Traditional banks and media organisations are left wanting.
Let me take two examples. One from history, one that is very topical.
When Microsoft launched its encyclopaedia product Encarta, it tried to do a deal with Encyclopaedia Brittanica. And it got short shrift — ‘why would we want to turn our hallowed product into a toy?’ was the gist of the response. Part of the problem is the Encyclopaedia Brittanica revenue model was closely tied to those door to door salesmen — many of whom rose up the ranks of the company to the board.
Encarta proceeded to annihilate Encyclopaedia Brittanica, which was finally bought out at a price which was a fraction of the value a few years before. There is an interesting footnote to this story. Encarta was in turn annihilated by Wikipedia, and Encyclopaedia Brittanica has enjoyed a second life as an online encyclopaedia that is sufficiently trusted to be used as a reference source in academic essays.
My second story relates to the the car industry. It’s in crisis. In the UK, the problem is exacerbated by Brexit, not caused by it. Part of the problem relates to the diesel emissions scandal. Regulations have gone from one extreme to another, from too soft to possibly too onerous. But it is in the interaction with the electric car that the issues become especially complex. Redesigning a car is expensive and requires long-term planning. The shift away from diesel requires this, but electric cars are close to replacing petrol cars. So the industry finds itself in this halfway position, a need to shift away from diesel quick, but in the full knowledge that what changes they make now may become irrelevant in a few years. This is having a disastrous impact on the supply chain.
The idea that the car industry was set to face an existential threat has been a theme here for years. Now it’s happening.
The car industry crisis mirrors what we have been seeing in retail for years.
But what is next? Watch banks, energy and logistics companies.
Only the ones that fully embrace technology will avoid the next wave of disruption. But also look for companies at the cutting edge of technology; they will be the next superstars.
These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees