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Why Hilton Didn’t See Airbnb Coming

Every business needs to know what the competition is planning

14Mar

Every business needs to know what the competition is planning. But sometimes we get so focused on others, we overlook opportunities for innovation from within — or worse, we fail to recognize when a new juggernaut of a startup could be coming from unexpected places.

A New Competitive Landscape

Incremental innovation can come straight at you, but with all of the new avenues of expansion available today, you might never see it coming. Startups around the world continue to make their mark by breaking into big industries, all while using strategies the major players never thought possible.

Leaders at Hilton and Marriott were too worried about what the other was doing to predict the meteoric rise of Airbnb. Whole Foods was too busy opening new stores to notice the emergence of Blue Apron. Gillette never expected Dollar Shave Club to eat into its business so quickly and so significantly. Even offerings as seemingly irreplaceable as phone services have found themselves threatened by Wi-Fi calling capabilities.

The point here is not to demonstrate how smart these startups are, but to notice that larger companies had the resources to control these potential revenue streams long before the startups were even a twinkle in a founder’s eye.

So, why did they fail to do so? Because they did not innovate from within. They stopped being open to new ideas. They were so focused on winning the game in front of them, they never considered the possibility that a few small players might sweep in and change the rules.

Shifting Your Perspective

Competing in this new landscape doesn’t require you to think ahead and predict the future. Instead, successful companies must learn to think to the side, looking horizontally within their own businesses to explore opportunities that might be unusual or even contradictory to their current models for growth.

Getting to this point requires companies to ask the questions that got them started in the first place: What is the problem we want to solve for our customer? How has technology evolved to allow us to solve this problem in a new way? What are indirect competitors doing in our industry? Car dealerships might not compete against Uber directly today, but if ride-share costs drop to a level where owning a car is impractical for more people, they soon will.

Questions like these open up whole new conversations. What business is a car dealership really in — the business of transportation? Status symbols? Mobility? What is the real problem car dealers solve for the customer, and if customers suddenly find themselves with options they never had before, how will dealers be ready for that new playing field?

Preparing for Tomorrow

Preparing for competition that doesn’t exist yet can be tricky, but these steps will help you initiate growth from within and stay flexible enough to adapt when unexpected players enter the arena.

1. Ask the right questions.

Stop thinking about the problems you have and start thinking about the problems your customers have. If your business isn’t growing, that is your problem, but the real issue might be that your customers have a new concern you aren’t positioned to solve. Think less in terms of how to grow your company and more in terms of how to meet evolving customer needs.

2. Prioritize ideas over expansion.

Think about the problems you’re solving now and what problems your customers could have in the future. Stay flexible within your structure. If the tides start to shift quickly, you need your organization to be able to build something dramatically different from previous offerings without totally disrupting your processes.

3. Evaluate your internal structure.

Don’t marry your company to the idea of growth for growth’s sake. The people within your company might be too biased toward your current direction to see opportunities elsewhere. Empower them to pursue avenues that might not be relevant to immediate growth, but that address customer concerns that could grow in the future. Create a methodology that allows your people to dabble in new areas without uprooting your entire organizational structure.

4. Get executive buy-in.

To explore adjacent opportunities, your senior leadership needs to be on board. No one at Hilton proposed renting out people’s houses, because they were in the business of renting hotel rooms. Senior management must be cognizant of potential threats — even small ones — and open to allowing the business to explore tangential avenues.

5. Test and evaluate.

You won’t be able to flesh out every new idea to the end. Instead, create a methodology that allows you to test the viability of new ideas without jeopardizing your current business — or spending endless amounts of money. You don’t even need to put test ideas under your primary brand — simply provide a space where exploration is possible, and then create a method to measure the potential merit of each idea.

It’s easy to operate by muscle memory, performing the same actions over and over. But the easy path is rarely the most lucrative one. Put a mirror up to your company, and ask yourself whether you are ready for potential changes on the horizon. Become your own competition and create a space for internal innovation so that no matter what comes tomorrow, you will be prepared to respond.

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