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As digital food-delivery platforms like DoorDash, Grubhub and Uber Eats emerged to offer convenient options for ordering food, Domino’s Pizza doubled down on its order fulfilment strengths rather than joining the flock forming partnerships with the newbies. It had been doing its own delivery for more than 50 years and already had pioneered a delivery tracker that allowed customers to figure out where their order was, which helped counter sluggish sales in 2008. Domino’s now added ways to make it easier for customers to customize and reorder their favourite pizza. It also opened more stores, to be closer to customers and cut delivery time.
“The advent of digital technology presented new opportunities for the Ann Arbor, Mich.-based company to enhance its strength in order fulfilment, and Domino’s seized this opportunity,” Harvard Business School professor Feng Zhu and former Bloomberg journalist Bonnie Yining Cao, now a doctoral student at the business school, write in Smart Rivals: How Innovative Companies Play Games That Tech Giants Can’t Win.
Many traditional businesses have been fighting a losing battle against Amazon and the other tech giants like Google, Alibaba and Uber. They have tried to match their competitors’ digital prowess. But strategy always comes down to what are your own competitive strengths, and how you can enhance them.
After a decade of research, Prof. Zhu and Ms. Cao have found that traditional businesses thriving in the digital age don’t try to outpace the tech giants, but design their own path, one difficult for the tech giants to contest. These smart rivals do embrace digital technologies, but their focus is on amplifying existing competitive strengths, as with Domino’s. They drive customer centricity and often build digital platforms and ecosystems with others that are uniquely their own.
“In the end, they develop products or services that are profoundly different from those offered by tech giants, consequently making them difficult for tech giants and other competitors to emulate,” they write.
Their research wasn’t looking at neighbourhood stores but at large, indeed often giant companies in their own right. But that didn’t mean they would glide into the digital future unscathed.
Sephora, the multinational purveyor of beauty and personal care products, seemed like a likely easy victim of Amazon, when the online superstore moved into selling beauty products. But Sephora built a moat around its own systems of personalization that others could not overcome. That’s vital because one customer’s optimal makeup or skincare routine is rarely appropriate for another.
Sephora introduced a Pocket Contour app that allowed users to upload photos of their faces to receive a step-by-step primer on facial contouring using shading and highlighting (and product recommendations, or course). The Virtual Artist app offers a library of what the company calls an infinite number of eyeshadows, lip colours and even false eyelashes to find your perfect match without even entering a store. It also started an online social platform, the Beauty Insider Community, where folks can mingle with beauty experts and share ideas with others. Unlike Amazon reviews, this is intended to develop a deeper connection with others whose preferences and insight might be valuable. Sephora also merged its online and in-store customer profile data to help people make better purchasing decisions.
Much of that is about customer centricity, an allied pillar for these smart rivals. It starts with product design and improvement, when companies can use their in-store and online activities to glean insights into what is needed. Coca-Cola, for example, introduced Cherry Sprite in 2017 after its self-service Freestyle soda fountains revealed that to be a common concoction. These companies also work to simplify the customer journey, making it more seamless, as Domino’s does by allowing instantaneous ordering of your favourite. They aim for extreme personalization, taking advantage of artificial intelligence to offer the right product at the right time; Coca-Cola even analyzes social media photos to figure out what’s hot. Finally, they take advantage of personal interactions to nudge customers to open up about their true needs, preferences and pain points.
None of this is new, at least conceptually. And that’s the point. Digital avenues have opened up more opportunity to broaden these efforts, but there is a lot of creative possibilities in-store as well. The tech giants are formidable opponents but your strength may be their weakness.
Two companies that are very smart – the leading start-ups aiming to develop artificial generative intelligence – failed, however, to avoid coming under the sway of the digital giants, as Bloomberg technology columnist Parmy Olson tells in her chronicle, Supremacy. Both OpenAI founder Sam Altman and DeepMind’s Demis Hassabis believed that tech monoliths like Microsoft and Google, which prioritized profit over humanity’s well being, had to be kept away from what Ms. Olson suggests could become “humankind’s last invention.” But both entrepreneurs needed money and massive computing power, and that led them to deals with the giants that Ms. Olson said have allowed those tech monopolies to grow even more powerful under our noses.
“They compromised their noble goals. They handed over control to companies who rushed to sell AI tools to the public with virtually no oversight from regulators and with far reaching consequences,” she says. It’s a harsh assessment, and we’ll learn over time how dangerous. But it’s a reminder that the tech giants are powerful and difficult to compete with, particularly if you enter their bailiwick.
Cannonballs
- Leaders can’t make up for bad behaviour by being nice later, a new research study suggests. Indeed, a “Jekyll and Hyde” leadership style results in greater uncertainty and emotional exhaustion among employees, damaging their ability to perform their duties effectively, reducing their willingness to engage in organizational citizenship behaviours like helping a colleague, and increasing the likelihood that they will engage in counterproductive work behaviour.
- When was your team at its best this year? Reflecting on the first six months of 2024 using the principles of appreciative inquiry can provide powerful insights into what truly energizes and motivates your team, says reinvention consultant Nadya Zhexembayeva.
- If applying for a board of director position, refrain from pointing out you have retired in the interview, advises consultant Mark Pfister. In the past, retirement indicated your availability to serve. For modern boards, your availability is already inherently expected. Whether retired or still working, focus on your understanding of the time commitment to properly serve on the board and that you are able to make that commitment.
Harvey Schachter is a Kingston-based writer specializing in management issues. He, along with Sheelagh Whittaker, former CEO of both EDS Canada and Cancom, are the authors of When Harvey Didn’t Meet Sheelagh: Emails on Leadership.