The advent of the internet and mobile phone technology has been one of the greatest forces of change in recent times, and nowhere has its impact been more apparent than in business.
Even in the last five years, the ability of entrepreneurs to grow ideas into successful and sometimes global businesses with the help of the internet has been unprecedented. Last year the UK alone was home to over a third of Europe’s 47 unicorn companies – of which four are in fintech. At the same time, the arrival of a tech-savvy start-ups have proved fatal to some well-established names – think Kodak, Blockbuster and Borders.
The internet and digital technology have democratised business. Fledgling companies like BrewDog and Funding Circle have rocketed from fag packet to flotation in record time because of ready access to a global market of three billion consumers.
Despite the plethora of start-ups and challenger brands ten companies including Johnson&Johnson, Unilever and Nestle still control a staggering proportion of the household brands consumers use every day.
Alongside the opportunity, start-ups like their more established counterparts are equally vulnerable to the negative impact of instant global communication – your corporate reputation is only a viral campaign away from an existential crisis.
Furthermore, regulation of the digital space is no longer quite so relaxed and companies like Uber and Deliveroo who once profited from the freedoms afforded to the so-called gig economy, are now facing a customer and regulatory backlash.
Firms that have invested heavily in their online services have also faced challenges. As lamented by John Idol, CEO of Michael Kors, e-commerce and online sales often offer retailers slimmer margins than those in-store due to the costs associated with free shipping, free returns, large numbers of warehouse staff and the tendency for shoppers to bulk buy online before returning all but one or two items.
The internet has therefore brought both opportunities and challenges for established and start up companies alike; so what have we learned so far?
- No company can afford complacency. But the temptation for established firms to innovate must be matched with a commitment to their USP and bottom line.
- Start-ups can learn a lot from established businesses who nurture their customers. Investment in customer service, employees and social responsibility schemes are not optional add-ons.
- And ultimately, trust remains the key asset – whether that is in terms of the quality of the product and service provided, or in the ability of a firm to keep our financial and personal details secure from internet hackers.
For businesses therefore, effective understanding and communication of the assets of trust in this new environment will remain an essential and worthwhile corporate investment.