Autumn is a time for reflection and preparation. It is only by looking backwards that you properly understand how far you have travelled, but it is only by looking forward that you can prepare for the future. This process is both terrifying and fortifying.
Thomas Friedman said that since he wrote “The world is flat” – his seminal book on the ten forces of globalisation – that the impact of the “steroids”, the group of digital disruptors as he had dubbed them, has been almost incomprehensible:
“Facebook didn’t exist; Twitter was a sound; the cloud was in the sky; 4G was a parking place; LinkedIn was a prison; applications were what you sent to college; and Skype for most people was typo,” he says. “All of that changed in just the last six years.”
As we plan for next year’s growth – what should we be thinking about? In the East, we suddenly have a raft of super stars from which to benchmark our own performance and also to direct our preparation for the future.
Xiaomi (meaning little rice) was founded 3 years ago largely modeled on the values of Apple. It now sells over 20m smartphones a year and it’s models outsell even Samsung’s. Unlike Apple, Xiaomi’s handsets are priced competitively to act as a foil to sell more apps and merchandise. They produce phones in small batches of 200-300,000, sell 70% of them online via their own website, and they often sell out within hours of going on sale. Its user base is adoring and fanatical. Xiaomi’s model is astonishingly responsive to consumer’s “wants”, satisfying “needs” and consumers buy without passion; satisfy “wants” and you will create an army of advocates. Xiaomi has found a way to bake the customer into the R&D process and produce something that gets better with age as the software updates on a frequent basis. “Organic electronics” where products get better with age – is not only a product model to watch, but a marketing and service model to emulate.
Another frontline, even more hotly contested is the battle of the “little black book” – the messaging platforms that effectively control peoples personal address book. Kakao (110m), Weixin (450m) and Line (150m) are fighting for territorial domination like the great gamers in central Asia 200 years ago. Their accelerated growth to reach over 100m users far outpaced that of Facebook’s and Twitter. Wining this battle is next billion-dollar play. Once you own the mobilised social graph, a communication channel unfettered with a newsfeed that is linked to commerce and mobile payment, then you have a chance to own not only the primary service channel, but also a chunk of the mobile payment channel. Brands, must learn how to play a major role in this primary access point.
Underlying the growth of Xiaomi, Weixin and Line is the consumers’ love affair with mobile in Asia. Why are brands, and retailers so slow to enhance service and develop new interaction models? Mobility is not a side show. It is the show. Facebook whose access rates over mobile go as far as 94% in Japan and are equally high in other parts of Asia, grabbed this reality a year ago when they declared “mobile first”. Of their 850 monthly users and 699M that use Facebook every day, 469M are from mobile devices – that’s 72%; 41% of Facebook revenues now come from Mobile. The significance of that number is incredible. Without their advertisers knowing it 40% of their spend on Facebook is mobile. Brands too should put their weight behind making mobile work for them.
So, in planning for 2014, my thought is this: don’t be “failing upwards”. Do not invest in the same places that provide some upward growth, but fail to assure long term shift; do not fail upwards. Learn from the rising stars in the east – steal back from those that once stole with pride from you.