The recent high profile demise of beloved UK entertainment retail brand, HMV, promoted a feeling of national mourning, as another established and seemingly permanent business began to disappear. But it also represents a tipping point for business as we know it. We have reached a point now where the ‘obvious’ future of established brands, businesses and infrastructures are no longer assured, simply by protocol and acceptance of ‘the only option’ or ‘the way it has always been’.
- What has brought us to the tipping point; this transformation of business as we know it?
- The Global financial crisis?
- Advancement of social technology?
- Consumer behaviour has changed?
- SOS Tweets from HMV head office shine a light on our debate
- The era of the ‘Cultural Innovator’ is upon us.
- Innovation does not = digital
- $31 Billion in funding
- What does the era of ‘The Cultural Innovator’ mean for the future of business as we know it?
What has brought us to the tipping point; this transformation of business as we know it?
The Global financial crisis?
With retail cases like HMV, their high street profile serves as a distraction from the underlying trend. Collapse of an established store attributed to the fiscal ruin of the market? Sure, that’s a clear accelerator that has strapped peoples pockets and forced consumers to hunt out alternative options for entertainment. Government legislation? and perhaps lack of, or loose monitoring of behaviour around UK Tax laws for the likes of competitors such as Amazon. Again, another accelerator. Bad management? perhaps that had an effect also. But while all of these factors have taken their toll, there is a more permanent undercurrent.
Technology and social channels have held much of the immediate credit and accolade for business change and innovation. New ways to communicate and transact with consumers. New power to consumers has certainly forced a more transparent approach to business practice and focus on valuable product and service. The startup scene has spewed many tech new comers into the market. But technology and social channels are simply tools, that all businesses can access and use.
Consumer behaviour has changed?
What about changing consumer behaviour?!? – ‘The high street is not relevant any more to todays consumers?’ – that’s the easy answer huh. New consumer behaviour has turned to the accessibility and price competitive digital channels. eBay, iTunes, Amazon in the entertainment retail sector for instance. This is what we have heard from many market analysts, digital evangelists and various research groups. Indeed they are correct and the numbers prove it. In fact the tipping point for music sales was 2011, when global digital sales topped physical sales.
“According to a Nielsen and Billboard report, digital music purchases accounted for 50.3% of music sales in 2011. Digital sales were up 8.4% from the previous year, while physical album sales declined 5%”
SOS Tweets from HMV head office shine a light on our debate
During a recent round of redundancies at the HMV head office, a series of rogue live tweets, blew the redundancy process into the public domain and caught fire across the digital press, sparking conversations about control of social channels. But look past the obvious social moderation point to the discussion captured below.
The era of the ‘Cultural Innovator’ is upon us.
While all the above points are completely legitimate, headline worthy and ‘facts’ in accelerating business change. They are results, they are conduits and they are factors. The real cause is more fundamental. Founded in a belief that there ‘IS’ chance and room now, for many more of us to create business opportunity ‘ourselves’ and have a share of that market.
The ‘Cultural Innovator’ now has a direct route to market, because the market has been opened to crowd demand; infact people now expect innovation.
‘There’s an app for that!
This ‘statement of our times’ sums up this ‘expectation’ perfectly. ‘Better’ and ‘More interesting’ and ‘Neater’ and ‘Easier’ are now the common place expectations of all of us. Furthermore we are all prepared to try new options to full fill these needs. So if you can see a way of innovating and doing ‘it’ better. You are a cultural innovator and the social crowd is waiting to hear your idea.
Innovation does not = digital
While in many cases these new opportunities play out in digital and through social channels, let’s not forget that these are merely the tools. The innovation is born from the change in people’s expectations and the demand for rapid solutions to ease needs and matched by the cultural innovators search for ways to fix and ease these needs. This is cultural innovation placed at the heart of business; the technology and channels come after the innovation.
To accentuate this point let us briefly consider an example on the UK high street CEX, an innovative exchange store, essentially providing a high street version of eBay, where you can instantly exchange computer equipment, mobile phones and console games, for vouchers or cash. A huge innovation for the high street; swapping goods not buying! This was an innovation previously only available online, but CEX saw the cultural shift in expectation and took the leap. By January 2013 they had opened 100 stores in the UK and 64 new stores worldwide. Cultural innovation was at the heart of their business.
$31 Billion in funding
Look at some of the digital leaders in this wholesale cultural innovation such as Threadless, innovating T-shirt retail. AirBnB, innovating holiday accommodation. Kiva.org innovating charity through micro loans. All have fundamentally built business around cultural innovation.
Nothing illustrates the ‘hope and belief of this era of cultural innovation better than the crowd funding platforms such as; Kickstarter, Fundable, WeFunder. Catapulting business after business into the market. Crowdfunding platforms raised an estimated $3Billion in 2012 according to Crowdsourcing.org.
Couple this with the rise of startup incubators like yCombinator, TechStars, SeedCamp and the rise and rise of VC investment. According to a report from CB insights; $28 Billion was invested in 2012 across 3267 deals.
What does the era of ‘The Cultural Innovator’ mean for the future of business as we know it?
This rise and flood into the market of these cultural innovators could be likened to a constant barrage of mortar fire against the walls of existing big business structure, chipping away at custom and revenue. It has reached tipping point, it won’t stop now, it will only continue, but where will it take us?
With the influx of so many competitors will we see a future of high turnover in all verticals. No longer seeing brands and business retaining exclusive market dominance for decades?
Will we continue to see acquisition of innovative competitors, as a way to maintain the market share?
Or will we see a new generation of major businesses becoming more adapted to open innovation and able to place innovation at the core of the business rather than as a satellite outfit.
Whichever outcome you believe in, or indeed are involved in, one thing is for sure, the tipping point has been reached. Business has changed forever, the fundamental and long established infrastructures in many verticals are no longer ‘the only option’. There is opportunity now and indeed expectation of many great things. It’s over to you now – ‘The Cultural Innovator’