How to Avoid Getting Uber-ized or Netflix-ed

…or Why You are Losing the Battle Against the Start-Ups.

I hate lists, specially those that seem to pretend to make something long and complex into a very simple list … that’s why I did just that. Enjoy!

Connectivity becomes one of the most basic human needs.

1. Internet is the new electricity

Forget the BS about digital immigrants. The products and services being conceived today will serve generations of kids who were born with the internet and cannot distinguish the need for it from, say, electricity. If you have a business which is not considering the internet seriously in its business model, you are in serious trouble. If you think its impact in your business will be moderate (lovely concept brought to us by market studies), think again. Connectivity is the New World Order and (potential) Equalizer.

No walls/fences will protect you from the inevitable.

2. There are no barriers

Michael Porter is all about barriers: to entry, to competition, etc. Barriers no longer exist in the digital world. Technology and Globalization have made sure that we cannot ever understand fully who we are up against, because they may be stuck in a basement half a world away. However, rest assured, you will be put out of business by one of the upstarts who just happens to like your industry and has nothing to lose. There is no hiding behind imaginary barriers. There is only being better than the rest (or quicker, or both).

Out of this garage can come out your downfall.

3. Everyone is becoming specialized

If you plan to stay in business long, you’d better be doing something better than others. Whatever it is you do, do it better. Sometimes — not always — better is being more specialized, that is to say, focusing on a more discrete set of products and services where you can make a difference. Do not try to make one app for everything; rather make the best app for something. Or someone else will. Only very large, very successful companies can afford to have loss leaders and still overall make a profit. In the digital world you become successful by helping solve a problem more efficiently than others.

Everything becomes variable.

4. Costs will be variable

In a free economy, pricing is of the essence. Long time product sellers are becoming part of the subscription economy (Microsoft and its Office365, Netflix, Spotify, and the list goes on). In a digital world, fixed costs (development costs) still exist, but as business models are conceived for large audiences, the aim is to bring the marginal costs to zero (as the product is downloaded / shared / consumed by more individuals). Charging an abnormally high upfront fee for your digital product seems a thing of the past — and can put you out of the market.

What do you think? Any other important rule for Digital Competition?

Share your thoughts! :)