Brands Need to Pivot Their Products to Stay Ahead in Today’s Digital World

How Starbucks, Netflix and DoorDash innovated outside their core products to stay relevant.

In 1960, Harvard professor Ted Levitt developed the “Marketing Myopia,” concept, used to explain how organizations invest time and resources in short-sighted strategies rather than planning for the long-term. Companies that fixate on their own products, rather than consumer needs, lack adaptability and subsequent growth potential.

Marketing Myopia explains how organizations often invest so much time, energy, and money in what they currently do that they’re often blinded to what lies ahead.

A myopic approach can lead to significant future ramifications for any business: consider Blockbuster vs. Netflix. Once a titan of the video rental industry, Blockbuster refused to alter its business model for fear of damaging its profitability. On the other hand, Netflix embraced continuous transformation since day one, sacrificing profits and market share in the race to innovate and stay ahead. The results? Blockbuster filed for bankruptcy in 2010, while Netflix is valued at close to $140 billion today.

Will your company be Blockbuster or Netflix?

A study published in 1960, is it still relevant today? Yes, the Blockbuster and Netflix example is proof that organizations struggle with Marketing Myopia to this day.

What should a company focus on in this disruptive age?

Successful companies focus on optimizing their digital products to transform their core business. Or they focus on scaling new business models to go above and beyond to solve consumer problems without limiting their operations to a particular domain or industry. That’s the kind of ingenuity that is reshaping the world, where the scope of innovation truly has no boundaries.

So which industry are you in?

If you have a definitive answer to this question, your company may be struggling with short-sightedness.

Now that we’ve introduced this concept, here are a few examples of companies who are well positioned to overcome marketing myopia.

Starbucks = Coffee? Think Again

Starbucks may soon release a new product (and no, we’re not talking about the Pumpkin Cream Cold Brew) that has serious potential to revolutionize the restaurant industry. The coffee giant announced a deal with Brightloom, a technology company that provides end-to-end, cloud-based software for the entire restaurant industry. This partnership aims to provide consolidated digital solutions for restaurant chains that often struggle to integrate data between mobile platforms, payments, order management, order delivery, promotions, and analytics. Think AWS for restaurants — from a company known more for their lattes than their tech.

“The results we’ve seen in customer loyalty and frequency within our digital ecosystem speak for themselves, and we’re excited to apply these innovations toward an industry solution that elevates the customer experience across the restaurant industry.” — Kevin Johnson, CEO

This is a great example of how even legacy companies are breaking traditional stereotypes and doubling down on their tech investments — not just for internal process improvements but to pivot their core business models for sustainable long term growth.

If you still think you don’t need to future-proof your business, consider this: Starbucks operates in 30,000 locations worldwide, is the coffee industry’s market leader, and with a whopping revenue of $24.71 billion, is one of the most valuable global brands. Despite years of near-dominance, Starbucks continues to seek new, innovative paths forward.

DoorDash: Delivering Data With A Side Of Food

When we think of DoorDash, we think food delivery. Yum. But did you know that DoorDash provides real-time, localized consumer pattern data- down to specific neighborhoods- for merchants to build promotional content? Unlike other companies like Yelp and Google Maps who acquire similar customer data, DoorDash’s verified transaction information provides powerful data points for merchants to generate strategic business insights.

An important factor contributing to DoorDash’s success is its pace of innovation. DoorDash was actually a late mover in the food delivery industry. With competitors having the early advantage — like Grubhub which was founded in 2004 and Postmates in 2011- DoorDash faced huge obstacles early on. But as DoorDash’s business took off, the company made the key decision to migrate its technology infrastructure to AWS. Since then, they’ve rapidly outpaced their competition and are today’s market leaders.

DoorDash also has plans to expand delivery services to 90% of Americans by the end of 2019, according to the Wall Street Journal. If they control a greater share of meals, delivery orders will be set to undermine restaurants’ core business instead of complementing it. DoorDash’s success has sparked a reaction from the venture capitalist front, which is resulting in the rise of a modern food industry. We’re seeing growing investments into a new restaurant model- “ghost kitchens” or “cloud kitchens” — made possible by a combination of advanced food preparation, underused real estate and data-driven optimization to lower overhead and increase output delivery.

DoorDash has bigger goals than simply challenging traditional restaurants and beating direct competitors. By creating synergy with merchants and food delivery drivers, the company is also promising to directly eclipse the growth of the nascent ride-sharing industry. It’s clear that ride-sharing leaders like Uber are feeling the heat, evidenced by the aggressive push of UberEats in response to DoorDash’s emergence.

So what business is DoorDash in? Is it just a food delivery service? Definitely not.

What are the Parallels between Starbucks and DoorDash?

Starbucks and DoorDash are two companies with different backgrounds and beginnings. Starbucks was founded in 1971 as a brick and mortar store in Seattle with a passion for selling roasted whole coffee beans. On the other hand, DoorDash was founded by three Stanford University college students in 2013 as a mobile application with the simple goal of delivering logistics services for restaurants. Yet there are striking similarities in the way they’re tackling their current day myopic threat. By embracing technology and continuously evaluating ways to innovate outside their traditional business boundaries, these companies are leaving their competition far behind. Today, Starbucks doesn’t want to just be a coffee company and DoorDash doesn’t want to limit itself to delivering food. Why? No one wants to be the next Blockbuster.

It’s Easier Said Than Done

Not every company has all the critical tools in place to innovate at lightning speed. One of the key pillars is having the right technical capability. Most of an organization’s time and budget is spent running the existing business, and with the multitude of ever-evolving technologies, embarking on a digital transformation and overcoming the myopic mindset can be a daunting task.

Ultimately, while it’s your decision whether or not to pivot your current business model, it’s important to consider the consequences of the failure to innovate.

Visit egen.solutions or reach out to digital@egen.solutions if you’re interested in learning how a scalable digital strategy can help your business grow.

This post has also been published on www.productschool.com communities.