Most businesses keep an eye on the competition, envisaging that’s where the next threat will come from when, in fact, it’s most likely to come from somewhere else totally left field.
That’s the view of Professor Rita McGrath from the Columbia Business School who was one of the chief speakers at the World Business Forum in Sydney yesterday.
Admittedly, her comments weren’t from a strict media/marketing perspective, however, McGrath told the audience “for most firms the most significant competition you’re going to face isn’t from companies in the same industry – although you want to be aware of them – your biggest threat is an entirely other industry coming in and making what you do irrelevant.”
To stress the point, McGrath added: “Who would have though that technology companies would be primary competitors in the music business? Or music streaming businesses would be competitors to content creation?”
McGrath noted some stats from The Wall Street Journal that mapped US consumer spending since the arrival of the iPhone in 2007. Spend on cars, fashion and restaurants were all down while spending on tech and tech for the home had skyrocketed. The good Professor’s assumption was that showed if you’re in the fashion business, as an example, the biggest hit to your bottom line wasn’t from other fashion competitors.
“So if you’re an apparel company and you’re sitting there benchmarking yourself against other apparel companies I would argue that you’re missing the point when you’re real competition is coming from some other place,” she said.
McGrath’s real speciality is in change management and leadership and she added that many businesses were still managed the old fashioned way – steady as she goes, firm hand on the tiller, don’t upset the customers and keep the cash register ticking over.
However, McGrath argued that that management style had become dated. Instead, modern leaders needed to be far more about change and crystal balling the business and their industries.
“So what’s a great leader in an organisation? Somebody who makes their numbers? Reliable? They stick to plan? They’re authoritative? They give strong guidance and direction?
“I think we’re really moving away from that to a leadership model that is much more, what I call, discovery orientated. Welcoming of new information, open to the idea that things could really be changing, welcoming different voices into the conversation.
“There is a lot of mounting evidence that diverse teams come up with much better solutions than teams that are more set in their ways. I think leadership is much more about discovering what is really going on these days than it is about control. And that has huge implications about how we select leaders, how we promote them, the skills we teach them,” McGrath said.