james thomas

Why your business needs to find its digital advantage

The specialist sprinters in the Tour de France will hit speeds of up to 65km/h in the final hundred meters to the finish. It’s an exhilarating experience watching them shoot around the corner and onto the home stretch, lifting themselves off the seat, elbowing their way to the front and hurtling towards the line.

It’s interesting to know that the cyclist who crosses the line first is not necessarily the fastest but the one who had the best advantage heading into the sprint. The advantage comes with three kilometers to go. Here the teammates of each sprinter form a train of riders all single file with the sprinter at the back. There are generally 5 leadout trains in the peloton, made up of the 5 teams with specialist sprinters, each vying for the best spot, each protecting their sprinter who is drafting off his team - keeping his legs fresh for the final sprint.

One by one the riders at the front of each train drop off, after putting in their maximum effort they drop to the back of the peloton while the next riders in the train take their turn at the front. By the time the riders get to the final corner there are only 2 men in each train. The sprinters and the leadout men. The leadout men are the final propellant for each sprinter to draft behind. They are the ones that begin the sprint and the ones that swerve out the way as the sprinters shoot past them towards the line.

The sprinters of the Tour de France cannot win by themselves, they need a leadout train - an advantage that gets them over the line first. When we compare this to business wins and successes we can look to where a business can best get its advantage from. And much like the effectiveness of the leadout train, there is a sure way to get your business to the top of the leaderboard.

You need to find your digital advantage.

To take a well known example we can look at Netflix. Before Netflix became a video content behemoth they were already doing pretty well in the movie rental space. Their business model was centred around the mail rental of DVD’s. You would rent a DVD online, it would come through the mail and you would send it back within a certain number of days. This was at the time where Blockbuster were the giants of DVD rentals. Netflix even offered itself to be acquired by Blockbuster for $50 million in 2000 when it went through a difficult period but the offer was declined by Blockbuster.

Cut to 2007 with even more competition in the DVD rental market. Netflix knew it had to innovate to succeed, it had to find an advantage over its competition. This advantage came in the form of online video streaming and the rest you can say is history. Blockbuster went into liquidation, Netflix has grown to have a market cap of $60 billion and shows no signs of slowing down.

In New Zealand we have our own examples. We can look at Trade Me surpassing the once ubiquitous ‘Trade & Exchange’ magazine by going digital first or Grab One taking over coupon booklets with the same tactic.

And even if all the competition is already online a digital advantage can be subtle. Like a newly developed routing software that saved UPS (United States Postal Service) millions of dollars a year in fuel costs by working out an efficient route where drivers never turn left. Or a way to fully incorporates high functioning digital software, the internet and third party applications into a cellphone - the first generation iPhone.

Finding a digital advantage applies to all businesses in all industries. It can be an advantage the customer interacts with to increase sales and growth. It can be an advantage for the employees to use to increase efficiency and profit. It is simply creating an advantage using digital innovation that gets your business winning.

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