Secret Tips to Strive in Disruption Era
In an era that the world has changed upside-down, the superpowers are no longer the leaders. Thick budget does not guarantee any success. Platforms disrupt the former way of business. These happens so fast and entrepreneurs will have to face with the challenges that are hard to foresee. To provide shields that helps entrepreneurs in business, SCB came up with a programme for Thai SME to be ready to become game changers with The DOTS Hotel Game Changer. This will help hotel entrepreneurs to grow sustainably and last long in this Disruption era.
Change before being disrupted
When the way of doing business and the environment have changed worldwide due to the changing consumer behavior, the old way of doing business has to be changed accordingly. This goes the same for the bank and hotel business. Mrs. Pikul Srimahan, Senior Vice Manager and the Senior Manager for the SME Segment at Siam Commercial Bank Public Company Limited, felt that the banking business has been disrupted just like how publishing business encountered. In the past, banks mainly provided deposit-withdrawal-transfer or loan services. However, nowadays, people are doing transactions through phone applications and they hardly go to bank branches anymore. Moreover, there are new players who loan or raise funds without having a bank as a medium. When all these happened, banks will have to change for their own survival.
Bring out the best weapon to the Platform
The challenge that banks are facing now is to change themselves to become more than just a bank. Pikul said that banks will have to become a platform. When the customers come to the bank, they will not just come to request credits or compare which bank offers the lowest loan rate. But, when the customers come to the bank, they will seek business advisors and banks will have to serve as their partner who will help them from starting to the finishing line on what to do to succeed. Also, banks can expand from the capital that they are rich in which is Big Data. With the data they have and their expertise in doing business in various sectors, they can use data to analyze and find the right solution for entrepreneurs, including, business matching, customer finding, marketing, insight analysis, technology support, expense reduction, etc. These put clients and banks into a Win-Win situation and this is an upside-down shift of banking business.
Teach an elephant how to dance
To do a business that one can lose in just a blink of an eye, one has to think of a way to survive when the business context changed. There is a lesson in survival tips that can be brought to practice which is to teach an elephant how to dance, to make the organization the lightest in weight, or to lean the organization. Pikul gave an example that “SCB has 20 000 employees and 1 000 branches. The bank asked the managers of each sector to do Positive Jaws which is the comparison of profits and expenses ratio. Each business unit will have to monitor how to reduce their expenses and ensure that the ratio of their profits must be more than expenses. As for the hotel business, they have to know what their profit structure is consisted of. For example, the majority of the budget comes from people. What is regular and irregular expenditure? What can increase profit? After all income and expenditure are known, we will then be able to see the way to make more profits than expenses. When the business is leaner, the company will be able to survive. Knowing how to carefully control financial statements is the key for a business to survive in this era.”
Apart from changing the business structure, obtaining knowledge and adapting to society as well as strategic thinking on creating innovation are parts of important factors to survive in this era. Mr. Thana Thienachariya, SEVP, Chief Marketing Officer and Head of External Communication & CSR (Acting) at Siam Commercial Bank Public Company Limited, talked about changes and perceptions of people in different generations that “Is there anyone who know Arnold Schwarzenegger in this room? People of my generation, all of them, know him. But, when I ask the younger generation the same question, the majority of them have no idea who Schwarzenegger is. The word BTS would mean an abbreviation of the sky train for people of my generation, but the name of the K-Pop boy band for the younger generation. What does this tell us? The society of this era is highly digital divided. The pictures that people of each generation perceive are different. If we take a piece of paper with a thickness of 0.1 millimeters and fold it over and over 45 times, what is the thickness of this piece of paper after folding? The answer is it is equivalent to the distance from the earth to the moon. This changing world is exponential, but people think linearly. The generation gap is so obvious in both knowledge and feeling. It has become so confusing.”
Micro-Moment –The villain that changes the world
In these past 10 years, human behavior has changed since the invention of mobile phones. Thana mentioned that “The action of checking on our phone over and over from the moment we wake up to the time before we go to bed gives birth to the new behavioral trend of humans. The Great Micro-Moment that happened. Everybody uses a smartphone an average of 155 times a day. Thai people ranked first in the world for using mobile internet at an average of 5 hours per day. This shows that the smartphone has become part of people’s lives in this era.” Also, from people’s increasing behavior in using smartphones, the Attention Economy happens. Thana noticed and said that “And we see that platforms like Facebook, YouTube, Netflix, online games, etc. are trying to attract attention from people. They try to make people stay and look at the screen as long as possible. This is because the more people looking at the screen, the richer these platforms will get. Netflix even thinks that bedtime is their enemy. If they can win over this sleeping time, they can gain even more profit than they can ever imagine. And this is how scary Attention Economy is.”
Who is behind Disruption?
In a world that every moment in life is knitted to smartphones, the consumers’ behavior changes rapidly. This is the cause that disrupts many businesses. Thana expressed his thought that “People, nowadays, search whatever they want to know on Google. If they want to buy something, they will look up product reviews. If they want to travel, they will trust Tripadvisor. If they want to make anything, they look for tutorials on YouTube. This is what disrupts the business. Recently, I gave a lecture at a university. A professor told me that when they were teaching, their students would check on the phone to see if they were taught correctly. This is the disruption that happened. So, the true disruption is ‘customers’.”
Impatient – Confused – Spoiled: Descriptions of consumers in this era
Thana described the common traits of consumers in this era that “The first point is Age of Now. By observation, people nowadays are impatient. They can’t afford to wait. If they want something, they expect to have it right here, right now. In the past, if the air-conditioner was broken at night, people of my generation would wait till morning to call for the maintenance service but people nowadays wouldn’t wait that long. The second point is there is lots of information circling around every day. We consume so much news but we hardly remember any. It’s confusing. We can see that if there is any crisis, nobody has to do anything, just left it alone for 3 days and nobody remembers anymore. Because there is too much information, there is a comparison over species. For example, if we get into a restaurant and we have an application to show membership, we can get a discount. Then we want to change our car’s tire and we need to show our membership card to get a discount. There is a comparison between the restaurant and the garage which, to be honest, they are under different categories. Lastly, this is the Age of Choice. People nowadays have plenty of choices. In this era, many things are cheap and free. People are being spoiled a lot. There are no charges in banking. Food delivery only costs 10 baht. Free delivery charge for e-Commerce. People will go for free service and those who charge will lose in this business war. People are lack loyalty and this is the true Age of Disruption.”
Stingy – Slow – Sloppy: Descriptions of business that refuses to change
Thana talked about the old way of doing business and it does not meet the demand of customers of this generation that “The business that operates the same as what they did 20 years ago, if they do not change, customers will perceive them negatively. If they charge for even a petty service, the customers will think that they are “stingy”. If the processes are too long and too many, the customers will feel that they are “slow” and if the reality doesn’t match the expectation of the customers, that business is “sloppy”. For example, a hotel has a can of carbonated drink in their mini-bar and it costs 100 baht while the exact same product costs 15 baht on the shelf in the nearby 7-11. Guests will start to perceive that the hotel is so stingy. Another example would be a purchase through e-Commerce that can be done by just 3 clicks while buying from a shopping mall requires one to go out of the house. If the seller isn’t there, one will have to wait. If one wants a discount, a membership card needs to be presented. From the examples, we can see that the business has changed into a linear pattern, but customers have changed into an exponential patterns. This makes the business unable to catch up with their customers because the expectation of customers has changed drastically. When the customers are not satisfied, they feel the pain. This is the beginning where the new players come in to ease this pain.”
Think like Startup
Thinking like Startup is what a business should study. Thana said that “Startup business found their stand from easing the pain for customers. They think of how to create customer engagement with customers. They think not of the profits or income. This method is the opposite of how other business does, but it matches customers’ needs because this is the way to ease the pain for customers. For example, e-Commerce offers free delivery and is willing to lose their profits for 4 -5 years to gain more customers. They want more customer engagement for even more data and they can use the data they obtained for other businesses. This is what disrupts business like ours because Startup attempts to do what other businesses can’t. They try to ease pain and become better, faster, and cheaper. Now, how can businesses deal with this rapid change? When technology changes so fast and, no matter how much we buy, we can never catch up.”
Trial and error to reinvent the new business that hits right in customers’ heart
“I want to recommend this quote by Mr. Prapas Cholsaranon. He said “Success comes from making the right decision. The right decision comes from experience”. And where does the experience come from? Experience comes from making the wrong decision. If we have never made a mistake, we can never have the experience. So, the courage to make a mistake starts from stepping out of the comfort zone. Only when we are out of our comfort zone that we will dare to commit an error. The problem of the present world is that the former experience does not work here. This is the problem. And how do we catch up with customers’ new experiences? The answer is trial and error.”
The trap that stops the change
The important point that makes most of the business stuck in the process of change is the old knowledge that contributed to the success and most business cannot get over their achievement. Thana talked about this knowledge that “The set of knowledge that we called experience is blocking our courage. For example, Marvel Cinematic Universe picked directors who have never directed any superhero movies before for their movies. This makes their movie novel for this theme and gains them tremendous success. Another example would be the making of the girl group, BNK48. The idea originator, who has never made a girl group, proposed this idea to the big record labels and all of them turned this idea down. They said this idea would not work. However, the idea originator goes on with this project because they don’t think making a big girl group would end up as a disaster. What do these examples tell us? They scream that if we put people without direct experience to do the job, we are deemed to get something fresh and that’s where we overcome the old experiences.”
Knowledge = Awareness of not knowing
The heart of the change is an acceptance that we do not know. When we are aware that we do not know, everything will start to change. Thana mentioned about ‘not knowing’ that “We will turn into Kodak or Nokia if we think that we know. In the new method, not knowing is a good thing. Knowing is such a hassle. We have to be aware that we don’t know. This is the most important thing because, right now, we don’t know the customers. There is so much that we don’t know because of the drastic change in consumer behavior of customers in this era. For hotel business, they sell moments. Guests will remember the experience in moments, not in a long stretch of memory. People will remember 2 types of experience which are peak and end. For example, Disneyland. If we do a customer survey of their experience on Disneyland, each moment is not very positive. The ticket is hard to book. It’s expensive and the queue is insane. But, why do people still like to go to Disneyland? The answer is because Disneyland creates peak moment like snapshots with the cute mascots and ending moment when fireworks are lit which send visitors back home with a blast of happiness. Therefore, designing memorable moments for the hotel is the challenge.”
Empathy –A key to Gen Now
Empathy is an important word to win customers. Thana explained the meaning of empathy in a very interesting way that “What does empathy mean? It means putting yourself in another’s shoes. Why is it important? It’s because the world is changing. For us to create differentiation for our business, we need to have the empathy to know what the customers want. Empathy brings about innovation. To be able to empathize, we have to start from pain and we can think about how to ease that pain. An example would be a clinic in Phitsanulok that examines cervical cancer for free, but nobody came for the examination. The doctor had empathy with the patients. Patients must feel embarrassed to come for the test. So, the doctor provides masks for both patients and the doctor to wear. The result came out that many people come for an examination right after. This is to think from the customers’ perspective.” Thana also said that “data will have to be used together with empathy to get the best result. For example, 7-11 in Japan thought about what to sell on the same shelf as stockings. From guts feeling, most people would think women's products should be placed there. However, looking at the data, there were many female customers in the morning. But, right after 6 pm to 9 pm, there were more male customers as they ran an errand for their wives. Thus, from 6 to 9 pm, 7-11 will place a fridge of beers next to the stockings shelf. The result came out that their sales increased. This is an example of using data together with empathy to build experience and boost sales.”
HiPPO –An obstacle to change
When there is a need to change and it is a time to win the customers’ heart, but, there is still obstacle to overcome and that obstacle is HiPPO. So, what is HiPPO? Thana suggested the method to handle HiPPO that “HiPPO (Highest Paid Person’s Opinion) is the person with the highest power, the manager, business owner or parents. The way to deal with HiPPO is to bring HiPPO out for a walk and meet customers. Meeting with people who don’t know Arnold Schwarzenegger or Chen Long. Making them realise that they don’t know. When they feel that there’s so much they don’t know, this feeling will make their confidence crumbles and HiPPO will shrink.”
In the end, who should change?
When it is time to change, the question would be who should change first? Thana shared his thought that “When I went to the discussion panel, young generation people would say that they want their parents to listen to this. People of the older generation would say they want their children to listen to this. So, who should change? I would say we should change ourselves first. Don’t think about changing others. We can take an initiative to meet customers and listen to them more. However, the majority would jump to the conclusion that everybody has to change. An organization should change. A boss should change. An employee should change. We have to start from being a small HiPPO and change our attitude. Be humble and we can have empathy. Be aware that we don’t know. These are the tips to bring change and create innovation. After that, everything will move on their own.”
Tips to do business in the disruption era are to change DNA upside-down, lean the organization, win the heart of the Gen Now with empathy and these are the ultimate moves that will allow businesses to survive sustainably.