Embrace Disruption or Be Eliminated
There is a well-known video of former Nokia CEO, Stephen Elop in 2013, who when announcing that Nokia was acquired by Microsoft, ended his speech while crying, with the following words. “We didn’t do anything wrong, but somehow, we lost.” Nokia in 2007 dominated the smart phone market. By 2013, they were being dominated by both Samsung and Apple. Nokia lost, and by traditional standards, ‘they didn’t do anything wrong.’ However, they failed to do anything right to respond appropriately to the rapidly changing demands of customers. And they were eliminated.
Veterinary medicine is undergoing disruption, and industry stakeholders are reacting predictably in varying ways. Most people say they want change, but in reality, they don’t like change when it impacts them. Innovation is typically judged by how it impacts current stakeholders, most notably how it impacts those who control the market now. Innovation should be judged by how it impacts the customer. If innovation improves the customer experience and provides increased customer value, then it should be seen as positive. It should be embraced. From experience, in veterinary medicine, innovation is usually judged by whether it makes current participants change how they do things, and whether they believe that they will lose control. If it requires change or if they fear loss of control, they try to kill innovation as quickly as possible.
Disruption in every era
A few years ago, I was presented with a story written by my grandfather in 1932 which provided a detailed accounting of his farming and ranching operation from about 1904 through 1932. Consider the challenging economic times of those years, including the Great Depression. My grandfather’s father and mother had homesteaded in eastern Colorado in 1887. They owned cattle, hogs, and horses. They farmed many acres of wheat and other feed crops for their livestock. In their early years, he spoke of the open range, and the challenges they faced with increasing settlement by other people moving west and staking their claims. This movement was disrupting their ability to allow their livestock to roam freely to graze. The open range allowed them to not have to have someone attend to those cattle at all times. When settlers started crowding the range, they had to pay someone to go with the livestock at all times. The increased labor costs made it difficult to survive.
They responded by building one of the first barbed-wire enclosures on the Great Plains. Barbed wire was the disruptive new technology on the market and they used it to control their livestock while not having to pay someone to tend to the livestock at all times.
This story reminded me that disruption has been occurring for decades, and even centuries. How you respond to disruption typically determines whether you are the recipient of opportunity presented by the disruption or if you are a victim of it.
Recognize your opportunity
In every instance of disruption, there are great opportunities if you recognize them and make the appropriate decisions in your business. It occurs when customer needs are not being satisfied, and an alternative solution becomes available that dramatically changes customer flow and power. Consider Uber as an example. Taxi companies had a government-imposed monopoly based upon the issuance and regulation of licenses to operate taxi-cabs in certain communities. This arrangement made it impossible for anyone to compete with taxi companies even though the experience provided to their customers was less than satisfying for years. Getting a cab to come to your location to pick you up was difficult, and responses were variable and unreliable. Rides were expensive, and payment was cumbersome. Cars were dirty, and drivers often treated customers rudely. It was not a positive customer experience. Yet corrections to this service never happened, because the companies had no competitors for their customers to select.
Along came Uber. Uber developed customer-friendly technology that allowed the customer to choose their level of service, to see pricing easily, pay for it seamlessly, to view their relationship at all times by seeing the car, license number, driver names and ratings, and the car location as it approaches your pickup location. Wait times essentially went away. The entire experience is positive and convenient and the drivers must compete to get good service ratings to retain their role as Uber drivers. Uber put the power in the hands of the customer, and taxi companies are suffering as a result. They refused to heed the demands of their customers. They got comfortable doing what they do, and failed to adapt to changing customer demands, because until Uber came along, customers had no choice.
In the animal health industry, there is a lot of disruption occurring now. Customers at all levels are gaining more choices. Distribution is experiencing difficulties with the advent of distribution technologies and organizations such as Amazon who have perfected more streamlined distribution models that allow them to prosper on lower margins or even to capture higher margins by reducing the number of times a product is touched or moved between manufacturer and customer. Buying groups have placed greater margin pressure on distributors as well by providing veterinarians alternatives at lower prices. This disruption impacts veterinary practices as well, because clients of veterinarians are being trained to seek better deals on medicines and foods. Clients have solutions to help them find better deals in almost every aspect of their life, so seeking better deals for their pets is natural.
How should veterinarians and industry stakeholders respond to these competitive pressures?
First, take note of the trends in the marketplace. Recognize your competitive advantages and use those to provide an extremely positive customer experience at all times. Focus on the customer relationship and provide services in a manner that satisfies customers, not that are convenient to you.
Map your customers’ experiences. How easy is it for pet owners to do business with them? Do they build value based upon convenience, speed, and service? Is their customer experience pleasing? Do they force clients to come into the practice to get questions answered so that they can turn the visit into transactions? If they do, they will be disrupted, because clients are gaining distrust for this type of service. Clients don’t want to be inconvenienced with a trip to the vet if it’s not necessary. They dislike invoices for several hundred dollars just to find out that they didn’t need to come in. They don’t like surprises. They don’t like delays and wait times. They want service now, and they want it on their terms.
Distributors and manufacturers must do the same. Map your customers’ journey with you. Do veterinary practice owners like having to track rebates and all of the special deals, the smoke and mirrors used in selling to them? No, they do not. They want a straight-forward, simple experience that helps them achieve optimal profitability. If you can help them be more profitable, they will be better customers. You should be a partner to your veterinary practice customers. You should help them optimize services to their clients and to manage their two biggest expenses, labor and inventory. You should help them attract more customers, and to serve them in a manner that is pleasing to the customer.
Most importantly, keep abreast of the changing market trends. Be on the forefront of serving customers in the manner they want to be served, rather than waiting for someone else to do so and then copying them. Don’t be the CEO of Nokia, who simply was focused on ‘not doing anything wrong’, rather than doing what is right. Do what is right. Serve your customers, and you will thrive.