Mark Ritson: Postcards from the digitally disrupted

Waterstones’ resilience in the face of digital competitors shows that sticking to what you know can also be ‘disruptive’.

Ritson award winner

Is there a more overused word within the current marketing lexicon than disruption? It seems to have trumped old favourites like synergy and innovation to become the undisputed champion of business bullshit. It’s no longer good enough to talk about competing in a market, one must disrupt it. An innovative new product is somehow secondary to a disruptive one. Even good old office flatulence is out of fashion these days. Marketers no longer fart, they use self-generated methane to disrupt their underwear.

Despite its undoubted buzzword status, there are certain industries where disruption is no longer a laughing matter.

In Australia the taxi industry has been forced onto the back foot by Uber and its combination of slick digital systems and strategic pricing. The value of an Australian taxi license has dropped by $75,000 in Sydney and $50,000 in Melbourne in the last twelve months as customers swap the antiquated and often inexperienced yellow cab drivers for the cheaper and more knowledgeable option from Uber instead.

Unusually, the Victorian Taxi Association decided to fight back this year and launched a massive social media campaign using the hashtag #yourtaxis in an attempt to rally customers to support their local cab drivers and share their positive experiences of riding in a taxi. Unfortunately the hashtag merely encouraged thousands of users to vent their fury after years of poor service and dodgy driving. Customers deluged Twitter with stories of overcharging, sexual perversion, personal sanitary issues and – most commonly – a complete inability to get from A to B. Digital tactics don’t offer the same effectiveness for the disruptee as they do for the disruptor it would seem.

Twitter responses to Yourtaxi

At first sight, the hotel industry would appear to be in much better shape than taxi firms. All-important revenues per room are up this year, as they have been consistently since the global financial crisis. The disruptive influence of Airbnb with its predicted revenues of $900 million this year would hardly appear to be major. But the hotel clock is ticking. Airbnb has promised investors that it will reach $10 billion by 2020, making it a bigger player than Sheraton, Westin, Accor or Holiday Inn.

Last month, in a surprise move, Marriot announced that it would acquire Starwood Hotels, the owners of Westin, Sheraton and W hotels, for $12.2 billion. If approved, the deal will result in a massive conglomerate with more than a million rooms and, more importantly, a capability to take on Airbnb once it reaches its 2020 target. M&A and consolidation are classic incumbent responses to disruptive entrants and we can expect more of it as Airbnb grows its footprint.

Airbnb vs competitors

Perhaps the most aggressive response to digital disruption has come from the least likely place. Despite the maturity and scale of Amazon, Britain’s last surviving national bookstore – Waterstones – is proving a worthy adversary. CEO James Daunt has fought an increasingly impressive rearguard action in which he has deliberately played to the strengths of his operation while poking holes at his digital rival.

Waterstones uses its employer brand, its outstanding service model, its fabulous locations and the old fashioned, experiential romance of being in a bookstore (with a good coffee) to fight back against Amazon. It openly makes fun of their bigger digital rival in a manner that also helps to underline how and why Waterstones is different. Oh, and they delisted Amazon’s Kindle device from its shelves this year “because it was getting virtually no sales” and replaced it with books. Actual books. The signs are good for Waterstones which recently reported its first profit since the global financial crisis.

Above: Waterstones’ response to Amazon’s drone delivery service

“I always believed there would be a natural point of equilibrium with digital reading – that it would overshoot, then come back and settle down,” Daunt explained to The Guardian last month. “That made intuitive sense, and that indeed has happened.” There is light, then, at the end of the digital tunnel.

Different brands are handling the threat of disruption differently. But if there is one insight to glean from all these cases it is the oldest strategic lesson of them all – to thine own self be true. When taxi firms start to use social media to attack their digital rivals it can easily go wrong, but when bookshops use their bookshopiness to fight back the odds suddenly improve.

How about that for a disruptive idea?