Uber, Airbnb, Deliveroo: What to do when the disruptor brand comes knocking at your door
You might think that the biggest crisis many CEOs predict for their business in the coming year is a cyber-attack or the impending threat of regulatory scrutiny, but you would be wrong: according to Burson-Marsteller's annual 'Crisis Survey', published today, the biggest threat for companies is the entrance of a disruptive competitor such as Uber, Airbnb or Deliveroo into their marketplace.
What is it about the disruptors that rattle business leaders; how can they counter the threat and what else makes them nervous?
Burson-Marsteller’s survey, running since 2009, interviewed more than 400 decision makers of large and medium business in the EMEA region, across 20 sectors, including finance, retail and technology, to arrive at its findings.
Almost three-quarters of respondents had seen new challengers or innovative models that could threaten their business in the past three years and a fifth said they had experienced a crisis related to a new or innovative business model in the past year.
This form of business crisis has moved from second place in last year’s survey, to becoming the uppermost concern for business leaders, with 12 per cent of respondents choosing this category in 2015.
Jeremy Galbraith (pictured above), Burson-Marsteller’s chief executive, EMEA , says: "The findings of our survey emphasise we are living through a particularly disruptive era with communicators facing a perfect storm of challenges. The upturn in the global economy has seen new brands enter old markets and small innovators rapidly expand, challenging traditional brands and industries."
The fear that a company’s respected, market-leading brand could be about to become the 2015 version of Betamax is no laughing matter, argues Ben Overlander, director of crisis comms agency Regester Larkin.
He says: "Each week seems to bring news of a different Uber-style app that promises to transform entertainment, healthcare, food delivery, home emergency services… as much as it did for how we travel by cab. The people who responded to the poll understood what a genuine crisis is: an existential threat to their company's long-term survival. This is material, it matters and is far more serious than, say, trending on Twitter for a difficult afternoon."
However, some might argue that new competitors are simply part and parcel of business and hardly constitute a crisis in the proper sense of the word.
Chris Hides (pictured above), managing director, London, of M&C Saatchi PR has worked with some of the world’s best-known brands for 20 years.
He says: "I think to see disruptive brands as a potential crisis is a bit extreme. They are of course a threat and are seen as a greater threat now than ever before given the emergence of brands like Uber, Airbnb and Deliveroo, which not only disrupt through their brand behaviour but have a business model built on disruption. It’s a justifiable threat but it’s not a crisis."
One of the biggest mistakes any established business can make in the face of a disruptive brand is to try to imitate or out–disrupt it.
Chris Hides, managing director, London, M&C Saatchi PR
Whether one regards disruptive competitors as a full-blown crisis or simply a threat, a strategy is needed to counter the challenger’s business model.
The worst thing a business can do in this situation, aside from acting like a rabbit in the headlights, is to radically alter its business model, warns Hides.
He says: "Brands and businesses need to be confident in what they do and what they stand for, have a clear vision but be willing to adapt – not kneejerk – should a disruptor enter their market. One of the biggest mistakes any established business can make in the face of a disruptive brand is to try to imitate or out–disrupt it."
Jim Hawker (pictured above), co-founder of digital agency Threepipe, thinks the best way to respond is to innovate today rather than scramble to respond tomorrow.
He says: "Incumbent brands fear disruption because they are unable to respond fast enough to the change. I am noticing larger incumbents respond by creating distinct innovation labs to bring more of this culture into their business, rather than turn around the whole enterprise."
Another hazard disruptors bring to bear on established firms is that the challenger enjoys the media spotlight, perhaps disproportionately to the share of the market they have at the beginning, says Hawker.
He adds: "People want to work for and be associated with forward-thinking and innovative organisations and businesses must respond by defining their own purpose and communicating that more effectively internally."
The communication function is responsible for bringing the outside world's views into an organisation’s decision making.
Ben Overlander, director, Regester Larkin
And the comms team, acting as a form of permeable membrane between the business and the outside world, has a crucial role to play when the challenger comes knocking, argues Overlander.
He says: "The communication function is responsible for bringing the outside world's views into an organisation’s decision making; helping it understand what its stakeholders feel about it. Any organisation that wants to respond effectively to a crisis needs to consider how its stakeholder will react to any decisions it takes. And of course once an organisation has agreed its strategy and approach, it is up to the communication function to communicate that in a way that makes sense and really resonates."
The other threats
So what else keeps business leaders across Europe up at night?
Controversial company developments, such as the closure of a steel plant or making part of the workforce redundant, is regarded as the next largest threat, with 11 per cent of respondents choosing this answer.
This is followed by digital or online security failure, such as the loss or theft of sensitive data and the rising trend of negative social media campaigns.
Businesses are increasingly taking preventive measures. Almost half of those surveyed say their business has a digital crisis comms plan to help cope with a negative social media campaign, up ten percentage points from 2013, while a fifth have experienced a crisis due to an online or digital security failure.
Galbraith says: "The online revolution means cyber hackers can access data and armchair campaigners, so-called clicktivists, can protest from their living rooms. And this is all set against a backdrop of massive erosion in the trust the public places on the words and actions of big business."
Businesses are beginning to wake up to the fact that it is not a question of if they will be subjected to a cyber-attack but when.
Overlander (pictured above) says this is the single biggest concern of companies asking the agency for advice over the past 18 months.
He adds: "Communicating around a cyber-attack – when it can take weeks before clear facts are established – is not easy. It requires a quite different approach to crisis management to be able to provide stakeholders with the reassurance they want."
It is clear that cyber theft – ironically, a corollary of the marketing industry’s obsession with customer data – will continue to grow as a leading source of crisis.
The experience of Ashley Madison, which had the highly sensitive personal details of its members stolen and the company held to ransom over the summer, should serve as a reminder of how grave the issue of data security is to businesses.
Data security and customer privacy have massive implications from a trust perspective and without trust, there is no business.
Jim Hawker, co-founder, Threepipe
Hawker says: "Data security and customer privacy have massive implications from a trust perspective and without trust, there is no business."
But what do the disruptors fear most; a challenger disruptor, regulatory scrutiny, Anonymous? Airbnb declined to be interviewed on the subject.