Why companies must invest in new technologies, even if it eats their own lunch

by Dramelin 2:30 AM 0 comments

Over the past few years, companies have been forced to reconsider their existing business models in sectors as diverse as media, banks and transport services.
For example, the emergence of Netflix and a host of other online and mobile streaming services have forced legacy media businesses to reconsider how they approach their customers.
"We`ve seen over the years, over the many years of media, this trade off or this contest between content and distribution, back and forth — it`s the history of media," said Catherine Wood, chief executive officer of ARK Investment Management.
"Any platform that understands its customer and tailors media for each customer, understands not only what each person likes, but can formulate new programs, new media, because of what it sees in demand from existing customers is going to continue to pull ahead," she said.
Video-rental chain Blockbuster`s demise in the wake of the introduction of streaming services can show what happens when companies don`t embrace new technologies, even when they cannibalize existing businesses.
Players such as Netflix have extended their reach by offering high-quality video-streaming options on mobile devices, even in regions where internet connectivity is spotty at best.
A recent report from GSMA, the trade body representing interests of mobile operators worldwide, said in 2016, mobile technologies and services generated 5.
2 percent of gross domestic product (GDP) in Asia Pacific.
This amounted to about $1.
3 trillion of economic value.
GSMA predicted that by 2020, this would increase to $1.
4 percent of GDP in the region.
"Mobile is where everything is going.
We`re going to carry our content with us, when we want it and anytime we want it," said Wood.
Financial technology, or fintech, is another sector demonstrating why established businesses need to adopt new technologies to keep up with disruptors.
For years, banks have enjoyed a monopoly over how people conducted financial transactions.
But disruptors are providing new ways of sending and receiving payments through the internet.
Today, companies such as TransferWise let users swap money in various currencies with each other on its platform, start-ups such as Toast allow remittances to be sent over the Internet and collected in person, and the likes of Alipay and WeChat Pay have changed the way users pay for goods and services.