Business Unusual

Surviving disruption - two global brands that dodged the bullet

There was a joke for a while that the worlds best-known and 250-year-old Encyclopedia Britannica did not have an entry for Wikipedia, the 17-year-old crowdsourced competitor.

The book publishing company was invested in selling actual hard copies of its books and then selling the updated versions as often as possible.

Parents might view the hefty investment as necessary for their kids as getting them into a good school. It certainly allowed them to defer to a book when a question arose that they too did not have an answer for.

It was not just Wikipedia that gave Britannica reason to worry, though, the problem started almost a decade earlier.

It was the World Wide Web’s ideal to make all knowledge public, easily accessible and free that would get the company to reconsider their centuries-old business model.

Getting people to pay for online content is a tough ask even now. Back in the 90s it was near impossible. Encyclopedia Britannica built on their educational value and sought to create products that could be bundled as part of other products like the Windows operating system and produced packages for educational facilities to subscribe to in the same way their libraries would stock the printed version.

The last printed versions rolled off the presses in 2010. It is only an online product now although you will still find many volumes for sale at auction or even online. The printed version topped out with 40 000 entries. The online version has 120 000.

Wikipedia may have almost 6 million English entries but ranks its best and most comprehensive pieces to be a similar number to that of Britannica.

A recent development has seen a partnership with YouTube to address false content posted to the site by adding links to Britannica articles to provide a balance to claims made in the videos.

Wikipedia has been a stunning success. Other crowdsourced reference collections for subjects like programming (Stackoverflow) and DIY (Wikihow) have done well too. Typically though, the ideal for credible information has been challenged by the ease of creating biased content that is more likely to be clicked and become popular by appealing to what we want to believe rather than question what we know.

By using a paid model that amounts to about a R1000 a year to access correctly researched and regularly updated content by an editorial team of over 4000 a better option than a free but possibly suspect source of information.

LEGO

You might not think Lego ever had much trouble shifting billions of little plastic bricks. For the world most valuable toy maker those bricks have indeed kept them on top of the world.

It did not start that way though, a struggling but quality-conscious carpenter saw a machine that made plastic extrusions, little blocks, while the company thought it was just a simple demo, to Lego it became a revolution.

In the 80s though Lego began to diversity as its patents that had kept competitors at bay were due to expire within the decade. In the 90s the advent of computer games reduced their reliance on the brick in favour of more digital options even more and they actually made the blocks bigger to make building the projects quicker. The research was suggesting that kids wanted instant gratification and had shorter attention spans.

In 2000, with sales slipping, the business was feeling the full force of a disruptive wave of challenges to its original plastic brick making model of 1947.

The low point came in 2004 with turnover dipping to the point that debt threatened to mark the end of the company altogether.

Then some things happened that possibly through desperation or keen insight saved them.

An adviser, Martin Lindstrom, challenged the big data view that the company had been using. An interview with a 12-year-old Lego-loving skater provided the news that the possession that most filled him with pride was a worn pair of tekkies. Not just any tekkies, these had the wear of a skater, something that would take many months to create. Rather than having little attention, a Lego lover might be someone willing to spend a lot longer to create something great than a bit of time on something average.

Lego discovered the insight to be real, they made the bricks smaller again, in fact, they added even smaller items with projects with detailed construction plans. These new models would take a lot of time and effort to build. It worked.

It was also helpful that they have partnered to create a movie using superhero Lego characters around the same time.

Cutting back on the non-core products like clothing and refocussing on the iconic block saw sales return and allowing a once small privately owned toy maker from Billund (population 6000) to become the world largest.

The story ends there, for now, but like computer games in 90s, the next decade may see it challenged again with 3D printing becoming the go-to construction kit of the future. Don’t be surprised though that the little block that causes barefoot parents to shriek in the night may one day not be sold but made in your own Lego creation studio. A child’s imagination will be free to then create anything.

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