The Digital Economy and Future of the Sailing Industry - Where is the Tesla of Yachting?
What exactly is the digital economy?
The term 'Digital Economy' was coined in Don Tapscott's 1995 best-seller The Digital Economy: Promise and Peril in the Age of Networked Intelligence, one of first books to show how the Internet would change the way we did business. Today, more than half the world's population is online, a third are on a social network, 53% are mobile, and they span all ages, races, geographies and attitudes across the planet. The culmination of this explosion in consumer connectivity is the Digital Economy. A young, dynamic, $3 trillion ecosystem based on technological infrastructure, increasingly intuitive devices and interfaces, vast audience networks, a whole new medium for advertising and an unlimited supply of content. Including access to a global offering of goods and services.
How does the digital economy shape the sailing industry?
The digital economy permeates all aspects of society, including the way sailors interact, the economic landscape, the skills needed to get a good job in the industry, and even the political landscape. Our emerging digital economy has the potential to generate scientific breakthroughs, fueling job opportunities, economic growth, and improving how people live their lives. On the other hand, every day traditional businesses are going under because they refuse to adapt or will not understand what is going on. Yards and manufacturers of equipment to sailing and motor boats are often conservative. That in itself does not have to change one bit. But how these companies deal with the digital economy and consumer behaviour will decide whether they will prosper or go bankrupt. And already yards around the world are getting customers asking for more advanced technology and innovation. The same goes for climate friendliness which for many buyers are now getting priority.
The Digital Nordics
The World Economic Forum’s Networked Readiness Index is a key indicator of how countries are doing in the digital world. It measures how well an economy is using information and communications technologies to boost competitiveness and well-being. Singapore is leading, closely followed by the Nordic Countries like Finland, Norway and Sweden. So, although costs are high in The Nordics, the infrastructure and the bedrock in which to found and run a company 100% digital is absolutely viable. More on that can be found here and here
Most boatyards and builders are not necessarily built for flexibility, they are intended to last and they often don’t want too much creativity and innovation. Many say the customers too are conservative and that follows the argument above. But, that may no longer true. Builders and designers who have adapted to twin rudders, more manageable sailplans, mast pulled back, new systems and even foils on production cruisers may have understood that incremental innovation is key. But is that enough?
Diversification & Disruption
A great number of leaders in the yachting industry are not taking the digital economy serious enough. But the times "they are a` changin"
One thing preventing massive disruption in the yachting industry may be high barriers for competitors entering the business. It does take quite an investment taking up boat design and building. What makes them vulnerable for disruption is that most yards have core legacy business models which often generate the majority of their revenue. They are not diversified enough to meet emerging competitors with a more diverse business models. Diversification is about building new products, exploring new markets, and taking new risks. Of course diversification is not the answer to everything. Taking financial risk in uncertain times and/or if you are already market leader in a narrow field are examples where it can be smart to focus on your core business. At the same time, history is littered with companies that failed to adapt to a massive change in the market such as Kodak and Nokia. The established market leaders should react to disruption if they see it coming. But do not panic, disruption takes time and an incumbent should not overreact and forget its core business. Instead some companies should adapt a duplex strategy and create a new division focused solely on the growth opportunities that arise from the disruption. Some research suggest this new division should be organised outside of core structure creating an environment detached from the incumbents culture.
This is a very interesting scenario that benefits both the disrupter and the disrupted. The challenger will improve their products and drive up market where they can compete at the margin against higher-cost established competitors. The disruptive effect drives every competitor—incumbent and entrant—upmarket.
So why aren`t yards offering more than just the yacht? Why aren`t sailmakers inventing the best racing and cruising software? Why aren`t electronics companies offering Yachtmaster Degrees and educational apps for the sailor? Where is the Tesla of Yachting and why isn`t the top yacht design university located in Scandinavia?
Manufacturers of goods and services are now seeing that more, if not all, revenue is coming from digital sales and channels than ever before. The media industry itself have gone through perhaps the biggest disruption ever seen. Traditional print media gave way to digital and linear TV advertisement is on decline. We are certain what YouTube superstars La Vagabonde are doing for Outremer and SV Delos are doing for Amel is branding worth more than the two companies marketing budgets combined. However, working with influencers is complex and a game for professionals.
Using influencers in the marketing mix may or may not be the answer, but gaining a deeper understanding of how marketing works in the digital economy is crucial.
The harvesting, analysing and the use data will separate winners and loosers
When data from social media channels like Facebook and the likes are combined with business transaction data, you can gain powerful new analytics to evaluate markets, competitive position, and find new markets for your business or service. If you are running a boat yard or an electronics manufacturer it means that you must change focus and become digital in all your operations. Investing in IT and hiring a Social Media expert is just not enough.
Thought Leadership and the Invisible Industry Manager
Leaders in the yachting industry in Europe are almost invisible in the public conversation. Apart from brief appearances in boat shows and a rare few articles in the industry press, their thoughts and opinions are grossly undercommunicated. Their peers in the Auto Industry are making headlines daily in the media and many are voices of change and are commenting on issues far from cylinders and tires. In fact, people find it interesting to hear a CEO of a car company address public transport and infrastructure. It is inspiring to listen to people having great ideas on how transport will be like in the future.
Companies like Apple, Google and Facebook are creating world headlines whenever they are making statements and releasing new products. Sure, they are bigger companies and have lots more customers, but some 6 million boats are owned in Europe and 36 million European citizens regularly participate in recreational boating activities. So there is both room for - and audiences for thought leadership.
We encourage all leaders in the industry to let their voices be heard. Our staff and readers will be listening! If you are in industry head or know someone who should be heard, please get in touch!
Update: The response on this article written by the Editor, Daniel Novello, has been overwhelmingly positive by industry leaders. We will certainly follow up on all the mails we have received as soon as possible. We are also exploring ways to connect everyone who has interest in the field some way or the other shortly.