Bricks versus clicks finds a new battlefield

OUR COVER story today is all about an organisation dealing with the disruptions caused by the rapid shift towards digital technologies, a challenge we in the media are all too familiar with.

NZ Post is fighting hard to ensure it has a place in the digital future, rolling out new models of business, new digital services and generally trying to anticipate the future shape of communications and information exchange in a rapidly changing world.

The organisation was lucky to be gifted its successful and popular banking subsidiary, Kiwibank, by the previous government. That has arguably helped sustain it and bridge it across the inevitable gap between being a primarily traditional post business and whatever comes after.

Other organisations, though, will have to fight their transformation battles without the benefit of such windfalls.

What is eternally surprising is the sheer extent of digital disruption. It goes far beyond media and postal services, with financial services the next likely frontier in the bricks versus clicks battle. Online stockbrokers emerged quickly, almost as soon as the internet was able to sustain them, but we still largely rely on our banks to provide most financial services.

That should not be considered an eternal certainty. Banks are only now beginning to realise the potential threat organisations such as Facebook and Google pose to their businesses.

Initially, this is likely to be in areas such as payments. Already it is easy enough to use systems such as Paypal to transact online.

However, the variety of online innovation appears to be almost unlimited and web entrepreneurs are even experimenting with substitutes for traditional currency: e-dollars of various shades.

But what makes many digital challengers so dangerous, their ability to launch low-cost forays against entrenched businesses, also makes them vulnerable.

Almost as soon as a new web model is invented a host of imitators target the market and can do so in no time at all. Such intense and immediate competition, of course, will quickly eat up profit margins unless innovation through R&D is a constant.

Google and Facebook are powerful platforms and NZ Post is attempting to create a powerful platform of its own in Localist. While the impairment of over $13m in loans from NZ Post is a worrying sign, Localist’s mobile strategy, previewed to me last week, does look promising.

I’ve never used Localist, as far as I can remember, but I am looking forward to taking the mobile version of its ‘‘recommendations engine’’ for a test drive when the application emerges next month.