- October 19, 2019
- Posted by: Ramkumar
- Category: Digital Transformation
Why few digital companies achieve global success
Few digital companies take the world by storm where as others get lost somewhere in between.Let us look at WhatsApp which started in 2009 based on the premise that messaging could be done through the internet rather than through telecom operators.In four years, WhatsApp had a subscriber base of 400 million.Looking at the popularity that whatsapp was able to gain, Facebook acquired the company for $19 billion in 2014.Another example would be Angry Birds – A mobile game developed by Rovio in 2009.Angry birds gained huge popularity among its users and achieved 2 billion downloads by 2015.The company has total revenues of around 500 million euros.
The surprising aspect of WhatsApp and Angry Birds was that they did not adapt their products to local culture.For instance WhatsApp had the same user experience in US and in India.The same can also be said about Angry Birds which delivered a consistent and uniform experience globally.The basic framework of strategy tells us that products should be adapted based on local culture.We have seen McDonalds offering veg burger in India as India is predominantly a vegetarian country.WhatsApp and Angry Birds have been successful in transcending geographies to deliver a uniform experience.
Local culture still matters even in few digital companies
- Let us look at two more companies – TomTom and BlaBlaCar.The two companies operate in two different industries.
- TomTom basically provides navigation features in maps to help users find addresses of the right places.It might seem that finding addresses is fairly a common feature and hence can be consistent around the world.This is not right.In case of India, most streets do not have names, the addresses are identified by blocks.Hence Tomtom needed to customize its maps and navigation interfaces to help customers orient themselves more easily in India.
- BlaBlacar solves a very common problem which is to connect passengers looking for a ride to drivers with empty seats heading in the same direction.The costs are split among the passengers.Even though this might seem to be fairly a common requirement globally, the company discovered that cultural differences between different countries can lead to varying levels of adoption.Some countries like Russia are far more open to the concept of car pooling than when compared to countries like UK.To solve this cultural issue, BlaBlacar started to acquire local car pooling platforms.This enabled the company to grow into a new market with an existing team that is aware of local culture which is key to induce a behavioral change at scale.BlaBlacar gives considerable autonomy to local teams when it comes to marketing and communication strategy.Currently BlaBlacar has presence in more than 20 countries.
Digital Partnerships are important for digital companies
- Partnerships are very important for Digital companies in order to access new markets.Mastercard provides contactless payment solutions to its customers by leveraging its partners.Mastercard provides the infrastructure whereas its partners supply the local hardware.By focusing on the digital backend and allowing its partners to focus on the physical front end, Mastercard ensures the global stability of networks while facilitating local transactions.
- BlaBlacar works with AXA insurance company for providing coverage to drivers willing to accept passengers on riding trips.This is because in UK, travelers need an additional layer of trust in order to adopt their platform and try this new mode of transport. This insurance coverage provided to drivers by AXA insurance has been successful in overcoming the UK traveler’s scepticism.
Network effects in digital companies
- Digital business models are based on Winner take all dynamic.In every industry, one or two incumbents enjoy a disproportionately high customer base while remaining players compete for the remaining customer base.
- When a local market already has a regional player experiencing network effects, it would be very difficult for the new digital player to enter that market.
Digital companies like WhatsApp and Angry Birds did not face any barriers to internationalization.This is because they addressed a common need that does not vary across national cultures.For instance the need for free SMS in case of Whatsapp.In addition, these products ran on partners platform.It is extremely rare for any digital business to have these two criteria – hence digital world conquerors remain an exception today.
Digital businesses need to take into account the factor of internationalization.They need to be cautious of cultural differences, hence need to look for local partners and figure out a way to fight network effects.