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By Leon Rudge, Director - Digital Experience, International
I’ve been pretty shocked at some of the messaging & language being used by the in commercial fitness’ digital / technology sector. The “I told you so” and the “you should’ve listened” phrases or the “your business should absolutely be doing X, Y & Z as a result of COVID-19 and our software coincidently can do all that critical stuff”.
Unprecedented times call for brutal reality and transparency to ensure that the correct strategic decisions can be made. Whether an individual or business, our role as digital specialists is to help companies solve problems using digital technology and not to just shift licences.

Digital has been a great channel through which to connect with members during the COVID-19 pandemic, while our primary places of doing business are closed. But operators shouldn’t settle for their crisis response being their longer-term digital strategy.

Operators shouldn’t get too distracted by digital if it’s not a strategic intention and, if it’s not, it might be time to make it one.

Digital strategy is entirely different from crisis response and there is induced confusion of the fact that COVID-19 has caused digital transformation. Digital transformation isn’t a phenomenon that just happens accidently; it’s a strategic intention and involves more than just an unplanned software implementation.

I recently attended a webinar that used the graph below to demonstrate the acceleration of digital in fitness. Its correct, more people want to work out online.

 But digital isn’t accelerating; digital accelerated years ago and this graph suggests people are looking for online workouts because they are at home. It shouldn’t form the basis of a strategic decision at least.
Here is an updated version of the same graph. Does this mean digital is decelerating… rapidly?
Here is another one from the Spain for the same period… what does this mean? The August peak is from the Andalucía region and coincides with an outbreak of Listeria that affected hundreds of people. Is this pivoting to digital? This is the same search, same criteria and same time frames.

 The reality is people have been quarantined. Inmates work out more while in prison. I’m not convinced that COVID-19 has created a new market so operators should be careful when making commercial decisions. It’s simply crisis response that has required the entire fitness industry to explore and open alternative (not new) channels to reach customers.

I have no doubt that COVID-19 has had and will have a positive impact on the digital space, but operators shouldn’t get too distracted by the quick and scrappy fixes of crisis response and set their stall out on creating a transformative digital strategy.

On a recent webinar, I looked at academic research that studied 98 companies in 11 industries and specifically how they successfully responded to strategic disruptive innovation. On the webinar I took an alternative approach and replaced a disruptive innovation with COVID-19. While I appreciate that disruptive innovation isn’t a coronavirus, it has similar characteristics in that it forces traditional businesses to find new and different ways of competing and usually when it’s already having an impact.

The research concluded that there are five ways that companies can respond to disruptive forces, so what can we learn from these five that could decide your strategic direction?
1. Invest even more in your traditional business
Companies could decide they don’t want to embrace a something new and continue to focus on the traditional business. This can be a successful strategy in times of rapid change. There is a huge misconception that if you don’t embrace a new way your business will be wiped out, but this isn’t necessarily true. It’s true where a fundamental technology that underpins an industry is replaced and for a company that refuses to adopt the new technology, but this isn’t commercial fitness.
It’s not a disaster to double down and continue to invest in the traditional business. You may have made some substantial investments that need to return; you may deem that you don’t have the capacity, the capability and the skill set to embrace something new and therefore your strategic direction could be to just make the current business more attractive and competitive.
In my personal opinion, if you choose to simply add on-demand and at-home services as an addition to your current membership then this is where you are playing. It’s investing in the current business and making it more attractive and competitive.
But a couple of red flags from me here. Don’t use this option as the default for “it’s too much like hard work”, or the industry paralysing phrase “my members don’t want that” - AKA your unvalidated opinion of what you think your members want. Don’t be led by your opinion. Secondly, if you choose this direction, try to avoid just reinventing the traditional business, it could just be a pig in lipstick. The key is to make the business more attractive and competitive.
2. Ignore it and consider it as a different market
Sometimes something new can look so similar to your traditional business, but actually be very different. It could have different customers, offer a different value proposition and require different resources and skills. Embracing something that you assume is a new market and encourages growth could be disastrous if it’s not easy to do. If it isn’t easy to adopt and grow it may be a good idea to just ignore it. It literally is not your business.

Consider the crisis response channels that gyms have opened to create “at-home workouts”. The market and its customers have always existed; the only thing that is new is that gyms are closed and need to use an alternative channel to connect with customers.

I’ve spent the last few weeks asking the most experienced heads in the industry if they have ever heard of a gym operator creating “at-home workouts” on VHS cassette or a DVD and charging for it. Unsurprisingly the answer is no. Sure the channel has changed, but the market is the same and has existed for years. Why is it different now or how will you make it different?

I haven’t got any data to quantify or validate this, but I’ve personally never heard a gym member ask to do classes and their gym workouts at home, at least not long term. They love the gym.
Be mindful that there has always been an “at-home customer”. Both the market and the channel have existed for decades but haven’t been attractive to commercial fitness. Why is this? Test your strategic assumptions and understand if you should adopt it or ignore it.

Remember it could be a mistake to assume it’s a new market. If it’s not easy to adopt and importantly grow, it might be too distracting and could impact the core business, you should choose to ignore it.
3. Counterattack by disrupting the disruption
There may come a time when something new comes along that is so attractive to your most loyal members that they leave you and choose to join the new.

You could choose not to embrace the new innovation and instead disrupt it yourself with a new business model that demonstrates an even better experience than that of the new innovation.

There aren’t great commercial fitness examples in the digital space. We haven’t yet seen members leave a gym because of Strava for instance. We do, however, see some physical world examples like the boutique space where gyms replicate the experience to make their traditional business more attractive to keep members from moving to the boutiques.
4. Adopt the innovation and play both games simultaneously
It could be that an innovation is here to stay. A disruptive innovation that members and non-members love and want, and its presence is having a commercial impact on your traditional business. In that’s the case then it’s probably time to adopt it.

Playing both games will require you to play in the physical space, the digital space and possibly a hybrid of them both. It’s not delivering content through digital channels to current members - that’s Option 1.

Operators shouldn’t make long term digital commitments during a crisis that haven’t been intentionally and strategically implemented. We should use crisis response for testing, measuring and learning. What metrics do you have in place for learning?

In order to play both games you will need to figure out the big “how” question. How do you play both games, how do you adopt a new innovation or new market, do you have to build it, buy it, partner? How does it fit the traditional business, and most importantly can you do it well?

If you choose to deliver services to an at-home member, not an existing member then this would be playing both games - you will be operating in a different market to a different customer. Can you play both games well, is it too distracting and do you have the capability?

We’ve seen some really good examples of at-home and on-demand workout experiences during the crisis response, but also some really bad examples that reflect bad on the brand. If you are going to play both games, do it well or don’t do it at all as it could be damaging to the business.
5. Embrace the new innovation and increase the scale
Again, a little far out for commercial fitness, but there may come a time when a disruptive innovation arrives that is so attractive to your current members that they all start to leave you. In this event, it might be time to abandon the traditional business, adopt the new innovation and scale it.

As an industry we probably have other problems to solve right now but we should always have a lens on what’s happening outside the industry, its impact on our business and ask those questions as part of our strategic development & execution.

Operators should be at least be timelining what the big techs are launching and their strategic directions to understand where they are playing in fitness, why they are playing there and what could be next. Do you have a big tech strategy? Will you be ready?

In summary, don’t get too distracted. Right now it would be worthwhile operating a two-speed strategy to your crisis response and also developing a longer-term transformative digital strategy. Use your crisis response to test, measure and learn. What worked, what didn’t, what are members and non-members asking for, what are they using and what are they ignoring. Critically, when answering these questions, be honest with yourself.

When considering your strategic direction and your timing of execution or pivot, make sure it’s done with careful and validated consideration or it could be disastrous. That means not a standard one-hour Outlook call where you discuss the five options.

I have no doubt that we will evolve from this with some kind of hydrid model that harmonises both physical and digital services or business models. But make sure that it’s a strategic decision and not just buying technology for technology sake. Has COVID-19 created a new market or is it just something to get us all through the crisis? This can be distracting.

I don’t think digital is something we can continue to ignore or keep on the fringes. From here take time to research your direction. Make sure you understand if a digital experience is just an extension to your current service, is it a new model that a customer will pay for (which is different from what you want to charge) or is it an entirely new business. Finally, can you do it well and be successful?

Good luck. Myself and our team of digital specialists around the world are able to help with your strategic development that won’t lead back to a single solution. Get in touch. We love the fitness industry and we’d love to help.
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