impact of technology on fitness industry - ihrsa 2010

Technological Innovation and the Fitness & Wellness Industry:

Predicting the Impact

Bryan K. O’Rourke, MBA

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Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

before we start a word from seth myers

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Thanks Technology

Seth Myers

broad

4

Key Trends

Biz Models

Innovation

Predictions:Consumers &

Facilities

“change is the process by which

the future invades our lives”

Alvin Toffler

think different

No Crystal Ball

Different

revolutionconvergence & divergence

<3>

demography

globalism

technology

key technology

trends

1st

how will it impact our lives & industry ?

technology - what has it &

Technology: etymology greek - meaning skillful application of an art. The practical application of science in commerce or industry.

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Technology: the pace of change is not linear its exponential. Adoption rate is increasing similarly.

Gordon MooreCo-Founder of IntelNumber of transistors on a chipwill double every two years. “Moore’s Law”

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Law of accelerating returns . We are just seeing the start - “knee of the curve”

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

1,2,3,4,5,6,7,8,9,10.......

2, 4, 16, 256............

Internet: The free exchange of information with limited constraints.

-Commercial Internet began only 5,300 days ago-Serves over 1.5 Billion people-79% of US adult population-40% of US consumers usesearch engines for comparativeshopping

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

The “Grid” Becoming Increasingly Integrated

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Devices - getting smaller and more powerful.

The ability to increasingly and more easily integrate technology into daily life is upon us.

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

15 Billion by 2015

Mobility: Communication & information when ever and where ever the customer wants it.

Mobile Internet Access:Pew - 56% of US AdultsIncrease of 73% in 17 months

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Mobile speeds will increase ...........

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Internet will become more intelligent ...........

Web 3.0the “Semantic” Web

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Cloud Computing: Low cost ubiquitous storage and application deployment !

Outsourced Service PlatformsSalesforce.com

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

explosion of interactive tools & platforms

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Merger of

Physical &Digital

emotiv

natal

key trends

digital reality

intelligence

connectivity

miniaturization

web 2.0 & 3.0

cloud computing

low cost

new products &services

2

Biz Models

VALUEPROPOSITION

COSTSTRUCTURE

CUSTOMERRELATIONSHIPS

CUSTOMERSEGMENTS

ACTIVITYCONFIGURATION

CORECAPABILITIES

PARTNERNETWORK

REVENUESTREAMS

DISTRIBUTIONCHANNELS

business model

INDUSTRYSUPPLIER

DEMANDCUSTOMER

"companies that expect a glorious

past to shield them from the

forces of change driven by advancing technology will fail."

- Rupert Murdoch

0

75.0

150.0

225.0

300.0

2021 40

206

Fitness FacilitiesVideo Games

OTC DietRetail Pharma

2009 U.S. Revenues(in billions $)

1%

99%

Fitness Facilities Health Care

2009 U.S. Market(US health care $2.6 trillion)

17%

U.S. Fitness Facility Marketstatistics from www.cmeto.com

46%

Market Evolution

“Membership” ModelPricing Has Declined

Low Price & Limited Features High Price & Full Features

PRIZM

Consumers

66 Groups

IHRSA 2009 comparative US industry data

7 groups account for 75% of US club members

Income / Price is a KEY Barrier

"It may be fatal to assume that minor adjustments to current business models will keep the fitness industry abreast of changing times."

http://futureoffitnesswhitepaper.ning.com/

DemandIndustry Convergence

clothing

supply side

Li & Fung Group

movie theaters

arcades

record stores

Economics of Free

VALUEPROPOSITION

COSTSTRUCTURE

CUSTOMERRELATIONSHIPS

CUSTOMERSEGMENTS

ACTIVITYCONFIGURATION

CORECAPABILITIES

PARTNERNETWORK

REVENUESTREAMS

DISTRIBUTIONCHANNELS

business model - new models needed

INDUSTRY SUPPLIER

DEMANDCUSTOMERdigital technologies

3

Innovation

“those who cannot change

their minds cannot change

anything”

George Bernard Shaw

How OrganizationsCreate Value

VALUEPROPOSITION

COSTSTRUCTURE

CUSTOMERRELATIONSHIPS

CUSTOMERSEGMENTS

ACTIVITYCONFIGURATION

CORECAPABILITIES

PARTNERNETWORK

REVENUESTREAMS

DISTRIBUTIONCHANNELS

business model - what is technology doing ?

INDUSTRYSUPPLIER

DEMAND - CUSTOMER

+

_

sustaining

disruptive

consumercentric

EmpoweredConsumers

It’s all about the

“You”

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Product - Build fences, own it all

Price - Competition, supply - demand

Place - Physical distribution

Promotion - Sell, sell, sell

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

....Legacy of the Industrial Revolution

To Deliver Value Organizations Used To ......

Product = Experience, Co-Created

Price = New Value Exchanges

Place = Marriage of Digital & Physical 24/7

Promotion = Conversation or Engagement

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

To Deliver Value Organizations Must Now......

.... A New Way of Doing Things

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

C.K. Prahalad

“To successfully compete companies must reinvent their process & culture in order to sustain innovative solutions.”

“World’s Most Influential Management Thinker”-Times of London 2007

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

N = 1

R = G

orchestration

Innovation = Value Creation

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

U’s Together =

CommunityCentric

customer focus

social media = new business models

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

To Innovate:

Change How Organizations Work

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

New Methods, Roles & Models to Compete

Integral Part of Organizational Capability

4

What’s Aheadpredictions

1. non-facilitycompetition will surge

Merger of Technologies Including Social MediaWill Create New Low Price Alternatives

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Nike Running

OutsideIndustry Convergence

2. successful facility competitors will deliver

new models

Product = Experience, Co-Created

Price = New Value Exchanges

Place = Marriage of Digital & Physical 24/7

Promotion = Conversation or Engagement

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

.... A New Way of Doing Things

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Hi-Tech Hi-Touch

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Financial ServicesIndustry

Measure is not# of Bank Branches

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

24/7 Service & Support

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Adoption of Social Media Best Practices

3. “wellness” will increasingly emerge

The Crisis...23% of Americans participate in no physical activity

62% of Americans obese or overweight -18% rise in last decade.

23% of Americans still smoke. 3000 start each day.

78% of men eat vegetables less than three times per day.

75% - 90% of visits to Primary Care Physicians are for stress.

THE COST IS BANKRUPTING OUR NATION

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Head - Traditional Fitness Industry

Long Tail - New Wellness Space

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Technological Innovation and the Fitness & Wellness Industry: Predicting the Impact

Finally

“The greatest obstacle to

progress is not ignorance. It’s the Illusion of knowledge. “

-Daniel Boorstin

"Of the ten leading vacuum tube companies, none participated in the transistor revolution".

–Chet Raymo

is up to us......

think different

Technological Innovation and the Fitness & Wellness Industry:

Predicting the Impact

THANK YOU