As so many companies have discovered over the past decade, disruptive innovation can pull the rug out from just about any business, even market leaders. Unless companies are quick to identify effective responses to disruption, and are flexible enough to implement those responses, they can quickly join the list of companies that the next generation will never have heard of.
Back in 2009, financial analysts didn’t see much of a future for manufacturers of stand-alone GPS devices. As the sales of GPS-equipped smartphones soared, it did look like the curtain was coming down on navigation device makers.
But for Garmin — then and now a leading manufacturer of GPS products and services — the reports of its death by disruption were premature.
Garmin still faces stiff competition from the makers of smartphones with Swiss-Army knife capabilities. But in the past half-decade, Garmin stock has trended higher. This past quarter, Garmin reported that its outdoor, fitness, aviation and marine segments drove revenue 9% higher in those segments on a combined basis.
Time for a Different Path
So what happened? To hold up against its smartphone competitors, Garmin recognized that it had to evolve from being a product-driven company to a service-driven enterprise. To do that, the company realized it needed to make significant improvements to its database infrastructure.
Garmin’s expansions of its services portfolio was well underway before it tackled the job of updating its data operation. The introduction of services like Garmin Connect and Garmin Connect Mobile, its online community created specifically for Garmin products, allowed millions of customers to create training groups and get feedback and encouragement from friends. But these are data-dependent offerings, and to ensure that they satisfied customer expectations, a major overhaul of its database platform was necessary.
Like just about every other company needing to shore up its bottom line in the face of significant change, Garmin needed a platform that was 1) powerful enough to scale with current and future needs, 2) easy to manage to help hold the line on costs, and 3) efficient and designed to integrate with other systems.
Efficiency and Integration at Work
Weathering disruption is a challenge for any company. But it’s especially difficult for an enterprise that’s light on efficient processes, and whose business units are not well integrated.
When we filmed a video with Garmin a few years ago, the company had been storing information on five different database servers. Outages were frequent, and the company was unable to keep up with the demand on its web properties.
Garmin consolidated several production databases onto a single half-rack of an Exadata Database Machine.
With Exadata, the company was able to better integrate data from different departments, including finance, warehousing and manufacturing. Supply chain planning was improved dramatically — Garmin reported up to 50% performance improvements in critical processes — as the Exadata system enabled more timely procurement of raw materials and more reliable manufacturing cycles. Last year, Garmin debuted 125 new products, including data-dependent wearable devices. Overall, it shipped 16.2 million units.
Scalability to Navigate the Data Deluge
Shifting to a data-based services organization requires elastic scalability that can still perform flawlessly. In Garmin’s case, what really tested — and keeps proving — the scalability and performance of the Exadata database is Garmin Connect. In March 2013, Garmin was already seeing the benefits of Exadata’s ability to scale with demand. With a capacity of 50 terabytes of data and 6 terabytes of spatial data, the new system had scaled to manage data on 3 billion miles logged in Garmin Connect. More important, the system administrators were confident they had the technology in place to manage the company’s fast growth.
They did, and Garmin’s Exadata platform continued scaling to support a much heavier load. By January 2015, Garmin reported that more than 4 million users had doubled the number of activity miles logged — now more than 6 billion. By the end of the year, Garmin Connect, with almost another 5 million new accounts, tracked 2.56 trillion steps, 2.5 billion miles cycled, 836 million miles run, and 19 billion meters swum.
Disrupting the Effects of Disruption
Market disruption like that experienced by Garmin will continue in many segments. Fintechs are shaking up the financial services industry. E-commerce is going to keep rattling traditional retail markets.
The shift to a sharing economy is transforming hospitality and other industries. Who knows what other sectors will need to change course in response to disruptive forces? Make sure your organization is sufficiently nimble to react quickly — and maybe do some disrupting of its own.
Learn more about how Oracle Exadata and engineered systems can enable your company to scale and innovate your competitive advantages.