It is increasingly clear to me that the pace of change, and in particular the impact of digital technology on competition and our organisations, is the reason.
The accelerators of change including artificial intelligence, robotics, cloud computing, big data, augmented and virtual reality, and even Blockchain (ignoring the smoke and mirrors of Bitcoin!) will, I believe, enable new products, services and business formats to develop and scale at a pace currently only just starting to be seen.
However, there is too much emphasis on the specifics of the individual technologies themselves, and not enough on how these technologies can be used together and applied to real customer problems. The ability to remove customer friction by the smart application of technology is a clear differentiator for many already. Think Uber, contactless cards, Netflix to name a few. This will be what differentiates winners in the future.
It is the role of business leaders to figure out how to ‘connect the dots’ – the nexus of technologies, models, concepts and ideas.
We are moving from a relatively linear trajectory to one of exponential change. Some sectors and industries will move faster than others, so the need to respond will be different. The opportunity, though, is available to all.
And it’s not just about start-ups – though their adoption and application of new ways of working and digital technologies are a sign of things to come and should act as a cue and/or wake up call.
Agile organisations that are able to transform their culture and think about how they can partner and work in alternative ways will be the success stories of the future. Impenetrable moats around our businesses are no longer assured.
The unbundling and re-bundling of integrated value propositions – just look at what has already happened in financial services – enables new customer offers to be designed and delivered for customers in different and exciting ways. As a result, we are already seeing industry definitions change, with some sectors effectively disappearing.
A key consideration is a shift in many companies from offering products to overseeing, participating in or facilitating ecosystems. Nespresso was an early example where the offering was a combination of components that only worked together - an espresso machine, pods, milk frother and the physical coffee making experience - in a closed fully controlled (via patents) loop.
Apple is another early ecosystem participant. They effectively embedded their ‘hardware’ (iPhone, iPad, Mac etc.), all operating of a single platform, as the core with complementary products and services creating value for customers – the sum being greater than the parts. Not ‘closed’, like Nespresso, but orchestrated or controlled by Apple with app developers, musicians etc embedding their offer in the wider ecosystem.
Newer ones worth having a look, at that are leveraging new digital technologies, include Babylon
Ecosystems are modular (re-bundling), and rely on mutual interdependencies, two-way value flow and shared data, held together with a variable level of hierarchical control specific to each one. As a result, the various players in these ecosystems are able to embed their offers in a broader set of customer needs.
This can be challenging. It requires business leaders to think beyond a traditional ‘value chain’ that their business model has been built on. We need to consider what could be the core of an ecosystem and its (typically) digital platform – the one or two features that drive customer take up and use. What can complement that core and ensures a broader set of needs are met – not just for customers but business partners and suppliers?
Will ecosystems be the business model of the future? Will thinking about how you could embed your product or service into a broader set of needs be a key strategic question to consider? Building, catalysing or joining an ecosystem (or ecosystems) could well become a core strategy for future growth. The legacy of an organisations cost base, structure and offering could be key barriers to overcome if you want to not just ‘connect the dots’ but work out how to win by being agile in a fast-changing world.
Vantage Strategy & Marketing
I recently attended the London Business School’s course on Exploiting Disruption in A Digital World where these, and many other such concepts were covered. The August Vantage Leaders Forum spent half a day exploring these issues and how they could be applied to their organisations.
If you would like to discuss running a workshop, or presenting a keynote, exploring the opportunities that these new ways of thinking open up, or how these models or technologies could be applied in your organisation, please feel free to contact me on 0419 516 655 or at firstname.lastname@example.org
WEBINAR: To view a complimentary 45 minute webinar on Connecting the Dots click here