Jack Welch, former CEO of GE, observed, “ When the rate of change outside the company is greater than the rate of change inside, the end is near ”. Yet in my role as business advisor, I often see companies naively ignoring this reality. The smarter ones look outside regularly for evidence of impending change, and treat these as opportunities to get ahead of competitors or enjoy the advantages of being early in a new market.
Today, the move to digital technology is driving marketplace change at an increasing rate. The pervasive Internet and mobile device access allows instant communication of new options, total sharing of customer experiences, and mass customization, on a world-wide scale. No more hiding behind a cultural stereotype, a well-built brand, or a geographic wall.
Because of this, important questions every Executive should be asking include:
A. What are the drivers of digital transformation? …. within our industry as well as in new markets
B. How can we make change an opportunity? …. rather than costs or added risks
Insights on this are provided in a new book, “The Digital Helix,” by Michael Gale and Chris Aarons, who have helped change the strategy of dozens of companies around the world.
To summarize, the seven key drivers of digital opportunity, how to recognize them, and examples of how forward-thinking companies have capitalized on them, are –
1. Compression of supply and demand enables near instant fulfillment – Historically, many businesses profited from the time lags between supply and demand by exploiting geography, relationships, and buying habits. Today people can find and switch brands based on delivery, prices, and new features, with one or two clicks and minimal risk.
2. Shifting demographics changes customer needs and expectations – With simpler and cheaper access to information and alternatives, the cultures and generations are rapidly becoming more homogeneous. Demands and expectations change regularly as people learn from others who share their experiences in this new digital age.
3. Access to more information is leveling the market playing field – Almost anything and everything is available online, and the amount and depth of information is growing exponentially every year. This means market changes in the world today are instantly available everywhere, and quickly change the way we buy, sell, interact, and live.
4. Pay-as-you-go provides infinite ability to scale every business – Due to the efficiencies of digital, it is now commonplace to have companies with billions of dollars of revenue and valuation, with few employees, and without years of building infrastructure. Witness the exponential scaling of Uber, Pinterest, Airbnb, and other recent unicorns.
5. New competitors are built to be digital from day one – Think about the up-and-comers during the past decade that have either created new business models or stolen share from established players. Digital gives startups the same power to understand, engage, and look for new opportunities that traditional brands have spent decades building.
6. The rate of change is extremely exponential – In the past century, the benchmark for disruptive change was about thirty years or so. Now evolutions and even revolutions are happening within years, or at most a decade. In this digital age, you need a business capable of listening, assessing, and adjusting to the early nature of these changes.
7. The trade-offs between price, efficiency, and innovation have disappeared – Basic business theory states that businesses have three clear paths to success: cut prices, be more efficient, or invest in sustained technological advantages. Digital enables you to do all three simultaneously, and you must build a plan to do so to compete or die.
The message here is about having a strategy to recognize change from early signals and moving to transform the organization to benefit from change – not abandoning what you have, or taking huge steps into the unknown or going way outside your comfort zone. In conjunction with this, if you don’t do the former, then there will be a need to do the latter ! This is critical for the business to evolve and be relevant to respect changing business needs and user expectations – in a current market, or to address a new opportunity in a new market. From this, there will be a need to determine the mix of Innovation to move the organization forward based on Incremental / Sustainable / Disruptive Business Innovation strategies.
Further, since ” Digital Platforms ” are the new competition, to learn more, you’re welcome to contact CAIL or others in the Innovation ecosystem familiar with –
A. technology for business impact
B. fast tracking finding new services / products that matter
C. better managing change and risk
D. monetizing new capabilities
Oct 20, 2017
CAIL – from Innovation Industry Commentary
…initially published on Inc.com on 10/5/2017
info@cail.com 800-668-5769