A key pillar of our work at KeySo Global is the belief that digital technology has significantly impacted and changed the digital lives of every one of us, and that systems and business models are consequently having to adapt to meet multiple stakeholders’ expectations.
Business models are dynamic and unique, and are a reflection of historic development, management personalities, economic and business environments, customer and channel requirements as well as resource, assets and technology. As much as humans like stability, no business model stays the same, no matter how perfect it seems at the time. In their 2001 book entitled “How Digital Is Your Business” Adrian Slywotzky and David Morrison compared the brilliance of the Dell business model with competitors like HP, Compaq and, at that time, struggling Apple. Dell spent limited amounts on R&D, leveraged a choice board for consumers to design their own PC, and outsourced manufacturing to Taiwan and distribution logistics to FedEx; this was seen as a virtue at the time when compared with HP, Compaq and Apple. Technology and a successful business model don’t guarantee success if a company doesn’t keep up with consumer need changes or fails to innovate. The focus that Apple placed on user experience changed the game; in recent news we’ve seen how Dell’s business model is now struggling to compete against the growth of smartphones, tablets and cloud services – particularly those of Apple.
Being aware and responding to developments around you is a significant and important part of senior management responsibility. We strongly advocate the interaction with external resources that will bring a different perspective to a business. Utilizing “thought leaders” or tools that allow the current situation to be viewed from a different vantage point can greatly strengthen a company’s thinking and focus. As the saying goes “no single event makes a trend” but the search, listing and assembly of data from multiple sources can enable companies to recognize emerging patterns and opportunities, particularly in complementary industries where competitive shifts in business models could be applicable.
Over the last few weeks I’ve observed in the news a number of noteworthy events that will, I’m sure, impact multiple industries. I’ve listed these below, together with what I believe are the broader implications for business.
Recent news events:
- Online clothes shopping hit 10% of U.S. sales.
- Macy’s overall sales increased by 11.7% and their online sales increased by 48.9%.
- H&M and Inditex – European fashion retailers – are reported tochange their in-store clothing range every two weeks.
- 15% of shopping malls will close in the U.S. over the next five years.
- Amazon’s fourth-quarter sales were down but their margins increased.
- Netflix develops streamed original content (House of Cards) targeted at “cord cutters” abandoning cable and satellite TV.
- Traditional Procter & Gamble partners with crowd sourcing venture capitalists “Circle Up” for new ideas and innovation.
- BSkyB in the U.K. introduces advertising based on localized demographics and TV program choice.
Digital implications for your business:
- smartphones and tablets have changed consumer behavior patterns i.e. online couch shopping and mobile price comparison
- traditional T.V. advertising is losing its effectiveness
- the digital consumer expects broader and more frequently refreshed product lines
- digital business models enable diverse competitive offerings
- traditional business models now embrace crowd sourcing and funding
If they haven’t already done so, these implications and others like them are likely to impact your business model. My message here is that you need to become aware of digital change and be prepared to do something about it. Have you checked to see if neighboring industries and competitors are already responding to the urgent need to adapt? The big question is – are you? Are you ready to take the first steps towards adopting a digital strategy, one that will strengthen your competitive position in today’s digital marketplace?
Steve Bell, President KeySo Global