Transformation has changed the Rules of Business.
What Hand will you Play?
Businesses like to talk about Digital Transformation.
But is this really what it’s about?
We are facing a plentitude of trends across technology, culture and business that are not only reshaping how products are being built and distributed but also how consumers interact, communicate and select those products.
We as consumers not only went from shopping in a retail store to ordering online and mobile. We also shifted from buying products to obtaining the same offering as services. We started to communicate not only with websites, but also with apps and increasingly with bots. Along the way we also have switched sides, having becomw hotel operators, full-time content producers, curators as we host AirBnB guests, and as we record, like, share and comment on social media platforms.
These shifts require us to re-think the fundamentals of businesses in many ways. Let’s just think about the abundance of products and marketing messages that target us as consumers on a daily basis. The means of production have become available to almost everyone, but our attention is not.
What to do when all products appear equal?
Today the physical quality of most products is at an equal level. Most hardware components have been commoditised.
But how to succeed in this world, where most offerings compete on a level playing field?
What to do when Competitive Advantages become Intangible?
And here is another pattern: the success factors of business have become increasingly intangible.
Building cars has become a software task. The biggest marketing agency of today started out as a social network. It’s key asset is the data that it collects about our behaviour. We are talking about Facebook of course. Similarly, the success of our movie and music stores is now driven by their data science capabilities. If in doubt, then have look at Netflix’s recruiting site. And of course, the ‘hotel’ business AirBnB, does not operate hotels.
How do we best compete in this intangible world?
A New Operating System
The first step is to understand the bigger patterns of these new success factors.
Let’s envision the Rules of Business as an Operating System which Companies need operate. This Operating System has been updated as we have moved from the Industrial Age into the Digital Age.
What happens once an Operating System is updated on our computer? To enable the smooth operation and compatibility we also need to update the Application Software. In Business, this Application Software is our understanding of new business models and of their competitive advantages.
Yet, while most companies are aware of the overhaul of the Operating System – the transformation of the business environment – they have failed to update their Business Thinking – their Application Software – accordingly.
Don’t get Stuck in an Update
While all businesses talk about digital transformation, most of them still operate by rules which have been developed in the Industrial Age.
It is impossible to talk about Digital Transformation without taking the broader shifts of the business landscape into account. Talking about new technologies and new channels to customers is one thing. But these shifts also force us to reconsider how the Success Factors have changed and how companies need to operate today.
We need to understand which types of value propositions, business models and business structures enable success today and how we can best apply them to our businesses.
We have provided a 3-Step Update Series for you to ensure that your Business Thinking is ready for the Digital Age.
This Series highlights the key transformations of our business ecosystem. We will see what the new success factors are and how sustainable they are. We will also explore whether and why new types of business models work, and how the unit economics of businesses are changing.
The Series has been developed by BIClabs founder, Martin Hoffmann. As a former private equity professional, he not only has unique insights into the patterns of success factors of businesses from a board level perspective, but he also learned to be quick to see what’s relevant and what isn’t.
This Series is for free, but it is members only. We want to keep it exclusive for those who are serious about getting one step ahead by understanding the bigger picture. If this sounds like you, then you can register at no-charge and you will get instant access to the Series as well as to our Forums where you can discuss these topics with other forward thinkers.