Blind companies in the face of digital competition
The greatest concern of business leaders in the face of digital is the transformation of their competitive environment which requires them to change their practices under penalty of being unable to react to threats that they are unable to see coming with their traditional approaches. .
This is, roughly speaking, the major conclusion of the 2015 edition of the always very interesting “IBM C-Suite Study” released a few weeks ago.
You only identify your competitors when it’s too late
We are moving out of a world of sectorial competition to enter a world of intersectoral competition. Before, it was easy to watch your competitors: they were known and we “frequent” them on a daily basis. Today competition can come from a neighboring industry or from a pure-player digital.
The convergence of sectors is therefore the main trend identified by the leaders for the years to come.
Digital technology allows new competitors to arrive with cheaper products and services and an improved experience, but also players from other sectors to enrich their existing offer and thus to walk on the beds of “complementary” sectors. .
From my point of view, this trend cannot be dissociated from what is called the advent of the experience economy. Previously, the client built his experience by bringing together products and services from players from different sectors. Today, one of these players can easily integrate third-party services into their offer simply by sharing and circulating data. As a result, they are no longer positioned on verticals but in relation to global customer experience chains.
If you are not an experience you will no longer be a brand… if you are not a platform you will not be an experience.
Coming back to the idea of convergence of sectors, we often hear “whatever your sector, tomorrow you will be in the technology or data business or you will be dead”. Digital enables the delivery of experiences on a large scale and at almost zero marginal cost thanks to the logics of platforms… which are based on technology and data, regardless of the product or service delivered.
On the subject, I invite you to watch this Platform Manifesto as well as to read the PWC CEO Survey 2015 which gave pride of place to the issue of intersectoral competition.
But the facts are there when competitors can appear from anywhere and mainly from elsewhere that in their radar new approaches to the competition are needed. With digital, your customers are everywhere … your competitors too.
And the fear ofuberization therefore reigns supreme.
We must face the pure-players digital in the field of engagement and ecosystems
Rather than reacting, it is now a question of anticipating and taking the initiative. One of the directions identified by the general management is that of customer engagement, a field on which the “disruptors” hasten to pull the rug out from under them as a priority. The study also quotes an interesting figure: companies say they are now able to understand 90% of their customer. A rather positive figure but which has another meaning: we are far from the individual understanding of “markets of one”, segments of a person. This confirms that if customer knowledge is an essential success factor, most companies are still far from it (especially since they systematically overestimate their level of knowledge of their customers, far from their expectations).
Another line of response is to seek out innovation where it is, especially outside the company. Partnerships and other “joint ventures” are thus on the rise. But this is not enough without an adapted decision-making and execution structure and, on this point, the study shows how difficult it is for companies to think outside the box.
A panoramic vision to anticipate
The more quickly and unpredictably the outside world changes, the more you need to have a broad and deep vision of it.
No surprises in the technological subjects identified even if I consider that a purely technological approach to foresight is dangerous: it is the use case that counts, not the technology used. Large companies also have a recurring tendency to use technology to find a need instead of doing the opposite. With the road exits that we know.
I note with interest that thecognitive computing is starting to point its nose in the policymakers’ radar. In my opinion, this is a subject that will be the bearer of a real revolution, even more than those which precede it in the list.
However, companies seem to be caught in the crossfire. They know that they must anticipate and therefore “try”, “test” while being aware that they have difficulty distinguishing the fad from the underlying trend. All while knowing the business impact of a bad strategic orientation at a given moment… or of a wait-and-see attitude. I am convinced that – and the facts prove it – the solution goes through innovation models allowing to quickly start from a need, test and develop the solution, decide to industrialize or not according to the observed impact. The strong trend that we see in the design thinking, the fast prototyting, agile methods and the use of an ecosystem of partners are clearly in this direction.
Be the first, the best or nowhere
Trend confirmed later in the study. To move in such a context, the general directorates see an interesting opening in “living laboratories” (or living laboratories) which allow them to quickly test initiatives. An essential approach from my point of view but which has a limit of which we must be aware.
Indeed, if general management are aware that they will have to reinvent their business model, their product portfolio, their operating methods, etc. Such a laboratory fully fulfills this function… except that it does not in any way allow us to presume the impact of industrialization on people and the organization. This is the only area where you cannot experiment on a significant scale but you have to take it into account.
No surprise, the study recommends that companies innovate off the beaten track and familiar grounds, give themselves the time and means to experience the impact and acceptance by people and prepare to grow the business. ‘initiative very quickly if successful to seize a moment for which we do not know how long it will last.
A study relatively in phase with everything that can be read and observed in the field and which poses (supporting figures, insights and verbatim) an excellent basis for reflection for general management.
However, I would like to add another point from my own reflection.
In digital competition, the enemy is as much inside as outside
Two years ago, I noticed that companies tended to put a lot of their difficulties on the external, the market and the competition. We see every day, and this study confirms it, that the subject is real. However, to be satisfied with this approach would in my opinion be going a bit fast.
As I said at the time, the real problem is not so much external as internal. No matter how fast the external moves, all is well as long as the internal is not stiffened to the extreme and incapable of agility. I also refer you to the most recent words of Yves Morieux on the subject. In my opinion, it is illusory to believe that a new vision and a better appropriation of technologies will solve the problem as long as the company does not make an effort of internal simplification. As long as we do not talk about organization, management, reporting … Technology will never be a factor of acceleration but will only make it possible to limit the slowdown.
Bertrand Duperrin is Digital Transformation Practice Leader in Emakina. He was previously Consulting Director at Nextmodernity, a firm in the field of business transformation and management through social business and the use of social technologies.
He regularly deals with social media news on his blog.