Digital disruption

Digital disruption – the block chain and its impact

Forget Bitcoin -- What Is the Blockchain and Why Should You Care?

I am fascinated with what is happening at the moment- every industry, every organisation is on the cusp of significant transformation, largely due to the changes in technology.

I am no technology geek – the technology has little fascination for me – but what it does to the business model, the ecosystem and industry structure I find incredibly interesting.

Crypto currencies, such as Bitcoin, have been talked about for a few years now – and getting an understanding of them and how they are likely to impact hasn’t been easy. I have no doubt that they will play a role, particularly within the banking system and the person to person  payments process.

BUT, the hidden sleeper behind Bitcoin, that I believe will have enormous impact, is the Block Chain. Block Chain is the technology driven consensus authentication process that authenticates every transaction and verifies asset ownership. It has huge potential to transform payments, transactions, auditing and credit.

The link below provides a simple explanation of the way the Block Chain works.

http://recode.net/2015/07/05/forget-bitcoin-what-is-the-blockchain-and-why-should-you-care/?_lrsc=d4e73b6a-2606-4333-a54c-97d90fe99ba4&trk=elevate_tw

Better or Cheaper? Why it’s no longer the right question.

gallery_lights_coloured_000002630054Medium

Classic strategy has taught us that we should ask one key question to win;  “can we make it better or can we make it cheaper?”.

With the rapid (r)evolution of online business models I believe the paradigm has changed. In many cases, we can now do both – we can create a business model that delivers a product or service both better and cheaper.

The challenge is that too many businesses are taking existing business  models and adapting them to online. Certainly a lot are getting benefits of reduced cost and they are making it easier for the customer. But most  are missing a golden opportunity to fundamentally change the business model and make it better and cheaper.

Below is a link to new reports from Deloitte on ‘The Internet of Things’ and how companies can be thinking about its use across their business and changing the business model.

Enjoy and I hope it triggers your thinking on the business model of the future.

http://www2.deloitte.com/global/en/pages/technology-media-and-telecommunications/articles/internet-of-things-ecosystem.html?id=us:2em:3cc:4dcom_share:5awa:6dcom:technology,_media_&_telecommunicationsBetter

A profound shift in organisational structure

gallery_kites_000004559427Medium

One of my favourite topics has been the changing nature of the organisation. In particular the extended enterprise, now commonly referred to as a company’s ecosystem is a major shift that organisations have only recently started to get their mind around. Most organisations still do not have a structured way of targeting, forming and managing alliances.

The other major shift in organisations is being created by the digital revolution. Not only in terms of organisation delivery through online, but the rapidly changing nature of the way people will work due to online. There is a huge shift in the  ‘democratisation’ of work or the rise of the ‘individual corporation’.  This is rapidly reshaping the way that we work and the way that we will deliver all of our products and services.

The attached article from the Economist gives a fascinating insight into the enormous growth of the ‘freelance workers’.

Hope you enjoy reading it as much as I did.

http://www.economist.com/news/briefing/21637355-freelance-workers-available-moments-notice-will-reshape-nature-companies-and

A strategy that drives customers away!

In The Directors’ Cut, a thought leadership publication based on interviews of 50 CEO’s and 50 Chairs of the ASX100, I commented on how Australian corporates were generally late in embracing digital or online business models. In a number of industries, intelligent Boards and C-suites observed trends overseas but didn’t act until disruption was on their door step.

So what are the plausible reasons for not acting:

  • a pushback from the CIO – stating that the current systems are not capable
  • a perceived view that the new online models are an ‘aberration’ rather than a permanent change
  • that it is economically irrational – “I will be disrupting a high margin legacy business with a lower margin startup that may not last”
  • we don’t have the capabilities required to run a different model

To me, while the reasons given may have short-term merit, they have the potential to be company destroying.

Creating a strategy that creates options for the organisation – through taking investments in potential disrupters or trialling alternative models is essential. The objective has to be to enable the organisation to learn about new potential models and/or to have a foothold if alternative models become significant.

A statistic that highlights the importance of having a foothold in the online world for me is, that we are arguably the number one country in the world for consumer takeup of technology/digital, yet our corporates rank 28th in the world in the use of digital. This indicates that our corporates are not delivering what customers want and are effectively driving customers away to be serviced by offshore entities with stronger online offerings.

Disruption – know your customer or be disrupted

Business model disruption is top of mind for most Non – Executive Directors. The most common question I hear from Chairs; “is my business model sustainable?”. The flip side of this question is “what might disrupt my business?”. This genuine (and right) concern is one of the key reasons why I believe  corporates in Australia are lacking confidence; being nervous to be bold in case disruption is around the corner.

Disruption is largely being caused by online business models; new digital models that provide better service to customers or provide a cheaper service.  Strategy ‘converts’ know that Porter talked about one of two choices – be better or be cheaper. New online models do give organisations for the first time, the real opportunity to be both better and cheaper.

Disruption is not only created through digital means; supply chains are also being disrupted due to a range of other customer and supplier actions. The major food retailers selling $1 bread and $1 milk has created huge disruption to bread manufacturers and the dairy industry; in one move completely changing the economics of whole supply chains within an industry.

The businesses and industries that are facing disruption first, are the businesses that know least about their customers and have not developed a systemic way of gaining customer insight and knowledge.

Media and Retail are both great cases in point. They have classically treated their customers as an audience and therefore been susceptible to new business models that can treat their customers as ‘markets of one’ through individual targeting and clever analytics. A number of our major retail and media organisations have been slow to respond with their own online models or have responded by creating online versions of their traditional mode; thereby missing the opportunity to get on the front foot to create a new organisational and customer construct.