How do you Ride the Digital Economy
Digital technologies have tremendously impacted our lives and the way we conduct business. Coping up and fine tuning existing business practices in the environment that is increasingly digital is the paramount concern of all CEOs and business leaders. This presents a dimension where businesses are faced with the most potent threats and disruptions with potential opportunities to boot.
Consider this, 52% of the Fortune 500 companies have disappeared from the list since 2000 - as was noted in the World Economic Form’17. Their demise/acquisition/withering away is largely attributed to digital driven business models.
Large corporations on the benchmark S&P500 index had a 61-year average index tenure during 1958. This tenure has dropped down to 25 year average by 1980 and further down to 18 years by 2011–according to research reports. This trend hasn’t abated and economy leaders promote this period as the “Fourth Industrial Revolution”. This is increasingly acknowledged as the period where one can see rapid and ubiquitous adoption pf digital technologies. The resulting impact on society and individuals is deep and lasting as those that adapt could survive and possibly thrive.
Executives and leaders will need to drop the inertia towards new learning and rapidly adapt to the changing environment to enables themselves to shape their destinies – rather than be affected by the tsunami of digital economy. Let’s walk through key steps to take us through this transformative period and you may add more to this list.
1) Building alliances
The digital connectivity allows organizations to partner and collaborate with specialist input providers and allow the organizations to focus on their core competencies. Specialist service providers provide inputs that are crucial for a successful delivery of services while companies take charge of their innovation pipeline. Business will need to respond and move from siloed and fixed processes to a dynamic network where the customers are served in an omni channel -digital and physical environment and the suppliers have a stake into your IT and procurement network basis quality data on consumption patterns.
The biggest examples are that of disruptors who are upstarts in the revolutions:.
- The largest Taxi (Uber) company relies on alliances - does not own cars.
- The largest Media company (Facebook) does not generate its own content.
- The most profitable smartphone company (Apple) does not own its factory.
2) Talent based outsourcing
As new networks and apps emerge to foster inter connectivity in the gig economy, companies can increasingly rely on sharing work outside their four walls to free agents and talent networks and this allows companies to decentralize their innovation engine. Talent based outsourcing is the latest buzz and trends in the US economy show that up to one fifth of the talent is available on interim assignment basis with the graph only increasing. The best person for an interim assignment could be available locally or in India/Asia as technology makes it easier for companies to open up interim assignments and demand services without the fixed cost of a full-term employee.
The Talent based outsourcing concept offers a collaboration based relationship where the Talent service provider is responsible for the daily operational management of the contractual workforce. In this case the service provider’s role increases from only a BPO based approach to providing a process transformation and performance solution to the contracting company.
Payment for labor is now shifting from a time-based availability model to a service based model where the interim worker is paid for results.
3) Automating tasks
Companies increasingly rely on outsourcing typical repetitive tasks to technology that can do this reliably and efficiently. Some of the business processes/areas being automated are the payroll processing, leave management online through employee access portals, retail ordering and forecasting, CRM tasks like that displayed on e-tailing sites with product recommendation engines, order tracking, digital product tagging through RFID, online insurance approvals to name a few.
The resultant quantity of data being generated adds to the machine learning process and further improves the business process and drops down the cost to serve the customers.
4) Extracting value out of Data
Legacy data scattered across the organization is the new Oil that will power the engines in the Information driven economy. Data is now increasingly aggregated through digitizing the capture and mining of this data through BI tools. Business intelligence tools now allow for analyzing patterns and shopper behaviors to aid the improvisation of physical store layouts and merchandise assortments/promotions. Big retailers routinely sell/share their data with suppliers to help them fine tune their merchandise range and promotions for increasing conversions at the shop-floors and web portals.
After learning from the collapse of industry stalwarts like Nokia, Blackberry, Kodak and many others - business leaders do acknowledge they need to self-initiate disruption rather than be upstaged by an upstart. They are increasingly relying on industry experts, Coaches and specialist service providers to think big, experiment fast with a proof of concept and scale up. To thrive in this age, leaders will need to shed their inertia and comfort zones within existing business models and adopt an innovation approach with help from inside and outside partners to ride the digital economy.