The digitization of the global economy is resulting in a tidal wave of new business and operating models throughout the world. Sparking rapid forms of innovations and turning existing markets upside down with new market rules and design. Digital disruption means organizations must stay alert to how an existing market strategy may have to undergo reinvention. Well before the impact of the next tidal wave of change hits with full force.
Change can happen in just a few short years. Causing shifts in organizational, consumer, and customer behaviors. Digital disruption can affect both consumer and business markets simultaneously.
For instance, GPS navigation initially became widespread in the consumer auto market, as well as, in the business markets of logistic and transportation. Web-based and mobile-based applications, further integrated into both personal and business applications on smartphone and tablet devices, caused market disruption. GPS companies such as Garmin and Tom Tom began to shrink considerably. In the case of Garmin, they began to explore new market strategies. Such as, wearable activity bands that use GPS to track running, cycling, and swimming activities.
Vulnerability Applies To All – So Does Opportunity
Today’s companies, in consumer or business-to-business markets, are faced with varying degrees of vulnerabilities to innovative digital transformation. Facing new threats from competitors, dynamically shifting market behaviors, and behaviors of customers being reshaped by digitization. The ability to consistently assess and align market strategy to dynamic digital transformation is no longer a matter of tweaking. But may call for tough choices to disband a current market strategy and move in new directions if needed.
Conversely, CMOs and market strategists today will need to consistently assess market opportunities created by digitization and transformation. In essence, developing a periscope capability to understand how markets will be affected and what opportunities present themselves to their organization.
Company Readiness In Market Strategy
As we move deeper into the 21st Century and rapid digitization of the global economy, organizations today will need to establish fundamental readiness to adapt. Readiness can consist of:
Unmet Needs and Goals: For organizations today, the imperative is to be aware and informed about unmet customer needs and goal-fulfillment aspiration. There are two perspectives businesses must address in this area. First, to look at long-standing needs and goals that are now possible to address due to digital technologies. Continuing with the GPS navigation example, newer digital technologies and applications are now able to route logistics and delivery transporters to maximum delivery effectiveness while lowering fuel costs. Second, companies must look at what new unmet needs and goals are emerging from new digital technologies being introduced. Much of the digital sharing economy, with such services as Uber and Airbnb, is about tapping into new unmet needs and goals.
Market Disruption: Recently, two nearby branches of the bank I used to frequent closed. Bank branches have been in steady decline for several years as more consumers and businesses adopt mobile and online banking. At the same time, Ally Bank has had nearly 7 years of steady growth. Reaching 1 million plus customers in this time period. Ally is tapping into millennials and new digital-driven behaviors, causing market disruption in the banking industry. The upstart Number 26 Bank (N26) is aiming to further disrupt banking with a digital service designed entirely for mobile. Some banks have been slow to adapt while others have made considerable investments in beefing up their mobile and online capabilities. Banks that best positioned themselves in a state of readiness to assess and handle market disruption are faring better than those who haven’t. This example of market disruptions also implies that long-held value propositions can change rapidly in the digital economy.
New Market Ecosystems: Digitization and the rise of the platform economy are playing havoc with traditional market models and ecosystems. In my previous article, I mentioned how the contact information management world was undergoing radical shifts. The previous barriers of high-stakes investment in hosted premises solutions are coming down and giving way to cloud-based platforms. Allowing for small and medium size businesses to improve their customer services capabilities significantly as a result of the cost barrier of entry being cut drastically. New supply and demand models are now altering market ecosystems. Models that includes linking tightly the digital and the physical worlds. Causing companies to assess how they must adapt in order to remain part of changing ecosystems, as well as, new emerging market ecosystems.
Fused User and Customer Experience Expectations: For years, many businesses have treated user experience and customer experience as two separate concerns of their business operating models. Both consumer and business-to-business expectations have risen considerably on both fronts in the past few years. The impact of the digital economy has created an environment where these experiences are fused into one. Whereby the consumer and the business buyer makes little distinction between the two. The experiences of buying, usage, and of being a customer have now fused into a holistic mindset. Also, expectations are now high for superior buying, user, and customer “fused” experiences whether they are experienced online or offline.
How Companies Get Ready
Companies today, be it medium sized or that of a large enterprise will need to be consistently focused on looking out into the horizon of the market they play in. Ever mindful of changes in such areas as:
- Changing buying, usage, and customer behaviors
- Shifts in market ecosystems
- Impact of new digital technologies
- New disruptive competitive entrants
- Impact made on goal-directed choices and decisions
Making use of both quantitative and qualitative means, companies must put in place practices that enable them to be vigilant in sensing new market dynamics and changing customer behaviors and expectations. Ranging from data-driven trending analysis to qualitative persona-based insights (both buyer personas and user personas fused into a market persona), market strategists will need newfound capabilities to distil, interpret, and act upon data and insights in order to not be caught unawares on disruptive market forces.
As the digital economy spreads and steamrolls globally, many organizations are faced with the readiness question. If you and your company have not addressed this market strategy question, then it should move to the top of the list. Covering other questions may be a moot point if this one is not answered well.
(Here is an interesting talk from former McKinsey thought-leader Dave Edelman on the digital disruption of markets and business.)