The new connected business strategies thinking

 

Development of business strategy has always been disrupted by the constants of new technological developments inside and outside the organization. The term “digitization” has become the latest term synonymous with several changes in how demand and supply consumption models have been transformed by online transactions, mobile devices, social web mediation offering new insights into connected business.  

 

While the digital and non-digital worlds are still with us and are a facet of the old and new transitions, some of the key numbers of digital impact cannot be ignored. With examples of  10-30% growth of revenue towards online commerce usage behaviour1; 45-60% growth of data traffic and data analytics driven by mobile usage2 and internet of things3 is potentially being slowed by over 70% concern over privacy issues4 and yet up to 80% data from “white noise” is being wasted5 reducing productivity and opportunities for new growth and capabilities.

 

Connected digital spaces

 

The modern 21st century society and economy are intertwined with new forms of social and technological capabilities now invading many living and working “spaces”.  The business planning issue is not just connectivity but how to maximize engagement and value of the experience in these spaces. There is a “digital land grab going on” by many incumbent and new players in the market who can get access and leverage by “proxy” into existing and new customers and markets through the digital medium. This disruption, this time round perhaps more than ever is changing the nature of customer experience. Connected Products, services, and resources are inverting the enterprise into a distributed model that potentially can work and connect “everywhere” through objects, locations and communities and partners not just in its physical span of control but the wider ecosystems of digital business.

 

If the early stage of this digital business revolution was characterised by the proliferation of websites, social networks and mobility of devices and consumers, then the next wave is seeing “smart” systems that connect data, products, services and devices with locations in “context” to enable much more significant connected experiences with the touch points used in activities with people, objects, assets and facilities.    

 

What are your digital journey ecosystems?

 

This new connectivity is driving new realities across both consumerization of products and services and into industrial supply chains and processes that deliver what has been described as ecosystems of connected multi-markets.   We regularly see Corporate Boards defining strategic vision and plans seeking ways to address new business models to redefine how to work digitally. Whether it is the smart home, smart transport, smart retail, smart government, smart health, smart finance or other vertical markets; these sectors are being “horizontally” redefined and reconnected through digital intermediation to establish a next generation of business and operating model capabilities.  

 

New Digital value – owning the “white space”

 

The facts of digitization point towards many wasted and lost opportunities to capture value in data and to build a wider and better connected customer experience journey using digital capabilities.  What we see is the emerging higher levels of fine grained integration and interaction that is now possible with embedded and remote sensors, mobile devices, data analytics and Machine learning AI that instrument and build out connected products, services and capabilities with new digital customer experiences and digital supply chains.

 

 

 

Often we see companies who, in the rush to respond to immediate agile requests, are questioning if the right strategic capabilities are being built in the medium and longer term? How is the overall digital vision of the future business being managed? What are the standards, skills, culture and roadmaps necessary to develop from a tactical multi-channel architectures and business models into a well-planned, de-risked organizations with clear direction and sustainable joined-up purpose?

 

Dynamic 247 culture and capacity

 

Because data and online behavior is now 24/7 and often real-time, this has in many ways redefined the expectation, threats and opportunities possible from how digitization can transformation personalized experience, business operating models and markets.    Perhaps more than anything it is the dynamic nature of the speed of the ubiquity of today’s computing and pervasiveness of internet of things IoT that point towards a near future of dynamic capacity, pricing and product-service models that are always connected through-life with user and influence them extended well beyond the immediate physical and virtual experience by connection into places and spaces where users live and work in locations and countries.   This is the reality of the emerging digital economy and the new regimes of connected business thinking.

 

 

 

Understanding digital impact on CAPEX and OPEX

 

Organizations typically have legacies of investment in physical infrastructure assets, who have built a strong brand reputation in the physical world and a workforce and partner skill base but are finding that the performance of these are being tested by rapidly changing digital business models that redefine how CAPEX, OPEX are being utilized, or worse, eroded by new and innovative digital business models. 

 

Creativity and structure in strategic purpose

 

Digital disruption and innovation is not just the preserve of large social networks, startups or telecoms or cloud providers, or popular silicon regions around world, but are an issue for all organizations that are building strategies to “own the spaces” and the seeing the impact of all the players and companies involved locally and remotely. This is primarily caused by digital lowering access barriers to consumers and markets through consumerization, modern mobile devices, the explosion of apps stores and the longer tail of choice and new ways to consume digitized content and services.  Enterprises who successfully define and erect digital commercial capabilities to define and manage their offering and markets have gained market share borne out from many cases and including PA Consulting digital track record.   

 

Digital leadership with expert knowledge

 

The rise of digitized business is a top concern for any Corporate Executive board that is seeking ways to both protect their institutional equity and value and exploit new value that may come from this phenomenon.  Even if the term digital is just today’s phase its impact on decisions and customer market performance is key.  What is needed is not just social leadership skills to create strategy that the board can follow. Or is it seldom just the Chief Information Officer CIO, Chief Digital Officer or even a technology evangelist or other technology representative, but how the whole Executive and Management board can support and develop wining strategies in a unified and responsive way.

• What investment strategies and key decisions do what Company Board need to address to be conversant with a potentially rapid changing market?

• How does Digitization generate more revenue, utility, agency?

• How does it sell more products and services?

• How does it enable a wider market potential, entry or creation of new markets?

 

Outcome Decision performance and “who owns the customer experience”?

 

Today the talk of automation replacing human tasks and jobs and the changes in productivity and intelligence from analytics and Artificial intelligence AI are real issues that impact comparisons of not just products and services and their equivalent digital counterparts but decisions of how companies may consider make, buy or merger and acquisition decisions to build digital capabilities. Often the need to link with new markets or to use partner systems and services are changing “who own the customer experience”.  The nature of digital experience from the user perspective often disintermediates the user from the provider so the critically of channel management and scaling the products and services across devices and partners has a real impact on adoption costs, revenue generation, margin and market share performance.  

 

 

 

 

New digital spaces services thinking

 

 

 

Vertical, cross-industry and horizontally connected journeys

 

Digitization is interconnecting and transforming industries and business operating models.  The direct impact is the way customer experience touch point have become “digital touchpoints” inside and outside the enterprise they have be searching, reviewing, buying, consuming or considering switching from.   The enterprise exists in connected spaces through connected products, services, objects, facilities, employees, partners, or transport; that can act as “proxies” of their business in their own markets and in others, other enterprises and even in unrelated markets but are entered by customers on their own journey paths.  To that end digital is “flattening out” the connected customer journey. 

 

• Vertically connected Industries

  • Social media, mobility, data, supply chains are all being transformed within sectors that become increasingly vertically connected between their respective partners, channels, distribution and customer touchpoints.
    Where through dominance of brand or product-services or municipal service, these vertically connected markets are increasingly enabled through digitalization.

  • Examples:  Connected retail products, connected insurance products, Connected transport tickets, Connected hospital records, Connected banking products Connected “Smart” Assets, Connected Engineering

• Cross-industry connected Enterprises

  • Digitization can transform products and service experiences within one vertical and enable it access and delivery across-industry verticals. Whether this is consumer goods, media to regional and overseas services expansion, user journeys can be seamless from the user perspective, being able to move and experience the same service or connected services across different industry verticals and locations.  From an enterprise perspective, their products and services can be developed and used in connect journeys across one or more markets. Higher levels of personalization and contextualization of products and services are possible driven by closer connectivity and productivity.

  • Examples: Connected cashless payments, connected energy, connected work skills access, connected multi-media, connected training

• Horizontally connected Experience

  • As data and markets connect with users and other enterprise the exchange of data, transactions and capabilities could be “horizonalized” by enabling seamless interchange of personal data, supply chain and industrial processes. The effect from the person or enterprise perspective is a contextual experience that “follows” them across and between activities and markets
    as joined up capabilities.

  • Examples:  Connected home, Connected transport, connected personalized retail, connected buildings, connected theme parks, connected cities

 

 

Understand what “proxy” services and the “uberization” model means for ROI

 

We have found that your business model topology of size and nomenclature has real issues over the rate and volume of digital impact ROI.  Fast moving consumer goods with high volume businesses across large physical geographic markets may have fine-tuned margins where fractional improvements in cost of operation reductions. Larger asset intensive business of advanced engineering and manufacturing will have different scale and complexity management issues that will see other types of digitization that can equality transform how these businesses need to reimaging themselves in a 21st century.

 

 

 

Digital maturity models – from knowing it to doing it

 

Measuring current digital performance takes many forms of comparison either from direct measured revenue of eCommerce to specific metrics of social net promotor scores NPS influence and attribution analysis of customer experience and satisfaction and the business outcomes.  But this needs to also consider that other view of what operating capabilities and persistent time based management governance is needed to move from just tactical digital sales and project initiatives to something that is working to capture analyse, visualize and move to higher levels of  performance from directed feedback and intelligent and smart connected business systems. What is needed is a view of today and softer issues of leadership that understand digital cultural but also the hard look at the capabilities and developments necessary to not automate and “fix todays model” but “realize a better digitally sophisticated and modern future”.

 

 

 

 

Building the digital transformation roadmaps

 

Even enterprises with high performance market numbers will continue to innovate to get past the “like for like” numbers of every increasing challenges of greater performance.  Yet most organizations will have many more immediate grounded issues of customer satisfaction, retention, workforce performance productivity and operational asset investment and improvement that seek to understand how this looks in as a digital business?

 

 

The challenges and opportunities ahead

 

There are many challenges that need to be addresses in being able to realize the potential of owning the digital spaces to transforming the wider business ecosystem.

 

How the enterprise rethinks its business, inside and outside its immediate span of control and customer-markets is critical in the digital business economy.  This impacts how and where your wider influence and connectivity will be able to create, protect and add value.  

 

We are in an era that is no longer local and provincial even if paradoxically, digital enables more personalized choice and experience. It has now moved into the connected realms of services, products and communities where competition for personal attention and better value have redefined loyalty as more towards the actual experience and  to the membership of the ecosystem of connected markets, players and social networks.    How a business thinks digitally will have a profound consequence in the near and future success and how modern customer segments and experiences are being rewritten by digital. 

 

 

Prof. Mark Skilton

2016

 

 

Source References to themes

 

1. 10-30% growth towards online commerce user behaviour.

   1. Future of B2B Online Retailing (http://www.frost.com/ma4e )by Frost & Sullivan, reveals that B2B online sales will account for close to 27 percent of total manufacturing trade, which is likely to hit 25 trillion USD by 2020. Geographically, China and the United States will lead the B2B online retailing market. The latter is anticipated to double its revenue contribution to 1.2 billion USD by 2020.

   2. Retail ecommerce sales in Asia-Pacific will hit $877.61 billion in 2015, up 35.7% from 2014. For the first time, the region will not only have the largest digital retail market in the world, but its share of global digital retail spend will also reach 52.5%—the first time it holds an outright majority of the world market. http://www.emarketer.com/Article/Asia-Pacific-Home-Majority-of-World-Retail-Ecommerce-Market/1013352#sthash.1uM8nXkV.dpuf

2. 45-60% growth of data traffic and data analytics driven by mobile.

   1. Ofcom said UK adults spend an average of eight hours and 41 minutes a day on media devices – estimate 60% daily activity), compared with the average night's sleep of eight hours and 21 minutes- reported in http://www.bbc.co.uk/news/technology-28677674    
      Ofcom annual communications study 2015
      http://stakeholders.ofcom.org.uk/market-data-research/market-data/communications-market-reports/cmr15/ 

3. Internet of things growth

   1. Cisco, 50 billion connected objects 2020. http://www.cisco.com/c/dam/en_us/about/ac79/docs/innov/IoT_IBSG_0411FINAL.pdf
      Cisco “Internet of everything” estimate $19 trillion by 2020 - Reported in Forbes  http://www.forbes.com/sites/gilpress/2014/08/22/internet-of-things-by-the-numbers-market-estimates-and-forecasts/

   2. Gartner reported survey estimate 6.4 billion connected devices in 2016 up 30%  and 21 billion by 2020. 60% of these will be just consumer centric between 2016 and 2020, only 30% cross industry and vertical services.    http://www.gartner.com/newsroom/id/3165317

4. Over 70% concern over privacy issues

   1. UK Digital catapult research commentary – “Understanding the benefits of personal data” 79% consumers believe organization’s use personal data for economic gain; 76% main concern was lack of control over data and how it is shared; 65% personal data and trust- 65% consumers unclear of their data ownership of use. Trust of personal data will hinder use of personal data   http://www.digitalcatapultcentre.org.uk/pdtreview/

5. Growth in cyber security issues

   1. PWC’s recent report – the Global State of Information Security Survey: 2015 Growth in security incidents 66% CARGR.–  Last year, organizations have reported financial hits up to 93% more costly than 2013.

   2. Verizon Data Investigations Report 2015 http://www.verizonenterprise.com/resources/infographics/ig_understanding-the-real-risk-of-data-breach_en_xg.pdf

6. Up to 80% data from “white noise” is being wasted

   1. OECD Digital Economy Outlook 2015.  The full potential of the digital economy has yet to be realized. Consumers account for a small portion of e-commerce, with up to 90% of e-commerce being business-to-business transactions. Despite wide diffusion, intensity of Internet usage continues to vary, particularly for activities associated with a higher level of education such as  e-government, e-commerce and online banking. http://ec.europa.eu/eurostat/documents/42577/3222224/Digital+economy+outlook+2015/dbdec3c6-ca38-432c-82f2-1e330d9d6a24

   2. “Mobile App Usage Up 58 Percent In 2015”, Flurry Report Jan 2016, http://flurrymobile.tumblr.com/post/136677391508/stateofmobile2015?soc_src=mail&soc_trk=ma
      “ personalization can deliver five to eight times the ROI on marketing spend and lift sales 10% and more”.   The demands of on-line marketing - McKinsey report http://www.mckinseyonmarketingandsales.com/the-demands-of-on-demand-marketing

   3. How marketers can personalize at scale, https://hbr.org/2015/11/how-marketers-can-personalize-at-scale

   4. “depending on the brand, the digital media ROIs have increased as much as six times, according to our 3rd party market mix models.” Kellogg Reporting ROI from Programmatic marketing in Forbes http://www.forbes.com/sites/marketshare/2012/11/09/kellogg-proves-roi-of-digital-programmatic-buying/#1c6d9e4a225b

   5. Gimbal public website - “Beacon-enabled campaigns have an average click through rate of 60%, compared with traditional campaigns like email marketing at 2%. “ http://www.gimbal.com/solution-providers/
      “Programmatic Can Finally Prove the ROI of Social Media Investment”,  reported in Clickz   https://www.clickz.com/clickz/column/2342181/programmatic-can-finally-prove-the-roi-of-social-media-investment

   6. Advantages of programmatic buying , reporting on knowonlineadvertizing http://www.knowonlineadvertising.com/programmatic-buying/advantages-of-programmatic-buying/