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If the message is resonating and a company, starting with the chief executive, wants to figure this out, the very first thing that they do is probably recognise the challenge. Recognise that this is happening. Look at the combination of business model innovation and software that is upending industry, disrupting industry, that is the first step. The second is to figure out ways in your organisation to truly do what I call disruptive innovation and it is an overused word but how do you come up with businesses that are growing faster than your industry growth rate? Everyone talks about innovation, pull a hundred annual reports of public cap companies and they are all going to say innovation or innovative in the first couple of pages, right, it is this socially desirable word that has lost all meaning in the business lexicon, but if you stand back from that – Rita McGrath at NYU by the way, data that she did said that only 8% of companies can grow at 5% per annum for 5 years in a row. 92% of large cap companies around the world aren’t growing yet they all say they are innovative in their annual reports. If a company really wants to figure out disruption what it has to get its head around is first acknowledge the problem and secondly serially launch new initiatives in new ways, not in old ways – these large companies typically do it in a pretty old fashioned way – but launch new businesses in very rapid ways and so called fail fast. Large companies talk about pilots, and pilots are a very dated idea. Pilots don’t accelerate learning, they actually are built to take risk out. But pilots in large companies can take a very long time and I understand some of the rationale and some of the reasoning but when I watch the disruptors they don’t ever talk about pilots, they talk about experiments and the point of experiments is to fail fast and learn from that failure to accelerate your learning, and you can make the argument that the only way of succeeding in business now is to be able to adapt and move fast. Adaptation is the only form of sustainable competitive advantage anymore and what we see companies doing is they are very, very good at learning, they are very, very good at running experiments and extracting learning from that as fast as they can and then move forward and this is something traditional companies have to learn.
Connected Economy TV will continue to discuss the digital generation. We have more opinions from Graeme Codrington.
When you look at Silicon Valley today they have a strategy to empower the consumer and the internet of things in just about every industry and therefore we don’t see a single sector that is really immune from these changes.Take a good example in the utility industry. For decades they have talked about smart metering systems and trying to build a smart grid, and the companies couldn’t do that on their own, but now you see something comes along; The ‘Nest’ thermostat - A simple device made by a company that is designed for the internet, that a consumer can operate for themselves and all of a sudden that little device becomes the end point to make that stuff happen and it has to be done, something at an industry level that no one firm could make that happen because they were thinking what they would do in a traditional sort of metered approach. So that is a very good example of just a small change. I can give you a couple more if you want, it is probably useful. If you look at health care today, the whole generation of consumerised testing – so you can take your own pulse or blood pressure, there is a company that we work with called Theranose which is trying to basically change the cost of traditional blood tests from hundreds of dollars and many tests to a single test for ten dollars that will check all of those things, that can be done at a Walmart or a Boots and so all of Silicone Valley right now is trying to essentially empower the edge, the outside of the marketplace with new capabilities that then feed back into the firm. There is virtually no industry that we have seen that doesn’t have a very real Outside In story.
Connected marketing relies on well developed personal brands to share company content. Our latest video from Bob Barker explores the issue:
A lot of companies out there have been using traditional marketing mechanisms.
They’ve been using digital marketing, and what we see is that more and more marketing has got to rely on the individuals in the company to help get the messages out because it’s those individuals that are often the sales people and it’s the individuals who themselves have got networks.
So what we do a lot of is helping people to understand what their personal brand is all about and to make sure, for example, on LinkedIn that they’ve got a decent profile because Google’s going to find you on LinkedIn if somebody’s looking for you quicker than any other platform, so you need to look the part.
You need to be dressed well, and so on and so forth. And then there’s the whole thing about network maintenance, or understanding and managing your network.
So we’ve all built up contacts on our Outlook or whatever it is, and we’re beginning to build up more and more contact on LinkedIn as it becomes more the de facto business platform for business people connecting.
So we have to put time in and understand how we build and nurture our networks using something like that.
And then the other thing is that now we’ve got a brand and we understand our network, we’ve then got all this content that the company’s produced that might be relevant to what we’re talking about but nobody’s sharing it.
So a lot of companies are building all this content and people aren’t sharing it, like these videos.
We see in large companies, when you look at the shares, nothing’s going on, and so we help companies to understand.
We help the individuals in those companies to understand it’s their responsibility to help get this content out there because on the internet when people are researching companies and they’re looking for what people, you know, what companies are all about, they’re doing a lot of their research without the company knowing.
So unless that company’s got content out there and people are interfacing and being out there, and having their brand out there, they’re not going to be visible when companies are looking for who they want to do business with and who they might trust.
In this TV show Julie Meyers looks at the business economy as a digital ecosystem.
Well, I do think that in the way that we used to refer to verticals we’re going to be referring to ecosystems in the future. So, we used to refer to maybe healthcare as a vertical and now I think of digital health as an ecosystem.
I think it just means that these are multi-dimensional markets and that you can’t think of it in the same way.
And you have to look at how the digital enablers or start-ups are interacting with the corporates and the process whereby you value any business and the transactions that will get done, whether the funding’s or the acquisitions is going to take on that network shape.
We won’t just look at it and we won’t, I think, attribute so much value to the Goliaths’. I think there will be,you know, in that, those five phases of company growth, the companies that get acquired early for big amounts, like Skype in September 05, why does a company that’s in phase two going into phase three get acquired for 2.5 billion?
It’s because the strategic value to the acquirer was so high. Why does a company like Beat That Quote which had £250,000 of EBITDA get acquired by Google for 37.7 million?
It’s because the strategic value is disproportionately high compared to where they are in those five phases of company growth.So, I just think there’s a set of structures which have become fairly normalised at this point whereby we will analyse what’s going on in the market. And I think that we’ll have to assess – we won’t look at markets in the same way, we have new tools to look at that. And those kind of David and Goliath model five phases of company growth, ecosystem economics, I think these are the ways. I mean, we’ve been looking at this for a very long time and we’re quite convinced now that our set of glasses kind of works. It doesn’t mean that we won’t, you know, explore and develop and understand better and make some mistakes, etc. We had the epiphanies, we looked for the exceptions, we found the patterns and we really do think we have the correct set of glasses. _________________________________________________________________________ Digital ecosystem is yet another way of looking at our world today. Hear more perspectives, ideas and analysis on Connected Economy TV.
Economic transition from the industrial revolution to a connection economy is the topic of this business TV Show with Keith Coats.
Ralph Jenson talks about various economies through which we’ve transitioned, it’s a very general, very broad framework but it’s really good to help us understand our current context, ‘cause leadership is always context-specific. So, very quickly, he talks about the hunter-gatherer era, it was an economy in which there was competitive advantage that was forged through a sense of focus.
The interesting thing in the story is that technology is the disruption, so technology changes the rules of the game. In this particular case the technology that did that, the plough, the ability to harness animals, so we moved into the agrarian society. From there we moved into the industrial era. So each of these are economies in which we look at what created a competitive advantage.
The industrial era is interesting because competitive advantage in this particular set of circumstances was created through business efficiencies, that’s where the science of management was birthed. Frederick Taylor and others – if you can’t measure it, you can’t manage it. If it isn’t broken, don’t fix it. So the legacy of that era remains today.
I still meet companies and leaders who think that their competitive advantage will be forged through greater business efficiency. Business efficiency is a hygiene factor now. So, we moved from then to what was called the information-based economy, where it was how we utilised data and from there we moved into the connection economy.
Connected Economy TV is very interested in theories about economic transition and we are adding more videos daily.