Business Strategy – Why you must factor in Technological Impact

Future is happening faster and impacting your business and you know that. Future will happen is not a matter of opinion, but how fast, always is. Technological cycles are getting compressed and planning cycles are struggling to keep pace. As businesses learn to ride in the chaotic wake of these fast paced changes they need to contend with two key forces, those of  Disruption and Convergence led by their master - Technology.

Arguably, technology is the single most important external attribute today that is impacting enterprises across industries and sectors. The line is blurring between industries and traditional value chains are being disrupted at a pace never experienced before. Consider Uber and Automotive industry. A few years ago a growth in ‘taxi’ services would have meant happy automotive company CEOs. However in todays technology impacted scenario, the industry construct and consumer behaviour stands altered. Individual car ownership in volume segments is loosing relevance challenging conventional thinking. New segments are being created by start ups and firms from unrelated industries. Start ups are selling flying cars and internet search companies testing self driving ones. While these companies were planning and executing, incumbents were thinking linearly.

Hospitality industry’s conventional model is experiencing disruption brought about by a TechStart up that does not own a single room and has yet surpassed 100Million room nights and is expected to book about half a billion room nights in five years from now. Online aggregators have made travel agents redundant in a short span. Those who embraced technology and now offer virtual tours of hotels, rooms, cruise liners and resorts for value added booking services might survive until tech gets enabled more strongly into consumer devices and the internet.

Banking industry is being disrupted with the smart, convenient and secure mobility solutions from start up fintech companies and not next door competitors.  Online wallets are morphing into banks offering higher interest rates and convenience of instant transfers and merchant transactions without the need for plastic.

If brick and mortar Retail was your strength then by now you have probably realised that the consumers purchasing power stands redistributed and you are only one of the options and probably not the most convenient. Machine learning is driving algorithms for demand forecasting, product search ranking, deals recommendations, assortment selection, merchandise placements and much more in making online marketplaces super efficient in predicting consumer needs and presenting them with the right product at the right price.

Virtualised commerce is a reality and impacting the key brick and mortar differentiator of in-store experience. FoodTech companies that were investors favourites until recently are challenged by taxi service aggregator that transports people not food.

So if you are thinking linear and creating strategy around it, think again. Many of the above industries are being impacted not by existing competition but by hitherto unrelated businesses. So what can firms do to ride this chaos?

Ditch the Ostrich Syndrome:

Linear thinking will not go far. Accept the new reality of your business and deconstruct it completely. Understand the new order, the new value chains that are getting created and create a firm strategy to partake in it. It is critical to look not just within but across industries to identify new emerging models, new threats and opportunities that may challenge your existing business or open doors towards new profitable revenue streams and market segments.

Technology is enabling over US$450Bn worth of m-commerce in China. Consumer wallet has not expanded to this extent. It has been re-distributed. In the process conventional business models have lost to this technological disruption. Firms who evolved with an ear to the ground have soared. Disruption and opportunity go hand in hand. Instead of burying your head in the sand, stick your neck further out to scan your horizon, course correct, repeat. That is your only choice.

Embrace Technology:

Technology is a great enabler, embrace it across all that you do. Engage with your customers, create your digital social universe and set out on a path of digital inclusiveness. Highly successful organisations like Starbucks have created direct engagement platforms with its customers where they not only get immediate feedback but where they co-create new products and services. What could be better than working with customers themselves to create that next success story. Geographical boundaries stand erased by digital networks. Leverage them in every possible way to reach customers, suppliers and improve efficiencies. Cloud computing, AI, IOT are here and being put to use extensively. Understand how they can be effectively deployed in your business for faster and better decision making, for innovation across products and processes, for operational efficiencies. Embrace cognitive computing and let it do your heavy lifting in analysing all that data and present you with relevant answers. Days of traditional algorithms are over. Move on.

Embrace Creative Destruction:

In every end lies a new beginning and that adage cannot be more true. However, you must bring this  end upon yourself  in order to survive! Should this end be brought about by the new reality of your industry then there may not be a resurrection for you. Sharpen your strategy in context of the emerging world order and then do not hesitate to destroy that is now irrelevant to make space for the new. Make those new alliances, create new partnerships, acquire that tech, create that new service, change your business model, develop or hire new skills and competencies that are now needed and up your game. Be prepared to take a long term view and not quarter to quarter performance. And once the stage is set burn the bridges and take decisive action to create your own new reality to stay relevant to your customers and create value for your stakeholders. Destroy to create value.

Corporate graveyard is full of firms that failed to anticipate the magnitude of the disruption coming their way, stayed straitjacketed in their strategy model and paid the ultimate price. Think Kodak, the inventors of digital photography, Blockbuster CEO passed up an offer to partner the then fledgling Netflix that ultimately buried it. Netflix is now worth US68Bn, Blockbuster rests under.  

We are in a knowledge age and business models don’t last as long. Technology is repeatedly creating a strategic shift where business strategy must be more emergent, more collaborative in order to survive.