Surviving in the digital economy

By Sheila Moorcroft

The growing levels of connectivity and embedded intelligence in the digital economy are driving down costs and enabling rapid responses. Companies will need to challenge costs at every level so that they can survive in this increasingly low cost competitive environment. But also examine where intelligent connectivity could disrupt markets and enable new approaches the length of their supply chain.

What is changing?

The digital economy is coming as levels of connectivity and embedded, interactive intelligence grow, bringing the ability to do things in new ways. The Internet of Things will connect an estimated 50 billion devices (not phones) plus 6 billion people by 2020.

A new book, Zero marginal cost society by Jeremy Rifkin, examines the impact of that connectivity, and of the emerging collaborative commons, in driving down costs and challenging conventional market models. MOOCs (Massively Open Online Courses) are challenging higher education; car sharing is challenging taxi companies, and as driverless cars take to the road, that challenge will go further; 3D printing is beginning to challenge conventional manufacturing.

Implications

Speed will be of the essence. The digital economy will enable and require companies to use intelligence to identify and respond to opportunities fast. These ‘moments of opportunity’ will require collaboration and trust between suppliers and with customers to identify the need and provide effective responses at the best possible price. These will range from the fridge finding the best price for favourite products as they run out, and possibly ordering and organising delivery at the best time; to infrastructures alerting maintenance departments to emerging defects and providing initial inspection data to prioritise and plan further analysis and schedule repairs.

Self-service will become more personal. We will move beyond the early models of self-service supermarkets, low cost airlines and internet banking to more intelligence based convenience and personalisation. Wearable technologies, for example, will enable personalised offers in stores; or provide ongoing support to enable tailored, preventative health programmes and long term care at home. Fixed costs will need to fall. Teleworking, as remote working was originally called, started in order to reduce overheads, especially office space. Virtual companies and highly mobile workforces within companies are now normal. BYOD (Bring Your Own Device) began because employees wanted to use their own smartphones for work; increasingly BYOD will enable companies to reduce overheads.

Boundaries will blur. As collaboration and open systems spread, so boundaries between organisations and functions, between sectors and markets, and between companies and customers will continue to blur. New business models will be needed.

Companies will need to challenge costs at every level so that they can survive in an increasingly low cost competitive environment. They will also need to examine where intelligent connectivity could disrupt markets and enable new approaches the length of the supply chain. They will need to rethink their business models to reduce costs on every front, become open and collaborative, responsive and lean.

Click here to find out how we can help your organisation rapidly assess and respond to this and other key issues affecting your business.

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