Envisioning and shaping the future of work and business.

Tuesday, February 8, 2011

The Rules of the Game Are Changing

9:44:00 AM Posted by Oscar Berg No comments
There is a past and there is a future. For a business to succeed, it needs to embrace both.

If you ask me Enterprise 2.0, or social business if you like, has never been about either or, about leaving everything we know or how we have done things previously behind us and replacing it with something completely new and different. I see it as discipline aimed at supporting a transformation which is needed for businesses to be successful in a globalized business environment which is subject to constant change, and where the advances in technology have given individuals access to powers which previously were only available to large organizations, or governments. The balance of power is shifting.

Since the industrial revolution began a few centuries ago, businesses have had to abandon their once entrepreneurial cultures, stop nurturing close relationships with their customers, and become less responsive to customer needs as they have tried to increase their profits by aggressively pursuing economies of scale and turnover growth. During this journey, they have had to introduce rigid structures and mechanisms of control in order to ensure that their operations and management are enough optimized to make them competitive.

Today, most businesses use the same strategies as always when pursuing increased profits. They are doing so while experiencing diminishing returns on their optimization efforts and that the time available for optimization efforts is getting shorter and shorter as new innovations constantly disrupt their markets and force their existing products and services out of the market. Some really important questions are yet to be answered. When every business have moved the production to low-cost countries and outsourced the parts of the businesses which others could do better and/or cheaper than themselves, what remains to create competitive advantage and get a bigger share of the total profits within a market?

I believe three things remain:
  • innovating products and services
  • creating outstanding customer experiences
  • creating new markets
These things have to be done not only once, but over and over again. The problem is that most large organizations, with some rare exceptions such as Apple, suck at all of these things. Instead, they often acquire smaller and more innovative businesses that are great at some or all of these things. Then they can use their size and massive resources to reach out to the markets and capitalize on their acquisitions.

But what if the small and innovative businesses don't want to be acquired? What if they realize that they can use information technology to reach out to consumers anywhere in the world and that they can collaborate with other small and innovative businesses and together shake the ground beneath the giants?

We are in fact seeing this happen more and more often today. The rules of the game are changing.


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