Book : Rethinking Competitive Advantage: New Rules for the Digital Age.
Author : Ram Charan
Many of us are experiencing the
greater convenience using digital platforms. These digital platforms have
enabled lower price, greater convenience, and instant access to relevant
information to the consumers, businesses and employees. These digital giants
have forever changed our experience as consumers and employees.
Creating competitive advantage is different in the
digital age. In the digital age. Competitive advantage is the ability to win the ultimate price the consumer preferences, repeatedly through continuous innovation on behalf of the consumer to create immense value for shareholders. Core competencies have a self-life. They become obsolete and new ones have to be built. Today due to information availability in abundance, the consumer takes the call.
Roadblocks to moving into Digital
1. An overreliance to outdated theories
2. A dominant psychology of incrementalism and short term thinking
3. A blind spot when it comes to customers
4. Acceptance of existing boundaries
5. Belief in mass markets and segmentations
New Rules of Competition
# 1. A personalized consumer experience is key for
exponentiation growth.
The digital companies imagine a
100X market space that does not yet exist. Digital giant’s relentlessly focus
on consumer’s total experience end and work backwardly. They operate with the mind-set of Market of
One – M=1, is the ultimate personalization. Technology is important, but the ultimate focus
is on the consumer. Mapping the customer journey is emerging as distinct expertise. It involves breaking apart all of the interactions and decisions
steps a consumer goes through from first exposure to an idea or recognition of
a need through to what happens after the person makes a purchase. Leaders in the digital age takes on a stiffer
but more exhilarating challenge.
# 2. Algorithms and Data are
essential weapons
The digital platforms are built
using algorithms and data that collects and analyses various customer
experiences and behaviors. Each
algorithm is a simpler sequence of steps for solving a problem. The ability to
personalize an end-to-end consumer experience creates market space of 100x. A digital platform is also key to exponential
growth. Standardization of data will eliminate lot fo the waste in record
keeping and combined with algorithms can detect fraudulent billings Technology,
logistics/ distribution and customer experience are the key pillars for digital
growth.
#3. A company does not compete,
its ecosystem does.
The ecosystem accelerates the
growth. In digital age, competitive advantage goes to those who build ecosystem
or network that leverages digital technology for the benefits of the consumers
and paves the way to multiple streams of revenue. Ecosystem are never
permanent, because the work is moving at such a ferocious speed, technology
changes continue to accelerate and consumer expectations, continuously evolve
finding new partnerships.
# 4. Moneymaking is geared for
huge cash generation, not earnings per share, and the new law of increasing returns.
# 5. People culture and work
design form a social engine that drive innovation and execution personalized
for each customer.
Most digital companies operate
with as few as three or four organizational layers. The digital companies
recognize that structure goes lonely so far and that success ultimately depends
upon the quality of its people. Technology plays a key role in giving people
greater freedom to do their work. Technology makes real time data transparent,
but still the organization depends upon people to knit the pieces together on a
daily basis. Decision-making is designed for innovation & speed.
# 6. Their leaders drive
learning, reinvention and execution.
Leaders continuously learn,
imagine and breakthrough obstacles to create the change that other companies
must contend with.
