Are You Going To Make The Competition Irrelevant Or Become Irrelevant?
Life and business is about growth & contribution and whatever is not growing is dying. As the most of the competitors in any industry use the same factors of competition (see figure below) as well as industries are maturing faster, the average industry profitability keeps on declining year after year making the need to find new areas of profitable growth vital.
The challenge of creating profitable growth moving away from commoditization of an industry, has been addressed from business authors including the books Blue Ocean Strategy and Blue Ocean Shift. But the world in the 21st century is getting more complex, is changing faster and many new technologies and their applications are growing exponentially as well as the effects of their convergence and multiplications are going to be big and unpredictable. The use of traditional growth strategies, something that is followed from many competitors copying each other can never result in a breakthrough. Any business to grow successfully in the 21st century needs a new approach which is a combination of 21st century mindset, new growth strategies as well as effective application of exponentially growing technologies. Exponential growth creates companies that grow faster that the rest of the competitors, who cannot follow and consequently becoming irrelevant.
The world around us is linear:
• We think linearly
• We project where things are going to be by looking at the past.
• 1000 yeas ago kings or religion only could create major changes
• 100 years ago the industrialists and inventors (Carnegie, Edison, Rockefeller) controlled change
But there is a change. Now smaller companies or even individuals can do things previously only governments/multinationals could do… (e g Space X vs NASA, INSTAGRAM vs KODAK).
Moore’s law is enabling exponentially growing technologies. With information technology growing exponentially every field of science/business sector that has significant information content and/or is enabled from computing based technologies is growing/becomes or will become more efficient exponentially:
Computers /Smartphones, Consumer Electronics, Cloud Computing, Networking, Mobile Communication, Social Networking, Healthcare, Transportation, Hospitality, Security, Biotechnology, Nanotechnology, Robotics, Artificial Intelligence, Data Analytics, Banking, Insurance, 3D Printing, …
Exponential technologies are behind:
• Robotics: Self driving cars (Google) and drones
• Artificial Intelligence: Watson (IBM Computer) eliminates any human opponent in Jeopardy
• VR/AR: DIY skills clinics
• Cloud Computing: cost per hour is declining monthly
• 3D Printing: Customized cars, human parts, ..
• Biotechnology: Synthetic substances for fuel, food, vaccines, genes.
• Nanotechnology: Genetically modified silk stronger than steel
• Transformation from product economy to service and experience economy
To evaluate if you or your company is ready for the era of exponential growth see below a few relevant questions:
1. Where are you or your company is thinking linearly?
2. Which products or services are going to dematerialize or demonetize first in your industry?
3. What will become free in your industry in the future?
4. What exponential technologies can you use to create a competitive advantage?
Are you prepared for the era of exponential growth?
To create exponential growth in your business, there are 5 steps to be followed:
Understand the current business
After you have understood the major changes taking place in the exponential 21st century and especially the impacts of the exponential technologies, we need to understand the current situation of the business in concern. To achieve that we follow the following 4 steps:
1. Identify the key factors of competition of your industry
2. Create the strategic map of your Industry or the top industry leaders e.g see attached the strategic map of the Taxi industry with UBER added.
3. Draw your own company strategic map
4. Compare to understand the competitive situation
Find out paths to grow
To be able to find new paths for growth you need first to broaden your mindset as a first vital step towards growth:
From competing in own market to expanding the market
From own industry to expand to other industries
From competing to make the competition irrelevant
From focusing only on existing demand to create new demand
From thinking in OR OR OR terms to AND AND AND terms e.g new value creation AND cost reduction
From limited product/service thinking to solutions thinking
After this vital step you are looking for ways to grow and you can execute the following steps:
1. Identify the pain points or blocks across the customer experience cycle
2. Decide what pain points to eliminate or needs to satisfy using the right criteria that support the discovery of important customer unment needs and which customers group(s) to focus
3. Understanding better the innovation characteristics in the exponential 21st century is a vital next step to be successful in the 21st century including creating new ideas and concepts using the Xponential culture matrix.
4. Identify new value creations and cost reductions by interviewing or observing customers or exploring separately the following paths:
1. Evaluate other industries solving the same problem
2. Evaluate other companies with different positioning in the same industry
3. Evaluate the types of customers across the value chain
4. Evaluate the total solution
5. Explore the functional/emotional orientation of your industry
6. Evaluate new technologies and how they can create new value or cost reductions
7. Apply AND, AND, AND instead of OR, OR, OR and find out what can change substantially in your value-cost balance
8. Reinterpret and modify existing business models using digital business modelling
There are more paths to be followed but the above cover the most important aspects of any business ecosystem.
Create Xponential growth strategy and decide the best path to focus
The previous step has normally generated a lot of ideas and insights to analyse in order to finally make choices.
As strategy is about choices, you need to decide which factors of competition to eliminate, reduce, increase or create new per path. The picture below explains how you can show the most important part of the strategy in 1 page.
Then you create the new strategic map for the various paths and finally make a choice of which path or combination of paths to choose using the right criteria and management knowledge in order to maximize growth and value creation for your company.
Concluding, in the 21st century we talk about exponential growth as we have a combination of exponentially growing factors as well as linear. Some of these factors are:
-New mindset and strategy
-New customers and new customer experiences
-Expansion of industry boundaries to other industries
-New exponentially growing technologies enabling new value/cost combinations
-New digital business models based on new factors of competition
Are you going to make the competition irrelevant or become irrelevant?
Thank you very much
Mike Mastroyiannis is Innovation, Management & Executive Coach and Consultant for among others Team and Business Transformations as well as in Xponential growth consulting. He has served as CEO of business units in Multinationals, founded or lead start-ups and served in advisory boards. He can be reached through LinkedIn or email mike@TenX2.com