Part 4 of 4 on Understanding the 2016 Business Headwinds and Tailwinds
In part 1 of my 4 part series on what will cause business headwinds and tailwinds for 2016 and what they mean from the Global Business Acumen perspective, I discussed, The Age of Emerging Market Urbanization. In part 2, I discussed one of biggest challenges on almost every CEO’s list, the Effects of Accelerating Change of Technology in the business world and in part 3 we reviewed the Challenges of the Aging World.
In part 4, I will focus on the implications of the connected global business world.
According to data released by the US Congress, in 2001, the United States exported about $19 billion of goods to China. In the same year, China exported about $102 billion of goods to the United States. By 2014, US exports to China had risen to $124 billion while China exports to the US had risen to $467 billion. At the same time, global Facebook users have grown from zero to about 1.6 billion people worldwide which means you can be connected to your friends around the world 24/7 and see what chicken dish they are eating no matter where there are in the world.
The forth major disruptive force converging on business is the level of connectivity through trade, travel, social media, and other digital technologies. The internet of things (IoT) changes everything including the ways companies execute their business models. Below is an overview of the three primary value propositions a company can execute – Customer Focus, Cost Focus, and Innovation Focus – and how the IoT evolves the execution from traditional to connected.
Customer Focused
Customer Focus |
Traditional |
Connected |
Marketing |
TV, Print, Magazines |
Web, email, social media |
Pricing |
Tailored to customer, delivered in person |
Tailored, based on patterns, delivered online |
Sales |
Networking, cold calling |
Online networking, Social Selling |
Manufacturing |
Local plants, make extra product just in case customers need it |
Global facilities, predictive inventory management |
Delivery |
Trucks, planes, cars |
Online, virtual printing, Saas, Cloud, etc. |
Cost Focus
Cost Focus |
Traditional |
Connected |
Marketing |
Direct mail blasts, newspaper |
Web, email, social media |
Pricing |
Put stuff on sale, everyday low pricing |
Instantly scan competition and dynamic low cost pricing |
Sales |
Add more people |
Add more online capacity |
Manufacturing |
Local plants, optimize process |
Global facilities, optimize supply chain |
Delivery |
Trucks, planes, cars |
Online, virtual printing, Saas, Cloud, etc. |
Innovation Focus
Innovation Focus |
Traditional |
Connected |
Marketing |
Public Relations |
Web, email, social media |
Pricing |
High prices, high demand |
High prices, higher demand, more scale, more flexibility |
Sales |
“The product sells itself” |
Social Media drives demand |
Manufacturing |
Local plants, create great products |
Global facilities, create greater products |
Delivery |
Trucks, planes, cars |
Online, virtual printing, Saas, Cloud, etc. |
One of the most interesting observations is that the connected global business world creates more chances to have recurring revenue, no matter which value proposition you choose and that is very different from traditional models.
Another important observation is that there are more customers in the connected world and the messages don’t necessarily have to be modified as they might in traditional models. In traditional models, marketing experts say you have to deliver the right message to the right customer. In the connected world the same message may resonate in many different segments and cultures. For example, the #1 shopping website in China is Alibaba’s TMall. The site sells hundreds of thousands of products including many US food products which the new middle-class Chinese can’t get enough of. The top three sellers include:
- Costco Mixed Nuts
- Huggies Diapers
- Ben & Jerry’s Ice Cream
The American companies making these products wouldn’t dare change a thing because their customers want the features, value and stature of these American brands.
In summary, the connected global business world offers an infinite number of opportunities to scale and become profitable very quickly. It also has challenges, volatility, and risk. To be successful and to fully leverage this new ecosystem, Business leaders need enhanced business skills to make smarter business decisions and need to strengthen their overall business acumen to be able to quickly understand the challenges and capitalize on the opportunities.