With digital disruption threatening enterprises in every sector, it’s time for C-suites to get serious about game-planning for the future of their businesses. PwC has a punch list that can help.
Digital disruption hasn’t reached its zenith, leaving many CEOs still desperate to learn how to get ahead of it.
1. Embrace the new logic
Don’t write off that digitally-enabled upstart just because it operates in a narrow niche. Zume, for example, uses robots to help humans make, bake and deliver pizza. Zume is hardly challenging Dominos, Pizza Hut and Papa John’s, but the company stands as a sterling example of how robots and automation can augment rather than replace working humans. The lesson: Don’t write off the challengers.
2. Start now, but move deliberately
Companies must balance moving reactively and strategically when disruption arises. Enterprises must prototype new products and services, test them with customers, fail fast and learn. Bring high-potential products to market at scale.
3. Earn your right to win
Define what your enterprise does well and why it matters. PetSmart gained customer service capabilities to complement its retail network and other services by acquiring Chewy.com in April. Gain your right to win at disruption by building, acquiring and maintaining combinations of people, knowledge, IT, tools, structures, and processes that suit the corporate culture.
4. Craft your customers’ future
Meeting customer needs in fundamental way will inspire continual contact with your company and its offerings. Watch your customers closely to identify pain points and figure out how to eliminate friction.
For example, IKEA sends executives to customers’ homes to see how they live and use furniture. Companies can also learn a lesson from Adobe Systems, which routinely consults with graphics professionals in designing new packages for them.
5. Let pricing drive demand
Customers respond more powerfully to cost reduction than to increases in value. For example, it wasn’t until Tesla launched the $35,000 Model 3 in 2017 that it began to compete with a wide range of automakers.
Consider slashing prices to drive demand, which can endear you to customers looking for a deal. Set your prices low, attract customers, scale up your new business model, and force changes that make it more difficult for rivals to compete.
6. Profit from idle assets
Gig economy businesses sell access to idle assets. For instance, Caterpillar acquired Yard Club to rent heavy machines through an online marketplace. Disrupt your industry by creating value from underused assets.
7. Control your place in the platform
Count on platform partners, such as cloud computing vendors, for speed to market, velocity and scale. But choose wisely. Once you sign on with a platform partner, the switching costs associated with moving your data can be significant. Be sure to retain control over your customer data, intellectual property and capabilities.
8. Don’t isolate skunkworks
Executives who fear disruption sometimes launch digital side projects, such as skunkworks and digital labs. But separation creates discontinuity between side projects and the core enterprise.
Digital efforts must instead be embedded throughout your organization and refined based on user feedback.
9. Challenge the rules
Leverage can come from finding gaps in the rules. Ride sharing is a great example. In many cities, the regulation of taxi medallions led to artificial scarcities and monopolies, which ride-sharing giants such as Uber and Lyft have leveraged to great success.
10. Define a new way of working
Companies conducting digital transformations rethink how marketing, IT, and finance work together. Follow suit, starting with recruiting. Your team should include user experience designers, anthropologists, data analysts, and psychologists.
The bottom line: Unfortunately, the No. 1 impediment to winning at digital disruption is a dearth of talent, with demand outstripping supply over the next two to three years. He recommends hiring talent capable of fresh thinking, especially digital natives.
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