The environment that businesses are operating in has changed phenomenally in the past 20 years, and is continuing to change at an ever rapider pace. Digital markets are growing and maturing and this will only serve to promote further change. This will need to better technology that is cheaper and more efficient. Change will be brought about in all areas of business from business models to human resources. Businesses that do not adapt will be likely to die. In a recent report into this topic, the organisation Ericsson stated that:
“Successful organisations will have to adapt their strategies to meet a vast array of new market conditions… this means dramatically redefining the boundaries of a company’s existing markets, competition, resources and the enterprise itself”.
There are many technological forces driving this tremendous change, according to Ericsson. The disruption of industry logic is being brought about by factors such as hyperconnectivity as people can now communicate via high speed internet with others all over the world. It is also being driven by the Internet of Things, where internet connections are being embedded into objects like electrical appliances, which offer real-time data that can be used in different markets. Commoditised technology is another important factor according to Ericsson, in the sense that during the 1990s it was hard for companies to get started up due to costs of technology, but now, innovations like the cloud makes technology accessible and affordable. Resources are becoming more available to everyone, increasing opportunities. At the same time, markets are converging in ways that did not seem possible in the past, and a Networked Society is emerging, in which people collaborate and are open. Ericsson argues that examples of this are networked marketplaces and crowdfunding.technological forces behind industry logics Intelligenthq
Digital markets are transforming as a part of this change. Markets are moving along increasingly rapidly and new markets are developing, emerging and becoming disrupted even quicker than ever before. One of the key features of digital markets is blurred boundaries, and Ericsson provides the example of how mobile phones are encroaching on the digital photography market. There is an increasing degree of business complexity also as relationships between those selling and those buying change, and developers and users are globally based. The market is both all-embracing and super-niche at the same time, according to Ericsson. Additionally it is both hyper competitive and collaborative.
Markets are particularly driven by innovation, and by scaling very, very quickly. This can lead to situations, say Ericsson, where there are just a few employees but millions of users of a service, due to the new ways in which it is possible to structure and organise businesses. User-experience is the name of the game, and product focused. At the same time, Ericsson argues that it is not all about getting rich quick, and modern entrepreneurs are eager to solve difficult problems or create amazing, unforgettable experiences.
There are other key features of new market drivers to consider as well. One is that because barriers to entry have been lowered in a great many cases, there may be a lot more entrants into different new areas. This is excellent for driving innovation as all of the competitors strive to do better than the other and win over customers. Getting funding to get started is also much easier, reducing this barrier to entry as well. Examples of crowdfunders like Kickstarter, IndieGoGo, Seethers, Lending Club and CrowdCulture are provided that illustrate this. All of this helps small businesses to get off the ground very quickly. Additionally, the existence of websites like ODesk and Elance mean that it is possible to access workers all over the world for cheaper rates for work that is still of a very high quality.
Distribution has also changed and digital distribution has disrupted the market considerably. Digital distribution means that companies can interact directly with end users, cutting out the distribution middle man for some types of products and services. Marketing can also be achieved by the lay person in a variety of different ways, using websites like Facebook, YouTube and Twitter, as well as online marketing using search engine optimisation and cheap advertising through services like Google AdWords. While all of this is exciting, competition can arise from all angles and is harder to predict or pinpoint than in the past. With all of these market changes and disruption, business owners have to be on their toes all of the time.
Paula Newton is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Paula’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Paula has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Paula has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.