By Ashootosh Chand, director-Business Development, Ricoh innovations
With each passing decade, business models are evolving faster than ever. A couple of months back, I was reading a research report about the life span of corporations in the S&P 500 index. Until the sixties, corporations in this index lasted an average of 61 years. But by the eighties, this number fell to 25 and apparently in the twenty first century, it is just 18 years. Clearly, the average life span of a firm is shrinking. Back in the eighties, people did not start a business and sell it off within a span of two years. But today, the likes of Instagram, Tumblr and SnapChat have become passing clouds. Gone are the days where you would dream about building a 100 year old enterprise. The fundamental definition of a sustainable business model is changing. Having witnessed this, our strategies across different verticals have always been about one philosophy: change is the only constant.
The trends that shaped business strategies two years ago will continue to remain even for 2014: social, mobile and the cloud. From a strategic point of view, business models are going to remain the same as they were in the last two years. Verticals like consumer technology and services will continue to see threats from new entrants as barriers to entry are low. Hence, the strategy for companies will be getting big fast and build defensible moats around the core business. On the other hand, verticals in the B2B space will continue to experience increasing bargaining power by our customers. Strategies for businesses operating in these markets will be to add value to customers in a manner that increases their switching costs. What is going to change is the tactical approach of executing these strategies. In most cases, businesses are going to tweak and refine their product development and marketing activities and align the execution accordingly.
Social has been about collaboration till now and it is going to remain so even in the next year. However, as consumers become increasingly mobile, the nature of this collaboration will move from a one-to-many to a one-to-few or one-to-one collaboration. I am hooked to FaceBook, but my son is hooked to WhatsApp and he thinks FaceBook is passé. What this means to us today is that the individual is more important than the social network. Until now, it was always about the number of “likes” in social media, but it is going to be about the quality of those “likes”. Businesses will be treating their customers as individuals and not segments, as users move into the next wave of social and mobile convergence. This is going to be a major catalyst for change in strategy for businesses in the next year.
Businesses continue to migrate to cloud computing to reduce costs and offer improved services. The Infinite Network – a world of connected people, devices and information, has the potential to provide infinite value. For example, over the next decade, the vendor who will take grocery orders from your fridge will be sitting on a cloud computing platform. Businesses have normally had different offerings for customers based on their IT budgets; on premise installations or private cloud infrastructure for large customers and multi-tenanted platforms on public cloud for SME customers. The trend has been that customers need a cloud platform not because it reduces TCO (Total cost of Ownership), but because it advances their business priorities. What was interesting in 2013 was that large customers have started preferring hybrid cloud models where data security is delicately balanced with mobility and scalability. This is a key trend which is likely to continue next year.
2013 will be remembered as the year that witnessed the inflection point where the number of mobile devices equaled the number of human beings on the planet. When I grew up, having a push-button telephone was a luxury. My son has never seen a push button telephone. I don’t think my grandchildren would ever see a keyboard. Today’s mobile devices are designed when desktops and laptops are slowly fading away into the background and to the data centers. The next generation human interface technologies would be based on normal human interaction methods like voice, audio, visual and motion based.
To sum it up, the strategies for businesses in 2014 will not be much different from 2013. What is going to be different is the way businesses continue to execute their strategies as consumer trends keep changing and impacting value chains across different industries. Businesses which leverage the convergence of three trends: social, mobile and cloud will thrive and grow in 2014.