1. Erosion of Economies of Scale Advantages
The Internet makes it possible for small and niche players to compete based on other strengths besides size or scale, e.g. differentiation using customization, instead of standardization through large production facilities.
For example, rather than spend millions to build your own factory, anyone can go to Alibaba.com and find a manufacturer for their component parts or entire products. How can you leverage on this trend to create new points of differentiation with your customers?
Business production times and cycles (from launching products to IPO) are shortening while the pace of competition is accelerating. You can leverage on the numerous online service providers (who offer every conceivable service from design to production and marketing), to do rapid prototyping, test and launch new products in a fraction of the time.
On the one hand, businesses can break apart traditional production chains and outsource practically anything today (see point 1). On the other hand, consumers are also increasingly able to get what they want, rather than what manufacturers place on the shelves. From online retail stores, to DIY T-shirts and tailored travel itineraries, it has become the norm for internet-savvy customers to find or define what they desire from the marketplace. How can you leverage on technology and niche players to offer more options for your customers?
4. Free flow of information
With social media, blogs, forum and discussion groups, people are accessing and sharing information freely. Information is no longer an effective way to maintain control, and the power has now tipped in the consumers’ favour (against the marketers’). Creating a fantastic experience, and developing fans who believe in your cause, is now the new way forward – focus on the message and the “why” behind the information you present; give customers a reason to engage with your brand, beyond the product or services that you offer.
5. Death of the Middleman
With disaggregation and free flow of information, it is now easier for people and information to be pulled together without a traditional middleman. Customers now know how to go directly to manufacturers to negotiate a better deal. However, the flux of information and choices have presented a different set of problems for consumers – too many options to choose from. In response, a new wave of platforms and brokers have emerged to help customers to compare options and secure the best deals, from airfares to discount deals to insurance.
6. Self-Organized Citizens & Customers
Social media has made consumer-led revolution possible. Customers are self-organizing into groups and communities where they share information, knowledge and recommendations. Leveraging on thought leaders and influencers, and developing your own communities and followers, should be a vital part of your organization’s marketing strategy.
7. Shift in Power toward the Developing World
Similar to how China has become a major supplier and consumer market, other developing markets will increasingly contribute more toward global growth. Developing markets will provide a growing talent pool, affordable products and services, and increasing purchasing power, to rival that of developed countries’.
8. A Rising Global War for Talent
People with the best resumes are now sought after globally, and have options to work practically anywhere in the world. Many of the younger talents also prefer work arrangements that offer mobility and flexibility in addition to learning and career growth. Your ability to successfully attract and retain these talents will be a huge determinant of your company’s long-term success.
9. Global network Volatility
Because of the greater interconnectedness globally, small changes in one place or part of a system can produce radical changes elsewhere. The 2007 recession started with sharp drop in the coffee and housing markets, which affected most American households. It spread to the financial sector – when Lehman Brothers declared bankruptcy, financial institutions worldwide were hit, credit (hence resources) for businesses and buyers dried up, impacting economies globally. Similar inter-dependencies will show up on a large scale in our globally-connected world.
Read more in our summary of Outthink the Competition.