Net ready
Winning strategies in the e-economy
Description
Before diving into new ventures in the evolving digital economy or "E-conomy," ensure you're fully and properly prepared across four crucial areas:
Leadership, characterized by a visionary and influential leader who knows the direction to take. Governance, which involves establishing and holding accountable a business framework that logically supports your path. Competencies, or the ability to adapt, utilize resources, seize opportunities, and face realities. And Technology, having the intelligence to create an infrastructure that is strong, flexible, and all-encompassing. Companies that are Net Ready leverage these aspects to effectively use the Internet for growth.
Table of contents
01Success tactics online
An organization that is strategically positioned to capitalize on the remarkable economic prospects presented by the burgeoning Internet business landscape is considered to be "Net Ready."
In practical terms, the extent to which an organization is prepared for the digital age is contingent upon four pivotal elements: Leadership, Governance, Competencies, and Technology. These elements are the bedrock upon which an organization's readiness for the networked world is assessed.
In addition to these foundational elements, there are eleven distinct trends that are reshaping the way modern businesses operate. These trends are instrumental in the fusion of the industrial and information economies, giving rise to what is now known as the Internet-enabled E-conomy.
The first trend underscores the importance of value creation in the digital economy, which is increasingly found in the content or the delivery mechanism.
The second trend highlights the evolution of business processes from one-way communication to interactive dialogues. The third trend points to the shift from physical products to digital offerings, necessitating a move from static to dynamic business models. The fourth trend observes that consumers are becoming more selective and less tolerant, demanding personalized experiences.
The fifth trend sees distribution channels becoming more versatile, allowing consumers greater flexibility in how they purchase goods and services. The sixth trend identifies the emergence of new infomediaries that add value by bridging the gap between what consumers desire and what businesses offer.
02Twelve e-conomy strategies
The initial step for many businesses entering the digital economy is to reimagine an existing product or service, infusing it with real value by presenting it in a novel format.
This approach typically involves starting with a product or service that is already familiar to consumers, incorporating a new element that is specifically tailored for E-business, and then crafting a targeted strategy for bringing it to market.
For instance, AOL transformed into an online portal, Valpak transitioned to offering virtual coupons, and Tippecanoe introduced virtual business cards as a new take on traditional networking tools.
In contrast to the inward-looking value propositions of the past, which centered on products or the corporation itself, the digital economy demands a shift in perspective that prioritizes the customer's desires and goals, even those they may not fully comprehend.
Companies that excel in the digital economy do so by redefining their value propositions within the context of these new paradigms. They understand that competition in the E-conomy is essentially a battle between contrasting value propositions, and they operate under the assumption that there is always someone, somewhere, actively working to render their current value proposition obsolete.
Hotmail serves as a prime example, having transitioned from a subscription-based model to one driven by advertising revenue, thereby reshaping its value proposition and uncovering new business opportunities in the process.
Elevating a product along the value chain can significantly alter its nature, especially when new services or information components are added. This process not only differentiates the product but also allows the company to claim a portion of the additional value that is generated.
Onsale.com and eBay have both created transformative experiences by moving their respective products up the value chain through online auctions and a virtual flea market model.
There are organizations that have managed to deliver the benefits associated with their E-conomy ventures without the need for traditional physical products. This decoupling of function from form can lead to the creation of substantial value.
Websentric, for example, offers remote presentations, HomeAccess provides remote medical testing, VSEA conducts remote diagnostic system testing, and Cisco ensures remote quality assurance.
Some organizations have taken the bold step of deconstructing their core business processes and reengineering them to better align with the attributes of the E-conomy. This allows them to offer customers more value-added information services, making the organization an essential part of the customer's value chain and significantly raising the costs for customers to switch to a competitor. McKesson's health care value chain services exemplify this approach.
The most successful companies in the digital economy often generate value by adopting new roles as they transition from one business model to another. In some cases, companies assume multiple roles that were previously held by separate entities, thereby creating significant added value. Eloan.com, which offers online mortgage origination and refinancing, is an example of a company that has adopted a different business model to create value.
03Eleven e-conomy truths
In the ever-expanding digital marketplace, it is essential to recognize and adapt to a set of eleven fundamental new business realities.
Firstly, it is crucial to determine your role within the industry: whether to be an innovator who disrupts the status quo, a dynamic player who shakes up existing rules, a leader who sets new standards, or a follower who adapts successful strategies to carve out a market niche. Each of these roles carries a different level of risk and requires a clear focus on delivering unparalleled value to a specific customer base, rather than trying to cater to all.
Secondly, it is imperative to be proactive and compete against your own business models, as the digital economy is constantly birthing new technologies and solutions. By not evolving, you risk being left behind by the market's rapid advancement. This approach may seem risky as it can disrupt current business arrangements, but it is necessary to maintain relevance.
Thirdly, the digital economy thrives on seizing opportunities. It is vital to stay ahead of the curve by continuously offering your customers innovative technologies and solutions that they may not even realize they need yet. If you don't, competitors are ready to surpass you by providing superior service.
Fourthly, focus your attention on the elements within your industry that are evolving, rather than those that are static. The greatest opportunities are found in change. This means prioritizing revenue growth over profitability, nurturing relationships over acquiring tangible assets, aiming for significant transformative steps rather than small incremental improvements, and valuing swift execution over meticulous benefit maximization.
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