3 ways to take on industry convergence
Disruption in business is inevitable. But the face of disruption is changing. It looks different. It feels different. A few years ago, you could recognise your competition. You knew how to handle it — you needed to improve, expand and get to market more efficiently.
Today, your competition is often invisible until it’s too late. As the boundaries of competition become ambiguous, the bar around you is constantly being raised. Disruptors and challengers outside of your traditional industry are often your biggest threat because they are not yet classified as competitors.
Industries are converging
Competition isn’t just coming from new permutations of old industries; it’s also coming from digital invaders with totally different business models. This makes everyone nervous. Not so long ago, CxOs thought new rivals were as likely to come from their own industry as from others, according to the IBM Institute for Business Value. Today, they’re more worried about outsiders invading their patch.
In the 2016 IBM Global C-Suite Study, which surveyed 5,247 business leaders from 21 industries in more than 70 countries, “industry convergence” was identified as the most highly anticipated trend in the coming three to five years. It ranked highest amongst such trends as the “anywhere” workplace, rising cyber risk and the redistribution of consumer purchasing power.
Industry convergence proves to be a mixed blessing. It represents the most fundamental growth opportunity for organizations and will redefine industry boundaries by shifting the focus from individual products to cross-industry value experiences, all based on digital business principles.
Some forms of convergence — such as the marriage of consumer electronics and healthcare in digital exercise trackers, like Fitbit — are fairly obvious. Others stem from unlikely liaisons. Uber has now partnered with big names like Nordstrom, Google and T-Mobile for a package delivery service. Uber drivers can now deliver new smartphones ordered online within 3 hours. They can even achieve an average delivery time of 23 minutes in San Francisco.
So, how can you take advantage of this growing trend?
1. Position your customer experience as your north star
The customer experience is everything. It’s what your company’s products and services revolve around and it’s what can differentiate you from others. Fiercely champion your customers. Become the custodian of the customer experience. Two-thirds of respondents in the IBM CMO study regard “developing deeper, richer customer experiences” as their top marketing priority.
Rethink every aspect of your strategy, design and operations to enhance your customers’ experiences with your organization. You must create an integrated experience and transform your customers into fans. Even as industries continue to converge and competitors enter your space, your loyal customers are seven times as likely to test an offering, five times as likely to make repeat purchases and four times as likely to refer your company to others.
2. Constantly reinvent your digital strategy
Taking on industry convergence requires more than the traditional transformation mindset. Leaders need to look beyond modernizing systems and incremental improvements to take on a total reinvention mindset.
As the customer experience continues to guide the way, implementing a continuously evolving digital strategy is essential to keeping up with customer preferences and demands. By 2020, customers will manage 85 percent of their relationship with an enterprise without interacting with a human. Digital interactions will have a massive impact on how customers perceive your company.
By experimenting, innovating and learning — and sometimes failing — you have the opportunity to ultimately become a disruptor yourself.
3. Drive with data, digital and cognitive
Extract valuable insights from mountains of data to design and create experiences that not only reflect a deep understanding of your customer but also enables the experiences themselves to learn and adapt as customers change. By 2020, data-driven businesses will take USD 1.2 trillion per year from their non-digitally-transforming peers. A business that understands, reasons, learns and adapts is a cognitive business.
To stay ahead in our quickly shifting competitive world, you must rethink your customer experiences, re-examine your digital strategy, and re-architect your data analysis capabilities. And you must do it quickly.