2017-09-13 06:09:56







Are industries obsolete?

Until recently, the concept of standalone industries made sense. From the Industrial Revolution on, the world’s economy has consisted of dozens of compartmentalized collections of companies, each serving its own markets, teaming up with its own suppliers and pursuing its own ways of capturing value. In more settled times, this paradigm worked well; staying within an industry’s established lines of business and ways of doing things made competition comparatively straightforward and was the normal path to profitability. In fact, lacking today’s digital means to change the game or global opportunities to form new business models, breaking out of the industry box was all but impossible.

Today, however, disruptions in everything from the flow of raw materials to the nature of end markets have conspired to knock even well-rooted industries off-kilter. Fortunately, companies have a variety of technology-enabled ways to smash through the confines of industry walls and unlock new value-laden synergies in pursuit of collaborative opportunities that stretch across multiple business sectors.

The new ecosystems
Cross-industry collaborations can be structured to meet multiple objectives, such as reaching the digital consumer or mastering mobile commerce, and can span multiple industries.

Welcome to the bold new world of business ecosystems, a term first coined two decades ago by James F. Moore, an expert on leadership and change in large-scale systems, in a Harvard Business Review article. Instead of being rigidly grouped around a specific business or branch of manufacturing, ecosystems draw together mutually supportive companies from multiple industries that collectively seek to create differentiated offerings and capture value they could not reach alone. Consider, for instance, how Apple leads an ecosystem that spans at least four industries—personal computers, consumer electronics, information and communications—and now encompasses even more, such as music and TV (see chart).

Breaking out
Because of today’s advanced connectivity solutions and value-laden emerging markets, many companies have never been better positioned to engage in multi-industry collaborations. But few have broken out of the static industry box.

They had better figure out a way to do so soon. Several Accenture studies suggest that future growth opportunities will increasingly emerge outside a company’s traditional business. And each of these opportunities will require disruptive new approaches and collaborative models.

Meanwhile, the new competitive dynamics will be shaped by two important factors. The first is collectively known as Big Data—increasingly vast pools of information that empower companies to link previously distinct industries.

But even though Big Data is blazing countless fresh paths to growth, in many cases, companies need new ecosystem partners to pursue them. These cohorts can help make up for a lack of internal competence or provide access to information. What’s more, the intimate knowledge housed in an organization’s customer databases can open potential new revenue streams beyond a company’s core business.

The pursuit of new business opportunities depends on the availability of increasingly scarce financing, which is the second factor shaping the new competitive dynamics. This scarcity, along with the instability in financial markets, is spurring the emergence of innovative ways for companies to obtain the capital they need.

At the same time, burgeoning public debt is forcing governments to reposition themselves as project initiators that depend on outside sources of funding when it comes to public-sector procurement. (see Sidebar). Sharing costs and risks has therefore become a necessity for both private- and public-sector companies.

For these new multi-industry collaborations, opportunities will be found in three broad areas: emerging markets, the environment and maturing Western markets.

Emerging markets are expected to drive up to 70 percent of future growth for multinational corporations. But penetrating these markets can present serious obstacles for most companies. In many cases, organizations will need to develop innovative business models to meet specific local market needs.

Leading companies no longer view environmental concerns as a barrier to growth, seeing them instead as opportunities to be pursued with partner enterprises. The new sources of growth being created by environmental issues often require a collaborative strategy that crosses industries. For example, offerings focused on energy efficiency are already being created by ecosystems of energy providers, technology providers, construction companies and more.

Maturing Western markets still contain significant numbers of sophisticated, affluent consumers. Instead of writing off these markets, companies need to capture value by pursuing new sources of competitive differentiation. Positioning an organization as an innovative market disruptor can be both risky and difficult, but it remains one of the best ways to generate significant profitable growth.

(Accenture, 2016)