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The new rules of strategy

07 Jan 10:00 by Richard Jones

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Today's world is a disruptive one with new technology changing the way ‘traditional’ businesses go about their work. Platform or interface businesses are now dominating and consumer & retail companies are now thinking about how they can also leverage this new way of working.

 

What is a platform business?

In 2015, Tom Goodwin, an executive at the French media group, Havas, outlined that:

 

The world’s largest taxi firm, Uber, owns no cars. The world’s most popular media company, Facebook, creates no content. The world’s most valuable retailer, Alibaba, carries no stock. And the world’s largest accommodation provider, Airbnb, owns no property.

 

These businesses are platform or interface businesses. These platform businesses bring together consumers and producers of content. The platforms face none of the costs associated with providing the service but instead take a cut from the millions of consumers that buy from them. Nowadays, the interface is where the profit is for a lot of sectors.

 

What does this mean for traditional businesses?

The Porter’s Five Forces model of industry competitiveness, the threat of entry, threat of substitutes, power of suppliers and power of customer is now changed forever.

 

The shifting sands of technological change has meant that the strategic advantages of many businesses do not lie in the what they own – tangible assets like stock and intangible assets like IP or a strong brand – but in how they engage in communities and what these communities are interested in hearing about or watching or playing – the power is in the content.

 

It also means that the way that many companies thought about strategy and how to compete is changing. Swatch, for instance, knows how to compete with Timex on watches, but how about with the Apple watch?

 

And could Amazon become a major threat to the UK food retailing? Or will it act as a facilitator? The answer to that question is still up in the air (along with those Amazon drones).

 

The consumer has the power

To get a reaction from any consumer brand now, the quickest way is to send them a Tweet or leave an online review. The power now is firmly with the consumer.

 

Consumers can double and triple check their plans for buying a product, seeing a film or staying in a hotel by the reviews left by previous consumers. This constant feedback means that all companies need to make sure that their products and/or service live up to customer expectations, and must try and make sure that positive feedback is left and ‘found’ by future customers.

 

We have a set of new technologies, or rather new applications of existing technology, that have over the past five years radically improved the efficiency of some industries. Airbnb, for example, has helped people and small businesses to promote their ‘spare’ rooms, helping to sell them more effectively and reducing their under capacity.

 

The changing face of company departments

In the article Pipelines, Platforms and the New Rules of Strategy, Van Alstyne, Parker and Choudary outline that the way that the traditional internal departments have set up to do business in the past needs to change, to take into account the disruptive way of thinking. It is now about getting these departments to think in this new way of strategic thinking, to the network or open way of doing business. 

 

This is 100% relative to us here at MacGregor Black, as the article covers the types of exceptional candidates that we place every day. We're constantly matching people with the game-changing attitudes and skills sets sought by our clients that will help them to compete and prepare effectively for the future.

 

Here's our evaluation of how our core discipline areas are evolving 

IT (and Digital)

Previously focussed on internal IT systems, IT now supports the change mentality required in business and the platforms that allow customers and/or network collaborators to interact in an effective way.

 

Marketing

No longer about producing adverts and content to pump out to potential customers, marketing is now about taking previous customer experiences and packaging them up as stories. Allowing customers to tell their own stories is now a popular marketing method proven to offer a higher return. 

 

HR

Tasked with capturing the right type of talent who are open to this new way of thinking, HR teams must now become more flexible to allow the internal flow of information out to a new partner network.

 

Finance

Finance teams in some of the more forward-thinking companies are now sharing their once internal ledgers to anyone vetted and with the right permissions. This allows companies that are ahead of the curve to crowdsource compliance with accounting principles or seek input on their finance management; essentially buying in a second opinion.

 

Operations

Being able to deal with inventory through networks and prominent digital shopping platforms is the main driver of commercial success for many of today's consumer and retail companies. The prominence of Google and Amazon in the consumer goods sector, is now moving and being felt in the food & drink sector.

 

Conclusion

 

The more forward-thinking organisations are developing and implementing strategies leveraging the network approach to business. To keep up, more traditional businesses must think about how to develop new core competencies and need to be able to plan and ultimately change their approach. 

 

 

The impact on talent strategies

 

At MacGregor Black we're seeing our clients ask us, across all our disciplines, for candidates that have the ability to deal with change in a positive way, who can apply strategic thinking to the way that they undertake their jobs and can help their employers survive and compete. 

 

Every day we speak to and meet some of the best talent in the strategy market that can help clients plan for the future. 

 

Find out more about our strategy practice here, including all our latest jobs

 

If you’re a client and would like to reach out to us, let us help you, click here

 

 

 

References

HBR Must Reads: 2017 the definitive management reads of the year, Harvard Business Review, 2017

Pipelines, Platforms and the New Rules of Strategy, M Van Alstyne, G Parker and SP Choudary, Harvard Business Review