Enterprise 2020

How digitalization and connectivity are changing the way companies do business

The enterprise of tomorrow, that much seems clear, will be very different from today. Digitalization and connectivity will force companies to fundamentally change the way they conduct their business. This is a Darwinian moment in history, as enterprises are being forced to adapt to a radically different environment by changing their business and communication processes and to rethink and retool their relationship with customers.

What are the factors that are forcing this change? And what will a typical enterprise look like in 10-15 years’ time?

Technology will play a pivotal role here. But the changes brought about by digitalization and connectivity will reach far beyond the merely technical. Underlying all of this is the growing empowerment of customers worldwide which has already tipped the scales, creating a truly customer-centric marketspace in which vendors and service providers are relegated to the role of customer agents whose job is to find out what exactly the customer wants and needs, when he will need it and get it to him with a minimum of fuss and cost. The customer is firmly in the driver’s seat, the vendor must follow.

Basically, there are four factors that are empowering customers:

• Globalized markets: Thanks to the Internet, customers can now pick and choose from offerings around the world; if he can’t find what he wants in his own hometown or even in his home country, the world’s his oyster. Macy’s recently opened a “World Store” catering to consumers outside the U.S. Chinese companies sell directly to customers in Europe and the U.S. If UPS can get there, anything goes.
• Direct access: The Internet effectively cuts out legions of middlemen, giving customers the ability to buy directly from manufacturers and producers at lower price and with greater convenience than ever before. Moore’s Law postulates that the price of a computer chip will halve every 18 months. In fact, due to the elimination of variable costs, consumer prices will sink even faster as computer-based systems become more and more essential to commerce and industry.
• Transparent pricing: Thanks to Google & Co. everyone can see what the „right“ price for a product or service is. But instead of bargain hunting himself, the consumer will increasingly delegate the task of finding the best deal to agents such as price portals. Vendors who ask more than rock bottom prices will be forced to justify themselves by providing additional perceived value – which will differ from customer to customer.
• Back channels: Instead of silently absorbing whatever message the vendor chooses to send out, customers in the future will increasingly ask questions, either directly to the vendor or to their network of friends in the Social Web. Businesses are rapidly losing control of their messaging and must learn to engage their customers in a meaningful dialogue – but only after listening very carefully to what the customer is saying.

Smart vendors will react to these trends by transforming themselves into suppliers of choice for their best customers. In order to earn themselves the title „Purveyor to His Majesty the Customer”, the vendor will need to discover as much as he can about individual customers. Big Data and analytics will play a huge role in enabling vendors to determine what an individual customer will want before he realizes it himself, thus becoming an indispensable and trusted partner instead of simply a provider of necessary goods and services. Credibility is the key issue here – trust must be earned, and never more so than in the Age of the Internet.

Every aspect of the enterprise must be refocused in order for the company to reach this goal. In order to fulfill the demand of customers for products tightly tailored to their individual needs and demands, enterprises will need to adopt mass customization to replace old-fashioned assembly line methods. 3D printers and other advances in manufacturing will make it possible to produce “one offs” that can still turn a profit. Within Corporate Communications and Marketing the flow of information will have to be turned around so that, instead of flooding consumers with self-important advertising, these divisions can become inbound channels of information for product developers and manufacturing experts within the company. Logistics will need to reorganize, streamline and innovate in order to meet popular demand for “next day delivery” – or even “same day delivery”.

The rules of everyday business are being rewritten as we speak. Those who do not understand the need for adaption and change will suffer the fate of any species that falls behind in the race for natural selection. The fate of the dinosaurs should be warning enough.