The business world is quickly digitizing, breaking down sector obstacles and creating new opportunities while destroying - business models that are successful. Given the total amount of chaos digital disruption is causing, writers Weill and Woerner of the MIT Center say it's time for firms to assess these dangers and opportunities and create new business options for the more-connected future of digital ecosystems. In recent research, board members at large businesses estimated that 32% of their firm's revenue would be under threat from digital dislocation in the following 5 years; sixty percent of members of the board felt their boards should spend more time on this issue following year. Despite the competition from companies including Uber and Amazon, increasing digitization offers opportunities for businesses to leverage powerful customer relationships and increase cross-selling, the writers assert. The writers provide a framework, supported by examples, for helping managers think about their competitive environments. "The mix of going from value chains to ecosystems and increasing consumer knowledge, "the authors write, "provides business leaders with four different business models, each with affiliated abilities and associations."Businesses can choose to manage as (1) providers, (2) omni-channel businesses, (3) modular manufacturers or (4) ecosystem drivers. Firms that had 50% or more of their sales from digital ecosystems and understood their end customers than their average competition found 32% higher revenue increase and profit margins that were 27% higher than their sector averages. As they prepare for digital dislocation that is growing, companies got two important decisions to make. They have to come up with the extent to which become part of a more complicated ecosystem or they wish to control the value chain. Secondly, they have to decide how much they wish to invest in understanding their end customers. Organization with ecosystem drivers as their forerunner business model had increase of all the four alternatives and the greatest margins in the companies the writers analyzed.
This is just an excerpt. This case is about GLOBAL BUSINESS
Thriving in an Increasingly Digital Ecosystem Case Study Solution
PUBLICATION DATE: July 01, 2015 PRODUCT #: SMR531-PDF-ENG
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