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Here are five ways ceos can update their business models for the digital age

Leadership in the Fourth Industrial Revolution

By [email protected]Published 2 years ago 4 min read
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How can leaders ensure their businesses survive in this new digital age?

The arrival of the digital age has caught many businesses off guard, and they never expected such a digital world to emerge. For decades, these companies, under the leadership of their helmsman CEO, bravely braved the big wind and waves, and went to market leadership without hesitation.

But as digitalization permeates every industry, many companies are starting to collapse and go bankrupt. They saw the iceberg in front of them, but there was nothing they could do. Corporate venture capital FoundersLane has conducted an in-depth study of the world's most effective ways to do business - and found these five steps ceos can take to update the way they do business.

1. Redefine how you think about growth and value

Every industry has faced collapse, but not every industry will eventually collapse. If you want to find a way to change, you will. If you are always alert to danger, you will find ways to deal with it. The world is changing and becoming more dynamic every day, and it is dangerous to naively believe that this change has nothing to do with you. Take the Finnish paper maker Stora Enso, whose corporate history can be traced back to a stock issued in 1288 -- the oldest existing stock in the world. You may not think of such a company will be prepared for the arrival of the digital age: they have already fully absorb new technology, set up a digital fund, established an accelerator project, developed internal innovation tools, has also established the external business partners, and build a batch of targeted excellence team. Such initiatives create a way of thinking that pulls everything else along.

Rethinking long-held ways of thinking is a good place to start, allowing you and your team to learn new business models to outperform other business models in the digital economy. The more teams understand how digital business models create value, the more likely they are to achieve breakthroughs.

Where does your business fit into this new paradigm of the platform ecosystem?

2. Envision the new ecosystem and your role in it

By 2025, 30% of global economic activity, worth a total of $60 trillion, will take place on digital platforms in new ecosystems. If you can't figure out which ecosystem you want to operate in and what role you want to play, how can you reconcile the market? If you start thinking about the impact of turning your industry into a platform-organized ecosystem with countless players, you realize that it's time to rethink the way you've done business in the past, including the type of market analysis, the opportunities and challenges that exist, and the platform strategies that will be needed to achieve success in the future.

3. Non-traditional resource allocation methods

If you continue to invest in stale strategies in a rapidly changing economy, you will miss out. Resource allocation is the way that corporate strategy is translated into action, which includes capital allocation. More than 90% of companies use the same spending strategies year after year and wonder why profits are stagnant. When developing a new investment strategy, bear in mind that 85 per cent of existing digital investments in Europe and the US will not generate a profit or even lose money. They failed because they did not make the investment that would have changed their development, they simply digitized their existing business model. Risk can be minimized by creating a digital portfolio that includes platform-based businesses. So what are Apple, Amazon and Microsoft doing to add value to their business? At least 10% of their annual budget is dedicated to developing digital business models.

4. Work with entrepreneurs in diverse organizations

Tech entrepreneurs are a valuable untapped resource in your quest to gain competitiveness.

In your digital venture portfolio, existing companies should be separated from new ones, or old ways of thinking and hierarchies could jeopardize new digital innovations. Let current companies focus on developing their core strengths, but also let them use software and data to maximize their business decisions and so on. This helps to grow core benefits, but it can also grow exponentially with standalone digital devices. A growth council can bridge the gap between the very different worlds of enterprise and digital entrepreneur. Digital devices have the potential to drive future demand for your core business, as well as facilitate learning and communication between new business and core business.

5. Increase your appeal and wow customers

The new way to achieve rapid growth is to have other people service your customers, which means you no longer need to own all of your assets. Like Amazon and Apple, most of the world's customer-focused businesses use other people to serve their customers. A large number of third-party developers and merchants provide customers with services such as Apple App Store, Amazon Mall and Anping platform to achieve rapid business expansion. In this hyperconnected world, we are increasingly likely to see ourselves as masterminds of innovation ecosystems rather than just suppliers of products and services. To achieve this, you need to inspire others to partner with your business. The most important third party is the entrepreneur, who is your key resource to create new growth and value in the digital economy.

economy
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