The creation, merging, and disappearance of industry sectors is nothing new. But never have these changes moved as swiftly as they are now thanks to the ongoing evolution of digital technology.
“Competing in a world of sectors without borders”, an article published in the July 2017 edition of McKinsey Quarterly, explores how digitisation is forcing not only sectors but entire industries to reorder traditional “you do this, and I do that” boundaries.
The article cites companies like Amazon and Apple as being leaders in this space. The authors say that even non-digital businesses such as Starbucks are being forced to blur sector boundaries in order to take advantage of cross-sector opportunities.
Consumers love digital ecosystems
Being part of a digital ecosystem delivers a host of benefits, including reduced transactional costs, increased customer trust, and better quality data. These digital ecosystems allow brands to meet customer standards, including the expectation that a company should already “know” them and that a consumer deserves as seamless an experience as possible.
The article predicts that in less than a decade 12 large digital ecosystems will emerge in institutional and retail spaces in place of several traditional industries, all of which are designed to make the lives of consumers easier. Some of the ecosystems mentioned include:
- B2C marketplace
- B2B marketplace and B2B services
- Public services
- Digital content
The article expands on a handful of these industries. For instance, the authors believe that multiple B2B services in the future may converge and share services as well as information on cloud-based platforms for the mutual benefit of themselves and the companies they serve.
They also predict how consumer marketplaces may improve because of these ecosystems. The mounting digital collection of insightful data and analytical information readily available to companies, for example, will allow retailers to tap into the broader needs of a customer and potentially develop deeper relationships with them.
Don’t jump in too fast
As appealing and sustaining as forming relationships with companies in other industries may seem, the authors warn that it is important that brands focus on what matters most:
- Core value propositions
- Fundamental organisational and human needs
- Distinct competitive advantage
- Data/tech available to merge with another company
The key is to have a strategic approach when considering a merger or relationship with another company. Think about what you may be able to give to your customers within a well-connected network, but also consider whether or not that network is something your customers actually want. Adopt that ecosystem mindset and continue to focus on forming emotional ties with customers, but hold data – the acquiring, the storing, the processing and translating of it – as a top priority in order to defend your position and exploit opportunities in the future.