As the current coronavirus pandemic has radically changed demand for products and services in every sector, it has become imperative for companies to reimagine their businesses and find ways to realign strategy and maintain their sense of purpose and agility.
Considering the unprecedented changes this pandemic has caused, business executives will need to think through and reflect on the core essence of business by examining scope, business model and ecosystem. The challenges posed by this crisis will make organizations rethink their business models and how they create and capture value for customers.
Defining the Business Around Your Customers, Not Competitors – Based on changing customer requirements, new ways would need to be identified to provide value and create competitive advantage. Any business model has to start with solving a customer’s pain point and then thinking about how to make that solution economically viable for the company. They need to devise an approach to deliver the best possible customer experience that benefits the organization from its offerings and network effects; customers create a powerful network effect and also provide an opportunity for introducing complementary services.
Whenever there is shift or change in consumer behavior, it significantly impacts the source of income for a company even when it continues to create tremendous value for its customers. The old ways of capturing value may no longer work and companies need to find new and often hidden sources of value. A win-win strategy needs to be built to find additional sources of revenue while providing customers with a great experience. Companies need to rethink their business model and shift from selling products and services to selling experiences.
A new business model would need to comprise of the following:
- Outcome-based solutions,
- Improved reliability and reduced cost,
- Expanded customer base and customer-focused innovation.
An outcome-based model drives a company to become customer-focused and thereby changes the company’s innovation process. Customers don’t buy products; they buy solutions. While a product-based company would continue to make products better, a customer-focused company would think of new technologies and innovations which could be used to achieve an outcome that a customer is looking for. Consider the case of manufacturer which sells jet engines to its airline customers. In the traditional service model, every engine problem and maintenance issue are a revenue opportunity for the manufacturer, even though this downtime was costing its customers millions of dollars. In other words, the incentives for the manufacturer and its airline customers were not aligned. However, under the outcome-based model, the manufacturer is paid only for every hour the plane is flying, thus aligning the incentives for both parties.
Reconnecting with your Customers – Growth is key priority for every business; acquiring new customers and retaining existing ones is a major driver of growth. Based on changes to business requirements, spending capacity, operational challenges for customers, etc. the strategy for successful customer acquisition would need to be tweaked. It would strongly depend on understanding different moments of truth and ensuring a brand is well represented at each stage, per the new demands.
Different moments of truth are:
- FMOT (first moment of truth) – represents when product or service is been purchased;
- SMOT (second moment of truth) – represents when consumers actually consumed or experienced products; and
- TMOT (third moment of truth) – when consumers advocate products and services through social forums and connections.
Building New Capabilities – A customer-centric strategy will require companies to follow the shift in customer needs and develop new capabilities to meet those needs. Companies will have to build significant internal capabilities around data science and advanced analytics so that they can provide value-added services such as predictive maintenance, prescriptive and descriptive analytics. For continuous growth and to remain successful, organizations will now have to redesign their businesses, operations, services and products to protect their company against the current and future threats caused by the pandemic.
For example, in consumer services, this crisis will lead to a significant increase in adoption of online and omni-channel delivery models. It will be imperative to develop new supply sources beyond a company’s current network to increase agility in the event of a shutdown. For logistics and manufacturing companies, supply-chain risk-management functions will need to be set up to apply robust risk-mitigation frameworks and crisis-response plans and capabilities will need to be developed. Telecom customers will have to move more towards automating processes or developing self-service systems for customers. Robotic process automation will need to be applied to a majority of back office and invoicing tasks to overcome shortages of staff and to make effective use of available resources to resolve complex problems such as rolling out profit-based revenue campaigns, network optimization etc.
Companies will now have to use digital platforms to accelerate the introduction of new products and services. They’ll need to use robots, advanced prediction driven systems and Internet of Things technologies to allow the rapid configuration of production lines and accelerate the qualification of new production lines and the scale- up of production. While transitioning to this new framework/model, companies will have to strike a balance between reduction of costs and greater efficiency. Upcoming digital technologies and advanced analytics platforms will help companies achieve this and the ability to predict problems, make effective decisions, and rapidly adapt their operations in response.
Data and Analytics will be at the core of the new normal, enabling organizations to better meet the needs of their customers, and improving the agility and responsiveness of operations without increasing their costs. Various research shows that companies achieve significant and simultaneous improvements across multiple performance measures when they integrate advanced digital technologies leveraging reliable data insights across the value chain. A good data analytics platform will help to transform customer experience and significantly boost enterprise value.
Data is most valuable asset of a company, even though it doesn’t show up in the balance sheet. These days, we often hear “Data is the new oil” and its true for good reason. Unlike physical assets, data doesn’t get used up or depreciate. It can be replicated, integrated and used in multiple applications without diminishing its value. That being said, oil sitting in barrels waiting to be processed in a refinery has very minimal value. To continue with comparison, the value of data also increases as more data is gathered, analyzed and refined - sort of like the “data network effect.” Companies update their algorithms and software platforms regularly as they get more data from their product usage. Companies are using Artificial Intelligence, Machine learning and the Internet / Analytics of Things (IOT/AOT) to build products with the ability to learn, improve and evolve the more they are used. As more data is analyzed and becomes reliable, the more refined their function becomes.
Data-driven Business Strategy with a Hybrid Multi-Cloud Platform – Research studies imply that a majority of organizations either currently have or are pursuing a cloud adoption strategy.
Some of the business drivers fueling adoption rates are:
- greater operational efficiency,
- Performance optimization,
- Cost optimization,
- Increased agility,
- Risk mitigation, and
- Access to best-in-breed solutions.
However, there also seems to be implementation challenges, such as:
- Data silos,
- Interoperability and integration concerns,
- Issues related to legacy systems,
- Security concerns,
- Resistance within the organization to change and dependency on the business facets and investment made in existing infrastructure and applications, and
- Lack of necessary skills.
To overcome these challenges, organization must have a hybrid multi-cloud platform that delivers trusted data to make accurate transformational decisions, new business solution capabilities, unified and integrated data foundation, and real-time analytics capabilities that scale across the ecosystem, with security and efficiency.
At Teradata, we deliver real-time, intelligent answers to customers around the world by leveraging 100% of their relevant data, regardless of scale or volume of query. We do this on-prem, in the cloud, and anywhere in between. We do this through the power of Vantage -- a hybrid multi-cloud data analytics software platform that enables companies to leverage all of their data, all of the time, so you can analyze anything, deploy anywhere, and deliver advanced analytics that matter. Teradata delivers unique capabilities that can scale across all of the available major public cloud platforms and on-premises, as well manage complex, mission critical workloads.
The current coronavirus pandemic has thrown us a lot of challenges, but it has also provided organizations a chance to capture untapped business opportunities. I’m certain that our team at Teradata can help customers navigate this journey and take advantage of these new business opportunities with the right, relevant and outcome-led answers to all of their business problems.