McKinsey’s Digital Practice released an article last month detailing seven CEO focus points, as technology transforms both the value of companies’ products/services and the efficiency required to deliver them profitably.
Where should CEOs put their focus? It’s a critical question for any company, but it’s actually more critical for companies in industries that aren’t inherently technology-focused. That’s because automation and software have already penetrated high-tech industries and forced major change. In the coming era, even historically low-tech industries will be impacted by technology. And because low-tech industries aren’t anticipating the changes that technology can wreak on their industries, they often face the most turmoil.
McKinsey asks some great questions, and the article is absolutely worth a read. Here are a couple of important questions they don’t directly address:
What is the value of the product/service you offer to your customer? How will technology change that value in the coming years?
Today, 44% of all people start their shopping at Amazon.com. But before Amazon sold almost anything you can imagine, they sold books. Book sales haven’t been a high-tech industry since Gutenberg invented the printing press in 1440, but Amazon was about to change that.
In 2004, there were over 38,000 bookstores in the U.S. and the value proposition for most of those stores was “We offer books to the local community.” Amazon had 7 billion in revenue that year.
Fast forward to 2016 – Amazon had $26 billion in revenue. There are 40% fewer bookstores in the US. The second largest bookstore chain, Borders, filed for bankruptcy during that time.
In the last decade, any bookstore that couldn’t find a better value proposition than “We offer books to the local community” was wiped off the map. Today, successful independent bookstores are vital gathering places for their communities, and their salespeople provide product knowledge that Amazon can’t emulate with an algorithm.
What technology will you have to adopt to compete efficiently?
While technology giant Amazon did tremendous damage to the bookstore industry, technological advances also provided major benefits to those same stores. Bookstores may not have changed what they sell, but the rest of their world has changed massively. Consider this quote from an independent bookstore owner:
“Ultimately I don’t think indie bookstores have changed their core business very much. Handselling great books, offering excellent customer service, tailoring inventory and events programming to your customers’ interests — stores have been doing this for decades,” said Beach. “It is easier to be a small store now. It was easier for me to establish credit with accounts than it was for those who came before me. It’s easier now to keep your inventory tight and know that you can restock quickly as needed. It’s easier to have a website where customers can place orders and learn about events, without requiring a programmer on staff.”
The benefits of technology extend beyond even these – social media helps advertise events, credit card processing has become cheaper, and stores know more about their customers than ever before. But in order to be successful in today’s marketplace, bookstores must rely on all of these technological advances to increase their marketing reach and improve their efficiency.
What do these questions mean for your business?
What’s in store for your industry in the next decade? Who will be the Amazon of your industry, and how will it affect your value proposition? What technology will you need to implement to stay competitive? It’s better to ask the questions years before the industry transformation than years afterwards – because when it comes to true industry transformation, the laggards rarely survive.
Do you want insight into how technology could transform your industry, or your company’s efficiency? Call WingSwept at 919.779.0954 or contact us online to learn more about our Managed Services!