CIOs must reinvent their businesses on three levels: Hung LeHong
October 8, 2013
CIOs must reinvent their business processes and their business models to capitalize on business moments, according to Gartner VP and Gartner Fellow Hung LeHong.
Similar in impact to a Black Swan, a "business moment" is a transient, dynamic experience that can come from anywhere, can happen anywhere, yet will rarely happen in the same form, the same time frame, or feature the same competitors. Like a Black Swan, a business moment is nearly impossible to predict and incredibly disruptive to your business. Unlike Black Swans, "business moments" can happen every day. CIOs must help their organizations compete and win at this level should they wish to remain relevant and in business.
LeHong described an emerging trend known as "collaborative consumption," which sees people transforming problems into revenue opportunities that often bypass incumbent players entirely. Take the service ParkAtMyHouse, which sees people renting out their driveways for short periods of time and at a moment's notice.
Or take, for the hotel industry. On any given night, and especially in times of peak demand (such, as LeHong observed, Gartner Symposium itself), a hotel chain may find itself competing not only against hotels in other chains, but auction sites like Hotels.com and most recently services like AirBnB, which now offer traditional and non-traditional lodgings in more than 34,000 cities around the globe.
How can a hotel compete for customers with a sailboat?
To compete for business moments like these, LeHong said CIOs must compete and win at two additional levels.
The first is at the business process level. This sees companies doing what they normally do, but doing it better with better and better products. FedEx rose to prominence on the promise of guaranteed overnight shipping, but continues to lead the industry through a continuous reinvention of its business processes. LeHong reminded the audience that as early as 1978 FedEx founder Fred Smith remarked that "the data about the package will be as important as the package itself. Now take the company's most recent offering, FedEx SenseAware, which sees sensitive objects (human organs for transplant, for example) transported in smart containers that continuously monitor and broadcast the object's temperature, lighting and other dimensions in real time. Further, the packages are equipped with geo-fences that alert doctors the moment the organs have arrived.
The second is at the business model level to defend against competitive threats from new market players. "You will find competitors who have no business in your business changing your business," said LeHong. Take Google, for example: major auto manufacturers may think a search engine has no place in the industry, yet Google's self-driving car is capturing headlines alongside the latest innovations from BMW and Audi. LeHong also pointed to companies like Square and Kickstarter, which have transformed centuries-old models of finance and venture capital. Through Kickstarter, entrepreneurs can build a customer base for their products before their products even exist. LeHong also pointed to Bitcoin as a major disruptive force in finance. "Typically only national governments could issue currency, but we're seeing people put more trust in a privately funded startup than in most Western governments."
LeHong advised CIOs and their organizations to take the following three steps:
- First: digitize your top three products and processes
- Next: survey and replicate digital processes. Don't ignore them. Pursue digital models.
- Third: build a way to compete and seize opportunities at the business moment level.
"You need a digital strategy that lets you compete at all three levels," said LeHong. "You must write your own digital story."
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