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Business Model Agility Trumps Strategy; Harnessing the power of Cloud to Create, Capture New Growth

Business Model Agility Trumps Strategy; Harnessing the power of Cloud to Create, Capture New Growth

23 April 2020

We are in 2020, and companies are spending big on refreshing, and modernizing their infrastructure. Many are acquiring niche competitors in areas where they want to strategically compete, however, very few are looking at the bigger picture. Emerging technologies and cloud have not only accelerated the rate at which companies are adopting IT as an enabler, they are essentially also transforming how consumers are leveraging Information technology to get jobs done.

This past decade, most IT departments have been divided on their strategic intent, to cloud or not to cloud? This question has been the core of so much debate in the IT world, between CXO often narrowing down the decision to just 3 critical factors; Security, Scale, and Cost.

In my view, we need to ask ourselves six additional questions, these are:

What’s my GTM speed;
How fast can we innovate?
Is my business designed to support high availability supporting 24*7*365 operations?
Is my Business model agile enough to sustain growth?
How can we Create and Capture Value faster?
How will Cloud adoption enhance customer experience?

Looking at both the scale and dominance of the business platform players in the world today, it is clear that many would not exist if the platform economy did not embrace Cloud as the enabler. Now the fundamental question we may need to ask ourselves is how does Cloud and emerging tech help existing business models evolve?

Treacy & Wiersema in their seminal work (Value Disciplines) argued that for companies to achieve and sustain a competitive advantage, they would have to be equally good at any two of the dimensions listed below (Product leadership, Operational Excellence and Customer Intimacy) and be outstanding in a 3rd dimension.

In the last 2 decades, we have witnessed a full scale implementation of the guidance provided by Treacy Wiersema, with companies such as South west airlines, Toyota having embraced operational excellence, some have also built their own culture around it i.e. the Toyota way.

Other companies such as Apple, Burburry, have improved along either product leadership or customer intimacy by building their own platforms. The implementation of the platform business model has enabled companies to scale, grow, and monetize their data opening up new opportunities for growth along different segments of the tail-end. However, as the cost of compute, storage, network, wearables has dropped significantly, we’ve been experiencing new trends. IDC often referred to SMAC as the fundamental enablers of the 3rdPlatform, SMAC standing for Social, Mobile, Analytics, and Cloud.

What’s remarkable is not how usage of emerging technologies such as SMAC and IoT have enabled corporations to build new products, but rather:

The rate at which they have enabled companies to reach out to new customers
Helping them grow their market-share.
The extent to which they have enabled the disruption of the dominant Business model (BM), leading to quick identification of new business models that help create and capture new value leading to massive monetization opportunities
The importance of GTM speed, and how companies can leverage Cloud as means to test their Minimally viable products (MVPs) prior to new product and solution launches.

The above points all serve to illustrate that the decision to adopt cloud should not be taken lightly, particularly given it’s capability to act as a business enabler, and most definitely a growth enabler. The ability to leverage cloud as an enabler to breakdown the barriers of specialization and delivery required to excel at either Operational excellence, Innovation and or Customer intimacy is mind boggling. In his work, Digital Disciplines byJ.Weinman illustrates how the application of technology, SMAC can extend each dimension of the Treacy Wiesema model providing new business model competitiveness.

Startups, born in the Cloud, and existing companies are leveraging SMAC and the extension of technologies such as IoT, benefiting from the lower cost of infusing and adopting these technologies to extend their Business models. As emerging technologies and cloud have lowered the entry barriers for new players to enter the game, they focus on how to create and capture value faster, more efficiently, leading to major disintermediation of industry incumbents.

Startups are now disrupting every industry including; Fintech, Insure-tech, Retail-tech, Healthcare & Pharma to name a few, and the rate at which this is happening is mind boggling, the secret sauce is their business model and how they use Cloud. Let us pause here and think of companies such as Netflix. Netflix has already evolved from DVD rental days into a company that has Data as it’s core Asset. I refer to it as Information Excellence, and it provides them with the ability to have a complete 360 view of what each customer needs are. Netflix has been so successful inspiring others to copy and adjust the recipe pursuing new growth.

Other companies have leveraged the power of platform business model, taking advantage of the ability to abstract the user from the underlying industry complexity offering simpler, better customer experiences. Let’s take a look at the examples of Uber, and Airbnb.

Without oversimplifying the beauty of their operating model and how they monetize, both have managed to use cloud to create a platform that acts as an intermediary to subscribers (Guest) and suppliers (home and car owners). Now, the usage of the platform, coupled with the ability of allowing guests to rate their service in real-time has empowered users to select their driver, or apt booking based on public feedback ratings. This is a tectonic shift, introducing a new dimension of value, and choice, often not present before the widespread usage of technology, internet, wearable devices.

As we look deeper into our business models, we realize that data is the new oil, however, I’d like to point argue that oil without energy, cannot create any sustainable advantage. In my opinion, I strongly believe that AI, and Machine learning will accelerate our potential to disrupt the current status quo and accelerate towards the 4thquadrant.

As the adoption and pursuit of experience platforms increases, we will also experience a shift in how customers and users consume information technology. What once was a product will most likely be an outcome, experience, use-case as a service.

If you are looking for new ways to accelerate your company’s growth, I would recommend you start from:

Think about your existing business model and what your business model of the future look like
Identify new means of how you can create and capture value
Think holistically about how you will evolve your existing technology infrastructure
To harness the power of autonomous data management technologies, artificial intelligence, and machine learning.
Innovate & build MVP leveraging Cloud

The above are my opinions alone.

Published on April 13, 2020