In a previous post we talked about the Cash Paradox. Our report showed that in Australia, small cash holding companies have experienced higher revenue growth since 2009 –a five-year compound annual growth rate (CAGR) of 6.5%, compared to large cash-holders that experienced a CAGR of 1.9% over the same period. More striking is the relative share price performance of the two groups. A clear divergence of performance exists from 2009, with small cash-holders producing better returns.
The fact that the effective deployment of capital drives improved shareholder returns is of course not surprising. But how can organisations best optimise their capital allocation and synchronise their strategies with a firm market value agenda in mind?
If your organisation has had reservations about the importance of digital capability for continued engagement with customers, new business model development, reaching new markets and enhancing existing operations – it is time you considered what role digital plays in your strategy. There is significant value to be captured from Australia’s digital economy, which has consistently outstripped growth forecasts to an estimated worth of $79 billion in 2013-14. Digital technologies are also estimated to have contributed $43 billion to the broader economy in productivity benefits.
Your strategy needs to approach digital as an enabler to revenue growth, attacking new customers or segments and a vehicle for fundamentally transforming your operations and the economics of your business.
Why pricing is important
For most companies pricing excellence is one of the most powerful but under-utilised levers for growth. Often a company has the required data to improve pricing, but hasn’t used it to its full potential.
Most managers will have an opinion about whether their product is inelastic or elastic, but may not be able to run a full price test to prove their hypothesis.
Platforms are all the rage. In the modern digital economy many organisations are looking to create platforms, rather than simply building a traditional value-chain driven company (otherwise known as a ‘pipe’).
In this context, a platform is a business model designed to facilitate exchanges between interdependent groups; as opposed to a pipe, which is centred on the sourcing, production and distribution process. The successful companies of the past focused on controlling distribution (something which is increasingly difficult in our highly-interconnected digital world), while it’s thought that successful companies in the future will focus on controlling access to customers (which they can do by creating a platform that attracts the best customers).
Platforms are where the smart money is going (particularly if your platform is seen as scalable). There’s even a Platform Strategy Summit where you can learn the tricks that will make your platform successful.
This recent obsession with platforms raises some concerns though, as it seems to confuse cause and effect.
In a previous post we explored the concept of ‘enterprise accelerators’ as a vehicle for inspiring innovation. Used in the right way, they can provide focus to organisations that would otherwise struggle to develop disruptive innovation. We believe that, for all organisations, there is little choice about whether to innovate or not. While an ‘accelerator’ may not be right for your organisation, the cost of doing nothing is terminal – “innovate or die”. But, before you head full-on into an innovation program or process you must recognise this – not all innovation is equal.
If you accept that that not all innovation is equal and your organisation is seeking to thrive rather than merely survive, then the question is not “how can we be innovative?” but “how can we innovate broadly across our organisation?”
The concept of ‘Business Transformation’ needs a new definition. In business discourse the word ‘transformation’ is (over) used to describe change – moving from one state to another – be it the result of disruptive factors (e.g. new digital business models) or as part of the implementation of a new strategy (e.g. new services or product releases). This use of the word ‘transformation’ in itself is a suitable working definition, whereas the term ‘Business Transformation’ creates unnecessary confusion for business leaders. What is missing is an understanding of the overarching context and clarity on the types of ‘business transformation’ that organisations are undertaking to help eliminate the confusion.
This article outlines the core elements of ‘business architecture’, provides a definition for what a ‘business transformation’ is, and discusses the types of ‘business transformations’ that organisations take.
The term ‘Business Transformation’ creates unnecessary confusion for business leaders. What is missing is an understanding of the overarching context and clarity on the types of ‘business transformation’ that organisations are undertaking to help eliminate the confusion.
Are firms getting bigger? Apple, having recently become the largest company ever on the back of the largest quarterly revenue ever, seems to suggest this. Or are firms getting smaller? The recent proliferation of niche operators providing niche products to niche consumers suggests that this may also be true.
Most importantly, which of these trends are shaping the industry you’re in, and what should you do about it?
It’s as if our efforts to rip operational cost out of business have incrementally worked their way from left to right across the value chain – from sourcing through to marketing and distribution – only to bounce off the customer and start working their way back, from right to left, fragmenting the business landscape in the process.
The world’s largest 1,000 public companies held US$3.5 trillion in cash reserves at the end of FY13. Here in Australia just 20% of ASX 200 companies have accumulated 82% of total cash reserves.
Record levels of passive cash reserves are destroying shareholder value for corporate Australia.
Digital is a ubiquitous term in the consumer space that is used to describe everything from products, experiences, channels to the strategic transformation of organisations. Looking beyond the marketplace, the European Commission announced in April 2014 its aspiration for a ‘digital society’ as part of its Europe 2020 strategy, embedding digital as the primary axis around which citizens will interact with each other and their government.1 In the B2B space, however, the drive for greater digitisation has only just begun to ripple with the consumerization of the B2B buyer. This article will outline the evolution of buying preferences as well as provide some best practice responses from B2B organisations around the world.
Industry leaders are ditching the monotony of email in favour of collaboration platforms and enterprise social networks to encourage idea generation and unlock products and services innovation.
In our report “Digital Disruption: Short Fuse, Big Bang?” Deloitte identified 65% of the Australian economy as facing significant disruption by 2017. Whilst disruption is nothing new, the introduction of cloud platforms, social media, smartphones and other digital business enablers have undermined traditional barriers to entry and accelerated the pace and ease of disruption – disruption cycles are getting shorter and their implications, greater.
Large corporations looking to innovate in the headwinds of disruption have sought out more focused and faster approaches to the creation of viable new offerings. For these organisations the world has changed. The cost of developing new businesses has reduced dramatically – free tools, cloud enablement, agile methods, entrepreneurial passion, commoditised bandwidth, super networks of information are becoming the norm. The large capex budgets that once required months of analysis distilled in a business case to justify spend and innovation are looking to ‘learning by doing (cheaply)’ as it is just more economical. In addition, as company-wide innovation programs have not yielded expected returns the concept of an ‘accelerator’ has been put forward as an alternative to generating, developing and testing new innovations – be they incremental or disruptive.
This article looks to dispel some of the myths surrounding the enterprise accelerator ‘buzz’ and highlights the specific benefits of this approach to innovation as well as some of the pitfalls.
Enterprise accelerators allow organisations to ‘learn by doing (cheaply)’ but choosing whether to use one or not should be assessed alongside of existing innovation programs or more systematic approaches.