This year has seen the pace of change in the media industry continue to accelerate with the introduction of new Subscription Video On Demand (SVOD) services to the local market, the release of innovative content publishing capabilities on social networks, increased adoption of ad-blocking software and continuation of the long-running battle that newspapers and magazines face against sliding subscription numbers in the digital age. Consumers’ media consumption habits are shifting in response to these changes, and understanding consumption preferences is becoming increasingly important for Media organisations as they attempt to capture and maintain audiences in an environment facing such fundamental changes.

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Understanding consumer preferences for engaging with content is critical not just for media, telco and tech companies, but for any organization interacting with consumers in the digital age.

Over 300,000 ‘things’ are being connected every hour[1], each of which is producing even more data – the Internet of Things is rapidly gaining momentum. The number of networked devices globally is almost double that of our global population and that number is expected to increase to over 50 billion by 2020[1]. As a result of the increase in the number of connected devices and the increase in bandwidth available, it is projected that by 2016 the amount of data generated that year will be more than all previous internet years combined – over 1 zettabyte[2]. Organisations have the unique ability to generate, capture, access and analyse more data than ever. The following article will briefly outline the concept of big data, the shift away from causation to correlation and the top three implications to business models.

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It is projected that by 2016 the amount of data generated that year will be more than all previous internet years combined – over 1 zettabyte!

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?

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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.

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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.

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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.

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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.

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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.

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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?

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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.