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Our study reveals businesses that exploit digital technologies to break into new market sectors can enjoy greater growth rates—and they are adopting flexible partnerships and alliances and fostering personal networks along the way.
Accenture draws on the insights of a survey of 500 C-level executives from 10 countries—Brazil, China, France, Germany, India, Italy, Russia, Spain, the United Kingdom and the United States—and in-depth interviews with practitioners, academics and experts, along with econometric modeling of market performance, to discover how digital disruption could open up new growth opportunities.
Customer Markets Study 2014Explore our customer markets study to learn more about how digital disruption is driving new business models and growth.
View the Research Website Download the Executive Summary
To perform well in a world of digitally contestable markets, companies will need the ability to:
As business leaders identify post recession growth opportunities, three elements are becoming clear:
Taking advantage of growth opportunities requires companies to address the needs of consumers and citizens.
Internally focused management approaches that provided much-needed agility during the financial crisis now need to be complemented by a more proactive approach beyond the walls of the enterprise.
Almost all new business is enabled by fundamentally digital approaches to insight or marketing or delivery.
Our study comprises:
Interviews with subject matter experts around the dynamics of markets experiencing digital disruption along with extensive secondary research and analysis.
An online survey of 500 business executives across a wide range of industries and 10 major countries: Brazil, China, France, Germany, India, Italy, Russia, Spain, the United Kingdom and the United States.
Econometric modeling of the historic and future growth performance of three markets experiencing digital disruption.
Interviews with four business academics and experts, exploring sources of corporate agility outside the enterprise: Professor Julian Birkinshaw (London Business School), Dr. Gary Hamel (author and management expert), Professor Ioannis Ioannou (London Business School) and Professor Andy Neely (Director, Cambridge Service Alliance, University of Cambridge).
Sixty percent of respondents see macroeconomic conditions (such as slow economic growth) as the most significant influence on corporate strategy while 38 percent identify structural change (such as the impact of technology on consumer behavior) as most significant.
Although 64 percent of companies’ respondents plan growth within their existing business model in the next five years, a larger share—80 percent—are planning growth through new business models. Also, business leaders see traditional capabilities, such as personal networks, as the most important.
Businesses’ growth plans are taking them into markets populated by different industry players that collaborate and compete to address evolving customer needs—fueled by digital technology. Accenture identified six digitally contestable markets that are disrupting traditional industries.
Growth rates are higher in digitally contestable markets than in the traditional industries. For example, in the United States, the retail sector is set to grow by 2.7 percent per year over the period 2012 to 2018, while we estimate a growth forecast of 3.8 percent per year for the relevant digitally contestable market.
Business capabilities needed to perform in a world of digitally contestable markets are three-fold:
Market sensing: Anticipating and integrating fast-changing customer needs as well as wider trends in other industries.
Organizational realignment: Redirecting the organization quickly to respond to new threats and opportunities.
Ecosystem orchestration: Collaborating with a wider network of stakeholders to become more proactive in exploring opportunities within a broader ecosystem.
The analysis points to a digitally enabled future in which approaches to business strategy and regulation will need to evolve. The analysis poses fundamental questions to both policymakers and business leaders.
Both incumbents and new entrants are embracing digital technology as a means to exploit their potential, often in collaboration with one another.
We believe that digitally contestable markets will have the following 10 implications:
Companies will need to aspire to be the best in all industries, not just their industry.
Customer understanding will become an ever more critical differentiator.
Companies will win by offering personalized solutions for problems.
Businesses from different industries will become more similar “under the hood.”
Analog capabilities will be a source of competitive advantage.
Data is the lifeblood of the new competitive reality.
Market leadership will mean leading on innovation as well as execution.
Businesses based on market anomalies will be most vulnerable.
Businesses will have to become better at cross-sector working.
Incumbents will have to act more like startups.
Our report identifies how these implications will require businesses to upgrade their capabilities—to anticipate customer needs, make decisions more quickly and manage more complex relationships. We highlight how the standard definition of an industry—a group of firms that produce goods and services that are close substitutes, and who supply a common group of buyers—no longer seems adequate for understanding value creation.
Competing in an environment of digitally contestable markets will require a constant process of reinvention. Businesses that are proactive in reassessing their place in a world where customer markets are being reshaped by digital technology will be able to lead from the front, turning disruption to their advantage.
January 22, 2014
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