Reconciling traditional and new age business models in the middle!

It’s only a myth that digital is only for the new age unicorns, the Amazons and Flipkarts of the world.

Digital offers benefits of squeezing efficiency, delivering customer experience and building new ways of doing business, that would make sense to all.

Amid a growing concern whether a new age digital business model can be sustained, the relevance of digital for the traditional businesses is only becoming clearer. Recent strikes by the app based taxi drivers in Delhi NCR, the constantly sliding valuations of the unicorns and the drying up of capital for further growth are only indications that there is more to a digital business model than just connecting multiple stakeholders together using technology.

I am not taking an extreme stand of ruling them out as they surely have permanently disrupted the market place. But I believe in the ‘reconciling-in-the-middle’ phenomenon where the two extremes finally reconcile towards the middle. This phenomenon has always played out in many industries, e.g. product companies look for services revenue and services companies move the product way. Essentially there are three aspects that become extremely important to drive the phenomenon– profits (can one burn cash incessantly), customer experience (can it be provided without addressing the physical aspects like availability of a cab or drivers’ behavior) and capacity (how can an optimum level of efficiency and effectiveness be achieved from the human system).

moving towards the middleUndoubtedly, both the extremes need to focus on all the three aspects in their own ways to cope with the force driving them towards the middle. It is explained in the figure above. I believe that the traditional businesses have a challenge posed by the new age business models, they also have an opportunity to play on their strengths. The later too have inherent weaknesses that can be exploited to one’s gains.

But what is essential is the realization that leaders of traditional organizations start a new discourse around the challenges and the opportunities for them and build a road map for change. Without this even their extreme position may be untenable in the long run.

How does one do that? By sincerely answering three questions.

#1. How does digital disruption impact us/ may impact us?

#2. Are we prepared to handle the digital disruption that has manifested/ may manifest in our market?

#3. How capable are we of growing profitably amid disruption?

These questions cannot be answered by the CIO or the CTO of an enterprise, rather it shall require the C-suite involvement at the behest of the CEO. The book LEADDDING intends to help create change generative conversations and support transformative assessment of reality in traditional businesses aspiring to focus on the hidden opportunities. LEADDDING Banner 2

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