During the days I was doing my MBA, I was introduced to Porter’s Five Forces analysis – Threat of new entrants, Threat of substitute products or services, Bargaining power of customers (buyers), Bargaining power of suppliers and Intensity of competitive rivalry. While all of these forces are very relevant for any business while defining and refining their strategies, I have always been intrigued by the “Threat of substitute products or services” because it can come from rather unexpected quarters and does not give an established businesses enough time to react.
An interesting case study that we analyzed during my classes was about Cadbury’s evolution in India at the turn of the century. Like everywhere around the world, India loves celebrating its festivals and mithais (Indian Sweets) are gifted and consumed with gusto during the festive season. Over the years, mithai and dry fruits have been in many cases replaced by boxes of chocolates and biscuits. This change was driven by Cadbury’s around 2004 when it started its campaign “Kuch Meetha Ho Jaaye (Let’s have something sweet)” and presented its box of chocolates as an alternate gifting option. This caught the fancy of the urban Indian and soon, Cadbury command a lion’s share of the non-traditional gifting space. This impacted the businesses of the mithai-sellers and by the time they realized the impact of this new substitute, the brand had registered in the minds of the consumers.
On similar lines, you would find numerous examples from the current marketplace – and the underlying theme is that this cuts across industries. The advent of technology and digital transformation has meant that the competition need not necessarily come from within your industry. It is in light of this that Porter’s “Threat of substitutes” gathers more moss.
The future will unfold numerous interesting shifts in the business landscape – leaving some of the established businesses, and possibly roles, redundant. Consider this –As per a recent announcement, YouTube will be going offline in the coming few weeks, allowing users to save videos. You can download a video once, save it to your phone, and watch it multiple times. This will definitely be a game-changer in countries where broadband internet is a premium and is not as widespread – YouTube offline will allow users on data network to watch the same videos over and over again without having to bother about data charges. Another recent report by Nielsen found that YouTube reaches more American adults between the ages of 18 and 34 than any cable network. Overall, where does this leave the TV media?
The media houses have absorbed some of the effects that YouTube’s popularity has had on their businesses – loss of viewership and reduction in advertising revenues. If they are not jolted yet and have not been working their strategies around this, they would fail to evolve and therein lies the risk of Digital Darwinism.
Some more unusual action is being observed in the Mergers and Acquisitions (M&A) space in the technology world. The big technology firms have surprised the industry with their unique acquisition strategies – possibly taking a long shot on futuristic business models. How else would you explain Google’s investments in wind-energy and driverless cars, Facebook eyeing drones and satellites? Non-technology firms have also moved beyond their traditional industry verticals to drive new business models. It is this confluence of industries that could generate the next big buzz in the marketplace.
What do all these industry shifts mean to the BPM practitioner? Essentially, it means that one needs to be prepared to study the client’s business without preconceived notions of the business processes within the enterprise. You may not only come across the traditional business processes but some rather unique ones given the fact that the businesses are constantly venturing into new spaces.
For example – a present day Telco firm need not necessarily be restricting its business services to Voice and data-based services but can expand into mobile banking and retail sales, an e-commerce player could go beyond retail sales and establish payment gateways and mobile wallets, a health insurance vendor could go beyond issuing and servicing insurance policies and establish health monitoring practice to track their customers’ health using M2M technology. The examples and possible scenarios are endless.
One needs to be well-aware of the confluence of industries and constant shifts happening in the marketplace. The confluence will be more evident now – thanks to digital transformation drastically pulling down the entry barriers of the past. As a BPM practitioner, it is imperative that you are aware of the “never-seen-before” business processes in the context of your new-age client.