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Find your competitive advantage by unlocking the potential of new revenue streams

 

Digital and technological innovations are blurring industries' borders. Consumers are becoming more and more demanding. New players are entering the markets and disrupting entire sectors. Consequently, organizations across all sectors are pressured to respond, reinvent themselves and evolve their core services.

Digital and technological innovations are blurring industries' borders. Consumers are becoming more and more demanding. New players are entering the markets and disrupting entire sectors. Consequently, organizations across all sectors are pressured to respond, reinvent themselves and evolve their core services.

Trend: Expanding beyond traditional portfolios

Let's illustrate the changing environment by looking at some recent examples from various industries:

·         Companies in telecommunication industry are increasingly looking for opportunities beyond traditional telecom services. Gartner believes that the next big thing for telecoms is not in its core services and that they will seek new services revenue outside industry’s borders. Major players on the global telecommunications market already recognized the opportunities in other sectors: Telenor established Telenor Banka in Serbia, Orange offers e-wallet called Cash and Deutsche Telekom established an open connected home platform that already includes more than 40 companies from all industries.

·         Retailers are increasingly using technological innovations to add value to existing products or even to expand with new cross-market services. Tesco established Bank Tesco, UK retailer Argos sells insurance for its home products and Alibaba started offering loans to Chinese consumers. Retailers are now competing with banks and insurance companies.

·         Banks and insurers are under pressure to offer products with added value. Many insurers are likely to partner with other companies such as emergency services, smart devices manufacturers or fitness brands to deliver added value services and connect to the consumer.

Opportunities to cross industry's borders are not recognized only by the major players on the global market. Although research 'Mind Wide Open', conducted in 2014 among Slovenian marketing directors, showed that entering new markets was perceived as one of the less important areas to achieve their company’s strategic objectives, trends seem to have turned around. Telekom Slovenije recently became a supplier of electricity and Petrol is becoming a strong grocery player. 

More than ever, organizations are building their own ecosystems, investing in platforms and partnering with other stakeholders to address the challenges on the market and facilitate growth.

How should an organization respond?

To expand their portfolio successfully, organizations must understand customer needs and extend their core products or services to relevant ecosystems. However, to be successful, the product or service must be aligned with company’s business strategy and objectives. We propose a step-by-step process to determine which of the current and new services organizations could offer within the ecosystem:

1.      ANALYSE REVENUE STREAMS

Firstly determine key revenue streams within the organization and understand whether there is a possibility to upsell in order to drive growth through existing revenue streams.

2.      UNDERSTAND THE CURRENT STATE OF PLAY

Analyze current product/service portfolio for deeper understanding of what your organization is currently doing. Within that the organization should recognize opportunities to add value to existing services and find potential new services that would fit and provide logical extension of current portfolio. In this phase, it is essential to understand customer preferences and needs as well as company’s business strategy and capabilities. Organizations should know their strengths such as physical location, logistics and customer data, but at the same time understand other markets and seek to expand to industries with expected growth.

For example: customers need simplification and would like to get an all-in-one solution. Many organizations such as retailers, banks and telcos have large quantities of customer data and a possibility to offer their customers package of services for their household and have consequently decided to widen their portfolio outside of their core business.

3.      KNOW THE ENVIRONMENT

Identify and analyze the ecosystem to determine key stakeholders such as competitors, influencers and regulators. Within the ecosystem, organization should know the relationship between all the stakeholders and its own (desired) position in it.

For example: Apple’s ecosystem includes not only its competitors, but also IT infrastructure partners, manufacturers, retail partners, universities, developer communities, technical backend providers, etc. Organizations in the ecosystem should understand interactions and relationship among them. 

4.      DETERMINE THE FIT

Apply potential services to ecosystem. Determine how organization would position itself within the ecosystem and sell its new services. Depending on the industry and company’s objectives, organizations could opt for their own presence on the market, creating partnership or developing platform with other stakeholders or even to acquire companies such as start-ups.

Platform economy, platform based business models and partnerships allow organizations across all industries to follow their growth ambitions and create new value on the market. Although in the past platform economy was dominated by tech and digital organizations, nowadays non-tech organizations are increasingly more often developing their platform strategies as well.

For example: Philips Healthcare is pursuing its platform strategy by launching Philips HealthSuite in partnership with Salesforce, Amazon AWS IoT and Alibaba AliCloud. On the other hand there are also cases of independent market entries such as Telenor Banka that was established by Telco operator in Serbia Telenor without establishing partnership relations.

Taking a decision on how to enter a market can have potential effects on internal processes. Companies are facing questions such as how to manage new sources of revenues legally, how new revenues effect organization, employees and P&L responsibility. Before making the final decision all external and internal aspects should be evaluated.   

x-industry eng

To sum up - what is the source of opportunity in new revenue streams and how to succeed once the decision for new revenue streams has been taken? By delivering value-added products and services within your organization's ecosystem.

 

Dr. Mitja Pirc preliminary presented his cross industry insights at DMS event on 30th of January 2017. Please, follow the link to see the invitation to the event.

For more information on this topic please contact us at: info@indigo-pristop.si.

 

Sources:

·         Accenture: Platform Economy Technology Vision 2016. Available at:

https://www.accenture.com/fr-fr/_acnmedia/PDF-2/Accenture-Platform-Economy-Technology-Vision-2016-france.pdf

·         Deutsche Telekom: Connected Home Platform. Available at: http://connectedhomeplatform.telekom.net/our-solution/

·         Accenture: Retail Technology Vision 2016. Available at:

https://www.accenture.com/t20160603T012006__w__/us-en/_acnmedia/PDF-21/Accenture-Retail-Technology-Vision-2016.pdf#zoom=50

·         Gartner: Market trends: Revenue opportunities for telco carriers. Available at:

http://www.slideshare.net/MMKamal1/gartnermarkettrendsrevenueopportunitiesfortelecomcarriers-45144669

·         Jan Schmiedgen: How to Prototype a Business Ecosystem. Available at:

http://www.slideshare.net/janschmiedgen/business-ecosystem-design

·         Mind Wide Open 2014: Budnica slovenskemu marketing. Available at: http://www.pristop.si/sl/mwo/mwo2014



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