Transforming Business Strategies

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TRANSFORMING BUSINESS STRATEGIES

Beginning in the mid-1990s and likely continuing in the coming decades, the global economy is undergoing a gradual convergence of two modes of economic production—the traditional bricks-and-mortar economy and the online e-commerce marketplace—rather than a fast transition.

The important thing to remember during this transitional period is that you must plan and conduct your business in both of these economies. At some level, your business, if it is to remain viable, must effectively plan and optimize its operations for its interaction with each of these economic environments, and sketch out the optimal balance of these operations for your needs and the conditions of your particular market.

Thus, a winning strategy for the transformation from a bricks-and-mortar enterprise to an online business will allow the business owner to carefully assess the conditions in the physical and virtual economies, and devise a formula that allows you to leverage your strengths in both areas to maximum competitive advantage and symbiosis.

THE NATURE OF TRANSFORMATION

In effect, all the transformations you need to ready your business for competition in the e-commerce marketplace fall under three broad categories: connectivity, interactivity, and speed.

Connectivity refers to the ability to put interested parties in touch with one another. In the traditional economy, connectivity was limited to a company's size and physical place of business, or its distribution reach. In the online economy, there is no such limit. Anyone can become a participant, as long as he or she has access to the Internet. Think about your own business, and outline how your enterprise is going to leverage the unique properties of connectivity.

Interactivity is the ability to interact directly with a source in real time. For example, when you are watching television, you are experiencing a non-inter-active media because you can't interact with the source (one-way communication). When you read or view the news online, however, you can interact with the source by voicing your opinion via email, or search for additional information on the same subjec. In the connected economy, customers expect instant gratification and information. So your business needs to provide your customers with an opportunity to ask questions or obtain additional information in realtime through your Web site—regardless of their geographical location or time of day.

Speed has always been a value in business; the centrality and level of speed in the Digital Age, however, is so great as to constitute a qualitative transformation fromthetraditionaleconomy.Speedisacentralcharacteristicoftheconnectedeconomybecauseitallowspartiesto communicateand interactin realtime. Forexample, when reading a newspaper, you are reading information complied many hours ago. The speed in which the information flows from the reporters to the press and then to the newsstand is very slow. On the other hand, on the Internet you can immediately view up-to-the-minute news and information.

Here, too, you need to think of how best to leverage speed and satisfy your clients' needs for instant gratification. As the pace of contemporary economic and social life accelerates, consumers expect the same from their service providers. Your business must provide customers with what they need in the shortest amount of time possible.

In order to transform to and take advantage of the online marketplace, then, your most obvious strategic options for transforming your business to the connected economy are to capitalize on and excel in one of these key areas. That is, you need to differentiate yourself in the interactivity component of your e-business, or excel in the speed of your delivery or other dealings with your customers, or specialize in the simplicity of your Web site and user interface and other forms of connectivity.

TRANSFORMING A STRATEGY OR OPERATION

The key to a successful transformation of your business is to understand that you will always operate in a competitive environment. As a result, you must first consider your competition before deciding on the tactics of your transformation, and base your transformation strategy on this context of a constantly competitive environment. This may seem obvious, but it's crucial to keep in mind, as your optimal transformation strategy as conceived in a vacuum may put you at a competitive disadvantage in the short run, thereby rendering your overall strategy useless.

Begin by identifying and prioritizing your competitors, and then analyze them and define your competitive advantage in relation to your competitive set. A competitive set is a collection of your top competitors—only those possessing the greatest influence on your target market.

The main purpose of this analysis is to identify and pinpoint the elements you can leverage to make your operation different from the operations of your competitive set on your road to transforming your enterprise for the e-commerce environment. This process includes three stages: listing all your competitors in their order of rank in your market; defining all those factors that have an impact on your market in their order of influence; scoring each competitor, as well as yourself, in each category.

In the course of this analysis, you will beging to delineate your strengths and weaknesses relative to those of your competitors, and thus the broad areas in which you can begin to eke out a competitive advantage in your transformation strategy will begin to emerge.

For instance, if you discover that none of your competitors is particularly strong on the interactivity portion of the online competitive environment, then your obvious strategy is to focus your transformation strategy around building quality interactivity with your customers, and strongly promoting this difference from your competitive set to your target market.