In 1965, Gordon Moore observed the emerging trend of increased computing power – and extrapolated that computing would dramatically increase in power and decrease in relative cost at an exponential pace. This became known as Moore's Law. We're now approaching the point of singularity, with predictions that computers will have human-level intelligence by 2029.1
So, why is the pace of digital change continuing to accelerate? In simple terms, because technology makes life easier, saving time and reducing friction in experience. Consumers continue to embrace the benefits that accompany technological advances, trusting digital technologies for everyday activities while analogue ways of doing things become increasingly obsolete.
Image: Gordon Moore^
According to McKinsey, in this digital economy the first movers and very fast followers achieve twice the three-year revenue growth, compared with companies that wait to see what plays out from uncertainty and volatility.2
Customers do not wait. They're constantly seeking ways to do things more efficiently and enjoyably. If businesses linger with ageing infrastructure, they'll find their customers move on – finding more straightforward ways to achieve their goals. For smaller businesses, this rapid adaptation is an opportunity to capitalise on.
The pace of change is increasing
Transform in increments
When Sir David Brailsford applied the theory of marginal gains to the British Olympic cycling team, he transformed its performance. From winning just one gold medal in 76 years, the team went on to win seven of the 10 gold medals for track cycling at the Beijing Olympics in 2008.3
By breaking down every aspect of competing on a bike and finding ways to improve each individual element by one per cent, they created an aggregate uplift in performance – and a significant competitive advantage.
It’s a continuous improvement approach that applies equally to any business’ every day activities. Many small improvements can create operational efficiencies – and in industries where margins are under pressure and salaries are the biggest expense, this can lower the cost to serve and help to support long-term viability.
However, as the British cycling team learned when they took this success and applied it to the Tour de France, incremental improvements must focus on critical success factors – the core of what makes your business succeed and what meets customer expectations.
Re-think your process
In some cases, incremental improvements may not realise enough change to provide the expected customer experience. The lifetime needs of one customer to your business is significant and it’s worth investing in a completely new approach if it helps eliminate or reassess entrenched organisational habits, especially if it’s likely to retain their loyalty, improve the chance of cross-sell or up-sell, or grow referrals.
For example, how long does it take you to identify and respond to customer queries? Could a self-service portal, chatbot, or personalised auto-response software transform that experience?
Partner for change
According to McKinsey’s work in this area, “collaboration now trumps acquisitions or build-it-from-scratch start-ups.”4 Across all industries, we’re now seeing corporations and start-ups come together as partners, rather than competitors. Established businesses bring test markets, financial resources and regulatory understanding, while start-ups bring their ideas, agility and technological knowledge.
Choosing the right partner is critical. Beyond the constraints of a legal contract, it’s important to document the values of both parties, and how each is accountable for the commitments made from the outset.
Create an entirely new platform
Adjacent growth is not a new concept. Last century’s innovators – including GE and 3M – have traditionally built profitable growth by creating new products in adjacent markets. However, it’s challenging – and in an era where digital has removed most barriers to entry, it’s a competitive strategy.
Many businesses shortcut the process by acquiring adjacent businesses, and bringing that talent, client base and capability in house. Others may take the time to cultivate it from within – for example, Gmail and Google Maps emerged from Google’s ‘20% time’5 policy for employees to pursue a side project.