How to thrive in a 'Business 4.0' world
CNE
A majority of global companies that have adopted the full range of business behaviors needed to thrive in a "Business 4.0" world expect to grow more than 10 percent in the next three years, according to a new report by Tata Consultancy Services (TCS), an IT services and consulting firm.
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For its research, TCS in November and December 2018 surveyed senior business decision makers from more than 1,200 large enterprises spanning 11 industries and 18 countries. The firm defines Business 4.0 as featuring the adoption of four key behaviors: Driving mass personalization, creating exponential value, leveraging ecosystems, and embracing risk.
The study found that only about one in 10 organizations surveyed have adopted all four behaviors, and the firm classifies these as "leaders." A majority (82 percent) have embraced one to three of the behaviors, with mass personalization being the most prevalent (78 percent). TCS calls these organizations "early adopters."
Leaders are three times more likely than "followers" -- the 9 percent of organizations that have not yet adopted any of the behaviors -- to have embraced technology initiatives such as artificial intelligence (AI), blockchain, and the Internet of Things (IoT), and twice as likely to have embraced automation.
Mass personalization is the most familiar behavior among business leaders, and is enabled by technologies that allow companies to offer personalized products and services at scale, which significantly improves the customer experience and leads to higher revenues.
More than three quarters (78 percent) of all survey participants said they can customize experiences at individual transactions. This has led to benefits such as higher customer profitability, increased value and volume of customer transactions, and reduced customer churn.
Businesses can drive more value from a single transaction using data analysis, IoT, and AI to forecast future customer needs and points of engagement, the report said. "By integrating digital or online channels and creating new business models, organizations can unlock new revenue streams and expand their customer base by shifting from selling one-off products to offering subscriptions to products and associated services," it said.
Among the top benefits from operating an exponential value model are the ability to target a wider range of potential customers, an expanded geographical marketplace, higher profitability and revenues, and new business models through collaborative ventures.
Companies that collaborate with multiple partners beyond just their supply chain networks are leveraging ecosystems and are no longer forced into silos by the limits of their resources, the report said. They can be more innovative and offer consumers broader propositions through existing and new partners.
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Among all of the companies surveyed more than half (54 percent) leverage their wider ecosystem by collaborating with multiple partners to create new products and services, and nearly half (46 percent) access a dispersed workforce or the "gig economy" when they need to boost their skills base.
The fourth behavior, embracing risk, is the most difficult for many organizations to adopt, as it goes against traditional management approaches. In the digital era, however, it's important to embrace risk to stay ahead of the competition and provide better value to customers, the report said.