Chasing Digital

Part IThe big decisions

At this point there are two important questions you need to ask yourself: what business are you in, and how do you make money?

As a leader of a pre-digital incumbent, you need to start by assessing the mechanical heart of your business — its driving economic engine — and what strategies will most effectively power it forward in today’s new economy. In the past, you initiated your economic engine by identifying a niche, understanding specific regulations, accessing resources or taking advantage of a growth opportunity. When cultivating growth in your business, you assumed that these conditions didn’t fundamentally change. Or if they did, it was a slow change, and your opportunity (and challenge) came from optimising your position in the resultant markets.

In recent years, new business models have been created that leverage the power of the internet — think Google, Facebook, Netflix and Amazon. This has led to a significant change in the economic engines and strategies that now power the world’s most successful companies. Long-held assumptions about the fundamental drivers of high growth have changed. In summary, the internet has done two things pretty much in parallel: it has destabilised the basis on which an enterprise can succeed, and it has opened up entirely new ways of doing business.

The good news is that it is possible to move your business from one model to another. We recommend creating a new economic engine and running it alongside the old. ...