- October 27, 2019
- Posted by: Ramkumar
- Category: Strategy
Digital landscape has changed
It is evident that digital landscape has changed and some tech companies have managed to grow much faster than others.Tech leaders like Google and Amazon have not just dominated the existing markets but have been successful in creating new markets.These companies have leveraged M&A as an approach to acquire targets that help generate new revenues and exceptional growth.
In order to achieve growth in this increasingly tech dominated world, deal makers just cannot rely on strategies that made them successful before.The deal making approach needs to change for the companies to achieve success.
Digital landscape is about Network effects
- Successful companies are able to anticipate how markets and industries will evolve in the future.These companies are able to evaluate deals through a new lens as prevalence of social networks has influenced virtually every industry.
- Companies can no longer operate standalone now.They have become networks connecting buyers and sellers, thereby eliminating the inefficiencies and costs of middlemen. For instance, Amazon has been successful in creating a marketplace for third party sellers in delivering products the next day.
- It is evident now that network effects will shape the future of the business and broader economy. As companies assess which investments will drive growth, they need to understand how platforms work and how will it impact the industry.
Prevalence of Algorithms
- Traditionally there were assumptions that economies perform well when they are left alone.Algorithmic technologies have changed this concept of free market and law of supply and demand.
- Algorithms curate content and hence influence how companies market and sell their products and services.At the same time, all content curated are not accurate, this can complicate how businesses operate and market to customers.
- Technology might not replace humans but will create new markets and opportunities.Algorithms need to mirror the real life action of humans and hence need to continue to learn from their daily actions.Sooner algorithms will virtually shape all corners of the business from all products and services we buy to the content we read.
Importance of Partnerships
- Technology have created opportunities to form new and sophisticated markets.Many companies like Uber have been able to create and scale a platform like ride sharing services that are difficult to be replicated by other taxi companies.These taxi companies were not able to provide a 24/7 supply of taxi drivers that Uber was able to provide with its ride sharing platform.
- Hence as companies look to get into the next big thing, they should join the competition rather than trying to beat them at their own game.
- In the ride sharing segment, taxi companies instead of creating a seperate app to compete with Uber, will be more successful if they are able to partner with these services. Partnerships here makes sense when both the sides can benefit from each other by sharing technological know how, scale, brand recognition or other assets that are high in demand.
The digital landscape has changed with the emergence of the latest technologies that have driven many companies to reinvent their business models. In order to win new deals, companies need to become part of larger networks, focus on AI driven new markets and collaborate with competition.