Mass market penetration of the internet may have levelled the playing field for SMEs, but will a shift to a data driven economy tilt the favour back towards the heavy hitters?
The emergence of new ideas and new practices has two notable impacts on the business world. Firstly, there is the element of surprise. Entrepreneurs and innovative organizations create new products and services generating hordes of cash due to the ability to perceive and adapt to the opportunities which are created. The second impact is the normalization of the technology and it being accepted as general practise by the larger and more traditional organizations.
In terms of the digital economy, we’re probably just getting to the stage now where these ideas are being taken seriously by the larger organizations. They might tell you they have been digital organizations for some time, but this is not the case. They prodded and investigated digital with limited success, but legacy processes and technologies still held them behind. As we move towards 2018, more organizations are starting to get digital, meaning the advantage of the agile and open-minded SME will soon be eroded.
This slow acceptance of new technology is nothing new. For every step forward taken there are numerous organizations which make themselves household names out of disruption. The internet saw Facebook and Amazon become giants, and mobility gave rise to Uber and apps like Tinder.
Soon it will become a rarity for non-entities to grow to such heights, as the fuelling technologies become normalized and a status quo is established at the top. The disruption has already been caused, Blockbusters or Encyclopaedia Britannia for example, and the traditional players are creating their own digital offers to negate the threat of potential usurpers.
So what comes next? How about the data economy? But this might be one which changes the rules of disruption.
A common phrase when looking at the connected society is ‘data is the new oil’, which is correct, but data on its own is useless, just like oil is. The winners of the data-driven economy will be the ones who can best make use of the information which is out there, turn it into insight and monetize that insight. If data is oil, then algorithms are the refinery’s and customer touch-points are the retail petrol stations.
To be a player in the data driven economy, you need to have all three. You have to be able to mine the data, then have the intelligence and technology to turn it into something useful, and finally, the ability to present a service or product to the customer.
Two and three can be done by anyone, this is the glorious thing about the internet, it democratises access to customers. But the first one is a bit more complicated. Getting hold of the data will be tricky, storing it in a compliant manner will also be difficult and adhering to new data protection rules which will be coming out in May 2018 will be complex. The ones who have the knowhow and the technical expertise to do this will be the players who are established already.
With new rules customers will have more control over what is deemed their personal data. Companies will have to be more transparent in the way they use data, meaning an element of trust will have to be created. Most customers are sceptical by nature, meaning a solid brand will be critical to capitalizing on the data economy. This might make it tough for a nobody to make cash.
There will of course be success stories, but perhaps the majority will be coming out of the already established players. Think of the smart home, an area which we think is going to make a huge amount of cash. The ones making the moves here are Google and Amazon. We can’t see any newcomers breaking the status quo. Or retail, autonomous vehicles, VR, digital healthcare, social media, finance. The new ideas are coming from the established players, or technology giants leaking into other verticals.
Moving into the data driven economy will start to make the big players bigger. They have the raw tools to make the information age work for them. Considering the normalization of digital engagement techniques, the online world is starting to become very noisy, just like the high street used to be. The ones with the financial might and scale won back then in the physical world, and we might be starting to see the same trend here.
To survive and thrive in the data driven world you need data, algorithms and access to the customer. Unfortunately, unless you have all three already, you’re probably going to start to fall behind, and it will become tougher to catch up.