The future has a landscape that is navigated as it comes, but across industries, legacy firms, and newly formed start-ups will do that very differently. All companies will be used to having sound strategies in the product world but may miss ways to capitalize on their data streams and what opportunities they open up. Mohan Subramaniam is a professor of Strategy at IMD in Lausanne, and he is also the author of the book The Future of Competitive Strategy: Unleashing the Power of Data and Digital Ecosystems.
Mohan and Greg discuss the operational and strategic differences between digital firms and legacy firms in business with Mohan’s research into how companies like Ford compare to a company like Tesla. Mohan talks about the value chains created by the utilization of data but also the real-time access to it for use by third parties that you may not have initially planned for, having its own set of risks and rewards.
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Episode Quotes:
How can legacy firms navigate digital ecosystems?
04:38: My hypothesis is that increasingly legacy firms will have to find ways of expanding their revenue base beyond their product and service worlds into the data world. And if you want to compete with data, it requires different principles. You have to figure out what digital ecosystems mean for you. They're not the same as Uber's or Amazon's digital ecosystems. They're different, and you have to understand what those digital ecosystems are. And figure out how to expand your business scope beyond what is defined by value chains through digital platforms.
What is the incumbency advantage in the digital world?
12:25: The bigger your value chain infrastructure and the greater your product footprint, the more powerful your digital ecosystems can become. But, of course, it requires a different way of framing and thinking about competitive strategy.
How do you look at your buyers in the digital world?
10:58: How do you look at your buyers in the industrial world? Buyers are those who basically buy your products. But in this digital world, your customers, or buyers, are those who give you data. Now, that's a very different ballgame. Selling a product and getting data from customers. It's a very different proposition. I call them digital customers. These are customers who give you sensor data.
Adapting to the new frameworks
51:34: If you want to impact practice, you have to give frameworks that tell you that in your business what makes sense. What is the new value that data can give you? What's the nature of the digital ecosystems you can build? How does it influence your competitive advantage? Now, it may fit in with the theory of the firm. I'm not denying that. But we need to now move forward with more specific frameworks for the new world that we are in.
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