If I were the CEO of FedEx..

If I were the CEO of FedEx
If I were the CEO of FedEx
If I were the CEO of FedEx

One of the most important and most talked about topics in the recent times in business circles has been “Disruptive Innovation”. Thanks to the book written by Clay Christensen – “The Innovators Dilemma” and his ability to explain the phenomenon in a few industries, the concept of disruption and disruptive innovation has become a common lexicon in the business circles.

One of the industries that is on the verge of being disrupted is the logistics industry. The entire logistics industry is based on the assumptions that production and consumption happen at different locations and hence there is a need for transporting these goods from the location of production to the location of consumption.

Now consider the following trends that you see playing out:

  • 3D printing is slowly but surely making its presence felt. Given a few years of consistent growth and innovation, it could slowly turn mainstream.
  • The rise of hyper-personalization. There is a lot of activity happening in the fringes where the hyper personalization movement is currently playing out. In my opinion, in a few years, that will also gain momentum and become mainstream. The popularity and the premium that this brings in to the businesses that offer hyper-personalization, will mean that more and more businesses will want to offer this to their customers.

Both these trends will feed on each other and will encourage each other. This will mean that more and more businesses will want to set-up a process to produce hyper-personalized products, as close to their customers as is practically possible (as the shipping costs for such material in the traditional sense tends to be prohibitive).

If I were the CEO of Fedex:

So, if I were the CEO of Fedex, I would already start experimenting with 3D printing and explore if they can set-up these 3D printers and offer printing services to their clients before their clients set these up. This can prove to be a beneficial to everyone involved:

Fedex:

  • They become a pioneer in a new and emerging business
  • They not only retain their clients but also can benefit from economies of scale (as their initial capital investment can be used for multiple products of multiple clients).

Brands:

  • They will be able to experiment with the hyper-personalization a lot more as the overall cost of failure for them reduces drastically as they will only be using services from players like Fedex instead of setting up 3D printing facilities.
  • They can also explore and experiment with their supply chains to enable some of these 3D printing experiments start to pay-off

Consumers:

  • We all benefit from the fact that we get hyper-personalized products, which we seemingly want more and more.

Economy:

  • This helps create an ecosystem of brands (both small & big) to experiment with 3D printing and come up new innovations .
  • This can also help spur a new class of workforce, solopreneurs, who design new products and then use the prevalent 3D printing facilities to distribute their products.
  • This can also help 3rd world countries to leap-frog an entire generation of industrialization and enter the generation of hyper-personalization. These printers would be easier to set-up and operate in these countries than setting up or importing a lot of brands. This could help spurn a new generation of entrepreneurs in these countries.

So, if I were the CEO of Fedex, I would already be experimenting with 3D printers and how they can be used by their clients to hyper-personalize their products. The risk of doing this and failing is much smaller than not doing this and getting left behind.

Your Turn:

These are my opinions. What do you think?

Building Sustainable Competitive Advantage in a Networked Economy

Business Networks

Sustainable Competitive Advantage

One of the most fundamental pillars of any successful strategy is an organizations ability to create and sustain a competitive advantage, create a niche, business practice, product, service that only is a differentiator for the organization in the market.

Some organizations use patents, some use product design (Apple), some use their ability to innovate and come up with new market categories (Uber, 3M, Proctor & Gamble), some use their ability to manage cost (SouthWest Airlines), some use their scale of operation& Gamble, Colgate), some use their customer focus (Amazon, Zappos, Ritz Carlton), some use a combination of these (Coca Cola) to build & sustain their competitive advantage.

If you notice all of these traits upon which sustainable competitive advantage is built are internal to each of these organizations. So, if there is a challenger in each of these categories who want to go after these organizations, they can still go after them using these very strengths, without their baggage and they have a good chance to pose a serious threat to these organizations and many organizations are actually using this to grow big and challenge incumbents in their respective categories.

Add to this, the amount of venture capital available for start-ups who want to go after the incumbents is staggering, to say the least. The fast paced change in the business environment is not helping either.

Death of Sustainable Competitive Advantage as we know it?

All of this has led to a lot of people believing that the era of building a sustainable competitive advantages is gone by. Hence the plethora of blogsbooks that herald the death of competitive advantage as we know it. These posts talk about sustainable competitive advantage becoming a transient competitive advantage due to the rapid changes in the business environment and the ability of competitors to mirror the advantage in a short span.

Creating Business Networks to Build Sustainable Competitive Advantage:

In my opinion, there is still a lot of different ways that organizations can build sustainable competitive advantage, that can last a long time. One such option is to compete as a network-of-organizations rather than as a single organization.

What do I mean by this? You do not compete with your competitor alone. You compete as a network. The entire network moves and competes as a single entity.

This calls for a very different kind of organization and leadership. Some key aspects that can lead to such a Business network are:

  • A mindset shift among the network, where the entire network is focused on one thing only – Helping the end customer happy by fulfilling his need profitably.
  • This necessitates the need for a single version of truth for the entire network, which means that the flow of information among the various organizations in the network needs to be, real-time and complete.
  • In order to be able to achieve this, there needs to be alignment among all the participants around all the business processes.
  • Once you have aligned the business processes and the information flow, the most critical thing that remains to be done is to nurture leaders within these organizations who continue to believe in the vision and at the same time are connected with the reality of the business environment and continuous dialogue among these budding leaders and the existing leadership.

Is this fantasy or Real?

I know that this seems to be the stuff of fantasy world rather than real world, as organizations still struggle with basic challenges like silos in their own organization, not enough engagement within the walls of the organization and many such challenges. To expect them to be able to pull off something like this seems to be a big ask.

You are right. This is not easy. However, this is exactly what makes this a good option to build sustainable competitive advantage for all the participants.

Factors that could make this a Reality

This is possible today as there are

  • Technologies which can enable such networks already in place.
  • The need to build a sustainable competitive advantage is strong
  • the next generation workforce will find this idea of cross-organization collaboration native to their psyche as they would have grown up in an environment where you share everything with their network and hence this would come naturally to them.
  • The socio-politic-economic environment today is also conducive for such a network to thrive.

Already there are examples where organizations have started exploring such cross-organization collaboration, albiet in a very small and in an experimental way.

  • Google’s collaboration with Nestle to release their software under the brand Kit-Kat is one such example.
  • Procter and Gamble’s Connect & Develop program is another such experiment.

These are small collaboration that tested waters.

I surely hope to see a much deeper level of cross-organization collaboration (fundamental building block for the Business Network as a Sustainable Competitive advantage strategy) sooner than later.

What do you think?

These are my opinions. What do you think? Is such a business network possible? Do you know of such a network already in place? Do share your thoughts and lets continue to take this discussion further. Its time we re-thought how businesses should compete with each other.

To learn more about the Networked Economy, you could join the conversation at http://futureofbusiness.sap.com/networked-economy.

This post first appeared on SAP Business Trends and is re-published here with permission.