Book Summary: Lesson 6 From Disrupting Digital Business: Win With Network Economies

Get All 10 Lessons Learned From Disrupting Digital Business

As with the beginning of every revolution, those in the midst of it can feel it, sense it, and realize that something big is happening. Yet it’s hard to quantify the shift. The data isn’t clear. It’s hard to measure. Pace of change is accelerating. Old rules seem not to apply.

Sometimes when you are in the thick of it, it’s hard to describe what’s happening.  In the case of digital business, these models have progressed over the past 20 years.  However, non-traditional competitors have each exploited a few patterns with massive success. However, as the models evolved, winners realize there are more than a handful of patterns.

Lesson 1 – Transform Business Models And Engagement

Lesson 2 – Keep The Brand Promise

Lesson 3 – Sell The Smallest Unit You Can

Lesson 4 – Know That Data Is The Foundation Of Digital Business

Lesson 5 – Build For Insight Streams

Lesson 6 – Win With Network Economies

In fact, the impact is significant and now quantifiable with 52% of the Fortune 500 gone since 2000 and the average age of the S&P 500 company in 1960 is down from 60 years to a little more than 12 projected in 2020.  That is a 500% compression that has changed the market landscape forever in almost every industry.

Over the course of the next 10 weeks, I’ll be sharing one lesson per week.  For traditional businesses to succeed, they will have to apply all 10 lessons from Disrupting Digital Business in order to not only survive, but also relearn how to thrive.

Win With Network Economies

The new winners of the digital era have built business models that aggregate components of network economies.  The three distinct components of the network economy include:

1. Content (value):  whether a product, service, experience, outcome, or business model, the content is the value.  How that content’s value is exchanged is the core tenet of the business model.
2. Network (sourcing and distribution):  how the content is sourced and distributed is the foundation of the network.  The network is only as strong as the content and the enablers.
3. Arms dealer (enablers):  the technologies and enablers to reduce friction between content and network or improve the experience between content and network is the mission of the arms dealer.

Most organizations choose one of these components as the primary business models and partner with the others to create a network economy.  However over time, organizations realize they need to build business models that include two or even all three of these components.

In fact, successful winners of the digital era have created an asymmetrical advantage by taking over all three components.  For example, in the consumer world, four companies have the ability to deliver on these network economy: Apple, Amazon, Google, and Microsoft.  These companies have the content, the network, and the arms dealer capabilities to trade on trust and identity.

Homework

The network economy concept is one of the hardest to master in digital transformation efforts.  For most organizations, this involves tough decisions in partnering, acquiring, or ceding certain markets and capabilities.  Digital masters start by understanding the brand promise.  From there, use the following questions as a starting point for design:

• What is the value of the content?
• Do you have the highest margin content?
• What is the lowest unit cost of content to be delivered?
• Have you stripped transaction costs in the network?
• When will you go direct or partner for network?
• How much influence do you need for your network?
• What technologies create game changers?
• Do you have at digital business architecture to support the network economy?

The Complete 10 Lessons Learned From Disrupting Digital Business

For those attending the full keynotes and book tours, you’ll get the complete session and in many cases a copied of a signed booked.   For those following virtually, I’ve provided the slimmed down slide share deck for your use.

You now have the 10 lessons learned to disrupt digital business in your hands. You can take this information and change the world in front of you or choose to sit on the knowledge as the world passes you by and digital darwinism consumes your organization.

I trust you will do the right thing. And when you want some company, come join us as a client at Constellation Research where we’re not afraid of the future and the art of the possible.

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