Globalisation has increased competition for many businesses with many of their competitors able to offer lower priced goods and services due to lower wage costs. To compete and survive, the focus of many downstream businesses has been on reducing costs and doing so by offshoring components of their business process into lower wage countries. Once this is done, however, how can you take advantage of these lower costs to diversify and compete in to different markets?
The answer is to think outside the box and to innovate. Don’t just look at traditional business models for diversification and growth. The Digital revolution is reshaping business in ways we haven’t even thought of yet. The ability to reach customers in new markets, communicate with them and service them better are only some of the benefits it brings. Many traditional industries (think videos, books, music, travel, even hiring a taxi) have been transformed by the digital revolution, leaving traditional business models on the extinct list. This has come about because Customers are time poor, want to get their products and services as quickly as possible and do far more shopping from their phone, work or home because of this. If they can’t find you or interact with you digitally and they can with your competitors, you will lose them.
From a diversification perspective, the digital revolution changes the way in which we can enter new markets. Starting a website (that adjusts for Mobiles and Tablets) and selling your product online in a new market is a quick and relatively low-cost method of entering that new market. Couple this with social media and the use of mobile apps and gamification to generate awareness and give you exposure for your products or services.
My recommendation is for businesses to embrace innovation and the digital revolution and look at how you can transform your business on an ongoing basis. You’ve transformed it by offshoring and reducing costs. Now transform it in how you deal with your customers. Look at what others are doing with digital in other industries and how they have transformed those industries and look at how you can leverage these ideas in yours. Focus on your time poor, instant gratification seeking customer and simplify their ability to purchase your product or service when they want to and do it in as many markets as you can.