Transforming Your Business Model

6. If traditional industries such as tires, shoes, movies and entertainment, life and home insurance, and health insurance for those with long-term disabilities are moving in this direction, then as a manager you must pause and ask: Why is my business different? We suggest that your business is not different. From cement to jet engines, education and health care, from children's toys to delivery of parcels to your home or office by UPS, all industries are going through this transformation. If managers do not recognize this trend and get organized to compete in this new environment, they will be left behind. This transformation is not a choice. (Chapter 1, p. 24)

Well, there's nothing I can add to that.

7. The authors say this mandatory transformation is manifested in five ways: (a) value is shifting from products to solutions to experiences; (b) all companies will have to access resources from around the globe; (c) flexible systems are indispensable; (d) resources must be reconfigured continually; and (e) models and processes must be shifted from a focus on millions of customers to the individual. (Chapter 1, pp. 24-25)

8. The second transformation listed above in No. 7--"all companies will have to access resources from around the globe"--can be seen in five evolutionary steps. Many companies, however, still believe that this evolutionary process is still stuck in phase one or phase two, and that dangerous failure to see the world as it truly is puts those companies at risk because they will miss opportunities and continue to believe they have no practical alternatives to business as usual. Here are the five steps:

Access to global resources is a key factor in continuous innovation.

9. Scalability: Global firms do not like to hire a large number of people and let them go after six months when the project is done. In contrast, the [outsourcing] vendors, as they work for a large number of firms, can afford to focus a large number of talented people for short periods of time. Infosys can move 300 to 500 software engineers from one location to another or one project to another in a week. They also recruit 15,000 to 20,000 per year out of a candidate pool of a million-plus. The selective outsourcing of work to others is a necessity for building scale in a short period of time. (Chapter 1, p. 32)

Staggering numbers, aren't they? But the key point might be "in a short period of time." Can your company afford to take its time, when competitors might be leveraging some of these vast sets of global resources to accelerate customer engagement, product development, and all-around decision making?