Digital technologies are opening new avenues for companies to disrupt competitors and markets. The prior post outlined three dimensions of disruption: access, enterprise economics and performance. This post focused on performance as a dimension of digital disruption. Theses posts reflect my personal thinking about how digital technology will evolve the nature of competition and value realization.
Digitalization of business has the potential to change the access dynamics within an industry. Access in this regard can be defined as:
The paths, channels and relationships among organizations and customers to realize value describe access. Access disruptions change how customers, suppliers, intermediaries and others interact and the way in which they create value.
Access is the oldest and most studied dimension of digitalization. Called ‘disintermediation’ in the first wave of ecommerce. Eighteen years ago the Internet created disintermediation – a form of access disruption – based on directly connecting customers with suppliers.
Access disruptions were the dominant strategy behind eCommerce successes like eBay, Craig’s List and Amazon. They were also the dominant strategy behind high profile flops like Pets.com, Webvan, among others.
Disintermediation was intended to mean the death of distributors, intermediaries and brokers, something that has not happened on a wholesale basis. While some distributors have gone out of business, others have adapted, evolved and disrupted the access dimensions of their industries through a combination of information and services. The persistence of these firms indicates that there is more to access based disruptions than just disintermediation.
Access disruptions victimize firms who believe their value rests in controlling access to products and services. Firms whose strategic value rests in ‘barriers to entry’ are particularly susceptible to access disruption, regardless of their industry. The idea that you control access, or territory in the value network and can exploit that position for profit identifies areas of potential access disruption.
Wal-Mart has used access to fundamentally disrupt an industry. While move students concentrate on Wal-Mart’s size and supply chain capabilities, looking at how the company applies them to redefine the terms of competition is equally important. One of those changes has been in terms of access to retail merchandise, starting in rural, then suburban locations.
Consider the book marketplace, where Borders and Barnes and Noble continued to survive, despite the Internet based model of Amazon. It was not until Amazon went beyond supply chain disintermediation and digitalized books via the Kindle and Kindle reader that the market became fundamentally disrupted. Amazon did not change the nature of books, but it fundamentally disrupted access to them.
Amazon, which continues to use of technology to disrupt access in the retail space, is now seeking to do the same in terms of its cloud computing model, products and services – which are fundamentally changing the access to computing power and storage. Their cloud services, Amazon Turk and other new product lines can be viewed and valued from the dimension of access.
In my personal opinion, not Gartner’s, if Amazon continues to seek digital disruption based on access, then others in the technology marketplace will need to look out as their business models are based on maintaining positional strength in a value chain rather than bringing together a value network.
Facebook is seeking to disrupt access to the native web itself, as highlighted in a recent Wired Magazine article. With 800 million plus people interacting via the platform, it has changed the way people access the web, disrupting the open access assumptions of competitors like Google, Microsoft, Yahoo, and everyone else.
The connection between access and digital technologies is obvious. Digital technologies create new access channels in terms of distribution and collaboration. Digital technologies also create new types of value, content, information etc. to access. Individually or in combination digital technologies are changing the nature of access.
Consider mobile and tablet computing and what that has done for access. If you have a smart phone count the number of apps and ask yourself – are they from the same company? Are they integrated? Do they even need to be integrated? If you step back you can see that access via extended communications and computing power has made you, the individual, the integration and access point. Everyone with a smart phone is a living example of access disruption of the software market.
Access disruptions are an area that has been well studied so I will not labor on this point for much longer. Look for future access disruptions in the future as digital technologies create more complex interrelationships, increase individual customer choice and computing capabilities create or corrupt relationships across the value change. Critical questions to ask yourself and your organization regarding access include:
- What are the value networks we play in?
- Where is our position in those networks?
- How do we extract value from that position?
- Where do information, value realization and expectations form for the customer?
- How can information, communications, products and services change our position in the value network or eliminate the need for our current value network?
There will be additional posts over time, and the purpose of this one was to offer a ‘description for discussion’ about access disruption. It is neither complete nor was it intended to be. But its time to think about how access is changing, not just in terms of the ability to disintermediate a value chain, but in the fundamentals of the relationships we create and rely on to realize value.