Are You Ready For the Vampires of Your Industry?
“Value Vampires” sounds quite frightening!! As a matter of fact, there is a good reason to be frightened of them. This is the new breed of digital companies that are sucking the profit pool dry of the incumbent’s companies, companies challenged by the digital economy. Often, the “value vampires” provide products and services cheaper than yours, their global reach is unmatched, and their consumer experience is better than yours.
“Value Vampires” is a term introduced by Prof. Michael Wade, an innovation and strategy professor at the IMD business school and the Director of the Global Center for Digital Business Transformation. He names “value vampires” companies like Uber, Airbnb, and Amazon, companies that have managed to be “winners of everything” due to their digital platforms. These companies scale quickly and almost without any limits; they expand their business from one area into new areas (e.g., Uber expanded from taxi hailing to food deliveries, Amazon from books selling to selling almost everything, to cloud computing, e-book readers, and much more).
The customer experiences and the prices they offer are unmatched, sometimes even free of charge, their service levels are better, they disrupt the markets in which they operate and drive down the profits of almost all the market leaders. Sometimes the market leaders surrender and close their business (e.g., Borders, Blockbuster, and others).
The “value vampires” wipe billions of dollars from the revenues of the incumbents in many industries. An example of a “value vampire” is WhatsApp – they sucked billions of dollars from the revenues of the mobile operators in a very short period. They use the platform business model that competitors can’t match; they have a global presence making it very easy for customers to reach them.
For “value vampires,” even the sky is not a limit!
As Prof. Wade says “Not only is Uber cheaper than most taxi companies they are competing with, but the quality is also better because the way you can hail them via an app, and their service is good. They also offer platform value in that you can hail an Uber almost anywhere in the world via the same app. They use their network to introduce other services.”
A link to the interview of Prof. Wade’s by the Norwegian business magazine Kapital: https://bit.ly/2GTJpeuProf.
Wade is also the author of “The Digital Vortex,” a book we have cited in Chapter 8 of our e-book “Doing Digital“. The book introduces the concept of the digital vortex, a tornado-like behavior of the digital force that is impacting all type of industries.
The combination of the tornado-like behavior and the arrival of the ‘value vampires’ is the perfect example of why companies must make their digital transformation a strategic move, and start their digital journey as soon as possible. This journey is challenging not just due to the need to transform the business employing digital technologies. It is challenging also because of the need to transform your organization into an innovative and agile business, that offers new value to its customers and can respond quickly to the new attackers.
To understand the challenge of becoming an agile organization, we invite you to download our article from Cutter Consortium’s web site (requires registration) at the following link: https://www.cutter.com/offer/agilifying-your-organization-6-steps-get-started
Don’t wait for the ‘value vampires’ to arrive at your market.
Start your digital and agility journey ASAP.