News Analysis: In Search Of Growth Amidst Digital Disruption

Published on January 8, 2016 by R "Ray" Wang

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Organizations In Search Of Growth Must Consider Macro Forces

Burgeoning money supplies in both the US and China have fueled an indefensible growth post Global Financial Crisis.   Since 2000, the money supply has tripled from $6000 USD billion to 12288.10 USD billion in November of 2015 (see Figure 1).   Since 2005, china’s money supply has grown 7X from 20000 CNY Billion to 137400 CNY Billion in November of 2015 (see Figure 2).  While this level of money supply growth would normally cause inflation, income inequality has played a key role in keeping inflation in check because the richest 1% of people in the world now own more than 50% of global wealth (see Figure 3)

20160107 News Analysis: In Search Of Growth Amidst Digital Disruption from Constellation Research on Vimeo.

Figure 1. Massive Growth In US Money Supply M2 Shows Tripling since 2000

Screen Shot 2016-01-07 at 8.31.23 PM

Figure 2. Chinese Money Supply (M2) Has Increased Seven Fold Since 2005

China M2

Figure 3. By 2016, The Top 1% Will  Have More Than 50% Share Of Global Wealth

Oxfam 2016 1% over 50%

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

Lesson 7 – Humanize Digital With Digital Artisans

Lesson 8 – Democratize Distribution With P2P Networks

Lesson 9 – Deliver Intention Driven, Mass Personalization At Scale

Lesson 10 – Segment by Digital Proficiency Not Age

Digital Disruption, Technology Startups, And Mergers Drive Growth

Investors tasked to achieve growth have mostly approached the challenge by:

  1. Pushing for mergers and acquisitions
  2. Investing in technology startups
  3. Investing in startups with disruptive business models

The result has been an average age of company on the S&P 500 down from 60 years to 15 years and 52% of the Fortune 500 merged, acquired, gone bankrupt, or fallen off the list since 2000.   Even worse, the proliferation of bets in these three categories is exacerbating the number of organizations in the market and reducing the number of growth options

The Bottom Line: Digital Darwinism Is Unkind To Those Who Wait

Organizations focused on jump starting growth must begin their transformation to a digital business.  With fewer and fewer companies surviving as margin based businesses, those organizations building new digital business models will be rewarded with growth valuations.  As the winner takes all market continues, digital transformation is a key lever in the ability to grow profits, expand markets, and dominate a market.

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  • Thanks for the kind words. i’ve been too busy delivering keynotes and workshops but slowly catching up!

    R

  • I just recently started following your blog and articles and have been awed and excited by your thought provoking discussions. I have always loved the idea of disruption in the business world, especially when it comes to technology. I think the key trouble businesses are facing is the transition to a data-driven culture. Companies need to embrace data and tech in order for it to truly disrupt their current business processes and efforts. As you mentioned, those that have embraced digital have thrived and continue to do so, whereas those that don are left in the dust. I look forward to learning and being exposed to more through your blog and social communication!

  • Clive

    You made a great summary of what’s really going on. And in this winner takes all market, we are seeing clear winners and losers – those who have digitized their business and understand how to adapt that digital model for almost any changing condition.

    R

  • Digital business is winner takes all by example. Uber, Amazon, each transfers operational risks away from its own servers to the suppliers at the edges with networked scale processes that concentrate profits at the servers. They do so by mirroring physical business processes with digital processes, done nearly perfectly with low latency networked effects so that traditional jobs are eliminated and taxes are minimized on digital business activities. I’m not sure there’s any solutions to digital businesses apart from digitizing your own business. Eventually tax collections will need updating to tax digital businesses, currently taxes were mainly designed to apply tolls to goods and services physically moving around. Wall Street is the master at digital business because they move money around digitally.

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