For small and midsize enterprises (SMEs), the digital economy has been a blessing and a curse. Doors to new markets – previously closed shut primarily by the dominance of larger, well-established
leaders – are now wide open. SMEs have access to the same kind of IT firepower used by large businesses for a fraction of the price. Most of all, they are on the same playing field as their well-known competitors – and sometimes winning the game. However, there is one aftershock of the digital economy that is uncharacteristic of most people’s perception of an SME and holding them back. And that, ladies and gentlemen, is complexity.
According to the recent Economist Intelligence Unit (EIU) study Hyperconnected Organisations: How Businesses Are Adapting to the Hyperconnected Age, 59% of executives agree that embracing hyperconnectivity is a matter of survival in a world operating at warp speed. This finding is not surprising given recent disruptions by SMEs – such as Uber, Lyft, and Airbnb – in the last few years. Unfortunately, most executives (81%) will not realize the full potential of the digital economy because they are not willing to make the broad, fundamental changes needed to simplify.
SMEs are obviously aware of the significance of the digital economy. But are they missing out by allowing their operations to become increasingly complex as they grow and expand?
Too small for the digital economy? Here are three reasons that will make you reconsider
Whether you are the chief officer of everything and sole employee or a CEO managing an executive staff and hundreds of employees, complexity is bound to increase as your business grows and expands into new markets. However, there’s a new twist in this era of the digital economy: Complexity is accelerating and directly impacting the survival of SMEs.
In the EIU hyperconnectivity study, there are three critical areas where complexity is becoming more apparent:
- Your competition. Contrary to popular belief, your established competitors, not just digital startups, are disrupting your business. In the EIU study, 57% of executives are experiencing “moderate” or “severe” pressure from an established competitors, while fewer than half (49%) view new digital startups as a real concern.
- Your industry. The digital economy is giving a single company the capacity to reshape a wide range of industries and markets. Automakers are a great example of this. With hundreds of embedded sensors in every car part, they are capturing data to improve everything from design to sales and customer service. However, its impact does not end there. It is also changing how insurance agents tailor pricing and coverage of every policyholder. Even your local bank is reaping the benefits of this information as they determine the risk of a customer asking for a loan. All of these impacts are unintended, but nonetheless revolutionary.
- Your customers. Thanks to increasing use of social media and other informational forums, customers are better connected and informed when it comes to making purchasing decisions. And executives are taking notice. The EIU study revealed that digital channels are empowering customers to interact directly with businesses, check product reviews and impressions on social media, and maintain engagement throughout the buying journey. For SMEs, this means that they can no longer resort to traditional marketing strategies alone. Instead, marketers are forced to engage with customers in real time, leaving no time for bureaucracies and a stamp of approval from a chain of command.
Run Simple in the digital economy with these two no-nonsense steps
Addressing these complexities requires a shift in the power dynamics of an organization, possibly even reducing central control of decision-making activities. This move will require companies to leave behind the comfort of stability and predictability and become fluid entities that exist to cater to ever-changing customer demand.
Although this evolution cannot happen overnight, there are two steps that can help your company achieve this state and become a disruptive force:
- Technology that works as one system. Real-time data begets real-time insights for sustainable competitive advantage. The key is using a platform that enables business users of all level to sift through all information – no matter its origin, volume, and complexity. Information that runs seamlessly throughout the business network gives all users decision-making power that goes beyond gut instincts. Even data as simple as inventory levels can prove to be valuable to your suppliers as they account for complex situations such as production and distribution, routing, and traffic and weather conditions.
- Unification of people, process, and things. To put new-found insights to work immediately, SMEs need a digital core to connect people, devices, and networks in real time. By simplifying collaboration, employees in all areas can accelerate and intensify business impacts with a clear and simple user experience powered by integrated technology such as the cloud and enterprise mobility.
For more details on how SMEs can compete in the digital economy, download the Economist Intelligence Unit (EIU) study “Hyperconnected Organisations: How Businesses Are Adapting to the Hyperconnected Age.”