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James Solomons

Accounting, Business & Technology; Advocate, Entrepreneur & Educator

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Growth

Darwinism & Digital Disruption

As featured in the Dec 2014 edition of Acuity Magazine, the monthly publication of CAANZ. http://www.charteredaccountantsanz.com/en/Site-Content/Innovative-Thinking/Acuity/December-2014/Darwinism-and-digital-disruption.aspx#.VH6MPDGUeqI

How to leverage opportunities in the new age.

Digital disruption = big opportunities.

Any business owner who denies, debates or argues with this statement is, I surmise, probably the kind of person who thought digital cameras would be a passing fad.

No longer just a theory or the subject matter of white papers, digital disruption is now the norm and, in reality, is an everyday – if not essential – part of running a business.

Why so? Well, my belief is that it’s because technology brings about change and this influences consumer behaviour so rapidly that businesses need to constantly disrupt the way they do what they do to stay ahead of the game.

The rapid rise and uptake of technology sees most people comfortable with it now, meaning that the way people transact has changed forever; this not only changes the way businesses operate but also changes what new technology is developed.

And herein lies the opportunity. Businesses that are able to respond to the changes in consumer behaviour will gain a competitive advantage as they deliver what consumers want faster than their competitors.

As Darwinian theory suggests, it is not the strongest who survives, not the most intelligent, but the one most responsive to change.

The key trends emerging that businesses can leverage
are that:

  • consumers want to do business with you anywhere, anytime and on any device
  • barriers to moving into new and/or overseas markets to sell products and/or services are reducing
  • significant reductions in the cost of enterprise-grade software applications are occurring
  • big data for all sizes of business is now accessible.

Generally speaking, the opportunities arising from these trends are internal and external. Internal opportunities are the ability to drive efficiency into your operations, to be able to scale with little capital expenditure and the ability to have real time data with which to make immediate operating decisions.

Externally, it is the ability move into new markets, reduce your marketing spend, capture new customers and to be able to transact 24/7. You can begin to connect with customers via a digital relationship.

Overall, to capitalise on digital disruption, a business must change the way it operates in order to be successful. To achieve both immediate and long-term results, the digital focus needs to be embedded into the culture of the business. While there may be key positions in the organisation that focus on this area, everyone needs to be engaged with operating in a digital environment.

So, what are some of the ways a business can leverage the trends and opportunities?

Ensure that your website is designed properly. It needs to be responsive so that it can be viewed on any device. Ease of use and easy navigation are paramount. Think about the new iPhone 6. For many people this may become their single way of accessing the internet. Your website needs to work on these devices.

The content, layout and information on your website must engage consumers to transact with you without the need for help. It must be a smooth user experience. How often have you moved to the next website in your search results when the first one hasn’t given you the experience you want? If you wouldn’t or can’t do business with your own website, why would anyone else?

Market your business in a cost efficient and effective way through the use of social media, search engine optimisation and smart tools like online newsletters. You do not need to spend excessive amounts on marketing to achieve a desired result and with many applications now also measuring the direct success of a campaign (ie tracking internet clicks) you can switch between methods easily depending on their effectiveness.

Look for new markets either in a new geographical location or possibly in a vertical market. For many service providers, a combination of high definition video conferencing tools and online real-time applications means they can deliver their consulting services to clients around the world “face to face”. Doing business is now a global opportunity and businesses will seek out the best providers regardless of their physical location.

When looking at vertical markets, think about products and/or services which possibly complement your current offerings. As an example many accountants and bookkeepers are now moving into cloud technology applications consulting, implementation and training.

Use online applications to run the back end of your business. Accounting, CRM, payroll, reporting and industry specific programs are available that when connected via the internet provide an enterprise-grade solution at a fraction of the cost, both initially and ongoing.

Embrace automation in your business. Look for any process that can be automated to drive efficiency. Then redeploy resources previously allocated to manual tasks into other areas such as sales or business development.

Constantly review the real-time data being captured by your online applications.

Use this big data for your business to make swift decisions to capitalise on any opportunities. Use experts (cloud integrators) to assist with setting up your big data systems to ensure that the information captured is correct.

Entrepreneur Ruslan Kogan stated in a recent article: “We interrogate our business model daily, which is why it’s completely different from a year ago. We view retail evolution as similar to Charles Darwin’s description of evolution.”

This use of big data is a key reason why Kogan has been so successful. In fact, he has embraced the true ethos of digital innovation – the process whereby applying a different set of values, modes and technologies that ultimately (and often unexpectedly) substantially impacts or overtakes an existing market.

As digital strategies and the customer experience are so critical to business success you should consider hiring a chief digital officer (CDO) or customer experience officer (CXO) to make sure that your digital and customer strategies are well thought out, properly implemented and regularly fine tuned. Or if your business isn’t large enough to accommodate a full-time role, either assign an existing employee to the role or outsource the role to experts (an external agency).

Foxtel is a prime example of a large business responding to digital disruption and seeing an opportunity to capture a new market. Traditionally only delivered to your TV via the Foxtel Box and with a lock-in contract (typically 12-24 months) at a premium price, it now offers Foxtel Play, a month-by-month internet-based streaming version of Foxtel, which you can view on multiple devices anywhere, anytime.

It has also reduced prices significantly in order to continue to remain competitive with traditional service delivery to TVs.

The Jack Welsh quote “if the rate of change inside an institution is less than the rate of change outside, the end is in sight” is an appropriate point to finish on. The greatest risk of digital disruption is the risk of doing nothing at all. Don’t make that mistake.

From Accountant to Business Advisor – Market your Firm in the Cloud

From Accountant to Business Advisor – Market your Firm in the Cloud.

A very interesting article from the WorkflowMax blog. Quite a detailed look at how the traditional accounting firm can and should make the move to become a “firm of the future” to avoid becoming stale and out of date.

It opens by challenging what the role of the accountant will be if and when automation takes away much of what a traditional accountant does. What is a traditional accountant you ask…..it is one who relies upon the compliance driven model to bring business to their door year after year. What will happen when business owners realise that many of the cloud accounting applications now coming onto the market will allow them to look after this compliance process themselves ?

As I have noted many times before in my articles, the traditional accountant must change and begin to build a true advisory business using the smart technology available and deliver it to these business owners in an efficient and effective manner. This is where they will be able to add value to their clients. This will allow them to use the business advisory skills they have acquired over the years and not simply be data entry clerks, filling out forms and basically being a middle man between businesses and the tax department. This will allow them to run a real business.

The article is actually a road map or action plan that many accounting firms could use to kick start their transformation.

Become a ‘Rainmaker’ in your business!

You may know what business to start, how to gather the resources; but if you do not know how to sell, then you might as well close the doors!

As much as you may dread of prospect of selling, your business needs customers, without which you are doomed. Regardless of whether you are a one person business or a big venture project, your goal needs to be to become a ‘rainmaker’ and attract new customers. Here are five useful steps to that can help you become a ‘rainmaker’:

1.       Find the WHY. Any business can sell a product/service and its benefits. To create a truly lasting relationship with your customers ask yourself why your business does what it does. Once you know communicate it. Apple sells ‘Think Differently’ – they just happen to make great computers and phones.

2.       Be well prepared and confident before you meet with a new customer or make a first sales call.

3.       Determine the competition. Know other ways your customer can get same kind of product or service that you offer. Find out as much as you can, including the price and benefits they are offering.

4.       State your benefits by listing down all the reasons why the customer should do business with you or buy your product such as reliability/durability of the product.

5.       Quantify the benefit. Determine what the benefit actually translates to for that individual or business.

Australian Market Outlook

Even though economists are positive on the outlook of the Australian share market for the remainder of 2011, there are still some concerning factors which have kept average returns in the red over the past 11 months. The European debt crisis, which began as concerns around Greece and its debt servicing ability seem to have spread further in the European Union, with Ireland and Portugal looking increasingly unstable. Further market instability has been seen with increasing oil prices a result of political instability in the Middle East and North Africa. These factors have kept the Australian market quiet on trade and discouraged investment over the past year. Looking forward we should see some of these issues regarding EU debt ease, although not quickly, as the global economy continues to recover post GFC. China’s economic growth has continued and this has benefitted Australia’s large resource companies as strong demand for its products continues. There may be a slight dampening of such demand as the Chinese government attempts to curb inflation on the back of fast economic growth.
The first six months of 2011 has seen the share market fall short of expectations due to events and concerns beyond our shores. Even so, our economy and the businesses that operate within it continue to grow and rebuild, albeit slowly, from the repercussions of the GFC. The forecast for the Australian economy is very strong for the next couple of years. This view is underpinned by the expectation that unemployment will continue to decline and stabilise around 4-5% as more labour resources are required. This is particularly true for the mining and resource service sectors.
Australia’s terms of trade have recently been upgraded creating an income surge which will quickly flow throughout the entire economy with workers, corporations and the government all benefiting.  Recent concerns regarding US debt have also had a negative effect on the All Ordinaries. However, recent developments suggest this too is improving with retail sales and production figures up and a trillion dollars’ worth of government spending cuts agreed upon in principle by the US government.
The mood across global markets appears to be decidedly downbeat and the reality is that 2011 was always going to be a tough year. In the short term at least it appears the australian market will continue to respond to poor global conditions and fears of another GFC.  However the outlook for the Australian economy is improving and we would expect this economic strength to be reflected in the market movements hopefully toward the end of this year and into 2012.
*The advice provided is of a general nature only. Everyone’s financial situation varies so please contact a financial planner at EFS on (02) 9868 3900 for a financial plan that meets your needs.

Elite Financial Solutions ABN 32 077 847 486 provides its financial planning services as an Authorised Representative of Count. ‘Count’ and Count Wealth Accountants® are the trading names of Count Financial Limited, ABN 19 001 974 625. AFS Licence Number 227232. Principal Member of the Financial Planning Association of Australia Limited.


AUSTRALIAN SHARE MARKET OUTLOOK

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