As industry lines blur, organizations embrace fusion has been saved
As industry lines blur, organizations embrace fusion
From The Wall Street Journal’s CMO Today
Many successful companies are looking beyond traditional industry boundaries to identify strategic partners, neutralize disruptive threats, and develop new ways to serve customer needs.
Over the past decade, the business world has experienced a blurring of the lines that historically separated functions, companies, and even industries. Cloud data and connected technologies have given rise to platforms capable of bringing together once-independent and -isolated organizations. Meanwhile, the growing gig economy has given companies easier access to new sources of talent. Fueled by such forces, ecosystems are emerging that make it easier than ever for companies to extend their reach beyond their traditional domains.
New sources of value will likely come from this fusion, according to Deloitte’s 2020 Global Marketing Trends research—if organizations, and marketers in particular, can adopt a more expansive mindset and reimagine their capabilities, partnerships, brands, and business models. Those that want to capitalize on this symbiotic environment are collaborating in new ways with cross-industry partners and even competitors to address human needs and identify growth opportunities.
The value of peripheral vision
Most companies today—even sector leaders—understand the dangers of disruption in the digital age. Companies that get too comfortable doing what they’ve always done risk being blindsided by unforeseen competition.
Such threats are not necessarily new. As far back as 1960, Harvard Business School Professor Theodore Levitt cautioned businesses on the dangers of narrow vision, citing several examples. The railroad industry was overtaken by automobiles and airplanes because it didn’t acknowledge it was in the transportation business. The film industry was outpaced by television. Corner grocery stores failed to anticipate the encroachment of one-stop supermarkets. In each case, Levitt pointed out, company leaders were focusing too myopically on what they did, and not more broadly on what their customers needed.
Companies that are effectively embracing fusion often use core assets to help expand the scope of who they serve, why, and how.
Today, the risk of disruption is amplified because technology has eroded traditional barriers to entry. Yet growth opportunities have expanded as well. Indeed, there is a monumental shift underway in how businesses operate and perceive themselves. Many of today’s organizations are looking beyond traditional industry parameters to take an unconstrained view of how they serve their customers. Messaging platforms are providing mobile payment and ride-hailing services. Department stores are opening their doors to e-commerce giants and fitness centers to provide cross-industry wellness services. Gyms and hotels are evolving to offer co-working spaces.
Many organizations in the public sector are also embracing fusion—for example, with smart-city initiatives. To address a high rate of breathing disorders in Louisville, Kentucky, for example, city planners brought together once-separate entities—health care providers, private technology companies, local government agencies, and citizens—to improve citywide air quality with the help of smart inhalers. By aggregating and sharing inhaler usage data, the city was able to pinpoint troubling patterns. City officials redesigned high-risk neighborhoods with more trees and altered truck routes to reduce emissions. The initiative led to an 82% decrease in inhaler usage.
Marketing in the fusion era
Capitalizing on convergence does not require rejecting everything that came before. In fact, companies that are effectively embracing fusion often use core assets to help expand the scope of who they serve, why, and how. Organizations can leverage their customer knowledge, domain expertise, and existing competitive advantages to identify opportunities where ecosystem partnerships could serve the marketplace in new ways.
To function more effectively in the fusion era, marketers can redirect or redeploy existing assets in several ways. They can seek to:
Champion customer needs. Marketers can orchestrate cross-functional teams to uncover unmet human needs and create solutions through experimentation. They can build sensing capabilities to better identify trends in real time and invest in understanding customer behavior across products, services, and industries.
Use data to attract partners. Organizations can explore how their existing data could create new capabilities. A grocery chain, for example, may have accumulated years of data on consumer food spending. The business could partner with health insurance companies to provide lower rates to those who purchase healthier food.
Team up to expand scope. Customer data analytics has value beyond retention initiatives and price optimization, particularly when combined with data from new partners. For example, last holiday season, to mitigate customers’ traffic and parking hassles, Old Navy and Lyft teamed up for two days to offer free rides to customers who opted for in-store pickups of online purchases.
Succeeding in the age of convergence may require brands to expand their perspectives beyond their current offerings, customers, and industries. Organizations that ambitiously solve unmet customer needs by participating in smart, open ecosystems can systematically displace competitors who are unwilling or unable to do the same. Companies that do not appreciate the value of fusion, however, will likely remain more susceptible to disruption.
—by Paul Magill, managing director, Deloitte Consulting LLP