Disruptive Changes

There is no room for doubts that a revolution on business models has arrived ant that it has come to stay. The concept of business innovation has already jumped off from within companies Head Quarters to a wider range world plenty of new ideas establishing a double way road for innovative relationships between companies and its peers, its competitors, its customers, its suppliers and other stakeholders.

In my point of view these new scenarios have come to replace old ones. Nevertheless for companies succeed in this future world they ought to foreseen what sort of new business or new technology is going to last longer. New model arrivals come so often that gets hard to know exactly what is going to succeed or what is predestined to fail. It seems to go like the recent competition between 2 new technologies for high definition in movies recording; Blu-Ray against HD-DVD. There is a chance for both cohabit in this new world, but there is a higher chance for one to fail and the other becomes the new world adopted model of recording data. The same competition happened a few years ago between Sony Betamax and VHS recording system. Betamax was vanished as the market chose VHS as a preferred technology. I personally make my bets on Blu-Ray to succeed.

I believe new business models brought up by new technologies and new thinking innovations will face multiple results. It will be similar to a Product Life Cycle. New business models (that l will call as NBM for easier further mention) will have NBM Life Cycle. Some will last very short, others will last longer and others much longer. Moreover, even those NBM which last longer than others based on its success, will need to be refreshed in the future in order to keep its attractiveness facing newer NBM that will eventually pop up.

Below we can see how NBM life cycle might happened in comparison with regular PLC’s. This is a chart extracted from “Global Marketing”, Pearson Education 2007 - 4e de Svede Hollensen where shows different life cycles faced by Sony Betamax and VHS products, among others.

I do not believe on NBM as a trend or a shift. I think it is going to be a positive combination of both. We can foresee that some NBM will be fashion as a newcomer and will disappear soon due to lack of long term consistence or due to other NBM better timing adjusted approach. For those NMB that will last longer (we may think about years of life), a refresh of ideas, concepts, and new technologies must be implemented to not allow the start of its declining period of life cycle. In this case, refreshment will represent an extension of life cycle. What, definitely is not going to happen, is the maintenance of the Status Quo for old-fashioned business models based on its past success.

The most amazing and robust changing process come from the media sector. Due to the Digital Convergence, that has shown an impressive fast evolution, media sector has changed for good. There is no more apart media industries, such as it was set up in the very recent past; movie industry, paper media industry, TV industry, music recording industry and so on. The boundaries of media industry have blurred and continue to banish any sort of distance among them. Interactivity between all sort of media broadcast and media electronic devices is already on place, however, evolution of new technologies has poping up so quickly that will improve it to unpredictable levels. The changes are coming in a so fast pace that we can barely comprehend. Ordinary people are amazed and trying to understand what is happening in this world. As stated by Ross Dawson, Chairman of Future Exploration Network, “we will soon have to explain CDs and DVDs to our children”.

Easy to identify changes that have impacted this sector;

 Hardly we will see a movie company as it was in the past. Now they are just a part of a media conglomerate. Big players in the media industry are buying companies who are specialized in different fields of media and technology companies focus on media integration, aiming to attend new demands created from digital convergence. According to PriceWaterhouseCoopers in its Media Market report published in 2007, a massive 43 billion worth of complementary media fields’ deals took place in Europe in 2006. Furthers 40 billion was expected to be done in 2007. The main reason is the expected re-direction of advertising investments on different sort of medias, in detriment to old models. For the next few years is expected to see a fast growing on digital advertising mainly on paid search, mobile and videos. Also, new segments of digital advertising are expected to emerge as personalized outdoor and in-building advertising, and advertising in virtual world. For example, newspaper may be delivered on e-paper as new forum for digital and personalized advertisements.

 Another change, based on the ability of people of getting used to new technologies and making deeper use of it is the growth of personalization of media products being made available. As an example, the majority of the 7 billion online videos streamed each month are user generated. The media sector is running after this new sort of audience which has already enlarged the size of each niche on the long tail, becoming more and more important on commercial matters. Media companies must to pace faster to keep selling its products and ads. YouTube, for instance, has established itself as one of the most popular online sites globally, exemplifying the impressive fragmentation on video programming and, as consequence, its new broader marketing segmentation.