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Discovering the competitive advantage in the connected era

October 22, 2015 • Top Stories

Uriel Rootshtain

Uriel Rootshtain, Application Services Group Lead at Microsoft SA.

In the business world, the ebb and flow of prosperity depends upon two forces: disruptive technology and competitive advantage.

During the industrial era, for example, competitive advantage emanated from business efficiencies such as Henry Ford’s production line assembly system, which revolutionised the automobile industry and manufacturing processes globally.

By the advent of the information age, technology was not just being used to drive production efficiencies, it also drove information efficiencies as well. The competitive advantage began to shift to businesses’ access to information, but the cost of obtaining said information was high. This led to the creation of R&D departments, which was charged with the duty of discovering information sooner than competitors could. In this era, it was vital for organisations to protect IP (intellectual property) with secrecy.

Today, in the connected era, the world has become a giant network in which people are far more connected in many more ways (social, web, mobile, email, IM) than ever before. Information and knowledge moves faster and employees are able to accomplish more by working together, because of the high level of connectivity.

Competitive advantage is gained not by hoarding information as in the information era, but through being able to effectively connect people and disparate pieces of information with the ultimate goal of driving innovation and obtaining valuable insights about customers (developing new markets, refining products and services, driving sales) and the business (optimising processes, attracting and retaining the best staff).

The need for an organisation to become responsive

While technology has progressed throughout the ages, disrupting established markets and industry players along the way, the model of how companies are built and operated has not evolved at the same pace. This model originated during the industrial revolution more than 200 years ago, at which time companies mostly had access to the same information and major product development occurred at snail pace. It worked within an era in which staff performed tasks that were highly routine, with very little judgment and creativity being required.

Within the networked era, this model no longer applies because the impact and success of an employee is based on their ability to collaborate with others, piece together information from disparate sources and come up with solutions to new and complex challenges.

Employees now need to perform many more non-routine tasks and the command and control approach (siloed teams with top-down hierarchical structures) to getting things done cannot compete effectively with the network like collaboration style of the modern workplace.

This new hyper connected way of working enables companies to become responsive organisations that can capitalise on opportunities and address problems quicker than rivals, while also becoming empowered to weather disruption storms more easily than competitors as well.

For instance, San Francisco sharing economy behemoth Airbnb, during the FIFA World Cup in 2014, was the largest hospitality company in Brazil; housing 20 percent of all World Cup attendees in its users’ temporary vacation squats. Airbnb has developed a new start-up business model, offering a service to travellers and revenue seekers that outsmarts the current service offering of the established hospitality industry. Airbnb’s business has paved the way for startups that make hosting easier and more lucrative by handling guest communication, cleaning services, key swaps, and price automation.

By Uriel Rootshtain, Application Services Group Lead at Microsoft SA

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