Competition in the 21st Century [Digitalization in Business]

The meaning of “competition” has changed over the years following the course of digitization, globalization and internet penetration. Traditional businesses are trying hard to embrace the change, while the young technology firms and new players are giving newer challenges every day. There is constant friction in both the digital and the physical world, and this has led to persistent competition. Technological innovations and advances are designs of imaginations and resilience. The urge to “do better than others” has always been common, but the very feeling is strengthened now more than ever.

Years back when Jamshedji Tata created history by laying the foundation of the Tata industries, he did not have any management degree or technical background. The salt to software conglomerate is running strong even now; ready to compete with the newcomers. There are several companies and organizations that are founded in the 21^st century. If you look at their founders, you will see that they have related educational background suitable for the field. The founders of companies like Flipkart, Swiggy, Ola etc are all hailing from premium colleges and business schools. Why this change? Has the competition changed its decorum?

Most modern-day business organizations are set up after ample analysis and in-depth market research. The leaders study the paths of their predecessors, learn from their failures and successes, they participate in well-defined industries dealing with a similar set of products and commodities. The classic and traditional business models are not sufficient for sustaining the contemporary complex competition dynamics. The life span of the companies and also their products remain unpredictable, leading to shrinking and blurring of industry boundaries. Technological disruptions and innovations are not only cushioning business growth but also challenging its existence. Digitization has paved the way for high economic, social and political uncertainties, thus re-shaping the meaning of competition.

As noted by Boston Consulting Global (BCG), the new age of competition will affect businesses in 5 frontiers, and they are:

“Increasing the rate of organizational learning

• Leveraging multi-company ecosystems
• Spanning both the physical and the digital world
• Imagining and harnessing new ideas
• Achieving resilience in the face of uncertainty”

The meaning of competition has transformed vastly, it has shifted from being predictable and stable to complex and multi-dimensional. The organizations that can understand the changing dynamics will be able to retain their positions in the rising waves of fast-paced evolutions.

Learning is the new competition

The world is changing fast and the pattern is no more predictable. In such a scenario, how can one retain his relevance? The answer is “by learning”.  Half a century ago, the founder of BCG Bruce Henderson observed that the companies will be able to reduce the marginal production costs with several years of experience. Learning and updating oneself is essential for both personal and professional development. But the major question today is “how to learn”. Internet penetration, sensors, Artificial Intelligence (AI), digital platforms and many such technological tools have expanded the scope of learning effectively. The rate of learning is crucial here, and it is directly proportional to the adoption rate in the changing dynamics. The uncertain market landscape demands discovery and adaptation more than just planning and forming notions based on production. As believed by experts and analysts, “Companies will therefore increasingly adopt and expand their use of AI, raising the competitive bar for learning. And the benefits will generate a “data flywheel” effect—companies that learn faster will have better offerings, attracting more customers and more data, further increasing their ability to learn.”

Digital Competitions in Business Ecosystem

In today’s world, the fastest growing and valuable companies thriving in the business ecosystem are the young technological firms that operate on digital platforms. The consumer services like retail, entertainment, information network are becoming the hotbed of the business ecosystem, targeting the diverse range of user base. Digitizing the physical world with the help of technologies like AI, the Internet of Things (IoT) and Blockchain is going on in full swing. This will lead the young tech firms and young companies engage in Business to Business (B2B) and (B2C) models and deal with specialized assets. The evolving organizations are developing the capacity to compete with the traditional older players of the market, with the help of technological innovations. We can understand the scenario with a very common example.

Three to four decades back, the people used to post-appointment letters and biodata to companies for job roles. They used to send to several companies, and get one or two calls in return. With the globalization and internet penetration of the 21st century, the scenario has changed completely. The job seekers, without going to the newspapers and magazine companies, are contacting directly to the organization. They are uploading their CVs on the online job portals and receiving calls from the consultancies or companies directly. The job portals are gaining business from two domains, firstly the companies who are posting the job roles and the job seekers who are posting their biodata. There is hardly anyone now who is posting ads in newspapers without subscribing in the job portals.

Converging of the physical and digital world

The digital giants are moving in the physical world, and the physical incumbents are exploring the digital world. The 21st century is witnessing the convergence of both worlds, giving birth to hybridization of the business ecosystem and market landscape. The eCommerce giants Amazon and Flipkart have ventured in the offline space, with the launching of concrete offices. Amazon has acquired Whole Foods and opened its offline retail store. Wal-Mart backed Flipkart launched its first offline store in Bangalore in 2019, competing with the players of the physical world. “Spread across nearly 1,800 square feet, Flipkart would offer a touch and feel experience to customers in the fast-evolving online furniture market, the e-commerce major said in a statement. According to the company, this is a step towards helping customers understand the vast selection of furniture offered by Flipkart and increase awareness around the seamless buying and installation experience it offers.”  Flipkart steps at a crucial time, just when IKEA was planning to expand in the Indian market aggressively.

Now, let us take an example of a name who has ventured in the digital world. During demonetization in 2016, the users felt the urgency of online cashless transaction, and that is when payment platforms like PayTM and Freecharge gained momentum. Besides, these platforms, several banks have geared up to enter the digital world with their applications. HDFC bank has PayZapp, SBI has YONO, ETC. These banks are exploring the unexplored digital zone, and players of the digital world are encroaching in the physical world.

Regulation of New Age competition

Technology firms and organizations are progressing aggressively, but they are yet to receive the limitless social license. They have cruise amidst thorny issues like user trust, data privacy and regulatory policies which are likely to strengthen in the years to come. The traditional incumbents and older firms have to sail across the institutional inertia and odds of technological disruption. It becomes challenging for traditional players to adapt to changing technological advances and fast-paced penetration into classical business models. The coming wave of disruptions will determine the winners and losers, and they could be from any sides, either physical or digital worlds. Rethinking and reforming pre-existing business models, developing healthy relationships in the business ecosystem, and adapting to the changing market dynamics are some of the crucial steps that can help the companies face the hybrid competition.

Imagination and Adaptability

The new-age competition is visible on these two fronts, imagination and adaptability of the companies. One who excels in primary imagination and one who has a higher adaptation rate can sustain the forces of hybrid competition. The changing market is proceeding towards a more shapeable structure, where innovation is rewarded more than ever. Coming up with something new, targeting the better customer experience and maintaining relevance in the long-run has become increasingly important now, in the era of new-age hybrid competition. Concentrating on analogies and anomalies, providing scope of imagination across all the organizational hierarchies, and being open to imaginations and innovations are key to business expansion.

Technological disruptions have hindered the predictability of the market landscape, thus uncertainty larking on the horizon. As viewed by BCG, “Looking ahead to the 2020s, uncertainty is high on many fronts. Technological change is disrupting businesses and bringing new social, political, and ecological questions to the forefront. Economic institutions are under threat from social divisions and political gridlock. Society is increasingly questioning the inclusivity of growth and the future of work. And planetary risks, such as climate change, are more salient than ever.” Rise of China as a global power, demographic shifts harming global growth, social polarization, a dichotomy between automation and human-centric workforce will air the uncertainty in the foreseeable future. Building adaptive organizations, robust business models and strategies and contributing collectively for the economic and social welfare of the world will help the companies to be resilient in the changing scenarios.

Wrap up

The competition will continue to exist in the coming years, challenging the longevity of both old incumbents and young firms in tune with technological advances. The businesses are engaged in cut-throat competition, trying to survive through the hard times. The companies that are “fittest” will survive, others will be grounded. The technological disruptions have converged both the physical and digital world, giving shape to a more hybrid competition. Competition to be better will persist, the competition to learn and adapt faster will persist, the competition to come up with better innovation will persist. As said by Karl Marx in his theory of historical materialism, thesis and antithesis will lead to synthesis. In the same fashion, the consistent hardcore competition will lead to the progression of mankind.