How To Make Convergence Work For You
The Convergence of Business and IT [Source: http://www.youtube.com/watch?v=GzP6pO_jzyk]
Time. The Rolling Stones sang about it ..."It's on my side...". And most of us wish we had more of it.
Thanks to strides in technology and a rapidly evolving marketplace, the word stands for a lot more these days. In fact, TIME is an acronym that experts use to describe the convergence of the telecommunications, information technology, media, and entertainment industries.
That the TIME acronym has become generally accepted is a fascinating development, indeed. The four industries that are covered by the word were, at first, separate and distinct. Now, because of convergence, they've morphed into a completely new marketplace.
From the hallowed halls of academia comes a study that investigates the effects of convergence. What happens, for instance, when companies that were once in separate industries suddenly become rivals? Well, the first thing to do is to acknowledge that times have changed and that your company is part of a new marketplace. Getting past denial is tougher than you might think. Who wants to have dedicated his or her career to being number one in a particular industry, only to find that this industry doesn't really exist anymore?
It pays to know how your ecosystem works. Not knowing or acknowledging can cost your company untold millions. There are certainly tremendous opportunities for those companies that can recognize the effects of convergence. In fact, experts say there are four characteristics of successful companies in converging industries.
The first is the technology pioneer. If you're going to be one of these enterprises, you need to get into the newly converged market early. Once you're there, take control of it. Make the intellectual property yours and dominate the market for early customer adoption. The study suggests that as a pioneer, your company must be the "technology of choice." It also doesn't hurt to negotiate plenty of nonexclusive licenses.
The second characteristic is that of market attacker. These enterprises approach an established technology and ask themselves how many ways they can capitalize on it through commercial applications. One suggestion is to team up with an aforementioned technology pioneer and collaborate in the value chain in a vertical manner. There are three steps to achieving this sort of collaboration, according to the study: striking up a relationship with a business partner, then consolidating the engagement model, and, finally, extending the partnership. In other words, your organization needs to devise ways to expand both the partnership's scale and reach.
Sometimes, there are established players who recognize the forces of convergence and decide to capitalize on the resulting wave of technologies. These companies are known as ecosystem aggregators. The secret to becoming one of these companies is to create a platform of innovation that focuses on offering complementary services to the technologies. The study speaks of a new phenomenon among rapidly converging industries: network effects. Ecosystem aggregators are best at riding the waves of network effects with their enhanced products and services.
Finally, there's what's known as the business remodeler. These enterprises are typically big, entrenched players that nevertheless have leaders who recognize that the winds of change are blowing through their industry. They smartly use their organization's size, brand equity, and wealth to embark on a rejiggering of business lines and models. They know that the way to staying competitive in a converged market is to go directly to their existing customers and to build new relationships with them based on these new business realities.
Where things can get really interesting is when a business remodeler successfully accomplishes transformation and then becomes more of a market attacker. Or when technology pioneers have command of so many proprietary products that they become ecosystem aggregators. The great thing about converging markets is that they're always changing. So the organizations that are within them must transform themselves as well. If not, they'll essentially be allowing competitors to transform them out of existence.