How the Digital Age Has Empowered Businesses
The digital age has enabled many extraordinary changes to occur – fast, real-time communication, access to abundance of information and many other such capabilities that have empowered businesses and people. Things that weren’t possible just 20 years ago are now commonplace in our lifestyles. And the best part is that innovation is continuously and exponentially growing making even more empowerment possible.
What’s Changed in Recent Years
What’s often overlooked is the fact that the digital age has empowered businesses to do something extraordinarily well. And that’s to exponentially drive down costs across every business function. Companies that have taken advantage of this particular digital empowerment have experienced exponential growth over the recent years. Case in point are Craigslist, eBay and Amazon who’ve disrupted and rocked the world of their competitors. Thanks to free online ads the print media has experienced drastic and devastating loses as their paid advertising model hasn’t been able to compete. Hence, today, we see far fewer newspaper agencies still in business. And those that remain are finding it hard to maintain profitability.
But it’s not just the newspapers that have been taking a hammering in recent years. If you look at other businesses within the media industry –television, music and book publishing businesses – you’ll find similar disruptions experienced by traditional players. DVDs, CDs and Vinyls that dominated how films were watched and music was heard have now given way to digital formats which are cheaper and faster to produce, distribute and sell. The same is with the publishing companies which have seen exponential rise in demand for eBooks. Thanks to these disruptions, the television, music and book publishing industries have been forced to rethink their business model in order for to not only remain profitable, but relevant as well.
Another phenomenon that’s being seen is how exponential organizations are able to scale their business with almost 100% variable costs. Companies like Uber, Lyft and Airbnb can enhance their presence and offerings with close to zero marginal cost. That’s not the case for traditionally capital-expenditure-heavy companies within their industries. For traditional taxi companies, Enterprise, Avis, Hyatt, Marriott and Starwood Hotels the cost of adding cars to their fleet or rooms to their hotels is substantial. Thus their margins are significantly lower compared to digitally empowered businesses.
Where To Go From Here
The key point to consider is that the internet has significantly reduced cost of sales, marketing and customer acquisition – it’s almost zero now! All of these traditionally contributed to a large portion of a business’ operational costs. Companies are now enjoying higher profit margins that are boosting their exponential growth.
Businesses today are empowered by the relative abundance of resources. As companies dive deeper into the realm of innovation and technology they realize that being an information-based company has several benefits. As a starting point, companies can have access to ample resources thanks to the fast growing trend of Collaborative Consumption. This enables them to not only be faster to adapt to their consumers’ needs and demands but to do it at a fraction of the cost that traditional companies would have to bear.
In their book “Abundance: The Future is Better Than You Think”, Peter Diamandis and Steven Kotler emphasize on this phenomenon which has empowered businesses to leverage the internet and social media to efficiently and effectively utilize physical assets. That is the power of Collaborative Consumption which has seen companies opting to “access” resources rather than going for “ownership”. Where is this being applied? For starters, there’s been a significant rise in supply (and demand) for ride sharing, bike sharing, shared workspace, co-housing, crowdfunding, bartering of professional and skilled services and virtual currencies to name a few.
Whether you call it the digital age, the information age or the exponential age, they all point to one core ideology – information is the key to success. The faster companies adapt to it the faster they’ll grow. Whichever angle you look at from, information is crucial to any company’s existence, its business model and its ability to do business. Empowered businesses, the exponential organizations, are aware of this fact and have enjoyed exponential growth based on it. It’s only a matter of time that others follow suit.
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