industry redefined v9 - ernst & youngcdn.ey.com/echannel/gl/en/issues/business-environment...…...
TRANSCRIPT
Industry redefinedIndustry convergence is the disruptive blurring of two or more previously distinct industries and sets of participants
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With traditional consolidation and diversification ...
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The “invaded” industry’s basic, long-held characteristicsc are overthrown
The converged industry is redefined, becoming something altogether different.
Disruption
Cons
olid
atio
n
Div
ersi
ficat
ion
Barriers to entry fall
c. The role of ecosystems
4
The upside of convergence
The world faces big global challenges …
… beyond the scope of any single organization or industry to address effectively, causing the future of competition to shift.
3a. The role of technology
The three drivers of convergence
Technology companies — both start-ups and big tech companies — are disrupting industry spaces and uprooting incumbents
Example: Industry redefined
Driver DriverlessR
1 3
2 4
5 New and nontraditionalcompetitors
Gender disparity Climate change
Core industry activities Value chain fundamentals
Customer proposition Dominant economic characteristics
Tech company advantages:
Growing software content of products and servicesDigitally savvy — excel at codes and algorithmsSubstitution of digital platforms for physical world ecosystemsAsset-light vis-à-vis incumbents
Reconfigures/democratizes industry information
Creates new complexities
Takes place at speed
Company fromIndustry
Company fromIndustry
Company fromIndustry
Company fromIndustry
Industrynew
DB
CA
Rising health care costs
Yesterday Tomorrow
Automotive Mobility
Hardware
10%Software
90% Hardware10%
Software90%
Vehicle manufacturersand suppliers
Who will “own” or be part of the mobility industry — moving goods and people — of tomorrow?
Yesterday Tomorrow
Example: Industry redefined
Centralized utility
Distributed energy
Tomorrow’s customer
Energy supplier
Home to grid(H2G)
V2H
b. The role of customer
Digital technologies have given consumers:
Democratized access to information
More informed decision-making
Powerful voice
Greater choice
Empowered consumers with more choices:
Redefine what’s valued
Eliminate industry boundaries
Become center of evolving industries
Traditional industries with high customer pain points are vulnerable to convergence
Passive ratepayer
Yesterday’scustomer
Home energy management
Technology companies
Automotive companies
Security companies
Retail companies
Consumer product companies
Telecom companies
Utilities vs.
Vehicle to grid(V2G)
Massive urbanization Income inequality
Company
Companyvs.
vs.
Ecosystem public/private Ecosystem public/private
Consumers Entrepreneurs
SocietyIncumbents
Reduced pain points and superior solutions and experiences
Source: Don Butler, Ford Motor Company, Digital Transformation and the Automotive Industry, CXO Talk, 8 May 2015, https://www.cxotalk.com/connected-vehicles-automobiles-technology-platform-don-butler-ford.
Lower barriers to entry
New cross-industry opportunities; option to acquire or partner with new competition; business model reinvention
Potential to leverage collective cross-discipline intelligence to solve global problems
Disruptive convergence redefines the “invaded” industry
Industry same
Industry same
Co. B
Co. C
Company AIndustry sameCompany A
Co. B
Co. C
... key industry characteristics stay the same