Competitive advantages used to be the hallmarks of successful businesses. They were tangible, predictable and measurable. In other words, they could be clearly identified, there was no secret sauce to them. But not everyone had the resources to build them. It was mostly the big guys who were able to do this. Often years, if not decades, were required to build them. And once they had been built, they would last for many more decades. That's why people talked about sustainable competitive advantages.
Today, businesses operate in a different environment. Any advantage can quickly turn out to be short lived. In some markets, competing businesses switch the lead like the athletes of the Tour de France. What’s more, current sources of an advantage are not always that easy to spot. They are less visible, more diverse, and sometimes they can be built quickly, before competitors notice.
But here is the one thing that unites many of today's sources of advantage:
THE MAJORITY OF THEM ARE I N T A N G I B L E
Only few of them are based on physical assets.
Only few are built solely on processes or technologies.
But most of them cannot easily be measured. They are rarely to be found on a balance sheet or P&L. We have to dig a little deeper to see them.
Welcome to the world of Intangible Economics.
Intangible Economics are about the elements that form value and that drive the success of businesses in today’s day and age.
In the world of Intangible Economics the factors that determine success are intangible. And often also the value that is being created - or what customers are willing pay for - and sold has become increasingly intangible.
How did we arrive at Intangible Economics?
How did we get from the Industrial Age to the Age of Intangible Economics? There’s a lot of change that lead to Intangible Economics. Many simply talk about ‘digital transformation’ or ‘disruption’. Yet both terms fail to grasp the scope of the shifts that have been happening. The impact of the reshuffling begins with the way that products and services are being built and distributed and it extends to how consumers interact, communicate and select those products. You could simply say that the whole business space has been reshuffled.
Consumer Habits are taking a Journey
Business Activities Shift Gears
Product Differentiation has been diluted
Consumer Habits are taking a Journey
Take for example consumer habits. There are plenty of layers to the transformation of consumer habits.
We as consumers not only went from shopping in a retail store to ordering online and mobile.
We also have moved from buying products to obtaining the same offering as services.
We became used to communicating not only with websites, but also with apps and increasingly with bots. And with each new social media platform, marketers even have to relearn new ways to communicate with humans.
Along the way we also have switched sides of the transaction. We have become hotel operators, full-time content producers, curators, thanks to AirBnB and the ‘like’, ‘share’ and ‘comment’ buttons of social media platforms.
Business Activities Shift Gears
Product Differentiation has been diluted
What does it mean?
NAVIGATING NEW RULES
Consider what would happen if the rules of a sport would change. Teams would have to relearn their skills, and the league tables would be reshuffled. While businesses talk about digital transformation, most of them still operate by rules which have been developed in the Industrial Age. Instead we should reconsider what value is based on today, and how companies need to operate today. We need to understand which types of value propositions, business models, unit economics and business structures enable success today. And we should figure out how we can best apply them to our businesses.
NAVIGATING NEW BUSINESS STRUCTURES
But it’s not only the rules of the game that have changed. The make up of teams have changed as well. Business structures have started to adapt to this new environment. Along the whole value chain many activities are now available as a service. Teams can choose to work leaner if they want to. One of the key challenges for businesses is balancing the operation of scalable businesses, while allowing room for innovation.
NAVIGATING WIDER FIELDS
Today’s world is much more connected than it used to be. With more connections we have more influences and interactions. This means we need to broaden our understanding of what the business entails and what business functions entail. We need to look out for connections between disciplines, open our eyes to what is happening outside of our core fields. We can turn curiosity into our core fuel for understanding.
