Uber did it. So did Airbnb. As did Dropbox, Zillow, and Wikipedia.
These companies destroyed incumbent brands and revolutionized established industries by using today's digital technologies (social, mobile, cloud, big data and the internet of everything) and the power of crowds (aka networks) to destroy older business models. And they are not alone. .
This type revolution is happening across all industries and it is the most recent of technological revolutions. Pioneers like Henry Ford and others ushered in the industrial revolution. Services firms like McKinsey, Bain and BCG created the services revolution. Software firms, like Microsoft and Oracle, changed the game again to create the Technology Revolution.
Now digitally enabled networks are bringing about a 4th revolution -- the Network Revolution -- on a scale and scope that is unprecedented based on our transition from the physical and material to the virtual and intangible. What does this means to you as a leader? Simply this: It's time to Uberize your company by leveraging today's digital technologies and the power of networks to create unprecedented value for your customers, employees and investors.
Research covering 40 years of industry and company data, performed by OpenMatters in partnership with Deloitte, indicates that companies that leverage digital technologies and the power of networks are valued at as much as 4 to 8 times more than the value of traditional product and service companies. Further, this research shows that the challenges brought about by digitally-enabled networks are pervasive and impact traditional profit margins and the marginal cost of expansion (from high to almost zero). In short, digital disruptors are leveraging the power of networks, and the big data derived from them, to change the game for everyone.
To better understand this "digital revolution," our research identified four business models that cut across all industries. These four models describe a process of evolution from physical and discrete to digital and continuous:
We also researched how investors value each of these four business models. The results show that Technology Creators and Network Orchestrators are valued 2X to 4X more than Asset Builders and Service Providers. This means that, on average, the investors pay approximately $8 for every $1 in revenue generated by a Network Orchestrator while Asset Builders receive only $2 for every $1 in revenue (see figure below).
Given these numbers, it is clear that leaders must evaluate their business models and determine how to cross the digital divide. To help leaders pivot their companies, we developed a seven-step process. The seven steps are: