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The successful companies of the future will be those that can innovate and successfully bundle services and package them for customers, Frost & Sullivan Growth Implementation Solutions director Mark Simoncelli told delegates at the GIL Africa 2015 conference, in Cape Town, this week.
He noted that companies such as Amazon and Alibaba had used innovation to disrupt the norm.
The growth of these firms was driven by the sheer volume of transactions. Alibaba had built its comprehensive model, which facilitates trading from basic raw materials to the final product, often using small- and medium-sized enterprises, such that it now had well over 30-million registered business-to-business users and was active in more than 240 countries.
Simoncelli singled out other success stories: US multinational technology company, Cisco, which designs, manufactures and sells networking equipment, executes more than 90% of its sales orders online without any contact from a Cisco employee.
Beijing-based Xiaomi, the fourth-largest smartphone maker in the world, focuses on services, with no or very little spending on marketing. Instead, it uses social media and word of mouth, lowering its costs by using online stores. It has managed to slash the cost of its phones to $150.
Simoncelli compared this to the iPhone, with Apple focusing on hardware and a high marketing spend through adverts and its own network of iStores. He said this contributed to prices of $650 a phone and margins of 50%.
In South Africa, Simoncelli said innovative companies like Snapplify had taken advantage of the disrupting world of content delivery.
The Cape Town-based company provides publishing and content producers with a platform for distribution, reading and retail of e-books, magazines and newspapers. In a few short years, it had become the largest e-book aggregator in Africa, with over 600 resellers and online stores.
In South Africa, T-Systems aims to change the way companies sell, market, operate and scale to a digital economy.
T-Systems South Africa Account chief technology officer Kim Anderson said the company was hoping to work with government to improve efficiency in ports through a digitised system for truck drivers delivering to the port.
The company has been successful in designing a mobile app for the Johannesburg Road Agency that enables citizens to report potholes, missing manhole covers and nonfunctioning traffic lights. The response time has been sliced very successfully.
Virtual Tesco stores in underground subways and companies like Instacart, were changing the way people shop for groceries, while Air BnB had revolutionized travel bookings worldwide.
Simoncelli said the Hilton hotel group had taken 93 years to build 610 000 rooms in less than 100 countries, while room-letting website Air BnB had taken four years to amass 650 000 rooms in 192 countries.
Simoncelli advised companies to understand the disruptive factors in their businesses and explore how to drive transformation. “You need to get in front of the juggernaut of change,” he advised.
Adaptation was key. He said companies such as Netflix had learnt the hard way but were now successful. Netflix used to provide DVDs by mail, but production companies weren’t happy about being cut out of the deal. Netflix then transformed its business model to become a content production company with on-demand video streaming. By producing hugely popular programmes such as House of Cards it had managed to transform and grow.