The digital path to business resilience
The COVID-19 crisis has turned the spotlight on the urgent need for companies to become resilient, and the importance of digital technologies in making this transformation. As markets and economies are likely to continue to change rapidly, uncertainty will persist. Only a small group of resilient companies will be able to capitalise on the opportunity to grow stronger in the face of uncertainty. Investing in digital resilience will help companies both accelerate out of crises quickly and create sustainable competitive advantage in the new reality.
This article outlines the components of resilience, and the strategic steps necessary to achieving it.
The case for capital efficient strategies
Industrial multi-business corporations need to pursue both margin improvement and capital efficiency. There is a widely held belief that conglomerates are not liked by capital markets. But this study of 21 industrial multi-business corporations found that investors did in fact appreciate the improvement of already good double-digit EBIT margins over the past 14 years. However, an even bigger success on the capital markets can be achieved when these corporations pursue the goal of improving both EBIT margins and capital efficiency.
Building a platform business
Platform businesses are taking over many long-established industries. Companies equipped with a platform strategy are more likely to outperform in the short term and create returns in the long term
Platform companies such as Amazon, Alphabet, Facebook, and Tencent are being joined by many other organisations (including financial services giants such as Visa) who are incorporating some of the same concepts.
Platform companies represent a new preferred business model for investors. You may think that you have to transform into a start-up and reinvent your entire core from scratch, but in fact it is possible to leverage the power of platforms and network effects without complete upheaval.