Strategies for Success in a Dematerialized World

Are you prepared to get vaporized? During the past twenty years I’ve worked with companies all over the world, big and small, helping them to craft a strategy so they can transition from the old world of producing physical products to a new world in which most things tangible – products, devices, stores, and even companies – will simply disappear forever to be replaced by invisible software.  I call this getting vaporized.

My motto is “Whatever can be vaporized will be.” That means any part of your business or product that can be replaced by pure digital information almost certainly will be.

You can’t stop this transformation process because dozens or even hundreds of other companies are already working on it. They are catering to the two billion consumers wielding smartphones who demand instant access to apps and services.

For start-up ventures with no stake in the old physical economy, this poses no particular challenge – just a wealth of opportunities.  But for old-school bureaucracies, it’s a scary new world that requires managers to rethink the basic principles that govern established businesses.

From health care to handbags, no industry is immune. At least some portion of every firm’s activity will be transformed from the old-school physical industrial process into a vaporized state of information available on demand. You won’t be able to stop this process, but if you react soon enough, you will at least have the option to determine how and when you will respond.

The secret to success when technology is driving change rapidly in an established industry is to envision possibilities that many consider unthinkable: to make an effort to envision what a disruptive change might look like, and how it will transform the entire business process. That’s easier said than done. To do so, you have to set aside everything that made your company a big success and focus on the changes that will wipe all of that success away. This is not an easy exercise for anyone.  To get started, ask yourself the following questions:[wcm_restrict]

  • How might software provide a substitute for your company’s product or service?
  • What happens if it is provided free of charge? What if the software is provided free in exchange for usage data? Who wins and who loses in that scenario?
  • Can software replace even a single part of the product made by your company?
  • How might that undercut your current pricing? Could it unravel the bundle of value that your firm offers?
  • If your company provides services, how might these be delivered digitally? Is there anything stopping a startup venture from providing this service on demand via a mobile app? (If not, there are probably several ventures working on it already).
  • Is mobile software considered a vital strategic priority in your company? Or is mobile app development considered peripheral and non-essential? (If your firm outsources mobile app development to an agency or design firm, there’s your answer).
  • Are you aware of any startup companies in your industry that focus primarily on reaching customers on the smartphone?  How seriously do you take this competitive threat?
  • Who is in charge of rethinking your company’s entire business model and operations? Does anyone in your company have such a broad mandate?  Or, like at most companies, are the senior managers incentivized to do the same thing in their departments that they did last year?  Is anybody steering the ship?
  • Does your company rely on barriers such as proprietary technology, arbitrary business rules, regulations or litigation to stifle competition? How well do you expect this defense to hold up against an overseas rival that provides free software in the form of a downloadable mobile app?
  • Are you aware of any startup company in your industry that focuses solely on getting the job done with digital or mobile software? What does it do differently? What can your company learn from the competition?

In the past five years, we’ve witnessed a host of new companies gleefully reinvent traditional categories, from ride-sharing services that undermine entrenched taxi cartels to free messaging apps that wiped out the most profitable segment of the mobile telecom business to free-to-play mobile games that reversed the business logic of the videogame industry. Now as computing power and network connectivity are embedded in a broad range of devices, appliances, vehicles and buildings of all shapes and sizes, this process is extending from media into industries that produce durable goods and tangible products. Entire industries are up for grabs as the value gets siphoned from the physical product into digital software.

Startup software firms are even rethinking the purpose of corporations. If the company mission can be expressed as a set of inviolable business rules encoded in software, why not replace the whole firm with a virtual automated corporation that exists in the cloud?

There’s a whole world out there ripe for reinvention. Pick a topic, any thing or institution or company or product or service or tradition, and ask yourself: how might I replace that with software? You can do it if you want to. All you have to do is jump in.[/wcm_restrict][wcm_nonmember]

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About the Author

Robert TercekRobert Tercek invents the digital future. He has launched satellite TV networks, the first video on mobile phones, multimedia games, and live interactive learning programs. He provides strategic insight to Turner Broadcasting, InterPublic Group, PBS, and other firms. He previously served in executive leadership at MTV, Sony Pictures Entertainment, and most recently as President of Digital Media at OWN: The Oprah Winfrey Network. And is the author of VAPORIZED: Solid Strategies for Success in a Dematerialized World, For more information, go to:

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