From what markets and investors are rewarding worldwide and from what I see , the following are the qualities of 'Firm of the Future'
1. Asset Light / 'Light' Assets : The firm is light on assets which keeps the asset servicing costs quite low and makes it easy for the firm to 'Pivot' to a new product/market/business model. Its more powerful to have 'light' assets such as Data and Intellectual Property which are lot more rewarding from a perspective of Return on assets. They are also that much harder for a competitor to replicate.
2. People Light: Most of the firm's activities do not depend /directly related to number of humans required to run them. This makes it easy for the firm to reduce/avoid attrition/training/retraining/skill gap/demand -supply issues.
3. Cost Variability - Bulk of the costs of the structure are variable and hence can be directly fine tuned to the market demand. Even better are those whose costs are not linked to revenues !
4. Scalability - A platform is easily scalable vs a manufacturing plant or a services factory. The combination of #3 and #4 means the Profit growth can be geometric and not linear.
5. SMAC - Businesses connect to /leverage Social Media, Mobile, Analytics and Cloud. You might note that all these are closely connected to how millennials live /work and play!
6. Assets to Services to Platform : Owning a platform is in many ways a business that relates to the above than a services business or an asset based business.
7. Pivot - The ability to pivot to market demands/poor business model/ business model obsolescence/ better business idea etc - How easy/able is your business to pivot ?
How does your business/ business idea relate to the above ?
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2 comments:
Hi Kishore, Great views and cannot agree more to your thoughts, but this may be more applicable to Fintech , Start Up's and Tech related firms. However Different industries may view each parameter as applicable to them. in different proportions. In the end what matter today is creating Value ie. IP, Patents brands , etc. which you have highlighted, but also one important aspect of what markets and Investors reward today is also "Delivery Excellence" and "Flawless and seamless Execution" to the likes of Amazon, Alibaba , etc. Thanks !! Rajiv Gada
Rajiv
Flawless execution while critical will very soon become table stakes
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