By Nadia Zaifulizan
Business models and performance has always been impacted by innovations and new developments. In the first Industrial Revolution, manual labour and agrarian economy transformed1 into mechanization and growth of urbanization after power generation was first introduced. That was the time of the coal-fueled steam engines.
The second Industrial Revolution then came in the form of more mass production and industrialization due to the discovery of electricity and more fuel, as well as the upgrade of production lines. By the third Industrial Revolution, electronic automation was introduced. During this time, production processes were simplified, and end products were multiplied through the application of electronics and IT.2 This further increased production efficiency, and its growth eventually led to newer developments of technology.
Now, these series of industrial revolution have arrived at its current installment: Industry 4.0, and with it comes significant characteristics that drive current industrial trends and consumer markets.
Industry 4.0 introduces new digitally smart automation on the existing commercial market.3 It harvests the utilization of electronics from the third industrial revolution and upgrades it into a smarter, more connected form of technological manufacturing systems in the industry, which not only extracts information but also produces data intelligence2 and solution response. This eventually produces a cascade effect that led to newer inventions and innovation, while influencing demands and trends in an increasingly digitized economy. Eventually, the developments influenced the patterns of existing production operations, business models, and consumerism.
Digital Age Consumers: The Millennials
After the four waves of industrial revolution, the market has matured into a more consumer-centric, sharing-based, fast-paced, connected economy. Consequently, consumers are becoming more aware and well-informed, possessing higher expectations of customer experience.
According to a research study published by Deloitte UK in 2017, although the current market is dominated by Generation X buyers whose purchasing habits are relatively traditional despite their modern outlook, there is an emerging population with opposite characteristics whose background are based around the growth of the internet era. Known as the millennials, this growing generation’s consumption habits, interests, and influences are steadily and consequently shaping the buying patterns, performance, and operation models of existing businesses today and in the future.
Millennials’ purpose of spending is for self-satisfaction, absorbing content from multiple channels and platforms simultaneously, while exhibiting fragmented, seasonal, and impulsive spending patterns. They prioritize quality and are less loyal to specific brands.4Hence the current challenge is to communicate and attract a generation that not only has irregular buying patterns, but also absorbs information continuously through various types of sources. This generation deliberate the information, make informed decisions, and actively engages online.
Rapid advancements of technology and fast-paced technology adoption also increases the millennial’s expectations of businesses5 and the associated socio-economic scene. Because of their strong online presence, connections, and networking, the impetus for digital transformation are even higher among companies and businesses to capture and profit from these expectations and demands. Furthermore, the millennials’ demands that are constantly evolving means that businesses are required to not only deliver current expectations but also anticipate future trends.
How Businesses Stay Relevant
In this increasingly digital economy, businesses are expected to transform their business models not only to accommodate the generation’s digital economic trends and expectations, but also to improve workflow systems and processes with better technologies. This includes expanding from product-centric to service-centric offerings5, utilizing technological advancements in production and operations, application of technology for business intelligence analysis, capitalizing various digital channels for improved brand accessibility, as well as presenting unique business engagement models that create value for the people, millennials included. To stay relevant, digital transformation and utilization is a necessity.
Leveraging on Industry 4.0 enables business operations to:
1. anticipate and respond to changes immediately,
2. link physical information with digital information for quality monitoring,
3. determine root causes to problems based on data, and
4. facilitate training and learning.
The impact of digital transformation and changes in business models are unequivocal. During the early 1990s, IBM’s mainframe business suffered when the disruptive wave of personal computers and client computing became known and highly preferred.6,7 Their mainframe business was unable to effectively compete in the market which led to major losses and eventual mass lay-offs in 1993. Under their new management IBM then shifted their business model and technological offering, from only a hardware provider to a technology and consulting services provider6, focusing on multi-expertise integrated business solutions incorporating products, technologies, solutions, and services.6 This not only diversified their presence on the market, created value for customers, but also strengthened their position as a technology and service solutions provider.
After the series of industrial revolutions, the current economy is maturing, and reinventing itself. It is a technologically and digitally influenced economy, with players and consumers who are technologically and digitally motivated. It is constantly shifting and experiencing disruption to allow only commodities with the most desirable features to rise at the top. The ability to stay relevant in this economy is a profitable albeit challenging endeavor. To be at the top, businesses need to unlock the key to capture the preference of the millennials as the relevant and visionary generation, as well as adapting more suitable business models, and subsequently applying the right strategy of technological and digital transformation.