A highlight from Constellation Research CEO R Ray Wang on Competing with Digital Giants


Welcome technician. I'm your host peter. Hi my guest today. is ray wong. Raise the chief executive officer of the silicon valley based constellation research. He's also the co host disrupt. Tv a weekly enterprise tech meter ship webcast averages fifty thousand us episode he also blogs at ray wong dot org his latest book is. Everybody wants to rule the world surviving driving at an age of digital giants. Terrific read that. I certainly recommend everyone pickup. And i look forward to digging into some of the details of what's covered in this but with that ray. It's so nice to see you. Thank you so much for joining me on tax evasion today. Hey thanks for having me as a show. I've been a meiring for years so glad to be on it and thank you for hosting where you're very you're very kind to say. I've certainly been looking forward to it as well. Well ray You know the the past year and a half or so that. We've been suffering through the kobe crisis the quarantine all these new ways of working it can certainly be argued that one of the key ingredients that has separated all things being equal separated those companies. That were more resilient than others is the extent to which they had made a commitment prior to all of this to digital transformation A concept of course there are so many things that are underneath that rubric It's a broad umbrella. Indeed but i know that as somebody who is a very early proponent of digital transformation as i was as well You are now drawing the conclusion that it's not enough digital transformation alone is not enough talk a bit about why that is and what then comes next. What needs to be included beyond that in order for companies to think more. Broadly about where they're headed. So when you and i were talking about digital transformation maybe like eight to ten years ago now all those elements that took us here. Those were differentiating factors in the marketplace. What we determined that occurred over the last fourteen months accelerated digital transformation by five years. And we're all on the same playing field. Digital transformation is is not like a nice to have. It's a requirement You're not doing that. You're kind of control. What we discovered over the last fourteen to fifteen months was people thought digital transformation was. Hey let's get a digital channel. Were off the fax machine now. Mobile right Let's get a digital channel where we can order on the internet right. No those were table stakes right. That's just the channel unit even scratched the surface on business model or even monetization model right. So digital transformation requires not just the channels the business models the monetization model technology and the culture on the back end right. This is something that has to be inside every executives playbook just to survive operations now when we talk to the early adopters at digital transformation which so many of your guests are when i look at that roster just like this is awesome like the world class list of digital transformation experts in one spot. When you talk to them you say hey how you doing. What the efforts privately they will say. Look you know. We've encountered some challenges and in some of those challenges. We've we've seen that maybe it's culture maybe it's investment dollars. Maybe it's something else now. We started to catalog all those different challenges and realize that this had nothing to do. The digital transformation efforts what change with changed as a big fundamental shift in the landscape of how companies are being funded as startups. And so. let's take a step back and talk about what's happening in the marketplace if you are not returning fifteen percent to an institutional investor you're going backwards because the us dollars being devalued at a rate were fifteen percent means you stay even so the hunt for yield the quest for yield the return and the you know the push on ebay is happening so cash cow companies were generating awesome profits are being stripped of those profits in mergers acquisitions divestitures in dividends and buybacks and divestitures are all coming because the same investors betting on these awesome companies are taking that cash and betting on start up. That's going to get forty to fifty percent returns and so the companies just one. They need that money to do innovation and beat back digital giants. That money's being taken away to fund those digital giants were going to collapse and destroy the same value chain and ecosystem at these companies are playing in today so investors are betting against them in hedging. And that's the first part you have to realize that's going on. And whether it's consciously or unconsciously the result is still the same the second piece reason digital transformation is is those digital giants are funded to operate in a different way. They're designed to be monopolies on day one and when we look at the history of companies right. I mean if you look at what's what's the different you know. What is airbus and boeing do right. They sell planes right. What is pepsi and coke. Do they sell fizzy water. That sometimes causes you know health problems. What does gm and ford do the compete head on right in the automobile market while those companies took forty to fifty years to become duopolies.

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