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How to compete in the new borderless economy

Bernard Cohen

In the next decade the ongoing digital revolution will continue to break down borders between sectors of industry, allowing savvy operators to compete simultaneously in multiple sectors. Your company must recognise and accept this impending change now and create a gameplan for a borderless economy, write Venkat Atluri, Miklos Dietz and Nicolaus Henke for McKinsey Quarterly.

Major players such as America’s Amazon, Japan’s Rakuten Ichiba and China’s Tencent – “digital natives that are not defined or constrained by any one industry” and are “simultaneously competing in multiple sectors” – are outliers in 2017. But in the next ten years, the onward march of digitisation is going to change the nature of the game for everyone – including your company.

The borders between different sectors of industry will break down, leading to the emergence of new “digital ecosystems” comprising diverse players who will provide multi-industry, digital solutions. These players will meet the rising expectations of customers who already expect personalised solutions to be delivered in a heartbeat.


“A world of ecosystems will be a highly customer-centric model, where users can enjoy an end-to-end experience for a wide range of products and services through a single access gateway, without leaving the ecosystem.”

These new digital ecosystems are already beginning to take shape. Leading online operators such as Alibaba, Amazon and eBay have already changed the concept of the consumer marketplace forever – and more fundamental change is sure to come. Atluri, Dietz, and Henke expect radical alteration to the currently demarcated retail sector within the next ten years.

Ongoing advances in data and analytics will enable retailers to predict consumer behaviour more and more accurately and react instantly, while the the breakdown of traditional industry boundaries will generate a “network factor”, with companies from different sectors forming partnerships and competing ferociously to meet their customers’ needs.

B2B services, e.g. human resources, tax planning, legal services, accounting, finance and insurance, will cease to exist as an independent sector and instead come together on cloud-based platforms in the form of a one-stop shop. This is already happening, with Poland’s Ideas Bank offering “idea hubs”, e-invoicing and online factoring, and Lloyds Bank’s Business Toolbox offering legal assistance, online backup and email hosting.

This brave new world might seem daunting, but it’s important not to panic. Instead, you should begin your preparations now to ensure that you will not only survive, but also flourish. Focus on your core value proposition, your competitive advantages, your organisational needs and the data and technologies you have to keep your bearings in this unchartered territory.

As you formulate your approach to tackling this emergent borderless economy, take note of these four critical priorities:

1) Adopt an ecosystem mindset. In order to survive in the new borderless economy, the multisectoral world of digital ecosystems, you first have to create a clear picture of what that world might look like for your business. It will be a lot broader than the landscape your company is currently operating in.

You and your team must consider what surprising, disruptive boundary shifts you can imagine and try to get ahead of. How can you turn your physical assets and long-established customer relationships into genuine consumer insights to secure what you have and stake out advantage over your competitors, including the digital giants?

As with all major change, you will encounter some resistance, but it is vital that everyone buys into this new “self vision”.

2) Follow the data. “Competing effectively means both collecting large amounts of data and developing capabilities for storing, processing and translating the data into actionable business insights.”

Aim for “data diversity”, partnering with other companies to create more value in multiple digital ecosystems. For example, information from telecommunications companies can help banks understand their customers better, while Nectar, the largest loyalty programme in the UK, connects hundreds of companies across multiple industries to provide both savings for consumers and growth opportunities for its partners.

What data points and sources are critical to your business? How many do you have? What can you do to acquire or gain access to the rest?

3) Build emotional ties to customers. The ultimate goal in the new borderless economy will be “customer ownership”. If you don’t build and maintain strong relationships with your customers, growing your business will be impossible.

What’s your plan for using data, content and digital-engagement tools to connect emotionally with customers? What else can you provide, with simplicity and speed, to strengthen your consumer bond?

4) Change your partnership paradigm. You are going to need to enter into more partnerships in order to take advantage of the opportunities created by the new ecosystem economy. What white spaces do you need to fill? What partners can best help fill those gaps? What “gives” and “gets” might be mutually beneficial?


Nobody can precisely predict the future, but it is certain that things are going to change in the next decade, and if you want to continue to succeed, you should start your preparations now.

“Companies that have long operated with relative insularity in traditional industries may be most open to cross boundary attack,” conclude Atluri, Dietz and Henke. But with the right strategy, leaders can exploit new opportunities, shape nascent openings and launch a killer counterattack.

Source Article: Competing In A World of Sectors Without Borders
Author(s): Venkat Atluri, Miklos Dietz and Nicolaus Henke
Publisher: McKinsey Insights