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GAFAnomics: 5 traditional business notions you should un-learn

Louis Moullard Trends

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For 20 years, Google, Apple, Facebook, Amazon (GAFA) have made the world tremble. These jacks-of-all-trades of innovation keep popping up where they are the least expected in record time. Their ability to move faster and stronger than anyone could think enabled them to gain market shares in many areas. They expanded to the point that they are now the new economy’s infrastructures. Whether it’s for people’s daily or working life, GAFA have become standard.

At FABERNOVEL, we are convinced that GAFA’s secret formula for success lies not only in their technological edge, but in their highly innovative way they see their businesses.

Here are 5 traditional business notions that Google, Apple, Facebook and Amazon have redefined. Forget what business schools taught you.

 

Notion #1. Customer

If you ask a traditional company how they define customers, they will probably answer “those who purchase”. If you asked Google, Apple, Facebook or Amazon, they would probably answer “everyone is a customer, even without money”. When you scroll down Amazon’s page, when you type a keyword on Google, when you check someone’s Facebook profile, or when you get into an Apple Store you are, in fact, already a customer. Being a customer means you deserve to be delivered the best possible customer experience, not just a sales pitch. In the past, transaction was what made you a customer, now it is attention.

 

Notion #2. Addressable market

GAFA have radically questioned the notion of addressable markets. When launching a business, they never think about geography or culture. Any connected human being is a potential customer, and any non-connected human being needs to become one. They set out to have a monopoly on customers’ attention and commitment on a large scale. 7 billion customers is their playground. As Mark Zuckerberg said, “products don’t become interesting businesses until they have 1 billion users”.

 

Notion #3. Value creation

Traditional businesses think about value creation as roughly revenue minus costs. GAFA have redefined value creation by putting themselves in a customer’s shoes. Making their customers save time and effort is a strategic performance indicator. To the extent that delivering sustainable customer value prevails over short-term profitability. As Amazon’s Jeff Bezos wrote in his 2013 letter to shareholders: “We don’t celebrate a 10% increase in the stock price like we celebrate excellent customer experience”.

 

Notion #4. Core business

AT&T is in the telecommunications business, GM is in the automotive business… GAFA are in the business of solving customer problems. Following their customers’ needs is a diversification strategy that led companies such as Google break into so many industries such as payments (Google Wallet), automobile (Google Car), or retail (Google Express) businesses. GAFA have set out to operate any type of business as long as they deliver customer value. “There are two ways to extend a business. Make an inventory of what you are good at and extend from your skills out. Or determine what your customers need and work backwards, even if it requires learning new skills” says Jeff Bezos.

 

Notion #5. Management

GAFA have, in a way, applied computing, open-source and hacking principles to management by minimising hierarchies, fostering project ownership through responsible and small teams and encouraging objective and data-powered decision making. GAFA have also replaced the notion of expertise and know-how by the notions of “learnability” (ability to learn what you don’t know) and innovation. GAFA have leveraged technology internally to free up employee brain time for innovation. “Experts will respond to problems with the same solutions they’ve seen work a million times. A non-expert will mess up occasionally, but once in a while they’ll come up with something that is completely new. That’s how innovation happens” explained Laszlo Bock, SVP People Operations at Google.

 

For all companies, we believe the time is now to understand and take over their growth mental model. Through our new study, “GAFAnomics: New Economy, New Rules” (which you can see below), FABERNOVEL’s ambition is to provide companies with relevant insights and tools – framework and new metrics – to monitor change towards the 21th century’s company model.

 

Louis Moullard is an analyst at innovation agency FABERNOVEL. Read more about his research on GAFA here, and find out more about future business models at LeWeb next week!