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Getting on Board

Why ‘crossing the CASM’ is key to minimizing risk


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“Business model risk is today’s biggest strategic risk, and companies without boards that are digitally savvy could find themselves starved of investor capital.”

 

Investors are rewarding companies that go digital and leaving others behind, according to this Knowledge@Wharton article – with contributing authors William J. Ribaudo and Henry Ristuccia, Deloitte & Touche LLP partners. In particular, it found the most effective companies are those reallocating their capital to make and deliver the digital products that consumers and businesses want (such as social and mobile networks) and to harness the power of big data and analytics. Meanwhile, companies that make, market and sell physical products and traditional services are left with lower valuations. Companies that don’t align their boards with the CASM (Cloud, Analytics, Social and Mobile) world may be missing out on major opportunities to create value and satisfy the demands of customers and investors. This article discusses four distinct business models that today’s companies use to create value, with each model featuring a different level of technological enablement.

  • Physical: Companies use capital to make, market, distribute and sell physical things. Examples include automakers, big box retailers and delivery businesses.
  • Services: Companies use capital to hire employees who produce billable hours. This model is similar to the physical model, but it substitutes an individual’s output for a machine’s output. Examples include consulting firms and financial institutions.
  • Information: Companies use capital to develop and sell intellectual property, such as software, analytics and intellectual property. Once created, these assets can be sold multiple times. Examples include software and biotech companies.
  • Network: Companies use capital to create a network of peers in which every participant makes and sells products or provides digital content to the many other members of the network. Examples include online marketplaces, social media businesses and credit card companies.
About the article

Research conducted by OpenMatters with input from Deloitte — which included an analysis of 40 years of financial data for the S&P 500 — shows that businesses at the forefront of the digital revolution are already cashing in with consumers and investors. Yet, many traditional businesses are still struggling to “cross the CASM” and have yet to embrace the disruptive power of digital technologies such as Cloud, Analytics, Social and Mobile.

Download the full article, posted with permission from the Knowledge@Wharton.

“Originally published by Knowledge@Wharton. Posted with permission.”

As used in this document, “Deloitte” means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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