The new business model: Embrace online, branch out

As we enter a period of fragile global economic recovery, something profound is happening to traditional markets. A supermarket begins to offer streamed home entertainment, a mobile phone company enters them market for insurance or payment services and an e-commerce company starts to finance its own merchants.

At the heart of these changes is the way in which new digital technologies are dissolving industry boundaries. That's bad news for some, but for many others there's the prospect of higher growth rates than if they stay within their traditional sector.

(Read more: Five tech trends to watch in 2014)

Mark Spelman
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Mark Spelman

New research from Accenture shows that a majority of top executives say their companies will pursue growth outside their traditional industry in the next five years, so as to provide customers with everything they need.

That is a significant development and a reflection of how barriers are being lowered between sectors. Instead of looking through the lens of their own industry, companies are increasingly joining forces with players from other sectors in order to meet the new expectations of consumers. Doing so also makes it easier to see things through the eye of the customer.

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Companies that are able to use their knowledge and insights about their customers are likely to provide better quality experiences. They are often successfully integrating the digital and analog worlds, for example shifting to click and collect online shopping as well as new forms of online learning and payment services.

Many of these new customer experiences rely on companies from multiple sectors coming together. That means incumbents must be open to entirely new ventures and partnerships that disrupt their existing business in order to secure future growth.

Consider, for instance, that Verizon recently acquired an automotive telematics company, providing the wireless phone carrier an entry into the car market where customers expect new entertainment and navigation features. By following their customers into their cars and making the communication experience seamless for them, Verizon is enhancing the customer experience, staying close to existing customers and expanding their market with new services.

In a report released this week at the World Economic Forum in Davos, Remaking Customer Markets: How Digital Unlocks new Paths to Growth, Accenture analysis explains how digitally contestable markets such as healthcare and finance stand to capture big gains from digital. For instance, while the core healthcare sector in the United States is expected to grow at 2.5 percent annually between 2012 and 2018, the impact of digital technology (such as remote diagnostics and electronic records management) will help drive annual growth of 3.3 percent in the broader market for staying healthy.

(Read more: Tech spending to soar in 2014, driven by mobile data)

The U.K.'s core financial services sector is projected to grow at 2.0 percent per year between 2012 and 2018, but the wider digitally contested "paying" market will experience annual growth of 2.9 percent, thanks to digitally enabled trends such as crowd funding, peer-to-peer lending services and virtual wallet applications.

Indeed, the aggregate value of three digitally contestable markets in 2018, alone – shopping, paying and staying healthy – will be US$5.9 trillion to the U.S. economy, 747 billion euros to the German economy and £519 billion to the economy of the U.K., according to Accenture's report.

But having the best technology does not necessarily predict success. While sharing data and deploying mobile or analytics technologies are important, companies must develop new capabilities and more flexible strategies to form those more open and collaborative networks that are at the heart of digitally contestable markets.

Accenture's research indicates that there is a gap between companies' intentions and their readiness to pursue new business models. Among respondents to an Accenture survey of c-level executives who classified their companies as being above-average performers, at least eight out of 10 said their businesses were well positioned to understand trends outside their traditional industry and well positioned to collaborate with outside entities to grow in non-traditional business sectors. For respondents from companies that consider themselves lower performers, the proportion falls to just over half and little more than a third, respectively.

To stay ahead, leading companies are enhancing "analog" skills at the same time that they are increasing their digital capabilities. For instance, they are engaging their employees in new ways to capture what is going on at the edge of the firm – and what might be affecting their customers. This information can then be turned into strategic insight for decision makers on how to make the customer experience better.

(Read more: Small-town theaters go digital or perish)

Top companies also are applying technology to augment human skills in new and interesting ways. The luxury retailer, Burberry, has experimented with technology that automatically makes customer histories available as those customers walk through the door, helping sales assistants offer a more relevant service.

Lastly, successful companies are creating true cultures of open collaboration. Thanks to crowdsourcing platforms and social networks, businesses can now tap the intelligence of a much wider "extended" workforce made up of partners, their employees and, of course, customers themselves.

In digitally contestable markets, customers care less and less about which company or sector provides services, as long as those services meet their needs. That creates commercial threats and opportunities, of course. But incumbents need to be aware that the barriers to their own sectors are coming down and that new digitally-enabled competitors are ready to enter. By embracing these newcomers and working with them, they can create entirely new markets, innovative new products and services, and higher growth rates.

Mark Spelman is Global Managing Director for Accenture