Google, Apple, Facebook and Amazon - they are industry leaders, market shakers and truly global brands that have reimagined and completely revolutionised their markets. So substantial have these changes been, and the effects that they have had upon their consumers, that they have laid fresh ground for a new economy. Known as the network economy here we take a look at just what GAFAnomics can teach the rest of the business world.
GAFA - Four companies that need no introduction
Google has a seemingly unshakable grasp not only on the online realm of search engines, but have expanded into everything from business apps to superior satellite navigation. Apple have long since been recognised as consistent market disrupters, innovators and standard setters. Facebook has revolutionised the very ways in which we live, interact and conduct our social lives and Amazon have redefined the realm of online shopping with consumer driven, supply and demand pricing and a logistics setup of which Santa himself would be proud.
Between them they have 7 billion customers worldwide (FaberNovel 2014) and this seems to be just the beginning of a monopolised world for GAFA.
The Network Economy – What is it?
The Network Economy is the way in which GAFA see the world of business. It is a market without borders; it is re-defined by a customer culture where consumers themselves define the products and services. GAFA imagine this newly mapped out business landscape to be a network, with a pool of consumer connections to be controlled.
The Network Economy can be defined by four core concepts that help harness and nurture the interactions between their company and the now border free market in which they operate:
1. Magnetic: The company capitalises and monetises micro points of value;
2. Intimate: The company understands its target market and engages them in such a way so as to feel like an old trusted friend, rather than a company;
3. Real-time: The company evolves its commercial offering in real time, reacting to the market immediately and adapting its products or services in an instant;
4. Infinite: The company grows at substantial rates through winning customers at the most minimum of costs.
Whilst differing drastically in the consumers that they serve and the products or services that they serve up Google, Apple, Facebook and Amazon go beyond a technology driven edge. They have the same five universal principals that define the ways in which they approach their markets. And it makes for a real shake up of the traditional ways in which most businesses, even successful ones, operate.
1. Customer – GAFA see each and every person as a customer – even those who are yet to purchase. They treat all as equals, providing superstar customer service and experiences whether someone has purchased or not.
GAFA focus not on winning the transaction of the customer, but rather their attention.
2. Addressable market – GAFA have made waves within the world of addressable markets, most pivotally asking if there is even the need for set markets in today’s ever more globalised world. They simple see any connected person as a potential consumer, and conversely see any non-connected person as someone who needs to become connected. Perhaps best epitomising this notion is Mark Zuckerberg’s project to beam the internet to remote regions of Africa.
GAFA aim to have a complete monopoly upon their customers’ attention.
3. Value creation – Ever since the very first business ‘value’ has been defined by revenue minus costs. Profit is a seemingly age old concept, and another that GAFA have reimagined, instead focusing upon a core key performance indicator of saving their customers’ time and effort.
GAFA ultimately aim to deliver consistent, sustainable customer value over and above short term profit
4. Core business – GAFA aren’t in the business of manufacturing. They are in the business of solving customer problems. This shift in focus has been key to leading GAFA to industry shaking moves, such as Google’s expansion to finance (e.g. Google Wallet), automotive (e.g. Google Car) and retail (e.g. Google Express).
GAFA don’t focus upon their business type, they are defined by customer needs –wherever this may take them
5. Management – For GAFA the days of endless management levels are over. They opt for small teams that take ownership of projects and they harness insightful data for superfast and intuitive decision making.
GAFA cut out bloated, ineffective management levels by being innovative and harnessing all that open source computing can deliver
So, how does this approach stack up in the eyes of the consumer?
The rules books have been well and truly torn up and it seems that going against the grain has literally paid serious dividends for the four companies that make up GAFA.
Google and Apple are actually considered to be the most valuable brands in the world (FaberNovel 2015) and as of 2013 GAFA had cash reserves of $123 billion, which could purchase 4 Big Mac Burgers for each and every person in the world (FaberNovel 2014).
Of course beyond financial figures are what these companies would say that they’re arguably more interested in: consumer satisfaction. And it seems that this focus, as well as each of the other concepts that make up GAFAnomics, could well be of benefit to each and every business within the world today.