Learning content

Why has business acumen become crucial in industry 4.0.?

The dynamics between companies and customers have undergone significant changes in recent decades. Previously, companies dictated the standards, and customers were expected to conform to them, whether it involved operating hours or business practices. However, the 21st century and the advent of the Internet have brought about two major shifts that have transformed the role and significance of customers for companies.

Firstly, customers are now more well-informed than ever before. With the accessibility of the Internet, individuals can search for information about products or services, compare prices, evaluate quality, and assess customer service to make informed decisions. Furthermore, they are exposed to a multitude of new offerings on a daily basis, making them more inclined to try novel products and services. Consequently, understanding customer needs and finding ways to fulfill them has become increasingly crucial for businesses to maintain long-term customer relationships.

Secondly, entry barriers in certain sectors have significantly decreased. Previously, establishing a business was arduous, requiring substantial investments, leasing physical spaces, and more. However, the advent of online business has simplified the process, enabling entrepreneurs to create websites, develop logos, and engage in buying and selling products and services with relative ease. As a result, standing out in Industry 4.0 entails not only offering quality products but also providing additional personalized services to customers.

These factors have intensified competition among companies in their quest to attract and retain customers while maintaining economic sustainability. In Industry 4.0, businesses strive to establish enduring, ongoing, and valuable relationships with customers by:

• Offering superior products and supplementary services
• Cultivating a trustworthy relationship that demonstrates credibility and commitment to customer satisfaction

Developing business acumen in two key aspects allows entrepreneurs to capitalize on new opportunities and foster customer relationships:

1. Understanding the industry landscape in which their business operates, including competitors, suppliers, and emerging trends, in order to differentiate themselves effectively.
2. Understanding their customers' needs, including their preferences, desires, and values, in order to provide the highest level of satisfaction possible.

Understanding the industry

Understanding the industry helps identify key areas and new opportunities to differentiate from other businesses and is one way of developing business acumen in Industry 4.0. Understanding the industry means looking at the company’s immediate environment.

Together, your customers, suppliers, intermediaries, and competitors constitute the micro-environment. Customers can be persons or other businesses. You could work in B2C business (“Business to Customer”, your customers are persons) or B2B business (“Business to Business”, your customers are other companies). Suppliers are all the companies you need to function (they provide your raw materials, and everything you need to function), while intermediaries are partners needed to deliver your product (a sales platform, a transport company, etc.). Finally, competitors are all companies by whom you can be replaced because they propose a similar product or service.

The macro-environment of your business is constituted by

• The technological environment: are digital technologies and Internet available in the geographical area you want to develop your business?
• The international environment: is the economic situation good? are there any legal constraints?
• The social environment: is the product or service you want to develop accepted by the public?
• The national environment: are there any national specificities (culture, laws, etc.) that would be an obstacle?

Your resources and competences of your business will be addressed in the next subsection.

Understanding your own situation

To complete the analysis of the industry, you will also need to analyze your own situation. This means identifying your resources and competences.

• Resources are what you have: equipment, facilities, financial means,
• Competences are what you do well: your expertise, knowledge, and human relations.

Together, resources and competences define the capacities that will set you apart from others. There are two types of capacity:

• The minimum capacities to enter an industry,
• The distinctive capacities that will distinguish you from others.

A competitive advantage is any characteristic of a business that differentiates it from others, putting it in a relatively advantageous position. For example, to create a website you need a server (resource) and a web developer (skill). You have the same server as your competitors, but you have a better web developer, who will create a better site.

The SWOT analysis brings together the analysis of the environment and the analysis of your capacities to help you make decisions. A SWOT analyzes the internal strengths (S) and weaknesses (W) of your business, and the external opportunities (O) and threats (T) that may affect its performance positively or negatively. Do not list too many items, a maximum of 5 items per topic is sufficient, otherwise, it becomes complicated to find where to act.

Understanding your competitors

In a competitive industry, measuring your performance is very useful, but it is even more useful to compare your own performance with the standards and best practices in the industry area you work in, to determine what you can improve to gain a competitive advantage.

A benchmark analysis is a tool that help to perform this comparison. It is a form of research used by businesses who wish to compare their existing performance to the best practices in the industry. Companies can gauge the best performance to be achieved and how to make changes to gain a competitive advantage. Metrics and KPI’s are very useful in this process.

There are 2 main types of benchmarking – external and internal – that could lead to different insights:

Here are 5 steps to follow when doing a benchmark analysis

1. Choose a practice you want to benchmark it can be the time needed to produce a single product, the time needed to process a customer complaint, customer satisfaction, product quality, ...
2. Choose the companies you are benchmarking against: it is within your organization or with competitors?
3. Analyze your own practices: in any case, you should first gather data about your own practices
4. Compare your practice with the benchmarked organizations (or teams or departments if it is an internal benchmark)
5. Determine what changes to make: make decisions about what you can improve in your practices to reach the standards and implement the changes.

Developing a customer-oriented business

With the analysis of your industry, you gained insights into your environment and have the keys to identifying new opportunities. At the same time, you will need to focus on your relationship with customers, who are at the center of attention in Industry 4.0.

It is not just about being “customer-friendly”, i.e., making their experience nice and pleasant, but rather about developing a customer-oriented approach, which means setting up actions, processes, or services that will add value to your business in the eyes of your customers. Nowadays, lots of businesses are customer-orientated. In a nutshell, this means that

• The needs of customers are put first: all processes and services are geared to the needs of the customer,
• Your business offers a personalized experience to your customer, according to their needs.

Here are five characteristics of a customer-oriented business

1. Prioritizes customer’s needs,
2. Puts customer orientation at all organizational levels, from salespersons to top management,
3. Understand customers’ concerns and be reassuring about them,
4. Have easy and relevant interactions with customers,
5. Make customer experience easy as possible.

Becoming customer-oriented is a process built on communication with your customers. It can be summarized as follows:

Customer-oriented businesses have many benefits:

• They know their customers better and learn from them, which allows them to better anticipate new needs,
• They offer goods that match customers' needs, so customers value them more and are more satisfied, which allows to build a long-lasting customer base
• They enable work to be organized more efficiently,
• They encourage creativity,
• They retain customers and differentiate from other businesses, so they are more profitable.

Understanding your customers’ needs

Understanding your customers is key to a customer-oriented business. It relies on empathy. Both communication with customers and customer experience can help you understand their needs. Also, your perspective as a woman allows you to bring in new perspectives and relevant ways to satisfy them that other colleagues may not have thought of before.

Communication with customers

As an intermediary with customers, there are several attitudes to adopt when discussing with a customer:

• Listening actively,
• Handling customer data,
• Adapting quickly to new customer needs and acknowledge their problems,
• Clear communication.

Customer experience

Customer experience is about the ease with which your customer can browse your website, purchase your product, or interact with your customer services. There are some things you will not be able to influence, such as the taste of the customers. However, your business can improve three aspects:

1. The quality of the product or service itself, and the range and quality of additional services,
2. The price,
3. The customer's experience when they are on your website,

The figure below shows different assets to improve the customer experience:

To understand customers' needs, diversity within a business team is an important element. Not all customers have the same concerns if they are male, female, young or older, intensive internet users or not, etc. From a gender perspective, the development by women of products or services that directly address women's needs is a form of empowerment. Being a woman in Industry 4.0 is a way of bringing women's needs into the business and developing products or services that meet needs or women-specific uses that other men do not think about (Morley & Kuntz, 2019).

This women's industry 4.0 entrepreneurship movement for women is called "Femtech". Femtech is “technology including products, services, diagnostics, and software addressing health and wellness concerns that solely, disproportionately or differently affect women, girls, non-binary folks, trans people, and those assigned female at birth” (femtech.ca)

Case study

Context: Mobile applications for women and by women (from Morley & Kuntz, 2019)

Description: Karl and Peter are both young entrepreneurs who work in start-ups and develop mobile applications. Karl develops health-related applications. His start-up offers products on smartphones and connected watches to measure different health indicators. Peter works in a start-up that sells children's clothes online.

Their respective applications are working well, but they realise that few women are among their users, although they are an audience they would like to reach. To do this, they have several possible methods to implement. Firstly, they work on their customer experience, to make their application more attractive and easier to use. This improves customer loyalty but does not bring a significant number of women into their customer base.

For his health measurement app, Karl decides to talk to female friends of his. He shows interest in their needs, asking them directly what they would like to see on their app, asking them about their consumption habits and what is important to them when they track their health. They will tell him that they are really interested in being able to track indicators related to their intimate health (menstrual cycles). Karl, as a man not directly concerned by this issue, had not thought of this. A reproductive health module was integrated into the app, and little by little, more women became customers, and he now knew that he would be careful to ask them frequently about their satisfaction with the services offered.

For his part, Peter has been joined in his team by Sarah. They are responsible for improving the number of sales on their application. Sarah, who is a mother and is therefore concerned with buying clothes for her young children, shares her experience. She says that clothes are a big expense for clothes that don't last long, as children grow up fast and the wardrobe often needs to be renewed. While discussing this, they came up with the innovative idea of renting clothes for young children, which consumers can rent for a few months and then exchange for bigger clothes. It's also more eco-friendly, a cause she is sensitive to. Thanks to her perspective on women's concerns, she has enabled her team to propose an innovative solution that meets a real need.

Lesson learned :

• Communication and cooperation between people with different perspectives is always rewarding.
• Empathetic listening allows to acknowledge the concerns of others and to find a meaningful way to address them.
• Listening to clients' needs is a continuous process.

Questions and answers

Q: How and why analyse your business?

A: There are different ways to analyse your business, and each one is important to get the full picture to define where you can improve. Analysing your business and its environment includes analysing your own situation (your resources and skills, through a SWOT analysis), but also analysing your immediate environment (suppliers, competitors, customers, and intermediaries) and your global environment (social, technological, international, and national) through industry analysis. You can also compare your business to other businesses with a benchmark analysis.

Q: Is a customer-oriented approach just a matter of nice design?

A: No, design is obviously part of the customer's experience, but it is not sufficient to be customer-oriented. First, think about all your practices and how you can improve them so that they best meet the needs of customers. Second, adapt the way you communicate with customers to listen to their needs more actively – be empathetic, be proactive about their needs, communicate clearly, etc. Finally, you can work on the customer experience.

Q: Why customers became a priority in industry 4.0?

A: Industry 4.0 and the Internet brought two major changes that make it relevant to be customer-oriented today. On the one hand, with the Internet, customers are better informed, they compare product quality, price, customer support, etc. On the other hand, the Internet makes it much easier to start a business. So, the competition between businesses is increasing and you need to be able to differentiate yourself from others. For businesses, it is therefore important to be able to understand customers, their needs, and expectations.

Q: How can my experience as a woman contribute to understanding the needs of users?

A: Diversity within a business team is important both to foster a more equal society and to offer diverse points of views about the users’ needs and expectations. Sharing your point of view allows to better include women’s needs in product and service development.

References

• Brady, M. & Cronin Jr, J. (2001). Customer orientation. Effects on Customer Service Perceptions and Outcome Behaviors, Journal of Service Research, 3(3), pp. 241-251.
• Dubois, P-L. (2015). Thème n°1. La relation client, priorité de l’entreprise, @GRH, 4(17), pp. 87-89.
• Chaffey, D. (2014). Online marketplace analysis for digital marketing, SmartInsights.
• Chaffey, D. et al. (2013). Digital marketing: Strategy, Implementation and Practice, 5^th Edition, Pearson Education.
• Economy-pedia, “competitive advantage”.
• Femtech Canada.
• Lucid. (s.d.). 8 Steps of the Benchmarking Process.
• Morley, C. & Kuntz, P. (2019). Empowerment des femmes par les technologies numériques : pouvoir avec, pouvoir pour et pouvoir intérieur, Terminal, 125-126.
• Mukerjee, K. (2013), "Customer‐oriented organizations: a framework for innovation", Journal of Business Strategy, Vol. 34 No. 3, pp. 49-56.
• Shewan, D. (2022). How to Do a SWOT Analysis, WordStream.
• Spiegel, S. (2020). 6 Types of Benchmarking Your Business Needs to Know About, Crewhu.
• Suresh, A. (2021). Customer Orientation – A Guide to Your Customer, Freshchat Blog.
• Whittington, R. et al. (2020). Stratégique, France:Pearson.

Additional resources

https://www.usability.gov/sites/default/files/documents/guidelines_book.pdf - a guide to usability in web design

https://eismea.ec.europa.eu/programmes/european-innovation-ecosystems/women-techeu_en - EU portal dedicated to support start-up led by women

https://careerfoundry.com/en/blog/ux-design/design-by-women-examples/ - examples of apps that respond to the needs of women

https://eige.europa.eu/gender-stereotypes - EU portal on gender stereotypes