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      The McKinsey long-term study “TMT Digital Insights” tracks changes in consumer behavior in the most important global markets and segments, and has revealed dramatic changes in US consumer behavior. Here are two examples:

      Consumers want everything, anywhere, anytime: In 2016, 83 percent of consumers possessed a smartphone – the same number as those who own a home PC. Even tablets, which first became a mass phenomenon in 2010 with Apple’s iPad, are now owned by two-thirds of consumers. This has key consequences for user behavior: US consumers now spend more time on their smartphones and tablets than they do on the PC. Mobile consumers expect answers immediately when researching products and prices on the move or when they want to order something. Smartphones and tablets have become personal command centers. Companies that do not adjust their online presence to service the mobile “anytime, anywhere” mentality may lose ground to their competitors.

      Increasing relevance of visual media: The medium of video has become significantly more important. Consumers now spend more time watching videos than before – often at the same time as other (often also digital) activities. So-called over-the-top (OTT) video content published directly online is threatening traditional linear TV and pay-per-view models. To remain attractive to customers, companies need to supplement their traditional text-intensive communications with videos. For a long time now, consumer fascination with the virtual world has impacted the real world economy: advertising budgets have shifted dramatically – from TV and print to mobile providers. And now video content is conquering the small screen: series are now optimized for smartphone screens in terms of time and image composition.

      Retailers, service providers, and consumer goods companies are also feeling the pressure to digitize their processes and offerings, driven by customers whose research and buying behavior has drastically changed in the past decade. Consumers browse online forums to find out about a product’s quality, they check value for money on comparison sites, and they use Twitter, Instagram, and the like to post their opinions. And even when shopping in a store, they’re happy to check their smartphones to see if a product they like is available for a lower price from an online retailer or a local rival.

      1.2 ESTABLISHED MARKET DEFINITIONS DON’T APPLY ANYMORE

      At the same time, managers find that the established definitions of their markets no longer apply – new challenges lurk everywhere. The networking of previously unconnected devices with online data sources – the Internet of Things – has dissolved traditional industry boundaries. Take the health care sector as an example: suddenly, technology firms with their apps and fitness bands have entered their industry, using the data leveraged from their customers to develop completely new business models. Even the old classification of companies that sell to business customers (B2B), and those that deliver to end customers (B2C) is becoming blurred – suddenly we see the term B2B2C. Even an industrial company like Alcoa might now like to know what the end customer does with its aluminum.

      Naturally, as digital pushes through, the frequency of channel conflicts that need to be managed increases. The accumulated data needs to be professionally analyzed, which requires new talent in the company. The result of all these factors is increased pressure on management.

      Previously, the business world was transparent: everyone knew who their competitors were, and surprises from outside the industry were rare. This fine sense of certainty has gone; digitization has made transgressions easy. For example, Amazon with its Amazon Web Services (AWS) is now the world’s leading provider of cloud services. Microsoft and IBM, which might have been expected to occupy this position as the top dogs in the IT industry, are positioned on the next rung down by some distance – they never reckoned with this competitor. Originally, Amazon had only intended to better utilize the capacities of its huge data centers. In the meantime, IT companies yet again find themselves wrangling with another intruder: General Electric (GE), whose subsidiary Predix offers a cloud-based platform for analyzing data sent from industrial machines – a cornerstone of Industry 4.0 applications.

      Even traditional machinery manufacturers are now crossing industrial boundaries. John Deere, for example, one of the giants in agricultural machinery and tractor manufacturing, offers software and data-based services. These services process highly detailed weather forecasts with data on soil conditions, the specific properties of the seed used, and a wide range of additional information to provide recommendations to farmers to help them increase their yields. It also helps save fuel, reduce repair cycles, and ensure optimum use of the vehicle fleet. Sensors installed in the vehicles send on-site data to the Deere data center, and farmers can access their information via the MyJohnDeere.com platform or view it on their smartphone or tablet via the Mobile Farm Manager app.

      The chemicals group Monsanto is pushing into the agricultural world from a different direction. In 2012, the seed specialist bought Precision Planting, a manufacturer of hardware and software, whose products help farmers during sowing to optimize seed depth, distances, and conditions to ensure the best roots. It’s the same customer base as Monsanto’s core business and the same value proposition – more yield in the field – and yet a completely different technical approach.

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