Without doubt “digital transformation” is the trending digital buzzword. Five or six years ago, we heard about “digital strategy” and then it shifted to “digital transformation.” It seemed only few industries like consumer goods, healthcare, media and travel made efforts to become more digital as their customer base became more tech savvy. Many of these early adopters realized tangible business benefits by embracing emerging technologies.
In today’s era of volatility, there is no other way but to re-invent. The only sustainable advantage you can have over others is agility, that’s it. Because nothing else is sustainable, everything else you create, somebody else will replicate.
Yet, for the most part, companies were slow to act in a significant way toward digital transformation. The potential of digital was still a novelty in the boardroom – something that perhaps felt inevitable, but still unproven. Today, virtually all industries, including “old economy” ones such as aviation, chemicals, energy, logistics and manufacturing are being disrupted by digital. Companies can no longer sit on the sidelines, waiting for the right time to pull the trigger on digital transformation.
Disruptive technologies are affecting market dynamics and how businesses need to operate to succeed. From mobile apps to cloud computing to internet of things and to social media marketing — and all of the big and small data between them — technology is advancing at an accelerated pace. Specifically, we see massive, digital-driven breakthroughs happening across four fronts:
1. Consumer behavior
Consumers across every demographic, geography and psychographic have become more digital, which has shifted both their expectations and behaviors. More and more offline/physical transactions are shifting online, so the available transactional and behavioral data is growing, building an ever-richer view of the customer. Yet, according to Altimeter’s 2017 State of Digital Transformation report, fewer than half of companies invest in knowing customers’ and employees’ needs and behaviors.
2. Product and service innovation
Digital technology has made it possible for companies to rewrite the rules around value creation and drive changes in business models. Clients across categories, including our client Hasco, has built deeper customer relationships with digital. Value propositions have been redefined. Not only is what we make new, but so is how we make it, the speed at which we make it, and who we make it. As these elements change, so does the value they can create for the customer and for the enterprise.
3. Critical enterprise capabilities and processes
Even for traditional, “non-digital” businesses, we’re seeing processes across the organization — from marketing to order processing to manufacturing to human resources and the back office — become enabled, and even reimagined through technology. Automation frees up heads and hands for new tasks, but also requires new skills and organizational processes. How companies evolve their culture and capabilities will be the difference between fast-movers and laggards.
4. Industry ecosystems, business models and competitive structures
We are seeing digitization eradicating the friction that has traditionally slowed down (and dumbed down) value chains and ecosystems. Collaborating and seamlessly delivering value to a customer has never been as easy as it is today. Mergers, acquisitions and consolidations also have more accelerated paths to synergy because of the higher levels of digitization.
How Businesses Can Evolve
Digital transformation has never been more urgent for businesses. There are higher expectations from customers, employees and the market that require digital solutions to compete. Companies today must have a broader set of solutions that will set them on the path to growth.
To effectively compete and generate growth, digital transformation integrates digital technology into all areas of a business, fundamentally changing how the business operates and delivers value to customers. It’s is about updating and upgrading the capacity to compete in a digital economy, not merely about using technology to scale and improve operations. Digital transformation is also a cultural change that requires organizations to continually challenge the status quo, fail fast with experiments, and drive those that succeed into operations quickly.
Companies must digitally transform one or more of these three functional areas:
1. Customer journey
Most organizations continue to focus on modernizing customer touchpoints and enabling infrastructure. Many companies making investments in digital transformation without doing their due diligence when it comes to understanding their customers. Successful digital transformations, however, employ technologies to enhance the way an organization builds and manages its brand, develops data-driven decision-making and engages its customers.
2. Product design
Market pressures are the leading drivers of digital transformation as most efforts are spurred by growth opportunities and increased competitive pressure. Successful digital transformations develop transformative customer experiences and new products and services – or reimagine existing ones –that fuel new growth.
Transformation on the outside requires evolution on the inside. The enterprise needs to consistently and reliably meet and even better exceed the promises made to the customer. Successful digital transformation designs new revenue models, creates or leverages new ecosystems with partners, employs agile and effective processes, and builds the culture and capabilities needed to deliver growth in this new era.
These are exciting times. It takes courage and ambition to step into digital disruption with the aim of creating a breakthrough for the customer and your brand. But disruption is not the enemy or the threat. It’s a reality to embrace in order to survive and thrive.
Is your industry being disrupted by digital? Is it time for your company to get off the sideline and transform digitally? Contact Upside Digital to learn how we can help your organization to succeed in the digital era.
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