Just as the industrial revolution of the 18th and 19th centuries changed our way of life with machines, digital transformation is set to disrupt today’s organizations beyond recognition. Previously successful models will be rendered obsolete; indeed, businesses that have grown up with rigid, structured legacy technologies built around predictable, repeatable steps may find themselves under threat from “digital Darwinism”. But for those organizations that can visualize the possibilities for data-driven innovation and creativity, there are market-defining opportunities up for grabs.
What’s driving digital transformation?
There are three major forces providing the impetus for digital business, the first of which is changing user demand. Major brands have effectively “trained” customers to use complex products to live simpler, more convenient and connected lives. Employees, too, are using digital innovations to determine where, when, how and why they work. Forget Gen-X, millennials and baby boomers – age is no longer the key determinant of technology adoption, but digital proficiency.
The competitive landscape is changing, too. Size, which was once a distinct advantage, is now becoming something of a liability, as technology levels the playing field for businesses of any size to disrupt traditional industries (think Über, Netflix and AirBnB). Bricks and mortar stores are closing and high streets face desertification as omni-channel retailing becomes commonplace. Businesses that cannot gain a single view of their customer are vulnerable to aggressive new “born-digital” entrants who can muscle in quickly with a customer-centric approach based on service and simplicity.
And of course, technology continues to evolve at a frantic pace. Having overcome its initial hype, the cloud is now proving its worth as a growth engine for business, supporting innovation without dramatic rip-and-replace. Mobility is fast becoming an enabler of user interaction with things, data, people and places, not just a bunch of apps. The falling cost of sensors and low-power networking technologies is bringing the Internet of Things within reach of a burgeoning number of organizations, which are now challenged to manage the explosion of data generated by connected devices and convert it into real-time actionable insights. Open source software, once seen as relatively niche, is now a major component of the next generation of high-performance computing clusters needed for big data analysis and applications, as well as providing the foundation for enterprise-grade mobile management and development.
The barriers to becoming digital-first
So what’s stopping businesses from placing their bets on a digital future? A combined legacy of organizational silos, ageing application estates and outdated technology management processes are common practical constraints. However, laggards are also hampered by a legacy mindset: cultural resistance to change, a lack of imagination and appetite for risk-taking, and a shortage of digital leaders to spearhead change from the top. As Professor Jerry Wind of The Wharton School, University of Pennsylvania shrewdly observes, “a successful business is the hardest organization to change”. But the time is fast approaching when ‘business as usual’ will almost certainly no longer be good enough.
Digital is a strategy, not a tactic
Rather thank tinker around the edges by deploying individual technologies with a narrow, operational focus, organizations must develop the digital fluency to articulate the strategic value of technology to the future of the business – reflecting the demands of customers, employees and supply chain partners – and work backwards. Digital transformation should, in practice, be nothing more than the continuous business improvement that any established organization should be doing as a matter of course to stay ahead of the game. The rewards go beyond mere survival: those that succeed typically exhibit higher revenue growth and profitability than their industry peers.
In summary, becoming a digital business requires:
- Shifting from a legacy mindset to “digital by default” ways of working and thinking
- An end to the generations-old silo mentality, with data integration at the heart of any initiative
- A strategy and program that touches every function of the organization
- Cultivating innovation through experimentation and learning
- Considered use of technology to improve the experience of employees, customers, suppliers, partners and stakeholders, and new business models that exploit digitized assets
You can find out more about the imperatives for digital business, the barriers to success, and practical tools and techniques to ensure your own business models are adaptable and fit for the future by downloading our concise eBook: “7 Steps to a Successful Digital Business”.