Digital transformation has been the catalyst for the new corporate playbook.
Traditional long-standing business, particularly business entities that are slow to react are at risk of stagnation and failure. If a company fails to embrace digitisation, they will, and they are loosing market share to new trends, innovative startups, disruptive innovations and early adopters. The businesses that are succeeding and winning are doing so with; new technologies that engage buyers, automated processes and procedures that require less human resources, data and information that is readily accessible, advanced analytics, and reciprocal access to end users on any device at any time. The competition has changed due to the low barrier to entry and lower cost for startups, these new entrants are offering better products that are more relevant. When it comes to competing in the digital age, it’s either change or atrophy and die.
Digital transformation is the implementation of technology and investment in new business models to effectively engage contemporary customers, reshaping their customer value propositions at every touchpoint for competitive differentiation.
So what is causing the big squeeze on incumbent business?
- Globalisation and the demise of borders. Customers want and expect a ubiquitous experience, where engaging with a brand in one channel is recognised in another, it is unified, it is instant and it is personal.
- Business models never stop. As technology improves and the consumer expects more, business has to rapidly evolve.
- The reduction in the cost of doing business. Declining labour and transactional costs have made new entrants and fast movers more profitable.
- Technology is getting smarter. Computing in the modern age is replacing human resources; machines are doing more human work and are doing it with increased efficiency and for longer, at a fraction of the cost. As Web 3.0 (the semantic web) and AI (artificial intelligence) becomes a reality, the increasing need to remove large volumes of existing personnel will become an issue combined with seeking a smaller number of employees with professional digital expertise.
- Instantly scalable turnkey business models. Third party products and services can be integrated into a business or started from scratch. In the current age, even with legacy systems, almost any digital product can API into another for instant and real-time benefit, at a lower set up cost.
- Novel competition. Forward thinking existing organisations are choosing to open up new revenue streams through diversification, this movement combined with innovative startups can quickly flood a product or service offering, dominating market share and leaving slow moving incumbents clutching for left over commerce.
- Transparency. In the contemporary world, products, services and prices can be instantly compared and benchmarked and consumers simply switch on a whim.
So while there are a number of forces impacting a business, its often internal issues that prevent change:
- Executives not being educated in digital
- Tunnel vision
- Lack of a sense of urgency
- Not having dedicated resources
- An insufficient common vision
- Lack of budget
- Job insecurity or self-preservation; and
- A very common inhibitor of, “that’s not my job!”
Another common issue observed is that many departments within organisations manage their own touchpoint, this causes major challenges in ownership, responsibilities and proving a return on investment. The forces and issues prevent progression, which instantly puts a time frame on the company’s sustainability.
Consumers and B2B business prefer online channels for communication, financial transactions and support. The opportunity here is to improve transparency and interactions with your stakeholders, such as, customers, suppliers, employees and partners. The availability of technology combined with data access, both structured and unstructured, enables a 360 degree view of not just employees and individual customers but physical “things” within the business. This provides a platform for better management decisions. Digital tools, platforms and services can improve, automate, reduce the cost or even replace traditional customer – supplier relationships. This not only provides an opportunity for new and improved operating models but new revenue streams as well.
To remain sustainable in the new digital world you need a new strategy, a strategy initiated and supported from the top, being the CEO and board. Some tough decisions will need to be made. Companies will need to either acquire or divest their portfolio. Business will need to look to launch their own digital innovations and disrupt the market. Some considerations are to acquire or partner with a startup competitor or do your best to mimic what new entrants have achieved and attempt to do it better. There is a risk of spreading yourself too thin and not funding new initiatives well enough, so you have to be smart. Digital teams are essential to succeed; the hard decision to make is whether to integrate the digital team into your business or keep them separate.
Regardless of the way you set up your organisation, you have to meet customer expectations at every touch point, if your organisation has never undertaken journey mapping, then its time to. Customer journey maps allow you to walk in your customers’ shoes by traveling with them as they interact with your company. This is important, as all customers are not created equal. Technology and the evolution of customer behavior dictate digital transformation. The primary ingredient needed for digital transformation, is to match the objectives of the business with the goals of the consumer. To do this you need a new vision, you need leadership, you need change agents and you need champions. The executives of the company need to know what it is like to be a digital customer with both the company and competitors.
Rapid development of new skills is a must and new thinking business need to move beyond experimentation, to hard wiring digital into the business. Digital creates value so ensure you are aspirational, to do this you need to challenge everything. Look at the way everything is done across all the business units, products and services, both internally and customer facing. Move as fast as the organisation is capable of moving and then move faster again; make sure decisions are data lead.
So let’s look at the benefits of digital transformation, many of which are obvious:
- Updated vision
- A culture of innovation
- Improved customer journey
- Competitive advantage
- Internal collaboration
- Empowered workforce
- Improved efficiency
- Deeper data analysis; and
- Customer conversion and loyalty
Digital transformation is a continuous journey; to succeed a business has to be a listening brand, growing with customers and technology simultaneously while achieving contextual relevance between them.
With authority from the top and the right change leaders, the digital landscape is ripe with opportunities.