Everybody knows someone who has a stack of 3½-inch floppies in a desk drawer “just in case we may need them someday.” While that might be amusing, the truth is that relatively few people are confident that they’re making satisfactory progress on their digital journey. The boundaries between the digital and physical worlds continue to blur – with profound implications for the way we do business. Virtually every industry and every enterprise feels the effects of this ongoing digital transformation, whether from its own initiative or due to pressure from competitors.
What is digital transformation? It’s the wholesale reimagining and reinvention of how businesses operate, enabled by today’s advanced technology. Businesses have always changed with the times, but the confluence of technologies such as mobile, cloud, social and big data analytics has accelerated the pace at which today’s businesses are evolving – and the degree to which they transform the way they innovate, operate and serve customers.
The process of digital transformation began decades ago. Think back to how word processing fundamentally changed the way we write, or how email transformed the way we communicate. However, the scale of transformation currently underway is drastically more significant, with dramatically higher stakes. For some businesses, digital transformation is a disruptive force that leaves them playing catch-up. For others, it opens the door to unparalleled opportunities.
Upending traditional business models
To understand how the businesses that embrace digital transformation can ultimately benefit, it helps to look at the changes in business models currently in process.
Some of the more prominent examples include:
- A focus on outcome-based models – Open the door to business value to customers as determined by the outcome or impact on the customer’s business.
- Expansion into new industries and markets – Extend the business’ reach virtually anywhere – beyond strictly defined customer demographics, physical locations and traditional market segments.
- Pervasive digitization of products and services – Accelerate the way products and services are conceived, designed and delivered with no barriers between customers and the businesses that serve them.
- Ecosystem competition – Create a more compelling value proposition in new markets through connections with other companies to enhance the value available to the customer.
- Access a shared economy – Realize more value from underutilized sources by extending access to other business entities and customers – with the ability to access the resources of others.
- Realize value from digital platforms – Monetize the inherent, previously untapped value of customer relationships to improve customer experiences, collaborate more effectively with partners, and drive ongoing innovation in products and services,
In other words, the time-tested assumptions about how to identify customers, develop and market products and services, and manage organizations may no longer apply. Every aspect of business operations – from forecasting demand to sourcing materials to recruiting and training staff to balancing the books – is subject to this wave of reinvention.
The question is not if, but when
These new models aren’t predictions of what could happen. They’re already realities for innovative, fast-moving companies across the globe. In this environment, playing the role of late adopter can put a business at a serious disadvantage. Ready or not, digital transformation is coming – and it’s coming fast.