Digital Businesses are Disrupting Industries
Businesses that incorporate digital transformation into their operations and apply it to their services, products, and business processes are leading the charge within their respective industries by disrupting service models, core offerings, and customer experience.
Over the past 10 years, thanks to the advancement of social, mobile, analytics, and cloud (SMAC) technologies, we have witnessed the rise and maturation of highly successful cloud-based business models such as Uber and Airbnb. Both of these organizations disrupted their respective industries quickly, on an enormous scale.
However, digital transformation is becoming faster paced and more disruptive than ever before. The Internet of Things (IoT), artificial intelligence (AI), augmented reality (AR), and virtual reality (VR) are all technologies that have the potential to spark highly innovative transformation within companies newly embarking on this journey as well as within digital incumbents. Businesses that incorporate digital transformation into their operations and apply it to their services, products, and business processes are leading the charge within their respective industries by disrupting service models, core offerings, and customer experience.
Why Aren’t More Companies Transforming Their Industries?
Despite technology being adopted faster than ever before, we are not seeing an increase in the number of companies transforming their industries with these new technologies. So why are next-generation technologies like IoT, AI, AR, and VR apparently not being assimilated at the same pace and on the same universal scale as the SMAC technologies?
The answer lies to a certain extent in the word “apparently.” A number of highly innovative organizations—both new and established—are in the process of transforming their respective industries through their products, processes, or both. For instance, in order to provide more value to their customers, DTE Energy partnered with Vectorform to leverage VR in high-consequence training for their technicians. By providing power-line technicians with a safe way to hone their skills and practice complex tasks in a simulated, interactive setting, DTE improves productivity and efficiencies, resulting in fewer power outages and faster restoration of service. Similarly, a handful of forward-thinking incumbents—like Bosch—are positioning themselves at the forefront of innovation by developing technologies that, instead of being relegated to one application only, can be applied in a wide range of industries including automotive, home security, transportation, and healthcare.
Of course, traditional companies are well aware of the implications of disruptive technology and the need to constantly innovate in order to remain competitive. According to Russell Reynolds Associates’ “Digital Pulse 2015” survey of executives from 12 industries, 50 percent or more of business leaders from nine of those industries anticipated moderate to massive digital disruption to their industry within the next 12 months. The five industries that are most likely to experience disruption include media, telecom, consumer financial services, retail, and technology. Interestingly, 90 percent of organizations in these industries stated that they have a digital strategy. However, for the majority of these businesses, the process of moving from strategy creation to execution is proving to be difficult for three reasons. First, it can be challenging to get all stakeholders in an organization aligned when it comes to using relatively new technologies. Second, they lack the leaders who possess the vision and the organizational skills to drive the necessary changes within the organizations. And third, there’s a distinct shortage of talent with the skills to work with these new technologies. As a result, many companies find themselves in the position where digital transformation has stalled—while other, more agile companies are forging ahead.
Digital transformation in itself is not an objective, unless the process results in the development of proprietary and cutting-edge technology that provides an organization with a competitive advantage.
How to Spark Digital Transformation in Your Organization
Fortunately, there are ways for organizations to move past this “digital inertia” and set their first steps on the path toward creating effective strategies for digital transformation.
To begin with, it’s important to understand that the role of disruptive technology is to provide innovative solutions for business opportunities based on consumer behavior. In short, the formula for business success hasn’t changed; the continuous, massive advancements in technology are simply providing new ways to meet consumer demand.
Note that digital transformation in itself is not an objective, unless the process results in the development of proprietary and cutting-edge technology that provides an organization with a competitive advantage. Digitally mature organizations are aware of this and therefore focus more on digital strategy than on technology—which of course might rapidly become obsolete.
Knowing this, you could begin by examining opportunities within your existing business model to improve or innovate your products or services in order to better meet your customers’ demands. Focus your digitization on those processes that will streamline your organization and make it more agile and effective. Then determine which technologies—IoT, AI, AR, VR—are relevant or necessary to attain these goals while at the same time driving the necessary communication internally and externally to establish your organization as an innovator in your industry.
Successful digital transformation requires a comprehensive change management philosophy. In order to drive change, you will have to ensure alignment of all of your organization’s stakeholders by clearly communicating how this innovation will benefit both individual departments and the entire organization. Aligned stakeholders must help drive innovation from the top by promoting a culture of openness and courage, making innovation a business priority. This may involve adopting a more flexible, matrixed organizational model; actively recruiting innovative talent with advanced technological skills; and creating a work environment where ideation and exploration are nurtured. In addition, you need to communicate your drive for innovation to your customers because their feedback and input is critical. Last but not least, your brand needs to be immersed in exciting new technologies in order to remain competitive and market-leading.
Companies, especially those with a legacy structure, will find it extremely beneficial to team up with an innovation partner who will help them kick start their digital transformation process. An innovation partner can help transform your work environment to one that fosters creativity. Moreover, it can help you determine what opportunities you currently have and generate innovative, impactful, and exciting solutions.
Interested in learning more? Let’s start a conversation.