These days I’m hearing quite a number of business leaders talk about digitization, going digital or digital transformation.
Regardless of which term you’re most comfortable with, it’s a good sign that leaders are seriously considering taking advantage of the power of modern technologies to transform their businesses.
An investment in IT is no longer considered a cost to the business. Rather, in highly performing organizations, embracing emerging digital technologies is considered an enabler of business performance.
In these organizations, business leaders are cognizant of the conditions in which technology supports the overall business strategy as well as those in which it helps shape the business strategy itself.
It’s no secret that we are in the digital era. Digital technologies are everywhere. Just think of the significant increase in the pervasiveness and the power of digital technologies in new domains such as cloud computing, robotics, wearable devices, 3D printing, drones, machine learning, blockchain, virtual reality etc.
These new technologies are influencing not only the way humans live and work, but also how we learn, play, innovate, transact and govern.
Your existing strategies will not carry you into the future
Although I’m not able to predict with certainty what the business landscape will look like in the next 5 or 10 years, I strongly believe that organizations that will survive and succeed during this period will be defined by their ability to master and take advantage of the power of these emerging technologies to deliver value to customers.
Traditional, tried-and-tested ideas that propelled your business to where you’re today are no guarantee they will continually move you forward and ahead of your industry incumbents in this digital economy.
Let’s look at Amazon as an example. The global ecommerce retailer started off as an online bookstore and along the way embraced emerging technologies to become a leader in cloud computing services, media and artificial intelligence.
The company did not become successful because of its size. Rather, taking advantage of digital technologies helped it to become a powerful global brand.
Just because your current business model is working does not necessarily mean you should allow it to run its course. It’s critical to always question, refine and enhance your competencies and strategy otherwise you risk becoming irrelevant and falling victim of some successful, but now outdated, past practices.
It’s not all about a set of technologies
Simply overlaying technology, however powerful, on your existing business infrastructure does not work. A change in structures, systems, processes, skills and network relationships is paramount.
Neither does digital transformation entail simple automation of traditional, routine and repetitive processes. It’s also about embracing new rules of engagement and continually experimenting with new approaches and adapting them to suit your performance objectives.
For instance, embracing advanced data and analytics tools to learn about and better understand your customers and solve their problems, challenge your current business model and ultimately alter the sources of your revenues and profits.
Shift your focus from thinking about how digital technologies support your current business to exploring how they could also shape your future strategy and business models. In other words, think of innovative ways these digital technologies can help you create and capture business value.
Further, effective decisions on digital transformation are not hype-driven.
Different companies are at different stages of the transformation journey, experimenting with different technologies to create new capabilities, establish new relationships and identify differentiated drivers of value.
Thus, instead of just mimicking what other players in your industry are doing, acknowledge that there is no one-size-fits-all solution.
Consider how the different forms and functionality provided by digital technologies could influence your company’s strategic actions and provide better value for customers of your products and services.
Don’t go it alone
Success in today’s digital economy depends on your ability to build a network of relationships and co-create value with other digital players. As an example, think of how traditional banks are partnering with fintech and regtech entrepreneurs to fundamentally enhance, transform and disrupt their current business models.
These tech entrepreneurs are ambitious, with bold views on how they can disrupt and reorder the traditional banking model. By taking advantage of different digital technologies, they have challenged and disrupted traditional methods of delivering financial services.
So depending on your industry setting, you need to recognize the role of such specialized entrepreneurs in solving your fundamental business problems in new and effective ways.
As digital technologies increasingly pervade the very fabric of our society and business, are you keeping pace with the change or you strongly believe in your established playbooks to continually help you survive and succeed?