“You know the day destroys the night
Night divides the day
Tried to run
Tried to hide
Break on through to the other side
Break on through to the other side”
…………….From “Break On Through (To The Other Side)” – The Doors.
Digital will destroy traditional. Traditional will try to run, try to hide.
Today, across Organizations, there is one buzz word which is making itself heard above all the others. And that word is transformation. Digital Transformation.
It means different things to different people.
To the CxOs in the organizations it is something that could be used as a quick fix to their existing business problems.
To Consultants, it is a theoretical articulation based on their observations of the innovative business models and processes of the brash young upstarts who dared break all convention and disrupt traditional businesses in ways that had never been imagined before.
To Enterprise Architects, it is the re-imagining of an enterprise in terms of customer experience, responsive operations and innovative business models, and developing a scalable enterprise architecture that will result in a digitally transformed enterprise.
And to solution vendors, it is a blueprint created by the joint efforts of the CxOs, the consultants, and the enterprise architects, based on which they will provide the solution components and implementation that will help the enterprise in their digital transformation initiatives.
Digital Transformation is re-imagining the enterprise in terms of customer experience, responsive operations and innovative business models which will allow the enterprise and their customers to interact with each other whenever, wherever, and in a manner that is most relevant and appropriate to any given moment in time.
Digital technologies today are creating a wave of industry and economic disruptions, totally changing how people and businesses interact. They have enabled unprecedented levels of disruption and have fundamentally changed the business economics. This is dangerous for those organizations that refuse to acknowledge the reality around them. Like ostriches, they have buried their heads in the sand. It works for ostriches, but not so much for today’s enterprises. For an organization to stay afloat in this disruptive environment, they will first have to pull their head out of the sand, and acknowledge the reality around them.
To succeed in this disruptive environment, organizations will have to offer new experiences, develop a new focus, build up new expertise and come up with brand new ways to work. And this is something that will have to be driven from the top as it involves a fundamental reimagining of how an organization operates and how it engages with its environment. They will have to take cognizance of the relentless technology innovations that are happening around them that are disrupting the business landscape, the new digital technologies that include contextual mobility, the internet of things and cloud technologies.
The changing business landscape has been driven by factors that have been enabled by the changing technology landscape. Traditional value chains are fragmenting as the new technologies are creating more transparent value chains that are easier to decompose functionally. Traditional industries are now converging as new competitors are emerging that compete in specific value chain functions across industries and this has been driving industry convergence, resulting in the blurring of boundaries between industries. There is an emergence of new ecosystems. These new types of ecosystems which are emerging are displacing traditional industries and they are the ones that upderpin the evolution of seamless and sophisticated customer experiences.
All this has resulted in non-traditional players disrupting traditional industry leaders. There are many examples littering the countryside.
To pick a few:
– Uber, with a market valuation of over 70Bn USD and more than 150000 drivers registered with them, own no cars. They have disrupted the traditional industry leader Hertz whose market capitalization is less than 10Bn USD.
– Airbnb with a more than 25Bn USD market valuation has over 1.5 million homes for rent, yet own not a single property. Totally disrupted traditional industry leader Hilton with a more than 21 Bn USD market capitalization and 550 + hotels and resorts.
– Similarly, other examples are facebook, amazon, skype – all have disrupted traditional leaders in their industry without owning any physical infrastructure or property.
So how should an organization respond to keep ahead of these young upstart start-ups who are the brash bad boys on the block?
They need to be embrace digital transformation. This will involve a ground up reinvention of strategy, operations and technology. They will need to aim for a day in the future when their organization will not look like what it does today. They will need to move towards a day when their strategy will begin with a focus on customer experience, they will need to embrace disruption, and they will need to have a unique business model and become part of an ecosystem. They will have to continuously reinvent their operations using iterative innovation, and integrate the physical processes with the digital. In terms of technology, they will have to decapitalize investments by sharing and renting, become fluent in agile, analytics, mobility and operate utilizing the full potential of enabling technologies.
Organizations will need a new focus, new ways of working and new expertise. These are the digital drivers that will take them on their digital transformation journey.
New focus can be brought about by employing advanced analytics across the organization and building new business models. They will need to develop new ways of realizing and monetizing value and come up with new business models.
New expertise will need to be brought in by identifying, retaining and building the right talent for an agile and innovative organization and actively participating in eco-systems. They will need to create a culture of design thinking, agile working and experimentation. They will have to utilise the ecosystem, decapitalize infrastructure and leverage partners. They will have to develop new relationships that will unlock new sources of value.
New customer experiences will create differentiated experiences that customers will desire and want. They will have to create differentiated experiences will drive the way the organization works.
New ways of working will ensure responsive operations which will involve digitizing the product, services and processes across the organization to redefine experiences with customers. They will need to leverage predictive analytics, cognitive computing, Internet of things and automation. Employing predictive analytics and advanced analytics will give actionable insights that can be used to optimize both experience and operations and will help to create deep and advanced competitive differentiation.
And this is the least they will need to do if they want to survive.
It is a given. Digital will destroy the traditional. But the traditional need not run and hide. It will simply have to break on through to the other side. The digital side.
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